Home sales


I look forward to what 2009 has in store, I am cautiously optimistic that the spring season will usher in the calm.  (that would be my crystal ball report!)

But allow me to deal in some real numbers for the 3rd quarter of 2008 as compiled in very factual form by Prudential Connecticut Realty’s own Barry Rosa, I read the whole report and you can too at www.prudentialct.com it is to the right of the main page (eleven pages long, per county separated by residential and condominiums).  For the purpose of my blog, I deal in residential sales in New London and Windham Counties:

New London County  (Groton, Bozrah and East Lyme all had modest price gains)

For nine months so far in 2008, here are the facts:

Days on Mkt                                     Median Sales Price                          Total # of unit sold

140                                                   $255,000                                        1316

For the same nine months in 2007, here are the facts:

Days on Mkt                                     Median Sales Price                           Total # of units sold

138                                                   $280,000                                        1903

Notes:  Median means just a many above as below, there is an 8.9% drop in house prices in year to year comparison, units sold are 30.8% less in 2008

Windham County (Wauregan and Woodstock both had modest price gains)

So far for 2008:

Days on Mkt                                    Median Sales Prices                           Total # Units Sold

138                                                  $205,000                                           613

Same months in 2007

Days on Mkt                                     Median Sales Price                             Total # of Units sold

143                                                  $230,000                                            717

Notes:  That is a 10.1% drop in house price and a 14.5% drop in total units sold

So, I suspect that now that it is being called a recession, maybe that means we are on our way out?  Cross your fingers and read the NAR economic report linked below.

http://www.realtor.org/research/reinsights/economistcommentary

On so many levels, but for this blog post it is about the literal Eau de foreclosure.

I have been hitting the showing pavement very hard these last couple of weeks and have seen some phenomenal deals (what that means to me is houses that are a great value for their square footage, condition and amenities)–I have seen some “deals” at every price point. 

But I have no tolerance for the smelly foreclosures I have been seeing lately, no matter the deal!  I appreciate that the entire civilized world is out trying to save a buck right now,  but give me a break, wouldn’t it be money well spent and translate into a higher price for the property if many of the foreclosure properties could be at minimum cleaned up, cleaned out and stripped of offending odors?  Isn’t a empty canvas more palpable then a clearly disregarded and mistreated property?

So buyers beware–and bring a nose plug!  The foreclosure sale is a different sort of animal.  There are minimal safeguards in place to protect the buyers of foreclosure sales.  Read the fine print on the addenda before you sign, for that low, low bargain price you need to be handy and/or resourceful–and just as a little FYI, they are not wild about high time financing and  likely competitors are the contractor or investor with cash in hand–so deal seeking regular buyer get out early, get out fast.

Furthermore, information can be scarce and the foreclosure sale addendum not bestowed on the winner until after price has been negotiated.  But if the bargain deal is truly what you want, it shall be my mission as well.  I personally prefer a more level playing field for my buyers and the foreclosure sale only gives you a price advantage (and sometimes not even that)… it is buyer beware, as-is, where-is.

Like I said, foreclosures are stinking up our market.

Finally…a financial institution to be proud of in recent weeks and despite dismal reports!  This bank has taken the high road toward Main Street!

Back in July, Bank of America bought Countrywide Mortgages and announced today that they have implemented a program to help keep these struggling homeowners in their homes.  Countrywide was a high risk player and one of the first to buckle under bad judgement and questionable business management. (that may be me editorializing!)

Bank of America starts a new program December 1, 2008 called the Home Retention Program which could potentially help some 400,000 customers modify their loans in a meaningful, stay in your home kind of way.  You can check it out at www.bankofamerica.com .  This kind of thinking is what the world has been waiting for…instead of bailing out greed, Bank of America is going straight to Main Street and facilitating real and immediate change.

This is a “Bail-Out” I can get behind!  This type of reconsideration has the potential of changing the housing market in a very real way by stopping foreclosures and keeping properties out of inventory.  Less inventory, certainly less fire sale inventory, will improve the housing conditions for all homeowners, especially those paying their mortgages

Thank you Bank of America for giving me something positive to say!  I appreciate you leading the charge and hopefully setting the standard that will make others look positively foolish if they do not follow suit.  Furthermore, thank you for caring about the people you serve.  I hope this proves to be the smartest, most profitable, compassionate decision you have ever made.

I received an email last night from one of my buyers.  It was 3 sentences long and titled “Market Conditions”.  Given the events of 9/29/08, my buyer was concerned as to what this meant now and what the future holds for real estate, here is my answer:

You have asked the million dollar, or should I say the 700 billion dollar question!

I believe it is safe to say the market is currently stalled and waiting to see what the end result will be.  Buyers are currently experiencing difficulty in securing financing if they are putting less than 20 % down as there are less companies willing or able to insure those loans.  I personally closed 2 transactions last week which involved local banks, so houses are still selling, and these lenders (though more cautious than before) were never risky players in the mortgage game.

Houses are selling!  The obvious values are still selling quickly…a 1500 square foot contemporary ranch closed in Griswold yesterday for $270,000 after only 11 days on market; a lovely colonial in Canterbury also closed yesterday for $395,000 with less than 30 days of marketing under its belt.  Both were in the 95% range of list to sell price.  (these are just 2 examples…there are many more)

As to the future, ugh, if I only knew!  But I will predict…some form of a “bail out” will be passed (today likely scared the living daylights out of everyone) and a new president is right behind, which usually ushers in more consumer confidence.  No matter what, everything I read indicates that we are likely in for a bumpy ride for the next 10 to 12 months.

For you, the buyer with no house to sell and funds to invest, this is likely a perfect market!  Only once before in nearly 24 years of doing this business have I seen such a market for buyers of real estate.

Invest in Real Estate!  It is clearly a safer long term bet.

The response to my email was:  Thank you for your response, I guess I will get off the ledge now.

Yes, please do!  This is a time for cooler heads….

Kind of how things feel…

Enough said…at this point!

That would be me..you are very smart! 

I read the economy news, especially housing stuff (been watching Freddie and Fannie pretty closely), and I find myself wondering, if any of it makes sense to most folks?  So I shall attempt to (over) simplify:

NAR says it is a 11.1 month market and the Northeast has seen a 12.6 drop in activity year over year.  You can read all about it www.realtor.org , research department.  (just so you know I do not make this stuff up..)

What does that mean?  We have a lot of inventory because people are not buying.

Why are foreclosures bad?  While aside from the lose of someone’s home, they affect market value for mortgage paying citizens.  Uninhabited properties held in bank inventory must sell, usually at more modest prices.  Foreclosures cost everyone!

What is SubPrime lending and why did it melt down?  Loosy goosy lending parameters that let folks buy property they really could not afford, at higher rates, which made it that much harder to afford.  It melted down because the risk was passed down on investors then these mortgages stopped being paid, investors were losing money and locked up the breaks for obvious reasons.  No more loosy goosy lending.

What needs to happen for the market to improve?  I say consumer confidence needs to improve.  Yeah, I know it is all blamed on housing, subprime markets and rising interest rates…but I contend that steadily rising fuel costs were the starting point for our deflated perspective on our economy.  When gas went over 3 bucks per gallon, is when the wind went out of the sails.   The survey says that a new president will improve consumer confidence (as reported in Realtor Magazine).

And the good news is…we are a short 6 weeks from that!  Now, if only Wall Street could calm down..invest in real estate, it is a safer long term bet.

So it seems, I am alone amongst my peers on this issue…I worry about the 200 billion price tag..

On a Sunday the federal government decided it was time to step in and shore up these lending giants.  For the short term, most everyone agrees this is a needed and smart move.  Only time will tell if it is truly wise or a bandaid fix.

Who will benefit?

It is reported that consumers will benefit with a lower interest rate and more available cash for lending.  More liberal lending than the current credit crisis is allowing.  Hmm, isn’t that kind of thinking sort of what got us in this boat in the first place?

Who will lose?

Taxpayers!  Someone has to foot the bill, and the estimated number I saw is huge.  Small and community banks are also at risk…too much capital invested in Freddie and Fannie, with dividends no longer being paid.

Theory

To right the economy, the housing market must be stabilized.  The 9 % NATIONAL (not Connecticut) foreclosure rate is stalling the economy.  The home value free fall is impacting the homeowners net worth, the credit crisis is causing consumers not to spend and further eroding consumer confidence.

Opinion

Yes, foreclosures in vast numbers, in your neighborhood are bad for everyone.  Yet, I wonder are we fixing anything or simply trying to lessen the impact of a tough economy and trying to ease this recession (yeah, I said it!).  Now or later, someone is going to pay and my fellow citizens I guarantee it will be you and I!

So, I hope we all get a better rate now…I recommend you get it fixed!

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