August Home Sales Suggest Recovery, Realtors Say
Alex Ferreras /LoanSafe.com / October 1, 2012 / link
( Source: Olivia Just The Stamford Advocate, Conn. (MCT) — Debra Rosholt knows about selling property during tough economic times. In fact, she has sold three homes in three different states — all during the housing bust. When she put her Minnesota home up for sale in 2008, it languished on the market for a year and half. Then in 2010, the house she left in Arizona — “one of the hardest-hit markets” of the recession, as she put it — took four months to sell.
So when Rosholt and her husband put their Shelton home up for sale in August, she was worried, but cautiously optimistic that a fledgling recovery in residential real estate was under way. She needn’t have worried. The Shelton house drew four offers in less than two weeks and, by the end of the month, a buyer was found, the papers were signed, the closing date set. Rosholt was astonished.
“We were not at all anticipating selling our house that quickly,” Rosholt said. “Based on everything I’ve been through, I think the market is definitely improving. I think people are more optimistic when you talk to them. Their perception is different.”
Recent data support Rosholt’s theory. Rental tenants, first-time homeowners and would-be sellers are all beginning to return to the residential real estate market, finding a new confidence in signs that the housing economy is pressing forward again.
In Connecticut, the market is starting to look up significantly, with the number of homes sold in August up 15.9 percent year-over-year, according to a report released last week by Re/Max of New England. Pending home sales have surged 48.1 percent, the biggest jump throughout New England, indicating the potential for continued activity and growth in the fall.
“We feel really encouraged, not that prices are going to soar, but that there’s activity,” said Virginia Klein, broker/owner of Re/Max Heritage in Westport. “We felt stagnant for a long time, but August has really given us a boost.”
The momentum in Connecticut, which has been bolstered by sales in Fairfield County, is hardly an isolated occurrence. Nationally, purchases of previously owned homes increased 7.8 percent in August the most since May 2010, the National Association of Realtors in Washington reported last week.
Even areas of the country that were severely depressed are growing, something that forecasters didn’t exactly anticipate, said Guy Berger, an economist at RBS Securities in Stamford.
“I think we started getting signs of a turnaround about a year ago,” Berger said. “But what’s surprising everybody now is that it seems fairly broad. It seems like everywhere across the country, prices have gone down so much and supply and demand are having the usual effect.”
Rising rents, favorable mortgage rates, prices that have remained low and, perhaps, less quantifiably, the pent-up urge for home ownership, have all contributed to the recent buzz of activity, local Realtors say.
August is typically a slow time for Barbara Cleary Realty Guild in New Canaan, but this year, the firm saw a marked increase in business. Broker/owner Barbara Cleary cited rates of 2.5 percent for a 5-year mortgage and 3 percent for a 7-year mortgage as strong incentives for clients returning to the market or approaching home ownership for the first time. Homes under $2.5 million have been getting considerable attention, while higher price ranges, $3 million to $4 million, are not seeing as much activity.
“The decisions are being made, people are moving forward and it depends on the particular house and price range,” Cleary said. “People have been putting off moving for a while. The prices are very reasonable, so it’s tempting.”
Klein’s office in Westport saw a 63 percent increase in the number of transactions over last year, and more than doubled the amount of income commissions paid. When dealing with recent clients, Klein has seen shorter market times and multiple offers on a single property, signs of a “renewed confidence,” she said.
Lonnie Shapiro, a real estate agent with Coldwell Banker in Danbury, speculated that the anticipation of the back-to-school bustle in September, plus the upcoming presidential election, contributed to the August spike in activity in her office. She has also noticed a renewed interest in the market, spread out across all the towns they cover — Ridgefield, Redding, Danbury, Brookfield, Newtown and Bethel — compared with the same time last year.
“Anytime we have an election, it’s good for real estate, because I think it creates energy,” Shapiro said. “If people feel good and feel positive, they spend money.”
For the economy as a whole, the recovering health of the real estate sector is “without a doubt a good sign,” said RBS’s Berger, since many of the factors that held the economy back stem from homeowners that were underwater or too worried to go to market.
“A minus, though is that housing is a much smaller chunk of the economy than it used to be, especially on the construction side,” Berger said.
There are indeed happy signs, but no one quite expects the market to ascend again to the heights of 2006 and 2007, Klein indicated — and these more realistic expectations may play a role in getting deals done.
“Sellers and buyers are getting accustomed to not believing that the market is coming back to what it was,” Klein said. “They’re getting educated that the market is the market, and that helps us.”