The River To Shore Group Newsletter

The Shoreline and Lower CT River Valley

 2010 is off to a great start

 

Requests for showings on our listings have been brisk and ahead of last year's activity by a long shot. We have 3 closings under our belt and 6 more pending to close over the next 2-3 weeks. Last year after the election, financial sector meltdown, and the like, it felt like a ghost town and in fact many deals fell apart in Jan. and Feb. of 2009.

 

Interest rates remain low

 

but can't stay there forever. For example:  One of our pending sales has a 4 3/8% zero point fixed rate loan in a rate lock. The first time homebuyer tax credit delighted one of our buyers who signed a contract this week on a great home in Westbrook. Unfortunately, I've not seen any sign that the upgrade stimulus is working as well as the first time homebuyers credit.

 

The River to Shore Group is making it happen!

 

The River to Shore Group has been notified that we will be receiving two achievement awards for placing in the top 50 teams for gross commission dollars earned and for the number of transactions. We were competing within the entire national GMAC and Real Living Real Estate networks.  Obviously we are quite pleased being such a young group - we just had our 2nd anniversary.  I anxiously wait to see our rank within the 50 and will let you know in next month's newsletter.

 

We welcome yet another new member to The River to Shore Group of Page Taft.  Kevin Geysen’s energy and drive will be welcomed as he truly shares our commitment to service and making it easier for both buyers and sellers.

 

The Local Numbers

 

Our data collection is a bit behind so I can only report on January's results for 2010, which are looking good. January posted a 15.38% gain in the number of closings when compared to January of 2009. This is for all price ranges across all of the 23 towns we service along the CT Shoreline and the Lower CT River Valley. When I drill down into pricing brackets:

 

  • The under $400K market claimed 76 of the 105 closings reported or about 70% which has been the case for a while which I attribute to the stimulus program.
  • There was literally no change in the $400 to $599K bracket, which held steady at 16 closings.
  • The $600-799k bracket jumped ahead 133% with 7 closings.
  • The $800k-1M bracket lost ground posting just 3 closings, a 25% loss over 2009, and lastly;
  • The luxury bracket of $1m and above posted 3, which is 1 more than last year. Not good news in any case for these higher brackets as these represent the closings for 23 towns.

 

Sales volume is following a similar curve. Average days on market across the region are all over the place from a low of 19 days reported in the Northford/North Branford market area to a high of 277 and 288 days for Killingworth and Lyme respectively. Essex has grown longer reporting 250 days and continues to grow.

 

Many sellers have gotten the message that waiting till spring to market a home is not the best strategy while the tax credit is out there. Thus we're seeing 622 new listings posted in January, which are 102 more than we saw in 2009.

 

Our overall inventory of homes for sale remains high at about a 17-month supply of homes sold across the board. When we break this down by price bracket we have:

  • 11 months inventory of homes under $400k
  • 26.8 months at the $400K-599k bracket
  • 21 months for homes between $600K and 799k
  • A whopping 41 months of homes for sale in the $800-999k bracket, and lastly;
  • A huge 64-month supply of homes in the luxury bracket.

 

It's looking like if you want to sell a home in those brackets with high absorption rates it will mean selling 5-10% under market value to get noticed and sold.

 

When I get the February numbers from our actuarial I will add those to this newsletter and send it out to you all again for those interested to see how February compared to January and if the trends are holding.

HURRY!! TAX CREDIT EXPIRES SOON

The Extended Home Buyers Tax Credit offers current homeowners and first-time home buyers alike an incredible tax-saving opportunity when they buy a home through April 30, 2010. First time buyers, who haven't owned a primary residence in the past three years, are eligible for a tax credit of 10 percent of a home's purchase price, up to a maximum of $8,000. Current homeowners are also eligible for a tax credit of their own. Homeowners who have lived in their primary residence for 5 consecutive years of the past 8 are eligible for a tax credit of 10% of a home's purchase price, up to maximum of $6,500.

The following conditions apply:

  • The tax credit is only awarded on homes purchased for $800,000, or less
  • Full tax credit is available to buyers earning up to $125,000 a year, or $225,000 for married couples filing jointly
  • Partial tax credit is available to buyers earning between $125,000 to $145,000, or for married couples earning between $225,000 to $245,000.
  • Under the rules, as long as a written binding purchase contract is in effect on April 30, 2010, the buyer has until July 1, 2010 to close.

The tax credit is a dollar-for-dollar reduction in the buyers tax liability, and does not have to be paid back as long as the buyer remains in their home for three years or more. This is a once-in-a-lifetime offer to have Uncle Sam help you buy a house. Don't let this opportunity pass you by!

EXISTING HOME SALES UP FROM YEAR AGO

Existing home sales are up in 2010 compared to the same time a year ago. According to the National Association of REALTORS (NAR), existing homes sales -- including single family, condominiums, townhomes and co-ops -- were up 11.5 percent from January 2009 levels. At the current pace, NAR is projecting existing home sales of 5.05 million units for the year. Total housing inventory is down 0.5 percent to 3.27 million units nationally.

Existing Home Sales By Region

NAR chief economist Lawrence Yun is watching the sales data very closely. "Activity should be picking up strongly in late spring as buyers take advantage of the tax credit, which is critical to absorb distressed properties reaching the market and to continually chip away at inventory," Yun said. "With a downtrend in the number of homes on the market, especially in the lower price ranges, values are beginning to firm but with great variance around the country."

Mortgage backer Freddie Mac reported an average commitment rate for a 30-year, conventional, fixed-rate mortgage of 5.03 percent in January. This is up slightly from 4.93 percent available in December 2009, but down overall from a year ago when the rate was 5.05 percent in January 2009.

INVESTING IN REAL ESTATE

Today's low interest rates and stabilized home prices have created some great investment opportunities!  Investing in real estate has unique advantages over other types of investments:

  • Interest in mortgage loans are tax-deductable.  Investors can lower their tax liability while increasing their equity.
  • Renters pay down your mortgage loan.  Investors reap the benefits of rental income, which offsets your mortgage cost and build equity.
  • Real Estate values increase over the long term.  Real Estate is limited and will always be in demand. 
  • 1031 exchanges are available to defer taxable income when you are ready to sell.

Many investors are taking advantage of these great market conditions. Have questions? Give us a call. We are happy to help!