Pearce Real Estate

What's Causing the Current Real Estate Market, and Will It Last?

noreply@blogger.com (Barbara L. Pearce) — Sun, 07 Nov 2021 22:11:00 +0000

Potential buyers and sellers have been curious lately about what will happen in the near term for real estate in Connecticut? Is it too late to sell this year? Will next spring be better? Given that there are no crystal balls, there are still some relevant observations to make.

Residential real estate tends to lead into a good economy, followed by commercial real estate, and also can begin declining before other sectors see a dip. The reason it precedes many other factors is that it is driven by consumer confidence to a large extent. That's an attitude, not necessarily a measurable reality, and reflects popular sentiment about the future, as much as the present. So, when the average person thinks things are improving, real estate goes up, as they act on those ideas by buying property.

Other parts of the economy, fueled by production of goods or job creation, take longer to ramp up, and often do so in light of what's happening in early bellwether fields, such as real estate. Increasing the supply of real estate takes the longest time, if we are talking about new construction, so, in the short run, prices will be driven up fastest, since the supply is constrained.

When the opposite is true, and people don't feel positive about the future, they then stop buying. Sometimes, given the tie between credit and real estate purchases, it may not be that they don't feel upbeat, but that they don't qualify for the size or risk levels of the loans they are seeking. That fact, throughout history, has been a predictor of trouble to come in the economy, but it is hard to measure loans not made, as opposed to purchases, unemployment, or savings rates.

Where does that leave us today? Connecticut in particular, since prices have been depressed for so long, and people have been leaving the State more than moving into it, is a relative bargain for buyers. However, because there has been little new construction, and because interest rates have remained so low, allowing buyers to keep monthly payments affordable despite paying more for a property, sellers are now in the driver's seat. There isn't the general overheating that we saw during the past year, fueled in large part by COVID, but there is demand for all kinds of life reasons, and not the supply to fulfill it. That, plus the ability to borrow, will keep the market strong for some time to come. Let's hope not too strong, so that we don't see an abrupt halt down the road, but strong enough to reach a balanced state in the months to come. There are already indications of that, and they include fewer bidding wars, and more houses going under contract and then coming back onto the market. We should be glad about that, since what flies up may fly back down. Slow and steady is the goal.

Current Absorption Rates

noreply@blogger.com (Barbara L. Pearce) — Mon, 01 Nov 2021 19:15:00 +0000

Explanation of absorption rate: The rate at which available homes are sold in a specific real estate market during a given time period. If you look at the number for Branford you can say “If market conditions do not change and if no new listings come on the market it will take 3.5 months for the current inventory to sell at the current pace of the market. A balanced market’s absorption rate is typically between 5-7 months”.

What Do You Think About Houses On The Market For Months?

noreply@blogger.com (Barbara L. Pearce) — Thu, 28 Oct 2021 01:06:00 +0000

We had an interesting discussion at a sales meeting today, about what people think when they see a home that has been for sale for a very long time? Or one that has been reduced in price over and over again? The consensus answer was that it depends, of course.

If you are a sophisticated buyer, and you look at the property on Zillow, you can see the history of listings and sales. People who discover price change after price change often assume that the property was very overpriced, or that there is something really wrong with it. Other homebuyers, especially those who are not as internet-dependent, may never see the history; however, those people may also forget about the house completely, unless it gets brought to their attention by way of advertising a price change.

Sometimes a tortured listing history does mean that is was overpriced. Because the listing agent is not always known, it could be a reduction due to listing with a new firm. Sometimes, there is something wrong with a property, although usually a real problem leads in the end to lowered price. The point is that we don't actually know why the price kept changing, or why the property didn't sell quickly, but we all draw our own conclusions.

Sellers sometimes take properties off the market and relist them, so buyers can see them again at the new price. That doesn't always work though, thanks to the aforementioned price history. So what's the answer? Don't overprice to begin with, because a quick sale is always better. And the first few weeks are the best time to sell. And the first offer is often the best. Need we say more?

Don't Chase the Market Down, Home Sellers

noreply@blogger.com (Barbara L. Pearce) — Fri, 15 Oct 2021 13:32:00 +0000

Because of the strength of the current real estate market, largely due to lack of supply, there is still time this calendar year to sell a home. Even now, buyers are out there. One agent at our firm listed her home yesterday, and had multiple showings within an hour.

What's the secret to selling your home quickly? Don't overprice. That's it. Many people want to try for more, so they overprice, hoping that a desperate buyer will bite. That's the wrong way to do it. The only real way to get more than your home is worth is to list it for at, or slightly below, what it should sell for--then buyers will bid, more than one offer might well come in, and, with luck, a bidding war will ensue.

When, on the other hand, the seller starts high, s/he misses the best two weeks to sell a home--the first two. And, since the best offer is often the first, it's important to get that offer in. Overpricing leads to lowering the price, which in turn leads buyers to try for even less.

It's so simple, and so often violated. Don't be greedy, and listen to your agent. You'll be happy you did.

Why Do Real Estate Professionals Care About State and Local Debt?

noreply@blogger.com (Barbara L. Pearce) — Thu, 07 Oct 2021 00:02:00 +0000

It was recently announced that Connecticut has a debt load per taxpayer of $62,500, against an average across all states of $9300. There are many ways to calculate debt, and to measure it versus average income, but this is a high number by any measure. The reasons go back decades, most specifically to the 1980s, when Connecticut was flush with tax money, and many programs and benefits were instituted. That, combined with the unusual strength of the public sectors unions in our state, left us with problems that still persist, and in some cases are getting worse. The looming issue of State employee retirements, due to the benefit changes that begin in 2022, is leaving us, thanks to many exiting the workforce this year or next, with a much bigger roster of retired State employees, still entitled to the old package.

Why does this matter? Ultimately, it affects property values. The certainty of large future State expenses almost guarantees future tax increases. Because we are not gaining population, as many other places are, the number we have to cover is not being spread over a larger group. This compounds itself as an issue, when those left to pay more decide to move out of state themselves. For example, 37% of Connecticut's retired employees live outside of Connecticut. So they don't pay taxes here, but get mailed checks every month. So, to make up for that, we have put in very high estate taxes compared to other states, making older taxpayers move away even faster, since they don't want to die in Connecticut.

This becomes a vicious cycle. More people moving out means that taxpayers left owe more, which causes more people to move out. You get the idea. When fewer people stay or relocate into Connecticut, there are fewer buyers for property, making the market softer. There are issues that go the other way, such as the fact that very little has been built over the past three decades, and that we have little land available for future construction. COVID has actually helped us, given our open spaces and proximity to NYC and Boston. That has caused shortages in housing and industrial real estate, for two examples, which is raising prices for those sectors.

Within Connecticut, some cities and towns have their own debt loads that are high. Hamden is a good example. Taxes are higher on similar property than in surrounding towns, as Hamden struggles to reduce its debt. Even though it is doing the right thing, there is pain for taxpayers in the solution. It's easy to see how that scenario could play out on a statewide level.

What should you do? Vote for fiscally responsible candidates. Write to the ones already in office, and express your concern for added entitlements or givebacks. Read the facts and take action as citizens. And, above all, remember why you love living here, and work to preserve that, as well as promote Connecticut to others.

Absorption Rates

noreply@blogger.com (Barbara L. Pearce) — Fri, 01 Oct 2021 12:00:00 +0000

Explanation of absorption rate: The rate at which available homes are sold in a specific real estate market during a given time period. If you look at the number for Branford you can say “If market conditions do not change and if no new listings come on the market it will take 2.0 months for the current inventory to sell at the current pace of the market. A balanced market’s absorption rate is typically between 5-7 months”.

It's the Best Time of the Year for Real Estate Buyers

noreply@blogger.com (Barbara L. Pearce) — Sun, 26 Sep 2021 22:55:00 +0000

Every year, we post some version of the same message to buyers: If you want to buy a house, the best time to make an offer--if you are serious and can move quickly--is between Halloween and Thanksgiving. Sellers who really want to sell are beginning to come up against winter, and the end of the calendar and tax years. They have begun to heat their homes, and sometimes plow their driveways. There are fewer active buyers, and not all properties have as much curb appeal once leaves have fallen and flowers are gone.

All of those factors taken together give buyers a last chance to buy in 2021. The number of multiple offers have declined in most areas, yet mortgage rates are still attractive. The choice of listings may be smaller, but more of them are actually going to be available for more than a day or two. If house hunting has been discouraging this year, think about giving it another chance this fall.

That means that you need to start now, at the beginning of October, so that you can be ready to go to contract in a month. Buyers, make your lists, set your priorities, and make sure that you are prequalified. Serious buyers are good buyers, and more likely to be decisive. If you use that logic to your advantage, you may be spending the holidays in your new home!

Real Estate Closing Problems

noreply@blogger.com (Barbara L. Pearce) — Wed, 15 Sep 2021 00:08:00 +0000

Real estate closings have changed outwardly in many ways, especially since the beginning of the pandemic. Most parties sign ahead of time, and--usually--not much happens at the closing. The monies are often wired from buyer to seller, and sometimes the commission is paid that way as well.

Although that all sounds smooth, there are always glitches that pop up at the last minute. The most problematic, and maybe most common, is a delay in the closing date. It could happen that the mortgage funds are not available. That could be due to processing issues, or for any number of other reasons. That commonly delays the closing. It's interesting to know that our contracts in Connecticut allow for closings to take place after the date specified, and that a couple of weeks, which can feel like forever to the seller, is not unusual. In fact, not all contracts in real estate use the phrase "time is of the essence", which signals that the transfer must take place on time, or there will be consequences. It is not uncommon for the party who wanted that phrase used to be the one who cannot close on the date identified. We had one buyer who insisted on using it, and then had a child with chickenpox, and was unable to move when required. Attorneys on vacation are another likely cause of a delayed closing, and they would most often work that out amongst themselves, without the buyers and sellers having much say in the matter.

Sometimes buyers want to move in before the closing, or at least store furniture in the new home. That raises issues of insurance--the buyer, before closing, has no "insurable interest" in the property, and the seller has no reason to take the risk. Attorneys would normally be used to write up an agreement of indemnification. Sellers frequently worry that the buyers will move in, find something wrong, and refuse to close. That's not crazy. Usually, something gets worked out, especially if it is the seller who isn't ready to close for some reason.

The walk-through can be sticky, if something is discovered to be broken or missing. The contract is usually clear that the purpose of the walk-through is just to be sure that the house is in the same condition as it was at the time the contract was signed, so it isn't clear that a buyer could get satisfaction for something found that wasn't working--it should really be that he or she would have to prove that it was not broken when the contract was signed. At other times, the argument is over what was taken. It could be the washing machine or the dishwasher, although the usual culprits are chandeliers and pool equipment. . There has even been one closing held up because the sellers took the light bulbs, and the buyers wouldn't close without them! All in all, everyone breathes easier when that inspection is done

Many other situations occur every once in a while, enough so that we caution sellers not to "count their chickens before they hatch". That way, a little bump in the road will be expected, which can be all that is needed to defuse the tension and find a way to move forward, if all parties are reasonable. And, if there are no last-minute items that arise, everyone can be pleasantly surprised!

Don't Count on Selling Above the Market Value

noreply@blogger.com (Barbara L. Pearce) — Wed, 08 Sep 2021 00:28:00 +0000

What is it that people say about the stock market? "Bulls get rich, bears get rich, but pigs get slaughtered". Things are only worth what they're worth, and real estate is no different. If a seller tries to take advantage of a tight market by overpricing, it might work, but, more times than not, it won't. If it does work, it will usually be because multiple buyers are bidding on the same property.

Even then, reason mostly prevails, often the next morning, or when the appraisal comes in. Although many people are either downsizing, or have saved extra money during the past 18 months, they still will be resistant to paying over the appraised value, despite what they might be putting down (which could even be the whole amount). Even cash buyers regularly ask for appraisals, just to check that they are not "overpaying". Although we know that that's a subjective term, and that appraisals can lag in a rising market, people still want to be validated for their business judgment. If they think they may be getting taken advantage of, they will balk at some point.

Lately, we've been seeing a good number of homes coming back onto the market, after going under contract. Sure, there are some bad inspections, and some mistakes about how much can be financed, but there are also cold feet, and they often relate to the aftermath of a bidding war or feeding frenzy. Buyers get caught up in wanting to "win" the house, then wonder whether they have overpaid.

All of this is by way of saying that sellers, who have a short selling season for the next two months or so, should be wary of overpricing. A good value will get snapped up, and will sometimes even have backup offers, but a property that looks to buyers as though it will sit for a while may do just that. If there's no perceived risk of losing the purchase, there's no urgency. And we all know that lack of urgency kills transactions. Thinking too much about anything will bring out all the negative points. So don't go there. Price your home to sell. Listen to your agent. You'll thank him/her later!

School is Back in Session, and So is the Real Estate Market

noreply@blogger.com (Barbara L. Pearce) — Fri, 27 Aug 2021 00:37:00 +0000

It may still be close to 100 degrees outside, but fall is on the way. Kids are headed back to school, vacations are mostly over, and many people still think of Labor Day as the true start of a new year.

If you are interested in selling your property, now just may be the season. There are plenty of buyers out there, and many of them were shut out of the spring market with too much competition. Also, we've been reading about the "wedding boom" that is following the COVID pause, so more households are forming all the time. People who have been living in pods are headed back to work, sometimes in remote locations, and change is in the air. Listing your home now will attract all of those groups.

But don't get greedy! The fall buying window is shorter than the one in the spring, and it isn't a good idea to try to test a high price, with the thought that you can drop it later. Figure out your bottom line, and price to sell where you can make that number, but where it will appraise out.

Buyers should be thinking that they can take another bite at the apple, now that the rush is over. Fall in New England is glorious, and many homes look at their best. You just may fall in love with your forever home. Winter is coming, and it will be so nice to be settling into a new place, just in time for the holidays. The pandemic months gave everyone a chance to see what isolated living is like, and to get a better sense of their priorities in a home. Now that you know, it's time to act.

We've all spent the last year and a half in a state of suspended animation, while we wait to see what the new normal will end up looking like. While there are still no firm answers, there are clear trends, and clear preferences among buyers. We have become more adaptable, because we've had to, and we can apply that trait to fitting ourselves into new living situations. Learning to embrace the possible has been a key success factor lately, and it applies well to real estate.

A Pause in the Greater New Haven Residential Market

noreply@blogger.com (Barbara L. Pearce) — Wed, 18 Aug 2021 12:14:00 +0000

Every day, those of us in real estate start off with notifications of new listings. In the past few weeks, those have started to include "back on market" houses, meaning that they were under contract, and had fallen through and were once again available. In addition, we are seeing more "price reduced" tags on listings, which is an indication that sellers may have been too aggressive in their pricing, given what they had heard about the state of the market.

Real estate is like that--it seems as though progression in prices and sales numbers would move more slowly, given the size of the overall numbers, but it often seems--usually in arrears--that there was one day, or one week, when things changed. That time doesn't always last, but the hiccup is noticeable.

What does that mean for the fall market? Buyers who were shut out during the spring season--now is your chance! Offers are more likely to be accepted, especially since fall and early winter sellers are likely to be more motivated. They can be aiming for a deadline at the end of the year, leaving before winter, or just finished with summer home renovation and improvement projects. Whatever the reason, sales may well move faster, with less backup for testing, qualifying, and closing.

Sellers, you also have another chance. Buyers, having often taken a summer break, are back. They usually mean business in the fall, since looking at houses in the busy days of autumn is not as often a fun activity, like browsing in a bookstore. They know what they want. If they have been frustrated with not getting a home in the spring, they know their limits, and they are qualified. Don't waste your time or theirs, by testing a very high price just to see what happens. Price realistically, even at or just below what you will accept, and get the transaction done. Remember that the first offer is very often the best offer, and don't take an early contract as a sign that you should raise the price. As Nike says, just do it.

Buying in Connecticut May Be the Better Option Over Renting

noreply@blogger.com (Barbara L. Pearce) — Fri, 06 Aug 2021 00:11:00 +0000

In many parts of the country, renting is cheaper than buying. Connecticut, especially Greater New Haven, is not typical. Thanks to years--decades--of languishing prices, we are no longer an expensive place to buy a house. On the other hand, given our student population, and our arts/culture hub, we are one of the hottest rental markets across the United States. In fact, the last survey we saw showed us as second!

What does that mean for buyers? It still is affordable for many to purchase, especially given the interest rates. Although there is a lot of competition, it is largely local, except for maybe the Shoreline. The rental market, thanks to Yale, is international. Listings are creeping up, and offers have been slightly slower to come in. Competitively, then, it's a little easier to buy.

Will there still be appreciation? It appears that millennials will be forming households at a rapid rate going forward. Even though we have been told how different they are than their parents and grandparents, they seem to want many of the same things in a home, especially during the pandemic. So the supply going forward should keep prices up for years to come. There hasn't been much home construction for a long time, and that, right now at least, is backed up with regard to both supplies and labor.

What should sellers do? There is still a need for more product, so keep those listings coming. Don't be greedy, and don't count your chickens before they hatch--a lot can happen before a closing takes place. You will, however, be in a great position to buy when prices are lowest, at the end of the year, if you sell now.

And Labor Day, the start of the fall market, is just around the corner for everyone!

Absorption Rates

noreply@blogger.com (Barbara L. Pearce) — Wed, 04 Aug 2021 13:58:00 +0000

Explanation of absorption rate: The rate at which available homes are sold in a specific real estate market during a given time period. If you look at the number for Branford you can say "If market conditions do not change and if no new listings come on the market it will take 2.0 months for the current inventory to sell at the current pace of the market. A balanced market's absorption rate is typically between 5-7 months".

Tips for Deciding Whether to Buy a House Now

noreply@blogger.com (Barbara L. Pearce) — Fri, 30 Jul 2021 12:57:00 +0000

With all the activity around the country in residential sales, many buyers and potential buyers are wondering whether it's time to sit out the rush to ownership. Even without the emotional turmoil caused by frantic bidding followed by disappointment, they are nervous about the economics of buying. Here are some tips to consider:

1--Most importantly, what you pay every month is the key factor in deciding what you can afford. Although home prices have risen rapidly in many price ranges, interest rates are still low. Once you know the monthly payment associated with a given purchase, you can compare that to your total earnings. Interest, over the life of a mortgage, makes more difference than a few thousand dollars in cost, so keep that in mind;

2--Buying at higher prices is not as risky if you plan to stay for awhile. Americans in general are staying in their homes longer than they used to do, and most price rises even out over time. Just as you are unlikely to buy at the very bottom of a market, you are statistically unlikely to be purchasing at the very top;

3--With that in mind, consider the likelihood of having to sell quickly for some reason. If you are prone to be transferred often, are looking to change jobs, careers, or location, you might decide to wait. Real estate, although it is a great investment, is illiquid, meaning that you can't just take your money out whenever you need it. If there's a high probability that you might have to do that, you should probably wait;

4---Next think about whether you might decide to move again within the area. If so, that's less risky, because it's fine to buy high if you are also selling high. If all the homes go up in a region, and you are planning to remain, you will just conduct that next sell/buy at a higher price point. You will have more equity, and you will pay more for the next property, in an inflationary scenario;

5--Inflation figures into the equation in another way. If you have basic living expenses that will be disproportionately affected by inflation, and you do not expect your income to match the rise, then you should be more conservative. For instance, your grocery bill and your income will likely rise or fall together, and eating out is not a requirement, so doesn't have to stay constant. Suppose, however, that you drive for a living, and gas prices take a big chunk of your monthly income--that might be a reason to worry more about inflation. It all depends upon whether you are more or less impacted by generally higher prices;

6--We are heading into the fall bumper season for real estate. If you've been shut out in the spring market, more houses will be coming on the market right after Labor Day. Sellers are at their most flexible in the late fall (actually, between Halloween and Thanksgiving), so you just might get a better deal soon. That should give you hope that you can be in your new home for the new year! Whatever you decide, we are here to help you.

Will Seller Financing Return to Residential Real Estate?

noreply@blogger.com (Barbara L. Pearce) — Sun, 18 Jul 2021 17:27:00 +0000

During prior periods where it was difficult to sell property, many owners agreed to take back mortgages, so that buyers could afford to purchase. We are almost in a reverse of that situation now, because there are lots of buyers and not enough sellers. However, there is one similarity, which is that some people who want to buy cannot get financing through traditional sources, although they may be good credit risks for other purposes.

In addition, there are sellers out there who are not selling due to the need to move, but who may be downsizing now, given the sellers' market we are now experiencing. If they do not wish to invest the proceeds in the stock market, and they are not buying another house right away, or for the same amount of money, lending to the buyers could make sense.

Interest rates are incredibly low right now, and people putting their funds into cash accounts are getting almost no return on that investment. If, instead, they lent some of the money for the sale as a second mortgage to the buyers, they could potentially end up with far higher returns. Buyers might be willing to bid a little more, if the sellers were taking back paper for the additional amount.

Not much has been written about this avenue in this most recent market upturn. However, it's an option for both parties, and might be considered as an alternative for willing buyers and sellers out there in the current interest rate climate.

Dog Days of Summer For Real Estate--Maybe Not This Year? Tips for Summer Homebuyers

noreply@blogger.com (Barbara L. Pearce) — Fri, 09 Jul 2021 13:25:00 +0000

What does the term "dog days of summer" mean? The Romans coined it to refer to a period around when Sirius, the Dog Star, rose before the Sun, and was thought to bring heat, thunderstorms, and bad luck. This year July 23rd is the exact day when Sirius is in conjunction with the Sun, with the 40 days called "dog days" running from July 3rd to August 11th.

Traditionally, it means a time when the weather is too hot for anything to happen. That isn't true this year for real estate, and the dog days of summer can work to a buyer's advantage:

1--Look at homes when everyone else is on vacation. There will be less competition.

2--Use the slow season to speed up the mortgage process. Due to overlapping time off, many organizations experience slowdowns for normal timelines. You can prevent this by dogging--pun intended--those who need to act.

3--Book inspectors, contractors, and others, who may be working, but not as frenetically as in June.

4--Take advantage of late sunsets to get appointments after work, or after the normal workdays of others.

5--Have a schedule for packing and moving that takes advantages of summer Fridays and long weekends, which might otherwise get frittered away.

6--Put shorter timeframes on contracts, so that signatures don't get delayed, and other offers don't appear.

7--Think about fall, which is right around the corner, and getting into your new home before the weather turns cold. You will feel the heat less that way!

Current Absorption Rates

noreply@blogger.com (Barbara L. Pearce) — Thu, 01 Jul 2021 19:45:00 +0000

Explanation of absorption rate: The rate at which available homes are sold in a specific real estate market during a given time period. If you look at the number for Guilford you can say “If market conditions do not change and if no new listings come on the market it will take 1.7 months for the current inventory to sell at the current pace of the market. A balanced market’s absorption rate is typically between 5-7 months”.

Sellers, Don't Count Your Chickens Yet

noreply@blogger.com (Barbara L. Pearce) — Sat, 26 Jun 2021 15:44:00 +0000

Just in the last few days, we've started to see homes in Greater New Haven come back onto the market, after a sale fell through. When we think about how many offers now are made without contingencies, in order to improve a buyer's chances of winning a multiple bid situation, the percentage of DFTs (deal fell through, as we call them in the trade) is actually higher than it appears. People who made contingency-free offers did not always leave themselves wiggle room to get out of a contract, so that the sellers likewise couldn't get out. Those contracts would therefore be sticking, meaning that the 80% or so of sales with contingencies are producing 100% of the DFTs.

Why would that be happening? There is always some amount of buyer's remorse. That house you were bidding on the night before doesn't seem as great in the light of day. However, it is likely that more homes are coming back onto the market because the buyers can't perform. Either they can't borrow enough money--maybe they bid too high in the last round of negotiations, or maybe they never had quite the credit they thought they did--or it's just coming at higher rates, as rates are inching up. Sometimes it's fees, or flood insurance, or repairs that will cost more that ends the deal.

In weaker markets, many of those contracts would be adjusted downward by both parties, especially if there are major defects that come to light, or if the home doesn't "appraise out" at the price being paid. That can easily happen in a rising market, because appraisers can only use closed sales, so current contracts at higher amounts can't be counted. In this time of short supply, the sellers are more likely to put the house back on the market, and try to resell it at a comparable price.

When one house has this problem, it can also cause a domino effect, where several homes each depend upon the buyers selling their previous house. One transaction can ripple through other sales. Even if a sale sticks, a lower price may lower the equity available for the next purchase.

What does all this mean? It means that the market is beginning to show the downside of rising prices, where buyers face hard upper limits on what they can pay. Sellers should remain flexible, roll with the punches, and not get greedy. A deal that seems too good to be true may be just that. If everyone works together, a good result may occur for all parties.

Quick Real Estate Statistics

noreply@blogger.com (Barbara L. Pearce) — Mon, 14 Jun 2021 20:44:00 +0000

Quick Real Estate Statistics from the National Association of Realtors

Overview of the Real Estate Market

5.64 million existing homes were sold in 2020, according to data from the National Association of REALTORS®. 822,000 newly constructed(link is external) homes were sold in 2020, according to the U.S. Census Bureau.
The Association of Real Estate License Law Officials (ARELLO)(link is external) estimates that there are over 3 million active real estate licensees in the United States.
There are 106,548 real estate brokerage firms operating in the United States (Real Estate and Rental and Leasing: Summary Statistics for the U.S., States, and Selected Geographies: 2017(link is external)).
Preliminary results from the U.S. Energy Information Administration's Commercial Buildings Energy Consumption Survey (CBECS)(link is external) show that there were 5.9 million commercial buildings in the United States in 2018, comprising 97.0 billion square feet of floor space.
There are approximately 119.7 million occupied housing units in the United States, according to the 2018 American Community Survey(link is external).
According to the 2020 Profile of Home Buyers and Sellers, the typical home seller has been in their home for 10 years. The typical home size is 1,900 square feet. The typical homeowner is 47 years old.
In 2019, 64.9% of families owned their primary residence, according to the Federal Reserve's Survey of Consumer Finances(link is external).

NAR Membership Statistics

Members to date: 1,504,474 as of May 2021

Number of local associations: 1,108 as of 2020

Source: Monthly Membership Report and NAR Membership Statistics, 1908-present

REALTOR® Demographics

68% percent of REALTORS® are licensed as sales agents, 20% hold broker licenses, and 13% hold broker associate licenses.
The typical REALTOR® is a 54-year-old white female who attended college and is a homeowner.
65% of all REALTORS® are female, and the median age of all REALTORS® is 52.
Real-estate experience of all REALTORS® (median): 8 years
Median tenure at present firm (all REALTORS®): 5 years
Most REALTORS® worked 35 hours per week in 2020.
The median gross income of REALTORS® was $43,330 in 2020, an increase from $49,700 in 2019.
Median number of transaction sides in 2020:
- Residential sides for all REALTORS®: 10
- Residential sides for residential specialist broker/broker associates only: 13
- Residential sides for residential specialists only: 9
- Residential sides for commercial specialists only: 5
- Commercial sides for commercial specialists only: 4
Formal education of REALTORS®:
- Some college: 29%
- Bachelor's degree: 32%
- Graduate degree and above: 13%
- Associate degree: 13%
- Some graduate school: 6%
- High-school graduate: 8%
REALTOR® affiliation with firms:
- Independent contractor: 88%
- Employee: 5%
- Other: 7%

Source: 2021 National Association of REALTORS® Member Profile

Statistics on REALTORS® and Technology

REALTORS® most often prefer to communicate with their clients through text messaging, at 93%. Ninety percent preferred to communicate via telephone, and 89% through e-mail.
70% of broker/broker associates and 69% of sales agents have a website.
81% of members have their own listings on their website, 69% have information about buying and selling, and 66% have a link to their firm's website.
74% of REALTORS® use Facebook and 56% use LinkedIn for professional purposes.
20% of all members get 1-5% of their business from social media, and 10% get 6-10%.
Of the members that use drones in their real estate business of office, 36% hire a professional, 14% have someone in their office that uses drones, and 6% personally use drones. 21% do not use drones.

Source: 2021 Member Profile

Home Buyer Statistics

First-Time vs. Repeat Buyers:
- First-time buyers: 31%
- Median age of first-time buyers: 33
- Median age of repeat buyers: 55
- Median household income of first-time buyers: $80,000
- Median household income of repeat buyers: $106,700
The typical home purchased was 1,900 square feet in size, was built in 1993, and had three bedrooms and two bathrooms.
Among those who financed their home purchase, buyers typically financed 88% of the home price.
88% of buyers purchased their home through a real estate agent or broker—a share that has steadily increased from 69% in 2001.
Buyers who would use their agent again or recommend their agent to others: 91%
Where buyers found the home they purchased:
- Internet: 51%
- Real estate agent: 28%
- Yard sign/open house sign: 7%
- Friend, relative, or neighbor: 6%
- Home builder or their agent: 5%
- Directly from sellers/Knew the sellers: 3%

Source: 2020 National Association of REALTORS® Profile of Home Buyers and Sellers(link is external)

Home Seller Statistics

The typical home seller in 2020 was 56 years of age, had a median household income of $106,500, and lived in their home for 10 years.
89% of sellers were assisted by a real estate agent when selling their home.
Recent sellers typically sold their homes for 99% of the listing price, and 22% reported reducing the asking price at least once.
The typical home sold was on the market for 3 weeks.
41% of sellers who used a real estate agent found their agents through a referral by friends or family, and 26% used the agent they previously worked with to buy or sell a home.
Sellers who definitely would use same agent again: 74%

Source: 2020 National Association of REALTORS® Profile of Home Buyers and Sellers(link is external)

Inventory shortage sends home prices soaring at record rate

noreply@blogger.com (Barbara L. Pearce) — Thu, 10 Jun 2021 21:47:00 +0000

Inventory shortage sends home prices soaring at record rate

14.8% annual home price growth is the highest seen in Black Knight data going back nearly 30 years

By Matt Carter of inman

With listings shortages persisting, U.S. housing markets remained “white hot” in April, with home prices growing at a record — and unsustainable — annual rate of 14.8 percent.

Black Knight’s latest Mortgage Monitor Report recorded “the highest annual home price growth rate we’ve ever seen” in records going back nearly 30 years, said Ben Graboske, the company’s data and analytics president, in a statement.

Western states saw the biggest price gains, with six metro markets — Austin, Texas; Phoenix, Arizona; Seattle, Washington; Riverside, Sacramento and San Diego, California — growing at an annual rate of 20 percent or more.

“Current levels of home price growth aren’t sustainable for an extended period, especially if mortgage rates begin to rise,” Black Knight analysts concluded in the report.

If home values keep climbing at the current pace, and mortgage rates go up, that will push a key measure of affordability, the payment-to-income ratio, above the 23.6 percent average over the last 25 years. Anything above the current ratio of 20.5 percent is considered a “tipping point” where home price appreciation typically slows, Graboske said.

If rates on 30-year fixed-rate loans rise to 3.5 percent by the end of 2022, the national payment-to-income ratio would hit 21.6 percent by the end of this year, and 25 percent by 2022.

Low mortgage rates are fueling demand for housing, but Graboske said the more acute driver of price increases is the shortage of available listings.

“The total number of active listings was down 60 percent from the 2017 to 2019 average for April,” Graboske said. That means there were close to 750,000 fewer homes on the market than is typical. “It’s not getting any better, either.”

Compared to pre-pandemic seasonal levels, there were 26 percent fewer newly listed properties in April. With homes selling so quickly, newly listed properties now account for more than 75 percent of listings, compared to 27 percent a year ago.

The drop in new listing volume is likely to “create noticeable headwinds for both purchase lending and existing home sale volumes in coming months,” the report said.

At the metro level, even the slowest-growing markets are seeing “aggressive” price growth, the report noted. At 8.1 percent, Pittsburgh, Pennsylvania, had the lowest home price growth rate among the 50 largest markets.

But that’s the highest “floor” Black Knight has ever seen — more than three times as high as previous high of 2.4 percent.

The top 10 metro markets with the strongest price appreciation were:

Austin, Texas (24.9 percent)
Phoenix, Arizona (24.4 percent)
Riverside, California (22.3 percent)
Seattle, Washington (20.8 percent)
Sacramento, California (20.8 percent)
San Diego, California (20.1 percent)
Salt Lake City, Utah (19.9 percent)
Providence, Rhode Island (18.1 percent)
Tampa, Florida (17.3 percent)
Jacksonville, Florida (17.0 percent)

Among the 50 largest housing markets, the 10 markets with the weakest price appreciation were:

St. Louis, Missouri (11.6 percent)
San Antonio, Texas (11.6 percent)
Orlando, Florida (11.0 percent)
New Orleans, Louisiana (10.9 percent)
Minneapolis, Minnesota (10.8 percent)
Birmingham, Alabama (10.8 percent)
Houston, Texas (10.3 percent)
Oklahoma City, Oklahoma (10.0 percent)
Chicago, Illinois (9.9 percent)
Pittsburgh, Pennsylvania (8.1 percent)

Many would-be homebuyers have seen the headlines about rising home prices and shortages of listings in many markets. More than half (56 percent) think it’s a bad time to buy, according to a recent Fannie Mae survey. The survey also found that while would-be homebuyers know it’s tough out there, an all-time high share of consumers (72 percent) said they’d buy a home if they moved.

Connecticut's Rise in Residential Home Prices

noreply@blogger.com (Barbara L. Pearce) — Wed, 09 Jun 2021 11:37:00 +0000

Although we all feel locally that prices are going through the roof, we are not out of line with the rest of the country. Residential home prices are rising all over, and we are right in line. So, despite the fact that it has been theorized that our increases are due in large part to a demand from people seeking to leave NYC, it seems to be a broader trend.

The evidence has suggested, even before the pandemic, millennials have been moving toward lifestyles very close to what their parents wanted. There have been some changes--among them the desire for walkability and smaller lots with smaller homes--the general trend has been for buying homes, often in suburban areas, with outdoor space and good schools. This was true before the pandemic, and has only increased with remote working and family bubbles during COVID. Generations before this age group have largely done the same thing, but now the people buying span a bigger age range. Student debt, poor job prospects after 2007, and protracted adolescences have caused first-time buyers to wait longer.

That cohort is now a broader spectrum, from the 20s to early 40s, and it is colliding with baby boomers who are looking to downsize. Given the differences brought about by changing tastes, it is putting mid-size homes in walkable neighborhoods at an incredible premium. This means that the rapid rise in prices would be driven primarily by a lack of supply, fueled by a postponement of sales for a decade prior. Americans are staying in their homes longer than was customary, and the backing up of the supply chain is causing shortages now, just as it has with paper towels and outdoor equipment.

What will happen next? Well, it doesn't seem that Connecticut is in a bubble by itself, which is good news. And the death of cities may not occur, although the trend toward smaller ones may continue, especially with the likely permanent increase in telecommuting, at least for part of the time. So prices will stay high for the intermediate future, as long as mortgage rates cooperate, and our region will go on doing well. It won't be about the pandemic, but about lifestyle, normal life cycle changes, and job opportunities.

If you are a buyer, you will be paying more, but at an affordable monthly cost that is comparable to what has been paid in years past, with higher interest rates. If you are a seller, now is your chance!

Current Absorption Rates (Single-Family Residential Homes)

noreply@blogger.com (Barbara L. Pearce) — Tue, 01 Jun 2021 21:16:00 +0000

Explanation of absorption rate: The rate at which available homes are sold in a specific real estate market during a given time period. If you look at the number for New Haven you can say “If market conditions do not change and if no new listings come on the market it will take 2.8 months for the current inventory to sell at the current pace of the market. A balanced market’s absorption rate is typically between 5-7 months”.

Exposing Your LIsting to the Market Before Selling

noreply@blogger.com (Barbara L. Pearce) — Wed, 26 May 2021 18:14:00 +0000

One of the country's large real estate boards recently did a study of the prices obtained for so-called "pocket" listings. Those are properties that are really sold before they are listed, but that often go onto the MLS and immediately flip to pending status. In all likelihood, they were sold to a client of the listing agent or agency before anyone else saw them, and were then put onto the MLS for the purposes of market share for that agency. Buyers are seeking these types of opportunities, since there is such a short supply of new homes for sale. It has some appeal for sellers as well, since it shortens the amount of time that their home has to be ready for showing. It also gives them an early indication of value, if an offer is made, that won't be able to be inferred by number of days on the market.

But what are the downsides? One of the basic principles of behavioral economics is called the wisdom of crowds. That refers to the fact that large groups of people weighing in on almost any forecast produces a better result than one or two people can produce alone. Therefore, a house that is bid on, or even seen, by the general public will result in a sales price closer to the true value, than a bid by one buyer. In fact, this study of pricing mentioned above, for homes sold with pocket listings, resulted in prices which were 6 to 20% below what those homes were estimated to have gotten if broadly exposed to the market. One could certainly assume that the same thing would happen, perhaps even to a greater extent, if owners simply sold the home themselves. Real estate agents should be, and generally are, much more familiar with current pricing in the area, and have an incentive to sell a property for more, since commissions are usually a percentage of the sales price.

There is one countervailing argument, however. If someone feels that they are getting an early look, with a chance to buy before others can bid, shouldn't they want to make sure that they are paying a fair price? Maybe, and perhaps for that reason, they may come in high. Odds are, however, that they will want to pay as little as they can, and that time will work for them. That is particularly true without a broker involved, since buyers will expect to save the amount that the seller won't have to pay in commission, and will aim to pay his or her net price. (This doesn't usually go well, because the seller also expects to save the amount of the commission, but that's a topic for another day).

So, in an ideally fair world, all buyers would have the chance to put in an offer equal to what the house is worth to them, and sellers would be able to tell what it's worth, by looking at the average of the offers, maybe throwing out the highest and lowest. The only way to do that is to make sure all potential bidders know that the property is available, which is how the MLS came to be in the first place. It still works pretty well, after all these years, and all these real estate cycles.

Buy or Renovate? Tips for Deciding

noreply@blogger.com (Barbara L. Pearce) — Wed, 19 May 2021 14:04:00 +0000

We all saw the tremendous amount of renovation that went on during the pandemic, as people hunkered down to work, play, and live with extended family in their homes. Now that restrictions are lifting, the market is so hot that some cannot find new houses to buy. They may consider renovation instead, although raw materials have skyrocketed and there is a shortage of labor with a backlog of jobs. What should a person do?

The answer is, as always, it depends. The first thing to consider is how long you plan to stay in your current home. If you plan to stay a long time, you should spend that money you saved from the vacations you didn't take last year, because you will be enjoying the fruits of your labor for some time to come. If, on the other hand, you are thinking of retirement and relocation, your horizon is much shorter.

Along with that calculation, you should think more about the purpose and scope of the work you would do in a renovation--is it mainly for yourselves, or would it improve the resale value of your property? If so, what percentage of what you spend would be recaptured in a sale? The usual answers can be found in numerous charts available online, but the general principle is that quick fixes and cosmetic repairs recover total value, while more elaborate or specialized changes bring back less from future buyers. If your household, for instance, is composed of people all over six feet tall, and your renovation involves putting all of your kitchen counters up to a height you find comfortable, a new owner would probably figure that he or she had to replace them with lower ones. If you add a bath downstairs, or a patio to the back of the house, those would be considered safe to count on recovering. Painting and landscaping are almost always smart to do.

Will the pandemic permanently change buyer preferences? It's hard to say. Outdoor space may get a big lift, home offices will be much more common, but should that bedroom become a gym? That's less clear. Tastes do change over time. There are also generational issues to take into account. Your choices may not resonate with a young family, or your decorating ideas may differ from theirs. The latter can more easily be fixed, although they will affect how the house shows, when the time comes to sell, if they are extensive.

So, each person's conclusion may be different, but certain steps make sense. Think about time left in a house, personalization of the work to be done, family needs and desires, and cost of renovation vs. cost of moving. And then call your Realtor for his/her opinion--we answer these questions every day!

Greater New Haven is Poised for Liftoff (Literally)

noreply@blogger.com (Barbara L. Pearce) — Sat, 08 May 2021 14:21:00 +0000

For decades, Greater New Haven business leaders have been pointing to the dwindling fortunes of Tweed New Haven Airport as a major barrier to economic development in the region. This week's announcement that the airport will be privatized for at least the next 43 years, with a longer runway and a new carrier offering flights to several cities, is a huge boon to our area.

Connecticut has spent most of its air transportation money on Bradley, which is now offers international, as well as domestic, flights, and is the biggest of the State's three airports. There has been a great deal of rivalry between Sikorsky in Stratford and Tweed in East Haven. Neither one has made much, if any, progress. Both have been hampered by surrounding residential developments, short runways, and poor prospects for big carriers. Nor has either location garnered steady support from its legislative delegation.

It's a new day now for Tweed. By inking a private deal, public sector funds are no longer necessary. The powers that be in Hartford don't need to be courted, and they should be nothing but enthusiastic about this outcome. Both New Haven and East Haven, whose borders it straddles, will see upsides from this arrangement, apart from a boost to the region as a whole. The terminal will be moved, which will ease the traffic burden on the Morris Cove neighborhood. Jobs will be created for both municipalities, and other development should spring up on the terminal side.

Once we can offer residents convenient flights to hubs or favored destinations, within minutes of their homes, people who travel regularly on business, or even for pleasure, will reap major benefits. Whether they park at the airport, get dropped off, or take a short Uber ride, they will save hours of time now taken up with congestion leading to the NYC airports. The certainty of the amount of lead time required to get to Tweed, and the small size of the TSA line, will outweigh in many cases the need for stopover plane changes to many cities.

Regional business leaders have long known the untapped demand for a viable local air transportation option. With the huge increase in remote work possibilities brought on by the pandemic, many more people are likely to choose to live in Greater New Haven. We have recreation, schools, health care, and the arts, all in abundance. Now we will have commutability as well. Let the commercial expansion begin!