Sales Around the Country This Spring

It's always interesting for me to visit with my friends from other large independent companies around the country, especially when the market is changing rapidly.  I just got back last night from Charlotte, and the mood from other places is almost giddy.  The feeling nationally is that market activity will be back within 10% of normal levels by the end of this year.  That's a big improvement from the projections we heard only last fall, when most experts thought that historical norms of housing turnover would not return before 2015.

Now the commonly heard complaint is lack of inventory.  There simply aren't enough properties for sale to meet the demand. The average number of months of inventory seems to be about three.  Well-priced, well-maintained homes in many areas get multiple offers--sometimes dozens--within a few days or weeks of being listed.  Once they go under contract, the problem that arises is that appraisals have been lagging, as they always do, so there are issues with mortgages.  In some cases, sellers and their agents are going back to the highest bidder and telling them that they need to release all the contingencies, including mortgage, or they will proceed to the next offer. New construction is hot everywhere.

Here in Connecticut, we're recovering slowly.  (Maybe that's why they call us the Land of Steady Habits?)  We have just over eight months of inventory overall in our county, with some towns much higher than that.  Guilford, for example, has 17 months' supply.  Our supply of million dollar homes will last several years.  So, for us, the report from other places tells us what the future will be like.  And it will be great.  However, if you are a buyer, my advice is to buy right now!

Bidding Wars in Phoenix

Everyone knows that certain parts of the country--the ones that were growing quickly--took the biggest hit in the recent downturn.  Arizona and Nevada, along with Florida, are always mentioned as places with thousands of homes for sale at drastically reduced prices.  Now, things are changing, even in those states.  Today's New York Times has an article about the return of bidding wars to Phoenix.  The story points out that this is not necessarily because prices would have risen on their own, but because the supply is finally drying up, and there is more demand for what's left.  That sounds like a normal explanation of supply and demand to me!

Prices in high-end neighborhoods in and around Phoenix are still dropping, but many of the foreclosures in harder-hit areas have moved through the system, leaving homebuyers with little to choose from.  Even new construction, which is finally picking up, cannot keep up with the pace of demand.  One suburban home, a foreclosed property, had 84 offers before the bank closed off further ones.  This illustrates how a glut of short sales and foreclosures can hold down prices, and what can happen when the flow of such properties ends.  

New Construction in New Haven

Around the country, there are locations with much more raw land--and therefore much more new construction--than in our region.  However, we have just listed a new condominium complex on the harbor in New Haven, and we are experiencing some of the excitement that accompanies new projects in this improving real estate market.

There are 31 units listed, and 8 went on reservation as of the first weekend!  Visitors to the complex, called Breakwater Bay, were blown away by the water views and expansive space of the units, which range in size from 1870 sf to 1915 square feet.  All have luxurious fixtures and detailing, and the response has been so good that prices on later reservations have already risen.

New construction tells us a lot about the state of the market, since older homes can usually be gotten for less.  The confidence to buy new shows that buyers believe that prices will rise.  It's really nice to have that feeling again after much too long!

New Construction

There's another sign out there that things are improving.  We are starting to see new construction again.  When prices go down, new construction has a hard time competing, since the costs of land, site improvements, labor, and materials don't really go down much, so new construction can't compare to the price of a home that was built a few years ago.  In addition, loans are harder to get, and most builders find it difficult to get financing for projects.  Add in the time a completed home could sit on the market before selling, and you don't see much being started.

Lately, statistics from around the country show housing starts beginning to rise.  We're at the end of that increase, since we don't have as much land, as much new employment, and costs as low as some other states.  Even we, however, are noticing activity.  There is always a portion of the buying public that seeks out new construction, especially people moving from other places, who want their new home to look like the home they left behind.  In recent years, many of them have turned to renting, either because they left behind an unsold home, or because they were worried that it was the wrong time to be buying.  Eventually, even the most skittish will want to settle down.  And it looks as though that time may be upon us--good news for everyone!