Tuesday, November 7, 2017

November Market Report for New Canaan and Fairfield County

We are having a very good Fall market here in New Canaan, not just in comparison to 2016. This chart makes it apparent that 2014 and 2015 were exceptional years and that 13 sales is more typical.

This chart of cumulative house and condo sales over the last ten years is a more sobering view. 216 single family house sales and 43 condo sales is fairly typical and last year was particularly poor here.

279 Active House listings is too many. This number has doubled from 145 back in 2000 and about 220 in 2013. The number of people in New Canaan has remained unchanged in the last 20 years so why has the number of active listings doubled? A good deal of this has to do with the financial and tax situation in Connecticut. There are many more opportunistic sellers than there were 10 years ago.

The number that jumps out on this chart is the number of closings under $1 million, up 147% year over year.  There is always a buyer for a relatively inexpensive home in this market, given the high quality schools and low taxes. So why did that number jump this year? One factor could be the relatively low number of inexpensive rentals on the market. When faced with limited options to rent many people opted to purchase instead. A second factor is the increase in inventory. Given the record levels of inventory, and the relative stability of prices and low interest rates, buyers did respond.

There is still 6 years of inventory above $5 million. This has to come back into balance. The number of active listings under $1 million is only 41 which makes it unlikely that we can sustain the current level of sales of 52. In the $1-2 million category we have about 1 year of inventory and that is a balanced market. 

Ah, condominiums. The condo market follows the housing market. When houses are selling then it produces buyers for our condo market. As we can see in the chart above there are sales at all levels in the condo market, and the current level of about 4 condo sales per month is consistent with condo performance over the last ten years. We expect that the increased volume in the housing market will result in higher median prices in the condo market.

What's wrong with Greenwich? Nothing. A 5% drop in volume is statistically insignificant because they had a relatively strong year last year. Prices are now $300,000 higher than New Canaan and Darien and this could account for the drop in volume. As I recall the prices were much tighter between the three towns a year ago. What is significant are the large increases in volume in 4 markets and small increases in volume in another 5 markets.

Inventory keeps climbing. While it is true that we're having a brief respite after hitting new records again in 2016, inventory levels are still much too high and reflect a whole generation of opportunistic sellers. Rather than settle into a home for 20 years people are much more willing to regard their primary home as an investment (and take a profit when it is presented).

This chart shows the seasonality of the number of listings is still a factor, with the peak number of listings in June before all of the pending Spring transactions have cleared.

The volatility in the November December months comes from houses coming off of inventory for the Christmas holidays. 

The absorption rate dives between November and January as people take a break from the market and pull their houses off with the expectation of re-listing in February or March. By May everything is back on the market and the number of sales outpaces the addition of new listings.

Ninety five percent is typical for the ratio between listing prices and selling prices. We have found that buyers will not typically make credible opening offers below 90% of asking price and prices tend to settle at the mid-point of the bid and the ask, 95%  What is far more instructive is the ratio to original list price which is consistently below 90% for the first time in recent memory.

Monday, November 6, 2017

New Canaan Advertiser Endorsement for Town Council 2017

NewCanaanite.com Endorsements for Town Council 2017

Seven candidates—four Republicans and three Democrats—are vying for six Town Council seats that are up for election on Tuesday.
For reasons listed below, I am endorsing three Republicans—John Engel, Rich Townsend and Tom Butterworth—and three Democrats—Sven Englund, Colm Dobbyn and Liz Donovan.
Two candidates, incumbents Engel and Englund, most clearly have earned re-election to the legislative body.
Engel is an insightful, articulate councilman who brings a singular perspective as a lifelong resident, community volunteer, open space advocate, parent and Realtor. His also is a common-sense voice in a body that can be derailed by overreach and politicking. During a tortured December 2014 session, for example, he was one of just two Republicans to vote in favor of listing Waveny on the National Register of Historic Places. The Council’s narrow vote saw the yet-to-be-created Waveny Park Conservancy written into a resolution for the first time.
Englund, another New Canaan lifer who has served 40 years in the New Canaan Fire Company, is in some ways the conscience of the Town Council. In the same 2014 meeting, he rightly asserted that Waveny as a gem of the town has earned the national designation then up for consideration. As the Town Council considered a proposal that would’ve seen the former Outback Teen Center building used to house a day program for local adults with developmental disabilities, Englund asked out loud just what councilmen were doing if not trying to help those in town who need it most. For the last two years, he far and away has had the best attendance record among Democrats serving on the Town Council, and diligently attends subcommittee assignment meetings—not all do—reporting back to the full body.
The next Town Council candidate most deserving of New Canaanites’ votes is Dobbyn. He has served for more than one decade on what is known today as the Inland Wetlands Commission, an important government body that exists in relative obscurity as it is dramatically under-covered by local media. An attorney on the commission, he diligently looks out for New Canaan’s best interests. For example, in early-2016, as the commission contemplated publishing a “Do’s and Don’ts” brochure on environmental regulations, Dobbyn cautioned that New Canaan could face a liability issue if it published a document too specific to the violating landscaper who had inspired it.
Committed to town and active in community discussions, Butterworth also deserves a seat on the Town Council. Like fellow GOP hopefuls, he had been under-prepared during an initial Republican Town Committee debate over the summer to answer basic questions that spoke to the workings of the Council. Yet Butterworth, a retired businessman, improved to a point where last month, during a discussion of town-owned buildings at the League of Women Voters’ Candidates Forum, he was the only candidate for Town Council in either party who cited, astutely, a recent finding that 20 percent of those municipal structures are vacant. “I don’t think we have a right to maintain” that vacancy rate, Butterworth said. He’s right.
Rich Townsend by a wide margin (and following a well-executed social media campaign that has continued into the fall) earned the most votes of any Republican at the party’s July caucus. A local businessman, Townsend served on the Charter Revision Commission and has run on a platform of protecting New Canaan’s property values. His friendly, civil demeanor will be an immediate plus on the Town Council—he would be a strong candidate for chairman. And his vow to approach the budget process with an eye on 5 percent reductions—though unlikely, given contracted wage increases—captures a fresh perspective on town spending that New Canaan must embrace. He should be voted onto the Town Council.
The sixth and final Town Council vote should go to Liz Donovan, a Princeton-educated entrepreneur from a prominent local family who has dedicated her free time to community service. Specifically, she left a successful corporate career to launch a business that helps seniors safely “age in place.” Returned to her hometown of New Canaan three years ago to help care for her own elderly mother, Donovan will bring a fresh perspective and sunny outlook to the Town Council, a legislative body that benefits from new blood.
The odd candidate out this year would be Penny Young, a widely respected community volunteer whose resume of civic accomplishments, compiled over two decades, would rival anyone’s. Young possesses deep institutional knowledge and New Canaan would be lucky to avail itself of her expertise in some way. Yet members of the Town Council, the single most-powerful body in New Canaan, must operate with transparency in order to represent the electorate most fully. Young was the low vote-getter among Republican candidates for Town Council in 2013, and though she is a shrewd politician who will land on a ballot this year alongside massively popular Engel and Townsend, she should not be sent back to the legislative body.