With just a few weeks to go until it’s over, real estate professionals are calling 2015 a good year. While prices dipped slightly year-over-year, the number of sales jump considerably.
As of October (the most recent month for which data was available) the median single-family home price in Connecticut was down 1.9 percent year to date, while the number of sales was up 14.2 percent when compared to the first 10 minths of 2014, according to data from The Warren Group, publisher of The Commercial Record.
Nearly every county in the state followed the same trajectory, except sleepy Windham, which year to date saw modest gains in both the number of sales (up 9.75 percent) and the median sale price (up 4.4 percent) over this time last year.
A Fairly Good Year
David Zamary, senior vice president of residential sales at First County Bank in Stamford and president of the Connecticut Mortgage Bankers Association. said 2015 was a good one for the industry – and an improvement over 2014.
“We have a lot of purchases in the pipeline,” Zamary said. “The economy is better and unemployment is down.”
The loosening of lending requirements by mortgage titans Fannie Mae and Freddie Mac contributed to 2015’s increase in sales figures, he said.
The minimum credit score has been relaxed to 620 and qualified first-time buyers can get loans with just 3 percent down; “that puts a lot more people in the market,” he said. “These are people who deserve to own homes.”
Out in West Hartford, RE/MAX agent Lisa Barall-Matt disagreed, ranking 2014 as a stronger year in her market.
“The spring market in West Hartford was extraordinarily busy, with tons of buyers and limited inventory choices,” Barall-Matt said. “As soon as the snow melted, the market woke up with a vengeance. Things were selling multi-offers, many over asking. Then, as fast as it came on, the light switch went off in mid-June. It dropped quickly and it dropped hard.”
Barall-Matt said that by July, the properties remaining on the market were stale. Recently she’s seen the owners of houses in anything less than pristine condition pummeled by low offers and tough negotiations.
“I’m seeing a lot of Millennial purchasers who are busy. They have good jobs and they don’t have the expertise or interest or the time to do work on a house,” Barall-Matt said. “If everything isn’t brand-new, they assume the worst. They’re being unrealistic. They’re asking for everything – and in some cases they get it. Our office saw a lot more deals fall through in the last three months then in the previous last year.”
TRID Fails To Derail Market, But Rising Interest Rates Could
After a robust spring market, Barall-Matt said the fall market was fairly steady, but deals took a little longer with the initial rollout of the new TRID rules. Still, she said, the season started strong.
“There are serious buyers out there,” she said. “I see a lot of price repositioning happening to get their property to the top of the MLS list. I’ve also seen a lot come off the market. Some agents are suggesting that owners not let their listings get stale over the holidays.”
Sandy Maier Schede, president of the Connecticut Association of Realtors, said the biggest factor driving sales are the historically low interest rates and general stability in the market.
“Usually prices and interest rates fluctuate throughout the year, but we’ve been lucky – it’s been consistent,” Schede said. “That gives buyers confidence. This year has been more positive than the previous year.”
“It’s been a very, very active November,” she added. “TRID was something everyone perceived was going to be a Y2K moment – and it was. Nothing happened.”
In mid-November, amidst increased chatter that the Fed would finally make a move on interest rates in December or early next year, First County Bank’s interest rate on a 30-year fixed-rate mortgage was a historically low 3.785 percent.
“Even 4.5 percent is still a good rate,” Zamary said. “If they went into the fives in 2016, that would affect business. People might then want to focus on a different product like an adjustable rate mortgage.”
Like most industry observers, Schede expects the Federal Reserve to raise short-term interest rates, which could raise mortgage rates. She said she doesn’t think a small increase would hurt the real estate market, but a larger one might. Schede also pointed out that she bought a home when interest rates were 17 percent and felt like she’d won the lottery when she refinanced down to 7.5 percent.
“The majority of buyers today haven’t experienced anything like that, so it’ll be interesting to see how it all shakes out when the Fed starts making the market more realistic,” she said.
Looking Ahead To Another Spring
With the optimism characteristic of the industry, all three said they expect 2016 to be at least on par with 2015, if not better.
Zamary was cautiously optimistic, expecting a continued rise in volume – if interest rates don’t spike.
“We’ll see better volume in 2016, as long as interest rates cooperate,” Zamary said. “They’re going to have to go up some day. [And] there’s always a little bit of uncertainty in an election year.”
Barall-Matt, on the other hand, expects the 2016 market to be robust.
“My crystal ball tells me 2016 overall will be a strong real estate year,” Barall-Matt said. “Prices won’t drop further; I think we’ve corrected.”
Schede agreed, adding that the market right now favors buyers and that inventory is good. She expects that momentum to carry though to next year.
“I’m very optimistic for 2016; sales are strong and prices are stable,” Schede said. “Buyers are confident. They’re not panicked, not impulse buying. It’s a good time right now.
Email: jmorrison@thewarrengroup.com
