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 Real Recovery, Real Opportunity
Real Estate on the Rebound
Eileen S. Townsend, REALTOR-Broker February 2011
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Real Recovery, Real Opportunity: Real Estate on the Rebound
Dear friends, colleagues and clients,
2011 takes wing on -- in a word -- Optimism. Talk about a turning tide ... the mood, the pulse, the turnout, the banter ... everywhere I've been during the first month of the year ... working in real estate, taking part in community interests, playing around town and on the mountainsides. The Vermont Economic Outlook Summit was tangibly, palpably different this year -- brighter, at moments even light-hearted (in a standing-room-only conference room of predominantly black suits). Quite a difference compared to the past two years, and not an isolated instance in the month of inaugural, year-opening events I've attended. All across Vermont, we still are welcoming our new governor, new party balance, and new legislative leaders ... who get to enjoy a few weeks' honeymoon while launching agendas to move Vermont forward on familiar priorities like state-wide cell signal coverage, containing healthcare and insurance costs, and consolidating school districts. I'm hearing renewed focus on job creation, and developing new economic engines in areas like renewable energy, niche manufacturing, and entrepreneurial growth.
The Burlington Business Association's Annual Summit featured an international "downtowns expert" leading discussion on why Burlington has an unmatched jewel of a city center ... and focusing on ways businesses, public officials, colleges and non-profits share roles in building lasting vibrancy into the economic and cultural hub of our marketplace. And, in a few firsts for myself and my personal enjoyment of our area: I've had the pleasure to visit the new Performing Arts Center at Spruce Peak in Stowe, and I've enjoyed switching gears from guest to helping plan and host one of the leading benefits for our performing arts sector, the VSO's Waltz Night. On a personal note, in this past transformativeyear, I've had the life-changing experience of becoming a mother-in-law and a grandmother (??!!)... all amid this overall rediscovery of "what fun and fortune" we enjoy living, working and playing in this wonderland of bustling Burlington and beyond.
At this time when tides are turning, and market forces can appear confusing or contradictory, I want to take some time to put local and national real estate dynamics in perspective so that you can make the most of what opportunities present themselves, what changes come your way, and what dreams you'd like to pursue. I hope you will call me if you need further information, if you want to explore some options for yourself or your family, or if you know anyone who will be buying or selling real estate this year.
Here's to making your real estate dreams come true ...
Eileen S. Townsend, REALTOR * Broker
Accredited Buyer Representative (ABR)
Certified Residential Specialist (CRS)
Lang * McLaughry * Spera
Office: 802-846-7861
Cell: 802-734-6937
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How's the Market? At Long Last: Awesome, Active and Optimistic!
The winter has been uncharacteristically busy in real estate. January saw a nearly 17% increase (year-over-year) in the number of homes sold in Chittenden County (from 60 closings to 70), with more than 30% increase in Northwestern Vermont (from 75 to 98) overall. Despite record cold snaps and snowfalls that shut down schools and businesses more than usual, the pace feels almost like early spring breaking -- before Groundhog Day! This bustle has been brewing on the fundamentals of change from recession to the recovery we now officially embrace.
2010: The Turning Point ... 2011: The Window of Opportunity
Housing Inflation?: The local "turning point" story is shaped by our own unique market dynamics -- a little more on the positive side, in some ways, a little rocky but still improving in others.. Notably, Vermont is one of 17 states predicted to experience "housing inflation" (or rising home prices) in 2011 -- this from the website Housing Predictor.comBurlington and Chittenden County lead the state -- and in many ways, the nation -- in the recovery. thanks to the lowest foreclosure rates in the nation, stronger than average employment, and enviable quality of life on so many measures (that "we" already understand!) 2010 was the pivotal year in which, experts believe, we turned the corner. On a national level, the NAR (National Association of Realtors) touts that real estate is on the upswing -- both in the number of transactions forecast for this year and next, and in the strength of prices. NAR summarizes the trend with the headline: Real estate sales rebound in 2011, prices nearly flat; NAR forecast anticipates quicker recovery for new homes. Nationally, the NAR expects the number of homes sold to increase 7.9% this year, and another 4.5% next year. The national median price of existing homes stabilized and increased  slightly (0.3%) in 2010, after having dropped 12.9 percent in 2009. NAR predicts that the median price of a home sold in 2011 will continue to rise -- .5% this year, to $173,800 and more, 2.4% in 2012, to $177,900. Newly built homes are forecast to enjoy even greater gains both in the pace of sales and the strength of prices. New homes could see a 17.7% increase in number this year, and as much as 20% in 2012. |
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Leading the Recovery: Prices Up, Inventory Improving
Chittenden County's average sales price was measurably UP in 2010 +4.5% year-over-year, to $282,902 from $270,686. The average price of a house sold in 2010 was up 2.59% to $313,946, from 2009's $306,063, while the average price of a condo sold was up 5.7%, to $229,029 in 2010 from $216,661 in 2009.
In 2010, we saw 2568 listings hit the market, down slightly from 2736 that hit the market in 2009. Inventory is a little lower, meaning that absorption of what is for sale should be a little stronger.
* The number of listings sold was down slightly in 2010 (-7.67%) -- with 1347 sold compared to 1459 in 2009. If, as has normally been the case, Vermont mirrors (if not leads) national trends, the pace of sales should pick up this year. And if January is an indicator, the trend has already begun.
* On another positive note: The cumulative value of all property sold declined LESS THAN the decline in volume -- meaning two things:
- that values have solidified, formed a base that we can trust won't slip more -- a market postured for stabilization and slight increase in values, and
- the latter half of 2010 saw the return of confidence and sales in higher price categories, with robust activity in the luxury market, and returning activity in the $400,000 - $800,000 range.
Market Recovery, Charted Average prices in Chittenden County in 2010, charted in comparison to past years, illustrates the emergence of a recovery trend. High inventory c9ntinues to compel longer than comfortable time on market for many homes, and increases the average amount of time it takes to move from "just listed" to "under deposit." However, improvement in inventory and absorbtion has begun.
Chittenden County by the Numbers The dark side of this otherwise up-lifting news is about the remaining inventory of homes on the market -- homes that have not sold. The good news is: inventory is returning to, but has not yet reached, balanced market levels. Between 2004 and mid-2008, Chittenden County carried anywhere between 350 and 700-ish homes on the market at any given time, selling between 100 and 250 homes per quarter. As recession took hold, between mid-2008 and the end of 2010, Chittenden County has carried between 750 and 1300 homes on the market, selling about, or slightly fewer than, 200 or so per quarter. Inventory grew and was not being absorbed by demand in the marketplace. By the end of 2010, inventory inched back down to 763 homes for sale in Chittenden County ... about eight months of inventory. We consider a market balanced when inventory is likely to be absorbed within close to 6 months.
 | | Five-Year Market Activity 2005-2010 |
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Making Sense of the Mortgage Markets
 | | Click to read full-size: Purchasing Power of $1500-a-Month |
The Amazing Expanding Purchasing Power of Your Mortgage Dollar
Exactly how much house can you buy with a housing budget of $1500 a month? $2000 a month? Or more? This economy presents amazing opportunities for buyers ... between the lowest interest rates in decades! and prices that have moderated from market peaks, we are truly in a sweet spot for buyers of real estate. How long this opportunity will last is the real question (more on that below). But while we are here, consider this: housing may be the one area in which your dollar buys three times as much today as it could 30 years ago!
Fact: a $1500 housing budget could get you a $100,000 house in 1980, at then-current mortgage interest rates. Today, that same $1500 can translate to a house purchase of nearly $300,000. Here's a great explanation of the impact of historically low interest rates on your bottom line from Mark Chaffee of Mortgage Financial. The buying power of a $1500-a-month budget now, compared with each of the past 30 years. Amazing. |
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Sweet Spot in the Buyer's Market: How Long Will It Last?
 | | chart courtesy Spruce Mortgage 802-652-1065 |
Home Prices and Interest Rates:
On Their Way Up
Too good to be true? Economists, mortgage bankers, Realtors, the US and local media, and good old Yankee practicality ... all seem to be saying the same thing. If it feels like it's too good to be true, it probably is, and it probably won't last. That's the new mantra regarding mortgage interest rates, and sources say, time's a wastin'.
Mortgage rates have hovered just above and just below the 5% mark since the winter of 2008-2009 -- giving us nearly three years of continuous 30-year lows in mortgage rates. Combine that with prices that have adjusted with the wave of recessions and, for buyers, it shapes up to be a "Perfect Storm" enviornment for making that long-awaited purchase. Only now, stabilized prices are staged to rise, and economic recovery removes reasons for keeping interest rates artificially low. The NAR predicts rates will average 5.1% this year, and rise to 5.9% in 2012. |
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Preparing for Market:
Cost Versus Value: Preparing Your Home for a Competitive Market
"Should We Redo the Kitchen Before We List?"
"Should we Paint the Bath Before the Open House?"
Remodeling Magazine's 2011 Cost Vs. Value Report is out: -- If you do x, can you sell for y? The truth is, in today's buyer's market climate, making or not making a repair, improving or not improving a dated feature ... can mean the difference between attracting or not attracting a buyer "at all," at almost any price. No matter how tough the economy, buyers have not shed their expectations for quality, style and aesthetic appeal. In fact, in this buyer's market, buyers have become -- and been able to be -- more demanding than ever! Basic expectations include: Is the home structurally sound -- are the foundation, walls, floors and ceilings properly supporting the structure and  providing a safe, dry, weatherproof environment? Is the home in relatively good (i.e. neutral or visually pleasing to current tastes) cosmetic shape, or will the buyer face significant cost to bring the "look and feel" of the home to current day standards? (wall coverings vs. paint, choice and condition of flooring, hardware and fixtures throughout the house, including lighting, counters and cabinets) And, importantly, is the home "safe" -- this most often relates to electrical systems, stairs and handrails, the solidity of porches, decks and balconies -- indoors and out.
What is the cost of making repairs or improvements in your home, in today's dollars and real estate climate? Remodeling Magazine tallies up the likely cost of doing dozens of common home improvements by specific regions of the country (Burlington, VT is one of the markets specifically tracked), by quality levels (bargain vs. average vs. luxury), and by how much of your expenditure you are likely to recoup if you re-sell the house right away in today's market climate.
For sellers who want top-dollar: If you want to get top-dollar in your neighborhood or among comparable homes to yours ... make sure your home DOES measure up on key features (the latest kitchen trends; current décor and colors; hardy, long-lasting selections for floor finishes and permanent fixtures. Not only will you "sparkle" when you hit the market, capturing that wonderfully positive "first and lasting impression," you also will stand much better odds for negotiating YOUR price, instead of the bargain-hunter's. Buyers do tend to recognize quality and the hard work you have put into maintaining your home, when they see it.
For sellers without time or money for repairs: Real estate wisdom says that "price cures all evils." In other words, if you are seeking to sell a home, and you can see that due to age, style or upkeep, it really isn't measuring up to other homes in your neighborhood or in the price-range you expect to market , then, you have two choices: either proceed with some updates, upgrades, or repairs ... or, be prepared to discount your price enough to motivate buyers to take the projects on themselves. Buyers do tend to recognize when, for whatever reason, homeowners have become unable to maintain their home. There always seems to be a fair number of shoppers who are willing to catch up on deferred maintenance -- but they expect a bargain price in return for the trouble. Often, it seems, the dollars counted by the buyer are several times the real costs expected by the seller. Here's a guide to help you close the gap in perspective, and make a better choice about what's worth doing, when.
If you're considering selling: Please, feel free to ask me about how we can work together to showcase your best efforts when we bring your home to market. Many of my friends and clients inquire -- even years ahead of their planned timeframe for selling -- about which home improvement projects people have more success with --- it is always a judgment call, and I'll be happy to share what I've learned with you, and to connect you with experts who can help you reap the most benefit at the cost that makes sense for you. |
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I am honored to be your eye on the market and ear to the ground here in the greater Burlington, Vermont real estate marketplace. Whether you will be buying or selling, whatever the market conditions, I want to assure you, I and my firm, Lang * McLaughry * Spera, keep the whole world of opportunities in mind when marketing your property, or helping you find the home of your dreams. Those of you who know me well enough remember that it has been through my own 15 (count 'em!) family moves -- coast-to-coast and back again -- that I developed my passion for real estate. Eight years into this career, I still take personal pride and pleasure in "getting it right" for my clients. More -- next time -- on how the leading real estate agency in Vermont and your favorite Realtor (me!) bring you the advantages you need to find and buy -- or market and sell -- your dreamhome.
Sincerely,
Eileen S. Townsend, REALTOR-Broker
Accredited Buyer Representative (ABR)
Certified Residential Specialist (CRS)
 
Lang * McLaughry * Spera Office: 802-846-7861 Cell: 802-734-6937 |
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