GREG SCOTT – No predictions

It may not feel like spring yet, but the official start came and went last week and Realtors are in the midst of their busiest time of year. But this year, the predictions about interest rates for mortgages and whether the market will soften are few and far between.

“Any of us who thought we could predict what happens with rates has been wrong,” said Greg Scott, president of the New Haven-based real estate firm Beazley Co.

Most of the Realtors who were playing “the rate game” last year by predicting increases and telling consumers to act immediately aren’t doing that anymore, according to Scott.

“They’ve kind of stopped saying that,” he said.

Scott isn’t making any predictions himself.

“[Rates] could go lower,” he said. “I don’t know how.”

Scott said he never thought rates would get as low as they are now. But last week’s rates were the lowest they’ve been since last June and those rates, which fell each month in 2004, could sustain an even better housing market than last year’s, according to Freddie Mac.

Candace Adams, chief operating officer of Prudential Connecticut Realty, agreed with Scott. Last year saw such low rates that many Realtors, including some at Prudential, predicted it couldn’t last long, she said. But that has changed and Realtors now are just enjoying the booming business.

“We’ve been saying [it wouldn’t last long] for the last several years,” Adams said. “I don’t know if we can draw any conclusions this year.”

Sitting Tight

But other Realtors think the rates could change after the presidential election in November.

“I think the rates are going to last through the election,” said Barbara Pearce, president and chief executive officer of H. Pearce Real Estate Co. in North Haven.

Leanne Spletzer, president of the Connecticut Association of Realtors and a Realtor at Coldwell Banker in Darien and New Canaan, agreed, citing predictions from the National Association of Realtors. The low interest rates will probably “sit tight” through the rest of the year, she said.

“Obviously, it has a lot to do with the election,” Spletzer said.

Some Realtors may be selling this spring with a greater sense of urgency, said Jeff Arakelian, president of the Greater Hartford Association of Realtors, but interest rates have continued to dip over the last couple of weeks.

“It might be true, but rates are extraordinarily low,” he said.

The low rates especially have attracted first-time homebuyers, Scott said.

“Almost anyone that has even marginal credit and can pay rent has to be considering buying,” he said.

Those first-time buyers are also the group that is probably looking most closely at the interest rates. Even if interest rates do increase, it will take time for them to get really high, Scott said. So, for most people, low rates mean they can have lower monthly payments than they would otherwise or that they can get a bigger home or a home with more amenities, but an increase in rates wouldn’t be a deal-breaker, he said. For first-time homebuyers, however, an increase in rates could be the difference between being able to afford a house or not.

“Even if they go up, they’re still going to be low,” Scott said. But when rates eventually do increase, it will put more pressure on homebuyers, because it will mean that rates could eventually become much higher.

The continued low rates have helped some companies achieve record-breaking months in the beginning of 2004. At Prudential Connecticut Realty, the company was 13 percent ahead of where it was last year at this time – based on contracts that have been signed – and are 28 percent ahead in revenue, Adams said.

“We are as busy as ever,” she said. “It’s a phenomenal start to the year.”

Adams has hopes 2004 will stay that way.

“It’s definitely an awesome market,” she said.

Beazley Co. also has enjoyed a successful start to the year, Scott said. So far, he noted, the company is doing better than it was at this time last year, and last year was the best in Beazley’s history.

“We really have had an unbelievably strong February and early March,” he said. “The lower rates bring so many more people into the marketplace.”

Pearce said she has noticed some changes in the market. A lot of pent-up demand has been satisfied, she said, but many people are still purchasing real estate for investment purposes.

“I think there are still a lot of people buying real estate as an investment vehicle,” Pearce said.

At Coldwell Banker, Spletzer and other Realtors have been digging for listings. Sales are still strong, but she agreed that the pent-up demand has been satisfied and that the housing cycle has gone back to normal, with most people looking to buy as a response to a change in life, like retirement.

Whatever the reason people move, many start the process in the spring.

For some companies, “spring” starts just after the holidays. Activity at Coldwell Banker starts just after Jan. 1, Spletzer said.

“If people wait ’til daffodils bloom, they’ve missed a good part of the market,” she said.

The start of the busy season varies by company.

“For us, spring starts in February,” Scott said.

The busy season at Prudential Connecticut Realty starts at around the same time, Adams said. Typically, things get busy after the Super Bowl.

“Spring has already started,” she said.

Spring is a popular time to shop for a home for many reasons, Scott said. People with children often start shopping in the spring with the hope that they can be settled in a new home by the time school starts the following September.

“I think a lot of people make life decisions that will affect their families; they think about them over the winter,” Scott said. “Spring is just new and ideas, things happen.”

Weather itself is a part of the reason spring tends to be busier, said Arakelian.

“It tends to be the busiest time of the year,” he said. “For one thing, weather alone [makes a difference].”

Many Realtors prepare for the season by increasing their exposure. At Beazley Co., marketing is a focus all year long, but a big campaign takes place before the spring, Scott said. This year, the company is doing a billboard campaign.

Adams said marketing also increases during the spring at Prudential Connecticut Realty.