1Q13 Sales Continue to Rise, Prices Slip Slightly

Sales of single family homes improved slightly in the first quarter vs. the same period last year, continuing the upward trend in sales that started in 2012.

Median home prices for the quarter dipped by about 8% vs 2012, possibly due to the long, cold winter in New England that’s finally releasing its grip.

Average home prices dipped to $230,414, losing about 6% compared to 1Q12. Small declines like this are common this time of year, and we can expect prices to strengthen as the spring and summer selling seasons hit top speed.

The really encouraging figure this quarter is the number of homes sold that’s slightly better than last year. In 2012, we finally saw signs that the market was strengthening with sales improving by 20% over the local market bottom of 2011.

With demand on the rise and supply lower than recent years, prices are likely to improve in 2013.

SF Homes Sold 1Q12:  394

SF Homes Sold 1Q13:  402 (+2%)

Median price 1Q12:  $205,000

Median price 1Q13:  $189,500 (-8%)

Average price 1Q12:  $244,182

Average price 1Q13:  $230,419  (-6%)

What’s Going on with Condos?

In the 4th quarter of 2012, the median price for condos spiked by 20%, and I’m pretty sure that hiccup was a temporary artifact of the small number of units sold. Last quarter, the median price was back to a more believable $135,000, or an increase of 8% over last summer’s prices and on par with summer 2011 prices.

Ignore the 4Q12 outlier or at least take it with a grain of salt.

Still, median prices are up, and starting to look like there might be a trend on the horizon.

Average condo prices held steady and have been essentially flat for six straight quarters. At least we don’t seem to be losing any more ground.

Condo prices tend to recover more slowly after a bubble than single family home prices, so this is historically consistent.

Number of units sold 1Q13:   51

Median condo price 1Q13:   $135,000

Average condo price 1Q13:  $151,762

FHA Certifications Slipping Away?

FHA certifications for condo complexes are expiring at an alarming rate. Realtors® and lenders are aware of this trend, yet no one seems to have a good explanation as to the reasons why.

Buyers qualified for FHA loans can’t buy into a complex unless the condo association is pre-certified by FHA. It’s estimated that FHA now insures about 40% of all mortgages.

Expired FHA certification means the buyer pool for your condo is 40% less than it should be.

Prices UP 8.4%, Sales UP 20% in 2012

January 2013

by Mark Sanner, Realtor, Broker, PhD, GRI
RE/MAX Realty Group, 1641 Route 12, Gales Ferry, CT  06335
marksanner@remax.net

Prices for single family homes improved from start to finish in 2012 and by year end, the median price of a single family home in New London County reached $229,900 or $8.4% higher than 2011. Even more impressive was the number of homes sold: Up a whopping 20% vs. 2011 at 2,053, and the highest number sold in the last five years.

Median price Year 2011: $212,000
Median price Year 2012: $229,900

SF Homes Sold 2011: 1,712
SF Homes Sold 2012: 2,053

Fourth quarter figures show us more of the same. In fact, comparing 2011 with 2012 quarter by quarter we see improvement in every period.

Median price 4Q 2011: $212,000
Median price 4Q 2012: $218,500

SF Homes Sold 4Q 2011: 406
SF Homes Sold 4Q 2012: 512

As we gain more and more perspective, 2011 looks more and more like a market bottom.  Broad housing indicators are consistently looking modestly positive, and we can probably expect about 3% appreciation in single family homes in 2013.

Make no mistake, it’s still a buyer’s market and there are bargains available for qualified buyers.

Where are the Weak Spots?

Condominiums ~

While single family home prices took the first steps toward recovery last year, condo prices generally continued to slip, losing about 8% in value in 2012 on top of a 10% loss in 2011.

The jump in condo prices in 4Q12 looks great, but I’m not sure how to interpret it. Is it a statistical anomaly or a harbinger of a condo market turn around? It’s too soon to tell. We’ll see if that trend continues.

Building Lots ~

Building lots have probably been the hardest hit real estate category since the bubble burst here in 2007 with prices losing 50% or more in value across the board.

I did a market analysis for a seller recently and found there’s a 10 year supply of building lots on the market right now.

A seller of a residential lot needs to ask him or herself one question:

“How little am I willing to take to sell this property?” How little … not how much.

Another Foreclosure Wave Ahead?

I’ve been reading and hearing that we may be headed for a new wave of foreclosures. Actually, it’s not new, it’s just catching up after being postponed a while.

The robo-signing fiasco led to a moratorium on foreclosures late in 2010. The moratorium was formally only 3 months, but it slowed the whole process throughout 2011, and sources such as RealtyTrac reported big declines in foreclosures that year. The media largely reported this as great news, but those of us who know better said, “Just wait.”

The banks postponed foreclosure proceedings against delinquent borrowers, delayed foreclosures in progress and kept property already in their inventory off the open market (the so-called phantom inventory or shadow inventory).

In February 2012, government regulators reached an agreement with the major banks that not only included a $26 billion payment, but also outlined the ground rules the banks needed to follow to foreclose on homeowners.

Now we’re hearing that the banks may be preparing to start dumping their phantom inventory on the market and restart foreclosure activity this year. If this happens, the number of foreclosed homes on the market could escalate quickly. Some pundits are advising homeowners to sell now before this happens.

At the same time, there are still tons of short sales going on, and the banks have figured out that short sale is usually better than foreclosure, at least in states like CT where foreclosure is generally a long and expensive legal process.

Activity Improves in First Quarter 2012

At long last we have a glimmer of optimism in the southeastern CT real estate market as buyer activity increased to the highest first quarter level since 2008. The 394 closings reported for the first quarter confirmed what Realtors on the ground have been saying about an uptick in buying activity lately, with 18% more homes sold in the first quarter compared to the first quarter last year.

Because prices lag activity, the average and median prices for 1Q12 declined from 4Q11, a carryover from the weak buying activity last year. (The number of homes sold in 2011 was 12% lower than 2010).

Median price 4Q 2011: $211,000

Median price 1Q 2012: $205,000

Median price 1Q 2011: $205,000

However, when compared to the first quarter last year, the median price paid remained unchanged.  After another year of price erosion (we gave back 5.8% in 2011), “unchanged” is looking pretty good.

Be that as it may, if the stronger sales we saw in the first quarter are an indication of things to come, we can expect a significant seasonal improvement in sales and prices in the second and third quarters.

Is Your Condo Complex FHA Approved?

Ask your condo association president or property manager if your complex is FHA approved. If you get a blank stare or a long pause, the answer is probably “No.”

FHA (Federal Housing Authority) is a government agency that insures home mortgages. It doesn’t provide money for mortgages, just the mortgage insurance. In the wake of the mortgage mess, FHA has become a major player in the mortgage insurance business, and now insures about 40% of all home loans nationwide.

For condos there’s a catch:  In order to get an FHA loan on a condo, the condo complex must first be approved by FHA. To find out if your condo complex is on the FHA approved list, go to this web site:

https://entp.hud.gov/idapp/html/condlook.cfm

If you don’t see your complex listed, it’s not FHA approved or the approval may have expired. Try searching by city or zip code, too, to be sure.

A condo complex that is not FHA approved means that 40% of potential buyers will not be able to purchase your condo.

Ask your homeowners’ association or property manager if your complex is FHA approved.

Mark Sanner, Realtor, GRI, CDPE, SFR, PhD
RE/MAX Realty Group, Gales Ferry, CT
Licenced in CT
marksanner@remax.net

Looking Ahead for 2012 … And a Glance Back

The 2011 sales figures are in for New London County real estate, and I’m going to walk on past that for now and talk about the outlook for 2012 instead. Skip down a few paragraphs for the nuts and bolts of 2011.

 Agents I’ve talked to lately report better than usual activity for December:

 “Someone flipped a switch after Thanksgiving and I’ve been busy ever since.”

 “I’d hoped to take a few days off during the holiday week, but my phone kept ringing and I had to go back to work. I’m not complaining, though.”

 “I’m actually running low on inventory. I’m sure my inventory will pick up again, but sales have been steady.”

 In addition, the National Association of Realtors reports that the pending home sales index of 100.1 for November was higher than the same period one year ago by 5.9%. The index hasn’t been this high since April 2010 during the rush brought on by the first time buyer tax credit. Pending home sales are homes that are under contract and haven’t closed yet, so this stat is a peek into what we can expect in closed sales a month or two down the road. Some pundits view an increase in this index as an encouraging sign for the near future in real estate.

 Are buyers finally going to pick up the pace and take advantage of the great value and interest rates? I sure hope so.

 Now for a look back at New London County real estate for 2011.

The key to 2011 was the significant drop in the number of homes sold … down 12% from 2010. With the number of homes on the market remaining about the same as the year before, the weakened demand pushed prices down as well. The average single family home price dropped 4.2% to $261,265. The median single family home price dropped 5.8% to $212,000. 

Figures for 4Q11 are almost identical to the closing numbers for the entire year with the average price at $258,484 and median price at $212,000.

 

Mark Sanner, Realtor, GRI, CDPE, SFR, PhD
RE/MAX Realty Group, Gales Ferry, CT
Licenced in CT
marksanner@remax.net

Fall 2011 ~ Home Prices Trending Up

After a rough start this year, real estate prices in New London County are creeping back toward the levels we saw in 2009 and 2010.

The median home price in New London County rose slightly to $219,750 in the third quarter, or only about 2% lower than the  2010 median of $225,000.

The number of homes sold in the third quarter was 8% higher than the number sold in 3Q10. However, the number of homes sold so far this year is 13% lower than the same period last year.

Number of homes sold 3Q11: 490
Number of homes sold 3Q10: 453 
Number of homes sold 1Q-3Q2011: 1,276
Number of homes sold 1Q-3Q2010: 1,473

The apparent discrepancy in the number of homes sold is due to the $8,000 tax credit that ended June 30, 2010. The tax credit motivated many buyers to purchase early in the year, and sales slumped later in 2010.

Corporate Relocation Secret: You can work with any Realtor

Is your employer moving you to another state with a corporate relocation service? Here’s a little secret they often don’t mention:  You can work with any Realtor of your choice, not just the ones recommended by the relo company.

Corporate relocation companies are often sister subsidiaries of real estate brokerage companies. The relocation specialist who contacts you will usually recommend you talk to one or two Realtors from the sister brokerage when the time comes to sell your home.

The next time you talk to your relocation specialist, ask this question:  Am I requiredto work with one of the recommended real estate agents, or can I choose another agent?