2 acres next to Country School, new listing: $1,000,000
Fellow real estate fans,
Real estate is a tug of war between the buyers and the sellers. Sometimes the sellers give in and the market drops. Sometimes they hold out and buyers get tired of waiting pull the trigger.
We are in the middle of that tug of war right now. Sellers are stubborn. Buyers are looking, but they are waiting. That is why we have so much inventory in a market with solid volume and strong prices.
The New Canaan Advertiser asked me this week to comment on their statement, “Buyers are highly selective butthings are moving. Sellers need to be on their game with ahome priced rightand orturnkey ready.” Ok, we’ve taken each of those comments and reflected on it below.
“Highly selective” is a function of ample inventory. Buyers think with choices they should be able to drive a bargain. That isn’t necessarily so. On average prices are holding up. Volume is steady. If you look at the graph below you see that houses are selling 96% of their final asking price, and 93% of their original asking price. I have been involved in 3 bidding wars this season ranging from below $1 million to nearly $4 million and in every case the buyers needed the affirmation of other buyers to inspire confidence and stimulate bidding action. In the cases where there is no second bidder we see buyers lose interest and move on.
“Things are moving” is also true. New Canaan’s volume of sales (68) is exactly the average of the last ten years sales (68.9) of single family homes. The same is true for condos. We’ve sold 17 condos this year vs. 15 last year and 20 two years ago and the average over ten years is 17.3
“Home priced right” is key. Many of the currently listed homes were priced “fairly” based on tax assessor, Zillow, and other available date. But, in this market it takes a house priced sharply to cut through the clutter. There are roughly 15 houses for sale in the $1.5, $1.6 and $1.7 million categories. 5 of each of these will sell this year. To be one of those sales you must have a scarce feature or be priced under the market. I ask my sellers “how badly do you want to be one of those 5 sales this year?”
There are a few sales this year that dramatically illustrate that point. One, beautifully built in 2006, sold then for $5.6 million. It was listed for that same $5.6 million in 2014. After two years on the market it was just reduced to $3.995 and sold this month for $3.3 causing many to say this was a great bargain. That’s 59% of its high, but 80% of where the tax assessor had it pegged. “Home priced right” is sometimes a function of how much time you have to wait for the market to come back. Should we evaluate the market based on the 2007 high?
The average sale price in New Canaan for the first 5 months is $1,875,000, a dip of only 1.7% versus $1,908,000 for the first 5 months of 2015. However, Average can be manipulated with a few large sales. Taking the more reliable Median pricing over the last 10 years we see that New Canaan is actually climbing fairly steadily, up 30% since the dip in 2009.
Finally, “turnkey ready” is also important. Many of our buyers are coming from New York and beyond and often don’t have the time, the additional financing, or the experience to take on major renovations right away. They are focused on easing the transition into a new community, not wringing the last ounces of value out of a “fixer-upper”. In a seller’s market buyers are sometimes willing to take on a fixer-upper. Or, when banks were able and more willing to lend against improvements we saw home equity and construction loans. Now, those improvements are a seller’s burden. Some of my motivated sellers are adding central air conditioning and replacing aged heating systems anticipating these objections. At least two of my sellers hired a building inspector before putting their houses on the market in order to repair any defects and not lose a sale over condition.
New Canaan single family home inventory has increased 4% from 332 to 346. We had predicted a June peak of 370 in our February Market Report but that might be too high because while pending sales are down the number of new listings has also slowed to only 58 from a more typical 92.
Let’s break it down…
Fairfield County Sales: The number of sales is up 7.4% across the county with four out of six town posting gains. Wilton remains flat for the year with 65 sales and New Canaan is the only town down, -8.1%. Prices are flat everywhere with only Westport, (-9.5%) posting a change of more than 2.4%.
New Canaan Pending Sales: is our best forward-looking indicator. Looking at the first quarter we saw the beginning of a decreasing trend in Pending Sales from 43 to 34. That number should be rising to 68. Looking only at the month of May we saw a 37% decline in Pendings which brought us to a five month decline of 44%. This remains concerning and something to watch.
Below is a link to the New Canaan June Market Report. If you would like to discuss the report, or if you have any other questions, feel free to contact us at 203-247-4700 (John) or 203-247-5999 (Susan).
John and Susan
Pioneers of Design and Architecture in New Canaan: Eliot Noyes, Brad Verbryke, Ernest Bevilacqua and Bob Graf in an internal meeting to discuss Mobil Oil, c.1968. This week we have listed Bob Graf’s own home, designed in 1966.