Ladies and Gentlemen, may we present Al Jacobs, with the annual 2020 State of Real Estate address

Feb 20, 2020

My fellow Americans,

As always, I hope this finds you and yours in good times and in good health. Here’s the official 2020 State of Real Estate. Figuring out where we are now and where the market is headed lately is akin riding wild animals. Sometime a burro and sometimes a bucking bronco. Yee ha!

Typically, real estate is affected by a variety of outside factors, i.e. interest rates, the weather and employment. One factor that is usually bad for business is uncertainty and what has been going on in Washington has been unsettling to the country. Politics impinges on real estate sales whenever buyers and sellers are unsure what will happen in the near to medium term. The upcoming election will most certainly affect the stock and bond market and should have an impact on interest rates. Sill, experts do not see a huge shift – perhaps rise by 1% BUT – READY for this. Per Kiplinger – If the coronavirus appears to be materially affecting global growth, then the Fed could cut rates once just to boost confidence, but that scenario is unlikely for now. What else????? We’ve had a mild winter thus far, which could certainly bring us an early start to the spring season. Also, the uncertainty of the economy made some homeowners much more fiscally conservative about making a move.

Economic recovery varies throughout the US. CT still has a ways to go. CT is not a business- friendly state, nor is it tax friendly to the elderly. People are moving to states with lower probate fees, property and income taxes. Bottom line: slowly, more people are moving out of the state than in.

More importantly, I’m seeing a population shift as well. Shoreline towns have experienced drops in population. In 9 years from Jul 1, 2009 to Jul 1, 2018 Guilford’s population decreased by 253, Clinton’s by 659 and Madison’s by 718, and Branford’s by 1009. Meanwhile, New Haven has increased in population by 7088. I don’t think that necessarily means that people are moving out of the shoreline to New Haven; it means that more new buyers are choosing an urban setting than suburban. You can see Guilford has been less affected – I think the new school’s impact is huge. Also, both Yale and Yale New Haven Hospital encourage shorter commutes and sustainable transportation, which does not bode well for towns farther out. Not great news all around, but not too bad for Guilford. They’re not quite the numbers we’d like to see, but they suggest some stability.

A NAR – National Association of Realtors – survey showed a breakdown of the changing demographics in buyers: married couples accounted for 63%, single females 18%, single males 9% and unmarried couples 8 %. Low inventory/high competition in the lower price brackets as well as lingering student loans hamper millennials and other first time buyers. Boomers are living longer. More buyers are looking at multigenerational homes; they are dealing with aging parents and homes they can live longer in (i.e. w/1st floor MBR, walk-in shower), or seeking in-law setups for adult children. Also, couples are having fewer children, requiring fewer bedrooms and less overall space. Schools are still important, and proximity to green spaces and veterinarians are emerging as more important factors than ever before. Access to mass transportation is a big consideration.
INTERESTING STATS – According to National Association of Realtor stats from 1985-2008), the median tenure in a home averaged exactly six years. That was then, this is now, and NAR’s most recent stats (Jan 2020) now show the average stay is closer to 13 years in our area. Why, you ask? The fall in home prices after 2008-9 during the housing crisis left many homeowners who bought or refinanced up to 2010+- , in a negative equity situation (where their home was worth less than the mortgage on the property). They could not afford to move. For those folks selling is not an easy option and they face two options: Come to closing with cash for the short fall…or pursue a short sale.

But, since 2012+, nationally, housing prices have begun to stabilize. 93.7% of homes with a mortgage are now in a positive equity situation with 79.1% of them having at least 20% equity. BUT such is not the case in Connecticut as we have the lowest appreciation of almost all the states, and only a few towns are even close to back to 2007 price levels. Another revealing statistic, for instance, the median sales price in Guilford in April 2006 was $457.000. In Jan of 2020, it was $365,000. Some of this is attributable to the fact that the market under $500,000 is far more active than that over. We have somewhat stabilized in that – the median price in November of 2010 was $364,000.
So, is this a good time to sell? The average number of days on the market this month is about the same as it was in 2016 with the average at 57 days on market vs 62 back then however a year ago is was just 45 days. A slowdown? Perhaps but, the inventory is smaller now. In Guilford there are just 214 homes on the market compared to 273 this time of year in 2016. Less inventory is usually a good thing for sellers. Houses that are well priced do indeed sell and usually for better prices than if they are allowed to languish on the market, having been offered initially at an unrealistic price and then reduced over time.

General comments- Realtors should always be honest with sellers about market conditions and pricing. I see too many properties on the market for a long time, many with their 2nd or 3rd Realtor. #1 should have been more honest. If you want a good deal (who doesn’t?), buy with your head and not just your heart. Banks and appraisals are unsurprisingly still making life difficult. Some prefer to rent as opposed to buying. Best to get a full document approval before you buy, not just a “prequalification”. Giving the seller the comfort of knowing they are dealing with an informed buyer who is prepared to financially perform will result in a lower price for you. Get current inre the buying process before you start looking. Things could be a little or a whole lot different now than when you last bought. For example, inspections are far more in depth than ever and I see more transactions falling apart as a result of buyers going into them uninformed and with unrealistic expectations. Realtors should attend with their buyers so issues can be easily explained and overcome. Legislation has also changed. If you have to sell in order to buy, be careful!

Let’s talk! We offer a 2 hour “Boot Camp” to familiarize our clients, both buyers and sellers, with all the current issues from inspections, zoning, finance, contract and more.
Check out our web site Easy to negotiate, chock full of great information and some fun stuff. We are local and have a combined 130 years of experience. Meet Siena! Get a $500 credit at Sunset Storage. Give us a call for anything, FREE advice, contractor recommendation, or just stop by for a cup of coffee.

As always, we appreciate your referrals. We will treat them like family. All the best.

Allen B. Jacobs, GRI, Broker, Owner

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