Update from The Leadership Council

I just came back from a meeting of my peers from big independent brokerage firms around the country.  Things are definitely picking up everywhere, and there was much more optimism in the room than in the past few years.  Many places have gone through their foreclosure sales, and inventories in those spots are very low compared to prior years.  Connecticut is behind in that regard, but has seen similar growth in company dollar and activity.  At Pearce, we are up 46% from last year at this point, so we're excited!

Around the country, first-time homebuyers are leading the way, with most sales at levels below $300,000.  There are still two parts of most markets--one for the listings that come on and sell almost immediately, and another for the overpriced, stale, or problematic listings that are still sitting there.  Taken together, the average time on the market is just over 100 days, but there is a large variation, and a much greater supply over $500,000.

It was interesting to learn more about the Denver market, which is hot at the lower end, and to see the very impressive Coors Field one night (although the Rockies lost decisively and the weather was a lot colder than it was back here!).  And, of course, it was wonderful to return to spring in Connecticut!

January Contracts Up

Today's papers cite that national sales figures have risen in January, pushing the index used for measuring the health of the market to 97.  The number used for a balanced market is 100, so we can see that things are not only getting better, but that they are approaching "normal".  We need to remember that what we had in the middle of the last decade would be considered abnormally good, so there shouldn't be expectations that we will return to that dynamic any time soon.  However, it is clear that there is pent-up demand out there, particularly from first-time buyers, and it is starting to seem likely that the momentum we are gaining will feed upon itself and lead to further upticks.

More spring weather, more home sales--what could be better??

It's That Time of Year Again

Every year at this time, I remind people of my strongly-held belief that the period between Halloween and Thanksgiving is the best time to buy a property.  Heating bills have begun. This year, even plowing bills have begun.  The holiday season is not quite upon us, but the end of the year is beginning to loom.  Anything that is going to get done by December 31st has to be in the works very soon. 

Add all of those factors up, and you come to one conclusion:  If you want to buy a property this year, act quickly.  Make your offer right now, and hurry to close by the end of the year.  You are likely to get the lowest price if you buy now, and take winter worries off the hands of the current owners.  Owners will be worrying that they might not sell until spring, and they will be at their most receptive. 

What are you waiting for?  Stop reading, and call your real estate agent immediately!

Will It Ever Stop Raining??

You must wonder what IS good for real estate, if we complain about snow and we complain about rain and we complain about heat and we complain about sunshine, but the truth is that people look at real estate when the weather is good but not too good. There is a human aversion to getting wet (although my dog seems to share it...) that keeps people indoors when it's pouring. There is also a natural tendency to want to go somewhere outdoors when the weather is beautiful. That leaves in between days to shop for property. Rain may be better than snow, because it doesn't fill up your driveway, and both are probably preferable to ice, but nothing that causes gray skies is ideal for showing property. Not too much looks good in gloomy light.

So we know that we're not the only ones wishing that the sun would come out, but we have our reasons. And they just add to all the other reasons that we--and you--are ready for spring!

Finally, an Upturn

I was looking at our financial results from last month recently, and I began by just checking our numbers, which didn't seem great. Then I compared them to the column from last year at this time, and I almost began dancing around the office. The numbers that I thought were mediocre (and they were) were 80% better than at this time last year!

This proves the old adage that everything is relative. If something is bad enough, anything else can be an improvement. While that may seem obvious, the effect may not be. If many people--especially buyers--start believing in this upturn, a little improvement can turn into a good market.

It did feel at the beginning of the year that there was a widespread feeling that this recession had gone on long enough. Everyone seemed to be ready to turn the page. Now we can add a little proof that this may indeed be so.

And just in time for spring!

Open Houses

Even though we are not in the traditional season for open houses, we've been surprised at how many people have been coming to the ones that have been held lately. We think it's a result of the tax credit, and the interest is stronger at the lower end of the price scale, but we're happy for the activity wherever it falls.

The moral of this story is that this may not be the typical holiday season, and that, if you are a seller, you may want to try harder to sell your home over the holidays. Don't make the assumption that the market will be dead until spring. Our November results were 80% ahead of our November results last year--we are clearly in the early stages of a recovery. While prices will lag for a long time after unit sales rise, there are clearly buyers out there.

It's the Buying Time of Year Again

Our agents have heard me say this every year, but it's time to say it for this blog: The best time to buy a house is between Halloween and Thanksgiving. Sellers are ready to sell, as they start to pay heating bills, think about plowing, and head into the holidays. Buyers are mostly settled into new homes or forgetting about buying until spring. It's hard to show houses in the winter. There's snow and ice, not to mention cold. Parking and driveways can make open houses and showings tricky. Although many homes show well when they are decorated for the holidays, most families are busy at that time of year and don't want to have to keep their homes clutter-free and ready to show. Most buildings look better in light, and there isn't much of it in the dead of winter. All of that adds up to the realization that, if you haven't sold your home within the next three weeks, you probably aren't going to sell it until the spring.

Despite that chilling thought, there are sellers who want to move at this time of year. For one thing, some have tax reasons for wishing to close before year end. Some have jobs or commitments in other places. Some are tired of the selling process, and some have another home waiting for them. Some just want to spend the winter in a warmer place. All of those people are competing for the buyers still looking when winter comes. Therefore, if you are an eager seller, you are most likely to compromise on the price at this time of year.

Buyers can capitalize on these factors to negotiate for a better price as the weather gets cold, especially if the home is empty and sellers are worried about freezing pipes and empty oil tanks, or even just heating and plowing bills. This is the time of year when a month of expenses can easily become six months of expenses, and sellers will take that into account.

If you are a buyer, particularly a buyer with cash, here's your chance! Don't waste it--buy now.

Back Down Again?

It's quiet in our offices this month--really, really quiet. Now we're reading that the national trends say that the uptick ended in about July, which, coincidentally, is what we saw. It was far busier through July than it typically is in the summer. It was slower in August, but that is almost always true. After Labor Day, we usually see a marked increase in activity. That lasts until about Halloween, or maybe Thanksgiving, and then the buyers hibernate like bears until the spring.

We're not quite sure what to make of this latest turn of events. The stimulus program and the $8000 tax credit for first-time homebuyers were supposed to be making the phones ring. Indeed, it did, but the phones have slowed down. I can only speculate, and my guess would be that the market will not stay up until unemployment comes down. I also think that the hoopla over national health insurance has people worried about costs. Whatever the reason, it's not good.

One of the earliest CEOs of General Motors famously said that "what's good for General Motors is good for America". I would argue that the same is true of real estate. The government needs to do what it has to do in order to stimulate the real estate market at all levels, not just at the lowest end. The recovery depends upon it.

Signs of Life

Although the temperature still says winter, it seems to be spring in Connecticut at last! The phones are ringing, people are listing their homes for sale, and buyers are out in force. It's still very hard to keep transactions together, particularly through the inspection and financing stages, but at least we are seeing contracts being written. It's more likely to see them coming in on properties that have recently come onto the market, however, and less likely to see them on properties that have been listed for months or years. Yes, it's still a buyer's market for the most part, even though there are a few neighborhoods where the supply is limited.

We are seeing mortgage requirements steadily rising. It now takes a FICO score of 720 to get a jumbo mortgage, for example, and PMI is sometimes not available unless the buyer is putting down at least 10%. These factors make me think that buyers should feel a little more urgency; after all, it's the financing costs that drive most purchase limits.

This post will be brief, because even my phone is ringing much more, and I have lots to do!