Will the Housing Market Bloom In Connecticut This Spring?
Spring is almost here In Connecticut and many are wondering what it will bring for the housing market. Even though the pandemic continues on, it’s certain to be very different from the spring we experienced at this time last year. Here’s what a few industry experts have to say about the housing market and how it will bloom this season.
“Despite early weakness, we expect to see new listings grow in March and April as they traditionally do heading into spring, and last year’s extraordinarily low new listings comparison point will mean year over year gains. One other potential bright spot for would-be homebuyers, new construction, which has risen at a year over year pace of 20% or more for the last few months, will provide additional for-sale inventory relief.”
“Some people will feel comfortable listing their home during the first half of 2021. Others will want to wait until the vaccines are widely distributed. This suggests more inventory will be for sale in late 2021 and into the spring selling season in 2022.”
“Since reaching a low point in January, mortgage rates have risen by more than 30 basis points… However, the rise in mortgage rates over the next couple of months is likely to be more muted in comparison to the last few weeks, and we expect a strong spring sales season.”
“As the housing market heads into the spring home buying season, the ongoing supply and demand imbalance all but assures more house price growth...Many find it hard to believe, but housing is actually undervalued in most markets and the gap between house-buying power and sale prices indicates there’s room for further house price growth in the months to come.”
Bottom Line
The experts are very optimistic about the housing market right now. If you pressed pause on your real estate plans over the winter, let’s chat to determine how you can re-engage in the homebuying process this spring.
Today’s homebuyers are faced with a strong sellers’ market, which means there are a lot of active buyers in Connecticut competing for a relatively low number of available homes. As a result, it’s essential to understand how to make a confident and competitive offer on your dream home. Here are five tips for success in this critical stage of the homebuying process.
1. Listen to Your Real Estate Advisor
An article from Freddie Mac gives direction on making an offer on a home. From the start, it emphasizes how trusted professionals can help you stay focused on the most important things, especially at times when this process can get emotional for buyers:
“Remember to let your homebuying team guide you on your journey, not your emotions. Their support and expertise will keep you from compromising on your must-haves and future financial stability.”
A real estate professional should be the expert guide you lean on for advice when you’re ready to make an offer.
2. Understand Your Finances
Having a complete understanding of your budget and how much house you can afford is essential. The best way to know this is to get pre-approved for a loan early in the homebuying process. Only 44% of today’s prospective homebuyers are planning to apply for pre-approval, so be sure to take this step so you stand out from the crowd. Doing so make it clear to sellers you’re a serious and qualified buyer, and it can give you a competitive edge in a bidding war.
3. Be Prepared to Move Quickly
According to the latest Realtors Confidence Index from the National Association of Realtors (NAR), the average property sold today receives 3.7 offers and is on the market for just 21 days. These are both results of today’s competitive market, showing how important it is to stay agile and alert in your search. As soon as you find the right home for your needs, be prepared to submit an offer as quickly as possible.
4. Make a Fair Offer
It’s only natural to want the best deal you can get on a home. However, Freddie Mac also warns that submitting an offer that’s too low can lead sellers to doubt how serious you are as a buyer. Don’t make an offer that will be tossed out as soon as it’s received. The expertise your agent brings to this part of the process will help you stay competitive:
“Your agent will work with you to make an informed offer based on the market value of the home, the condition of the home and recent home sale prices in the area.”
5. Stay Flexible in Negotiations
After submitting an offer, the seller may accept it, reject it, or counter it with their own changes. In a competitive market, it’s important to stay nimble throughout the negotiation process. You can strengthen your position with an offer that includes flexible move-in dates, a higher price, or minimal contingencies (conditions you set that the seller must meet for the purchase to be finalized). Freddie Mac explains that there are, however, certain contingencies you don’t want to forego:
“Resist the temptation to waive the inspection contingency, especially in a hot market or if the home is being sold ‘as-is’, which means the seller won’t pay for repairs. Without an inspection contingency, you could be stuck with a contract on a house you can’t afford to fix.”
Bottom Line
Today’s competitive market makes it more important than ever to make a strong offer on a home. Let’s connect to make sure you rise to the top along the way.
How Much Leverage Does Connecticut House Sellers Have?
The housing market has been scorching hot over the last twelve months. Buyers and their high demand have far outnumbered sellers and a short supply of houses. According to the latest Existing Home Sales Report from the National Association of Realtors (NAR), sales are up 23.7% from the same time last year while the inventory of homes available for sale is down 25.7%. There are 360,000 fewer single-family homes for sale today than there were at this time last year. This increase in demand coupled with such limited supply is leading to more bidding wars throughout the country.
Rose Quint, Assistant Vice President for Survey Research with the National Association of Home Builders (NAHB), recently reported:
“The number one reason long-time searchers haven’t made a home purchase is not because of their inability to find an affordably-priced home, but because they continue to get outbid by other offers.”
A survey in the NAHB report showed that 40% of buyers have been outbid for a home they wanted to purchase. This is more than twice the percentage in 2019, which was 19%.
What does this mean for sellers today?
It means sellers have tremendous leverage when negotiating with buyers.
In negotiations, leverage is the power that one side may have to influence the other side while moving closer to their negotiating position. A party's leverage is based on its ability to award benefits or eliminate costs on the other side.
In today’s market, a buyer wants three things:
To buy a home
To buy now before prices continue to appreciate
To buy now and take advantage of historically low mortgage rates while they last
These three buyer needs give the homeowner tremendous leverage when selling their house. Most realize this leverage enables the seller to sell at a good price. However, there may be another need the seller has that can be satisfied by using this leverage.
Here’s an example:
Odeta Kushi, Deputy Chief Economist at First American, recently identified a situation in which many sellers are finding themselves today:
“As mortgage rates are expected to remain near 3%, millennials continue to form households and more existing homeowners tap their equity for the purchase of a better home…Many homeowners may want to upgrade, but do not for fear that they will be unable to find a home to buy.”
She then offers a possible solution:
“While the fear of not being able to find something to buy will not disappear in a limited supply environment, new housing supply can incentivize existing homeowners to move.”
There’s no doubt many sellers would love to build a new home to perfectly fit their changing wants and needs. However, most builders require that they sell their house first. If the seller sells their home, where would they live while their new home is being constructed?
Going back to the concept of leverage:
As mentioned, buyers have compelling reasons to purchase a home now, and many homeowners have challenges to address if they want to sell. Perhaps they can make a deal to satisfy each party’s needs. But how?
The seller may decide to sell their home to the buyer at today’s price, which will enable the purchaser to take advantage of current mortgage rates. In return, the buyer might lease the house back to the seller for a pre-determined length of time while the seller’s new home is being built. A true win-win negotiation.
Not every buyer will agree to such a deal – but you only need one.
That’s just one example of how a seller might be able to overcome a challenge because of the leverage they have in today’s market. Maybe you feel a need to make certain repairs before selling. Perhaps you need time to get permits or approvals for certain upgrades you made to the house. Whatever the challenge, you may be able to work it out.
Bottom Line
If you’re considering selling your house now but worry a huge obstacle stands in your way, let's connect. Maybe with the leverage you currently have, you can negotiate a deal that will allow you to make the move of your dreams.
Are There Going To Be More Homes To Buy In Connecticut?
If you’re looking for a home to purchase right now and having trouble finding one, you’re not alone. At a time like this when there are so few houses for sale, it’s normal to wonder if you’ll actually find one to buy. According to the National Association of Realtors (NAR), across the country, inventory of available homes for sale is at an all-time low – the lowest point recorded since NAR began tracking this metric in 1982. There are, however, more homes expected to hit the market later this year. Let’s break down the three key places they’ll likely come from as 2021 continues on.
1. Homeowners Who Didn’t Sell Last Year
In 2020, many sellers decided to pause their moving plans for a number of different reasons. From health concerns about the pandemic to financial uncertainty, plenty of homeowners decided not to move last year.
Now that vaccines are being distributed and there’s a light at the end of the COVID-19 tunnel, it should bring some peace of mind to many potential sellers. As Danielle Hale, Chief Economist at realtor.com, notes:
“Fortunately for would-be homebuyers, we expect sellers to return to the market as we see improvement in the economy and progress against the coronavirus.”
Many of the homeowners who decided not to sell in 2020 will enter the market later this year as they begin to feel more comfortable showing their house in person, understanding their financial situation, and simply having more security in life.
2. More New Homes Will Be Built
Last year was a strong year for home builders, and according to the National Association of Home Builders (NAHB), 2021 is expected to be even better:
“For 2021, NAHB expects ongoing growth for single-family construction. It will be the first year for which total single-family construction will exceed 1 million starts since the Great Recession.”
With more houses being built in many markets around the country, homeowners looking for new houses that meet their changing needs will be able to move into their dream homes. When they sell their current houses, this will create opportunities for those looking to find a home that’s already built to do so. It sets a simple chain reaction in motion for hopeful buyers.
3. Those Impacted Financially by the Economic Crisis
Many experts don’t anticipate a large wave of foreclosures coming to the market, given the forbearance options afforded to current homeowners throughout the pandemic. Some homeowners who have been impacted economically will, however, need to move this year. There are also homeowners who didn’t take advantage of the forbearance option or were already in a foreclosure situation before the pandemic began. In those cases, homeowners may decide to sell their houses instead of going into the foreclosure process, especially given the equity in homes today. Lawrence Yun, Chief Economist at NAR, explains:
“Given the huge price gains recently, I don't think many homes will have to go to foreclosure…I think homes will just be sold, and there will be cash left over for the seller, even in a distressed situation. So that's a bit of a silver lining in that we don't expect a massive sale of distressed properties.”
As we can see, it looks like we’re going to have an increase in the number of homes for sale in 2021. With fears of the pandemic starting to ease, new homes being built, and more listings coming to the market prior to foreclosure, there’s hope if you’re planning to buy this year. And if you’re thinking of selling and making a move, doing so while demand for your house is high might create an outstanding move-up option for you.
Bottom Line
Housing demand is high and supply is low, so if you’re thinking of moving, it’s a great time to do so. There are likely many buyers who are looking for a home just like yours, and there are options coming for you to find a new house too. Let’s connect today to see how you can benefit from the opportunities available in our local market.
Living In Connecticut | Litchfield VS Hartford, CT
Are you thinking of moving to Connecticut and want to know the difference between Litchfield and Hartford? In this episode of CT Life, I’m going to talk about the differences between Litchfield and Hartford so you can decide which one is right for you. We’ll look at everything from lifestyle and housing prices to give you the best idea of what it’s like to live in either city.
Litchfield VS Hartford
One of the biggest questions we get from people moving to Connecticut is what the differences are between cities. When it comes to Litchfield and Hartford, we’ll examine the lifestyle, housing costs, location, and commute times so you can make the most informed decision on where to settle.
Lifestyle
The first thing to understand is the different lifestyles you’ll find in Litchfield and Hartford.
Litchfield tends to be known for its wide-open spaces and natural landscape. Hartford, on the other hand, is a city. While you will be very, very close to the airport and the highways, you won't have the small-town feel there that you get in Litchfield.
Socially, Litchfield has a small-town feel, a lot of award-winning restaurants, and bars that you're going to be sitting at with all your friends where everybody knows you—almost like Cheers. Hartford also has great restaurants as well, but you could go in and out without people even recognizing you or noticing you.
The big difference between the two is whether you prefer big city living or small town life.
Housing Costs
Another difference to consider is what you get for your money as far as real estate goes.
Hartford is generally less expensive when it comes to real estate than Litchfield. The average three-bedroom, single-family, 2000 square foot house in Litchfield is going to cost you just under $400,000. That same property in Hartford will only cost $160,000.
You're probably aware that that's a huge difference between cities than you’d find in most states. If you're inside the main cities or the capital, it usually will cost you more in other states. It's not like that in Connecticut. You’ll pay more to get away from the hustle and bustle, have a bigger yard, have a little more distance between you and your neighbors, and have a little more privacy. A two-bedroom house in Litchfield is approximately 1100 square feet and will cost you $227,000. In Hartford, you could find a two-bedroom for about $135,000.
If you're not ready to commit to buying in a city here in Connecticut yet, you might want to try renting. A three-bedroom rental in Litchfield with approximately 2000 square feet will cost you about $2,500 a month. In Hartford, the same size place will cost you about $1,250 a month. A two-bedroom house in Litchfield would roughly cost about $1,600 a month, while that same property in Hartford would cost you $1,080 a month.
Location
Now you have an idea about the real estate and the lifestyle differences between Hartford and Litchfield, let's talk a little bit more about the location. I'm sure as you’ve noticed on a map, Connecticut is not that big of a state. You could drive from coast to coast in under two hours. One thing you’re going to want to make sure of is you are located where you need to be for work.
If you're working anywhere near the capital, you might want to be in Hartford. Bradley International Airport is only 15 minutes away. If you're over in Litchfield, though, it's going to take you over an hour to get to the airport. If you're the type that's frequently flying and you're going back and forth to the airport a lot, it might not be ideal to live in Litchfield and Hartford might be the better bet.
One thing a lot of people ask—especially if you're coming from New York City with lots of traffic and congestion—is what is the traffic situation is like between cities. Hartford is one of the biggest cities in Connecticut, and you're going to have a lot of traffic. It gets ugly during rush hours. In Litchfield, the only time we're going to have issues with traffic is during the fall season. This is due to the leaf peepers, people coming in and out from New York, Massachusetts, and Rhode Island that want to see the foliage. It’s literally one lane in, one lane out, and it gets bad—but only during fall.
If you're not from New England, you might not even know what fall foliage is. We have four seasons here in Connecticut, and every year at the end of September through the beginning of October, the trees turn crazy colors. People come from everywhere to see them.
Which Connecticut City Is Right For You?
I hope this gave you some insight into the differences between living in Litchfield versus Hartford. Every day we help people move to and from Connecticut. If you still have questions about anything with life here in CT, don't hesitate to ask. We want to be your resource for anything CT, and we have a guide available for every single town in Connecticut that could put you in contact with the best contractors, best restaurants, and help you get comfortable in your new home.
If you want to learn more about Connecticut, please don't forget to subscribe to my channel. You'll be notified of all our new content and every new episode of CT Life. Stay tuned to see what we feature next!
Are you thinking of moving to Waterbury, Connecticut, and already have your bags packed? In this episode of CT Life, I’m going to show you 10 things you need to know about living in Waterbury before you get here. Before you pack your bags, these are details you’ll need to know to decide if this area is right for you.
Traffic, Property Prices, And Taxes
The first thing you need to know is that the traffic in Waterbury is one of the worst in Connecticut—though it's still probably better than New York. The reason traffic is congested in Waterbury is it's one of the state’s central hubs. Because it also has all the major highways that run through it, everybody's coming in and out of Waterbury.
The second thing you need to know about Waterbury is that it’s one of the least expensive real estate priced towns in all of Connecticut—though that comes at an expense. The property taxes are very high here. To give you an example, a raised ranch in Prospect, Connecticut, at about 1800 square feet, will have a tax bill of $6,000. That same property in Waterbury will have a tax bill of $12,000.
So if you're thinking about buying a property in Waterbury, be mindful of the taxes. There are great things that come with those taxes, however, including city sewer, city water, and city gas.
Weather, Restaurants, And History
The third thing to consider is that Waterbury is a New England city. It's cold in the winter—like, really, really cold. So if you're moving here from warmer climates, you need to know that. We have a full four seasons and our winters barely break 40 degrees. We also have storms that drop 18-24 inches at a clip.
The fourth thing you're going to find out when you get here to Waterbury is that it has a plethora of eating establishments. One of the main things it's known for is its pizza. On every block in Waterbury, there is a pizza place. In addition, there are plenty of amazing restaurants to try, including La Tavola, D'Amelio's, San Marino, Brass City Bistro, and Nino's—just to name a few.
The fifth thing you’ll want to know is that Waterbury has some great historic things to do here. One of them is the Palace Theater, one of the most famous theaters in all of Connecticut. The Jersey Boys have even played there.
Transportation, Colleges, And Affordability
The sixth thing you need to know about Waterbury, Connecticut is that you need a car here. While it's very easy to get around, you still need a car to get to the bus station, train station, and anywhere else you're going to go. That being said, the public transportation of Waterbury is pretty good. You can take the Metro North to travel to New York City or get direct to Boston—but you’ll still need a car to do it.
The next thing people are surprised to find out about Waterbury is that it's home to not one, not two, but four college campuses. Those colleges are Naugatuck Valley Community Technical College, the University of Bridgeport Post University, the University of Connecticut's downtown Waterbury campus, and Western Connecticut University's regional campus.
The next thing you're going to be pretty surprised about is that Waterbury is pretty affordable. The average three-bedroom house in Waterbury is only $153,000. If you're coming here from New York City, that might buy your parking spot or maybe a closet.
Crime And Population
The ninth thing you need to know about Waterbury is it does have its fair share of crime. But then again, so does every city in Connecticut and every city where you're coming from as well. Waterbury is ranked as the third-worst in crime in all of Connecticut, but it's not number one.
Finally, the tenth thing you're going to learn about Waterbury is it has one of the largest populations of all the cities in Connecticut. There's only a handful of cities that have more than 100,000—and Waterbury is one of them.
Is Waterbury, Connecticut Right For You?
Now that you have more insight into Waterbury, Connecticut—and if you still want to move here—we want to be the team that helps you do that. Feel free to give us a call at (203) 758-0264 and one of our people would gladly show you properties as soon as this weekend.
If you have any additional questions about Waterbury or anywhere in Connecticut, I'm the guy you want to talk to. I've lived in the area my whole life, and I’m always happy to help. And if you simply want to learn more about this town, make sure to subscribe to my channel so you never miss an episode of CT Life.
Are you thinking of moving to Connecticut and you're wondering what town you should settle in? In this episode of CT Life, we're going to talk about the differences between Waterbury and Watertown, Connecticut. We’ll walk you through everything from lifestyle to home prices so you can choose which area is right for you.
Waterbury VS Watertown
While both towns are great for Connecticut living, there are a few key differences between Waterbury and Watertown. One difference is lifestyle. Depending on what you’re looking for, each of these cities is bound to fit your ideal.
Waterbury is known for its great transportation and has a little bit more of a big-city feel. Watertown is a little more rural, perfect if you like a slower pace of life. If you're looking for action, you're more likely going to end up in Waterbury. If you like the country, you're probably going to head over to Watertown.
Socially, Waterbury has more chain stores and restaurants whereas Watertown is known for its mom-and-pop shops and local shopping. Waterbury has more hustle and bustle, especially since it’s one of the biggest cities in Connecticut. Watertown will give you that small-town feel, where you’ll go into the post office and they're most likely going to know your name.
Comparing Housing Prices
If you're considering moving to Connecticut, you're probably wondering what you can get for your money here. Waterbury is generally less expensive than Watertown, at least when it comes to real estate. The average three-bedroom, two-bath house is 1300 square feet and costs $153,000. That same property in Watertown would cost you almost $250,000.
If you don't need a three-bedroom, a two-bedroom property with two baths in Waterbury will cost you an average of $105,000. That same property in Watertown would be $172,000, which is quite the increase. If you want to try renting first in Connecticut, that also an option. A three-bedroom apartment in Waterbury costs an average of $1,100 per month. That same three-bedroom apartment in Watertown would cost $1,500. Alternatively, a two-bedroom rental in Waterbury is approximately $900 and a two-bedroom apartment in Watertown would be $1,100.
Overall, a good rule of thumb when it comes to pricing inside of Watertown is the closer you get to Litchfield, the higher the prices are. The closer you are to the Waterbury side of Watertown, the lower the prices are.
Commute Times And Location
If you're working anywhere near Waterbury and you want to know how long it's going to take you to get to the airport, you're approximately 49 minutes to Bradley International Airport from Waterbury. From Watertown, it’s about 57 minutes to Bradley. If you're moving to Connecticut from New York, you're probably already pretty used to traffic, though it’s something to consider.
Waterbury is more congested than Watertown, though they are making great strides to improve. They are in the process of completing a huge overhaul of 84 and Route 8 called the Mixmaster, and the traffic that used to be at a standstill is already moving a lot faster. Still, it’s not as fast as Watertown. Traffic in general in Watertown is much more manageable since it's more of a rural area. The only time this is a little different is when you're on Main Street. It's one lane in, one lane out, and it does tend to congest during busy times of the day.
Which Town Will You Choose?
I hope this gave you some insight into the differences between Waterbury and Watertown. Besides the fact that they both have water in their names, they couldn't be more different. When it comes to real estate, lifestyle, and shopping, these towns are the opposite—though each has its advantages. If you or anybody you know is thinking of moving here to Connecticut, let us be your resource. We have the insight of all the towns and can help find the one that's the perfect fit for you. Give us a call at (203) 758-0264 and make sure to subscribe to my channel so you never miss an episode of CT Life. I look forward to having you be one of our neighbors!
Are you wondering what it's like to live in the great town of Watertown, Connecticut? In this episode of CT Life, I’m going to give you the pros and cons of living in this Waterbury suburb located right here in Litchfield County. As one of the fastest-growing real estate markets in all of the state, Watertown is a great choice to experience Connecticut life.
The Pros And Cons Of Watertown, Connecticut
Schools
The population of Watertown has grown to 22,500 people for good reason. One of the pros of living here is the collection of amazing schools, with the iconic Taft School in Watertown being one example. Taft was founded in 1819 and is home to a diverse student-base made of people from over 45 different countries. It is a boarding school that accepts grades 9-12.
Additional schools include John Trumbull Primary School, Judson Elementary, Polk Elementary, Swift Middle School, Watertown High School, and Watertown Transition Academy. Now that you know a little bit about the schools, let's go see some of the fun things to do here in Watertown.
Outdoor Activities
If the sun is shining, you’ll want to check out Veterans' Memorial Park. This park features playgrounds, soccer fields, baseball fields, gazebos, comfort stations, walking trails, and Latins Pond for fishing or hiking. You also have access to horseshoe pits, bocce courts, picnic tables throughout the park, and even an area designated for skateboarding.
Another great way to spend the afternoon is at Hawk Ridge Winery on Plungis Road. It's one of the coolest wineries here in Litchfield County, so you’ll want to be sure to check it out.
Food And Shopping
Main Street in Watertown is where you will find one of the pros of living here. There is a huge variety of stores selling everything from fresh-made bagels to comic books. You’ll also find hair salons, barbershops, automobile centers, fast food, and clothing stores—just to name a few.
Watertown is also known for its awesome restaurants, including Uncommon Grill, 16 Straits, Taps & Taverns, Sakura, the iconic Daveluy's, and one of the best rated Italian restaurants in all of Connecticut, Roma's. Back on Main Street, you're going to find Mangia, Thai Bowl, Jimmy's, Rock Garden Cafe, G's Burgers, and Carvel. Watertown truly has an endless supply of restaurants and all of them are great.
After a great main course, you're going to want to check out something for dessert. Head over to Hardcore Sweets, an amazing shop that’s been featured on the Food Network, Cupcake Wars, and the Cooking Network. You can get some of the best cupcakes here in all of New England.
Here in Watertown, you're going to get the hometown market feel when you shop at places like the Watertown Meat Center and LaBonne's. At the same time, you have the convenience of some big-box retailers like Stop & Shop and Staples.
Parking And Business Space
One con of living in Watertown is the lack of parking on Main Street. However, there's also currently a bunch of vacancies for businesses on this awesome little thoroughfare. Have a business idea? There's no better time than now to take the leap and open it. Give us a call and we'll help you walk through the process of setting up your business and leasing out some commercial space.
Affordability
Now that you know a little bit about what there is to do here in Watertown, let's talk about whether or not this town is affordable and what you get for your money here. One con about living in Watertown, Connecticut is the home prices. When compared to neighboring towns like Waterbury and Thomaston, the values here are much higher—though you do get an awful lot for your money. In 2019, a total of 272 single-family homes were sold. These properties averaged three bedrooms, two baths, seven rooms, 1,685 square feet on 1.1 acres, and were listed on the market for 71 days. The average sales price was $235,664, working out to an average of $143 per square foot.
Also in 2019, a total of 39 condos were sold. These condos averaged five rooms, two bedrooms, two baths, 1,300 square feet, and an average sales price of $167,000. That works out to be an average price per square foot of $126.
Is Watertown Living Right For You?
So what did you think? There are so many other great things that we didn't have time to feature, like Watertown Historic Society, Black Rock State Park, and Sunset Grill just to name a few. There are a lot of reasons to love Watertown, Connecticut, which is why it's one of the hottest markets in the state.
Do you want to see some homes here? Give me or somebody on my team a call and we will get you out seeing properties immediately. While we're meeting with you, we'll also give you a local Watertown guide and introduce you to all the shops that we visited, along with all their contact info and our personal recommendations. We look forward to connecting with you!
How Low Inventory May Impact the Housing Market This Fall In Connecticut
Real estate continues to be called the ‘bright spot’ in the current economy, but there’s one thing that may hold the housing market back from achieving its full potential this year: the lack of homes for sale.
Buyers are actively searching for and purchasing homes, looking to capitalize on today’s historically low interest rates, but there just aren’t enough houses for sale to meet that growing need. Sam Khater, Chief Economist at Freddie Mac,explains:
“Mortgage rates have hit another record low due to a late summer slowdown in the economic recovery…These low rates have ignited robust purchase demand activity…However, heading into the fall it will be difficult to sustain the growth momentum in purchases because the lack of supply is already exhibiting a constraint on sales activity.”
According to the National Association of Realtors (NAR), right now, unsold inventory sits at a 3.1-month supply at the current sales pace. To have a balanced market where there are enough homes for sale to meet buyer demand, the market needs inventory for 6 months. Today, we’re nowhere near where that number needs to be. If the trend continues, it will get even harder to find homes to purchase this fall, and that may slow down potential buyers. Danielle Hale, Chief Economist at realtor.com, notes:
“The overall lack of sustained new listings growth could put a dent in fall home sales despite high interest from home shoppers, because new listings are key to home sales.”
The realtor.comWeekly Recovery Report keeps an eye on the number of listings coming into the market (houses available for sale) and the total number of listings staying in the market compared to the previous year (See graph below):Buyers are clearly scooping up homes faster than they’re being put up for sale. The number of total listings (the orange line) continues to decline even as new listings (the blue line) are coming to the market. Why? Javier Vivas, Director of Economic Research at realtor.com, notes:
“The post-pandemic period has brought a record number of homebuyers back into the market, but it’s also failed to bring a consistent number of sellers back. Homes are selling faster, and sales are still on an upward trend, but rapidly disappearing inventory also means more home shoppers are being priced out. If we don’t see material improvement to supply in the next few weeks, we could see the number of transactions begin to dwindle again even as the lineup of buyers continues to grow.”
Does this mean it’s a good time to sell?
Yes. If you’re thinking about selling your house, this fall is a great time to make it happen. There are plenty of buyers looking for homes to purchase because they want to take advantage of low interest rates. Realtors are also reporting an average of 3 offers per house and an increase in bidding wars, meaning the demand is there and the opportunity to sell for the most favorable terms is in your favor as a seller.
Bottom Line
If you’re considering selling your house, this is the perfect time to connect so we can talk about how you can benefit from the market trends in our local area.
Is the Economic Recovery Beating All Projections In Connecticut?
Earlier this year, many economists and market analysts were predicting an apocalyptic financial downturn that would potentially rattle the U.S. economy for years to come. They immediately started to compare it to the Great Depression of a century ago. Six months later, the economy is still trying to stabilize, but it is evident that the country will not face the total devastation projected by some. As we continue to battle the pandemic, forecasts are now being revised upward. The Wall Street Journal (WSJ) just reported:
“The U.S. economy and labor market are recovering from the coronavirus-related downturn more quickly than previously expected, economists said in a monthly survey.
Business and academic economists polled by The Wall Street Journal expect gross domestic product to increase at an annualized rate of 23.9% in the third quarter. That is up sharply from an expectation of an 18.3% growth rate in the previous survey.”
What Shape Will the Recovery Take?
Economists have historically cast economic recoveries in the form of one of four letters – V, U, W, or L.
A V-shaped recovery is all about the speed of the recovery. This quick recovery is treated as the best-case scenario for any economy that enters a recession. NOTE: Economists are now also using a new term for this type of recovery called the “Nike Swoosh.” It is a form of the V-shape that may take several months to recover, thus resembling the Nike Swoosh logo.
A U-shaped recovery is when the economy experiences a sharp fall into a recession, like the V-shaped scenario. In this case, however, the economy remains depressed for a longer period of time, possibly several years, before growth starts to pick back up again.
A W-shaped recovery can look like an economy is undergoing a V-shaped recovery until it plunges into a second, often smaller, contraction before fully recovering to pre-recession levels.
An L-shaped recovery is seen as the worst-case scenario. Although the economy returns to growth, it is at a much lower base than pre-recession levels, which means it takes significantly longer to fully recover.
Many experts predicted that this would be a dreaded L-shaped recovery, like the 2008 recession that followed the housing market collapse. Fortunately, that does not seem to be the case.
The same WSJ survey mentioned above asked the economists which letter this recovery will most resemble. Here are the results:
What About the Unemployment Numbers?
It’s difficult to speak positively about a jobs report that shows millions of Americans are still out of work. However, when we compare it to many forecasts from earlier this year, the numbers are much better than most experts expected. There was talk of numbers that would rival the Great Depression when the nation suffered through four consecutive years of unemployment over 20%.
The first report after the 2020 shutdown did show a 14.7% unemployment rate, but much to the surprise of many analysts, the rate has decreased each of the last three months and is now in the single digits (8.4%).
Economist Jason Furman, Professor at Harvard University's John F. Kennedy School of Government and the Chair of the Council of Economic Advisers during the previous administration, recently put it into context:
“An unemployment rate of 8.4% is much lower than most anyone would have thought it a few months ago. It is still a bad recession but not a historically unprecedented event or one we need to go back to the Great Depression for comparison.”
The economists surveyed by the WSJ also forecasted unemployment rates going forward:
2021: 6.3%
2022: 5.2%
2023: 4.9%
The following table shows how the current employment situation compares to other major disruptions in our economy:
Bottom Line
The economic recovery still has a long way to go. So far, we are doing much better than most thought would be possible.
