Connecticut Real Estate

Recently I received a call from a friend who was thinking of doing some upgrades and remodeling to his home. He wanted to know what his home is worth today, and how much, if anything, he had lost over the last two years, because he keeps hearing the national statistics about how bad the housing market is.

My answer: It depends on where you live, I would love to do the proper research for you and get back to you with THE TRUTH.

You've all heard the phrase attributed to Benjamin Disraeli that Mark Twain made famous: "there are three kinds of lies: lies, damned lies, and statistics." In the real estate market, you have to be careful which statistics you pay attention to. The general market statistics for the entire US may help those in Washington and in the financial community make decisions on a grand scale, but make sure you get the local facts before making a buy or sell decision. What is the local market doing, what is the current financing situation like in your price range, and more importantly, what is it doing on the particular type and size of home you are looking to buy or sell, in the neighborhood you are interested in.

Below is a three year look at the numbers for several of our local towns. I've included the number of sales, days on market (DOM), Average Sale Price (Avg.), High sale price for each town (rounded to 10K), and the number of sales over $1 Million ($1M+), town by town so you can see how things change. These number are for single family homes sold through the MLS.

I've also drilled down a little deeper on a specific type of home so you can see that some segments of the market are much healthier than the overall market numbers would indicate.

All comments refer to 2007-2008 numbers.

Brookfield Sales - Volume down by 1 sale, market time increased by 21%, average sales price down by 12%
2008    163 sales   114 DOM    Avg. $473,201    High $1.85M    $1M+ 5 
2007    162 sales   94  DOM    Avg. $537,151    High $1.64M    $1M+ 6
2006    196 sales   86  DOM    Avg. $529,218    High $1.97M    $1M+ 7

Danbury Sales - Volume down by 17%, market time increased by 10%, average sales price down by 7%
2008    319 sales    100 DOM    Avg. $376,253    High $1.82M    $1M+ 2
2007    384 sales    91 DOM     Avg. $406,108    High $1.41M    $1M+ 3
2006    496 sales    85 DOM     Avg. $410,010    High $1.56M    $1M+ 6

Easton Sales - Volume down by 26%, market time increased by 38%, average sales price down by 3%
2008    62 sales    156 DOM    Avg. $871,419    High $1.78M    $1M+ 14
2007    84 sales    113 DOM    Avg. $848,827    High $2.25M    $1M+ 21
2006    72 sales    105 DOM    Avg. $834,504    High $3.2M     $1M+ 13

Fairfield Sales - Volume down by 32%, market time increased by 10%, average sales price down by 12%
2008    521 sales    99 DOM    Avg. $781,750    High $6.05M    $1M+ 112
2007    766 sales    90 DOM    Avg. $892,274    High $7.85M    $1M+ 196
2006    656 sales    82 DOM    Avg. $819,213    High $6.98M    $1M+ 143

Monroe Sales - Volume down by 28%, market time increased by 3%, average sales price down by 10%
2008    136 sales    99 DOM    Avg. $451,214    High $915K    $1M+ 0 
2007    190 sales    102 DOM   Avg. $500,443    High $1.3M    $1M+ 2
2006    180 sales    81 DOM    Avg. $517,118    High $1.35M   $1M+ 3

Newtown Sales - Volume down by 34%, market time increased by 1%, average sales price down by 9%
2008    226 sales    113 DOM    Avg. $508,840    High $1.6M    $1M+ 7
2007    345 sales    112 DOM    Avg. $557,462    High $2.5M    $1M+ 18
2006    343 sales    102 DOM    Avg. $597,968    High $1.6M    $1M+ 24

Trumbull Sales - Volume down by 25%, market time increased by 6%, average sales price down by 11%
2008    284 sales    88 DOM    Avg. $461,276    High $1.33M   $1M+ 3
2007    376 sales    94 DOM    Avg. $520,948    High $1.46M   $1M+ 12
2006    385 sales    78 DOM    Avg. $507,615    High $1.4M    $1M+ 5

In Connecticut in 2008, volume of sales dropped 23% across the board, while median sales price only dropped 10% and DOM went up by just 5%. Which number are you reading about in the media? The larger one, of course. You might see a headline like: "Real Estate Down By 23% in 2008," which most consumers would interpret to mean they lost 23% of their homes value in 2008. While this may make for better headlines, it is a prime example of Disraeli's "Lies, Damned Lies, and Statistics."

OK, so what does all this mean? The above numbers are all general trends. We've covered state level, we broke it down to the town level, now let's dig a little deeper.

In Fairfield, the average sales price dropped 12%. But if your home was appraised or purchased in 2007, this doesn't mean you simply deduct 12% of the 2007 value to come up with your January 2009 value? There was a 39% drop in the volume of sales for homes over $1 Million in Fairfield in 2008 from 2007. Does this mean everything over $1 Million was impacted 39%? No, not even close.

Let's look at one specific type of home as an example: If you wanted to buy a 3500 to 4500 square foot home in Fairfield on .75 to 1.25 acres in 2007, you paid on average $1.3 Million. In 2008, you paid $1.31 Million, on average, for the same home. Statistically speaking, the same number. Only 5 sold in 2008, versus the 10 the previous year, volume down 50%. Is it accurate to report a 50% drop in this case?

In Newtown, the same home sold in 2007 for $702,000 on average, and sold in 117 days. In 2008, that Newtown home sold for $702,000, but sold in only 79 days. Average sale price for this home remained the same, marketing time actually went down 32.5%. There were 9 sold in 2007, and 9 in 2008, again, the same. Would it be accurate to report a 32.5% drop? Of course not.

What is THE TRUTH for you?

It all depends on where you live, I would love to do the proper research for you and get back to you with THE TRUTH.

All real estate is local. Not local on a state level, not even on a town level, but you have to look at what the market is doing for THE specific home you are looking to buy or sell in THE specific neighborhood.

If you are interested in buying or selling and would like to know what is really going on with a particular neighborhood, just let me know. If you are outside of my area of expertise, I can recommend a highly respected local appraiser or Realtor, like me, to help you get a handle on local values.

Now it is time to take the kids sledding!

Your friend in the real estate business,

John

Sandy Hook Home Price Report

January, 2009

Highlights:

Sandy Hook experienced a 10% drop in average sales price for single family homes in 2008 over 2007, a 31% drop in sale volume, and a 21% increase in average market time. We fared better than the national averages, and better than some of our surrounding communities.

Whose market is it: This current market heavily favors first time and move up buyers.

Sandy Hook Snapshot:

Currently Active Listings — 74, down 17% from last month
Pending and CTS Listings — 8

December 2008 3 Sales, 147 DOM, $328,000 Average Sales Price
November 2008 3 Sales, 81 DOM, $365,000 Average Sales Price
October 2008 5 Sales, 79 DOM, $549,300 Average Sales Price

3 Month Average— October to December 2008:
11 Sales, 98 DOM, $436,682 Average Sales Price

3 Month Average— October to December 2007:
27 Sales, 117 DOM, $523,387 Average Sales Price

Closed Sales 2008: 101 sales, 119 DOM, $442,282 Average Sales Price
Closed Sales 2007: 147 sales, 98 DOM, $491,228 Average Sales Price

From 1/1/2008 to 12/31/2008, 301 Homes came off the market.
- 101 Sold
- 5 as Pending (3 CTS are still on the market)
- 195 expired, withdrawn & canceled

This translates to a 33.5% Success rate for overall market for the year.

As we move into 2009, there is a lot of uncertainty in the market, liquidity has not been restored to our financial market, the FHA conforming loan limits nationwide have been reduced, and we have just ushered in a new administration.

The lowering of the FHA conforming loan limits will have a significant impact on properties in Sandy Hook primarily in the $510,000 to $730,000 range. In 2008, you could buy a home in Sandy Hook with 3% down up to a loan amount of $708,750 with a FHA loan, which mean that homes selling for up to $730,000 could easily, with good buyer credit and income, be purchased with government backed loans and fund within 30 days. The new conforming loan limit for FHA in Fairfield County has been reduced to $511,000 as of right now.

The new administration is being urged by many involved in the real estate market to reinstitute the higher conforming loan limits. NAR, among others, has lobbyist on the case. Without this, we will see even longer marketing times and more challenging finance conditions for properties selling above the new conforming loan limit.

On the positive side, interest rates remain near historic lows, and while in the last couple of days they have started creeping back up, they had remained at or below 5% for the last several weeks.