Mar 27, 2008
Redding
Amidst ‘mortgage crisis’ Realtors put market in perspective
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by Rachel Kirkpatrick
rkirkpatrick@thereddingpilot.com
Even to those who have weathered economic storms before, some say the recent wave of foreclosures is something they have never witnessed.
Nationwide, confidence in the economy is down. And factors such as slowing retail sales and fuel prices, according to the National Association of Realtors, are having an effect on the housing market.
But for seasoned Realtors, national reports on the housing market do not provide an appropriate local perspective. Permits for new construction are down significantly, and there are more existing homes on the market not selling, but the surplus inventory has evened out prices.
For three local Realtors who provided insight on the current market, the equation is simple: If the price is right, the house will sell.
Foreclosures
A recent national report said foreclosures in the nation were up 51% in 2007. Connecticut may not have been hit as hard as states like Florida, where reportedly 1 in 30 homes are in foreclosure, but Redding and surrounding towns have not escaped the wave.
Since Jan. 1 of this year, there were four foreclosures recorded in the town’s land records. There were eight lis pendens listed, which indicates a mortgage foreclosure lawsuit is in the works.
The Pilot’s sister paper, The Wilton Bulletin, recently reported 20 notices of lis pendens. The Weston Forum, also a sister paper of the Pilot, reported five lis pendens and two foreclosures since Jan. 1.
“When you have this many foreclosures, we’ve got a problem; people are going under,” said Redding resident Joan O’Neill, who owns Joan O’Neill Real Estate. To put the number of foreclosures into perspective, Ms. O’Neill said when she came to Redding, there were only about a dozen houses for sale in town.
“In the 1970s it was tough, but I have not seen it like this in all my time here,” she said. “There were times when I remember paying a 22% mortgage interest; I didn’t sleep at night.”
“But I’ve never seen anything like this ever in my career,” she added. “There is always a cycle, though.”
Randi Hutton, a Redding resident and Realtor with the Hutton Edge of William Raveis, agreed.
“I’ve been in the market for 11 years, and I have not seen this kind of fear,” she said. “Banks loaned more money than they should have loaned, and they gave people higher expectations. It’s a shared responsibility.”
Besides the spike in new construction permits issued by the town building department in 1999 and 2000, when 60 were issued, the number has steadily declined.
In 2000-01, that number totaled 38. The numbers continued to drop moderately, leveling off in 2001-02 and in 2002-03 with 26 new construction permits issued.
The end of 2003-04 saw 25 new construction permits issued. From there, the numbers slumped to 16 permits in 2004-05, 17 permits in 2005-06 and only six new construction permits for 2006-07.
Consequently, construction fees the building department collected dropped dramatically from 2005-06, totaling $385,239, compared to 2006-07, when only $157,587 in construction fees were collected.
Last fiscal year, said Jay Hennessey, the town’s chief building official, was the first year his department did not meet budget revenue projections.
“It’s been slow, unfortunately,” he said Monday, “but this week we’ve got guys coming in with new houses.”
After the holiday season, said Mr. Hennessey, permit applications for houses to be built speculatively have come in. Those are often referred to as “spec houses,” which means they are built with no specific buyer in mind.
One of his goals when he started with the town, he said, was to make the budget pay for itself each year. The last fiscal year was unlike any year that he has seen.
Ira Stone, a Redding resident and Realtor with Coldwell Banker Previews, said his firm is in negotiations for a new construction. “I think we put another one together about a month ago,” he said.
“Every house has its time to sell, and it is definitely a function of price in this market,” he said.
Ms. Hutton, and Ms. O’Neill agreed.
In fact, Ms. O’Neill, who generally deals with higher range homes, said high-priced homes are always hard to sell because those particular buyers are looking for something specific.
There are approximately 130 listings on the market in Redding. As of Monday, there were six listings under deposit, according to Mr. Stone, which is approximately 5% of the market.
Normally in the springtime there is more inventory than that, Mr. Stone said, “but not an outstandingly vast amount.” He said for the first few months of the year, homes were being sold in the lower price range, rather than the upper price range.
“I’d say the market has come off of its high since two and a half years ago,” Mr. Stone said.
Ms. Hutton said 2006 was the high in terms of home sales. Since Jan. 1 of this year, there were 17 closings, with average time spent on the market of 152 days. The average list price for that time period was $727,332, while the average sale price was $688,235.
These figures are based on the Consolidated Multiple Listing Service, which is a database to which all Realtors belong.
Compared to this same time period in 2007, the numbers are down moderately. There were 22 closings in the same time period in 2007, with an average time spent on the market of 111 days. The average list price was $758,561, and the average sales price $722,273.
“It is taking longer, but houses are still moving,” Ms. Hutton said. While 2006 was a high, now the market is ironing itself out, she added.
For the entire 2007 year, there were 108 sales, of which the average time on the market was 127 days. The average list price was $886,551, and the average sale price was $839,744.
For the entire 2006 year, there were 104 sales, of which the average time on the market was 109 days. The average list price was $926,383, and the average sale price was $886,651.
What also has to be kept in mind, Ms. Hutton said, is that one sale of a $10-million house will push up the average.
“I don’t really see it as a buyer’s market,” Mr. Stone said. “The only thing that would make it seem like that is the selection.”
More housing inventory will generally lead to competitive pricing, he said. If there are 20 homes that are similar, for example, a price can be negotiated.
“The media forgets about interest rates, because interest rates are good right now, and there is heavy inventory. Buyers should be out there buying,” Ms. Hutton said. “The media leads people to believe that prices will come down, but they won’t come down to any depth that would make up for a rising interest rate.”
What is really selling are homes in the lower price ranges, Ms. O’Neill said.
“We have an occasional one big sale now, but it’s because someone lives in town and has been looking for a long time,” she said.
Despite the negative press about the housing market, Mr. Stone said Redding is a sophisticated town and it has sophisticated sellers.
“Houses sell for what they’re supposed to sell for,” he said.
The National Association of Realtors said in a recent report the market should take an upswing in the coming year. Local Realtors are hoping the warm weather will encourage more people to get out and look for homes.
“The powers that be have a vested interesting in having real estate be strong for the country, because so many industries and jobs have depended on it,” Mr. Stone said. “Real estate is a commodity, and it does always sell, just maybe not as quickly as one would like.”
© Copyright 2008 by Hersam Acorn Newspapers
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