Tim Bray -B.S. Real Estate & Urban Economics (UConn)

Market Update-

As predicted, the real estate market has slowed dramatically since the $8,000 tax credit faded into the sunset. The majority of first time home buyers seem to have put their home buying searches on hold creating a ripple effect for those trying to sell their properties and either upgrade or downsize.

Many buyers now in the market are relocating from outside the area and are becoming extremely picky when making a purchase. Inventory is high but the quality of the properties priced accurately is discouraging. Those properties that show pride of ownership and are priced right are selling quickly. Successful sales are creating a downward push on value because they are creating the market and become the most recent sales comparables. I have not seen a transaction this past year without the following language. “Property must appraise at or above the purchase price.” I encourage all of my clients to have their properties appraised by a local reputable appraiser in an effort to prove value and get in line with the market before we see a greater decline. Your competition will ultimately remove themselves from the market or get aggressive with their pricing which will ultimately lower the value of your property.

Yes, we believe that a decline is still in the cards for the remainder of the year. This is attributed to a weak perception of the market due to the value of our currency, slumping stock market, record inventory levels, foreclosures, short sales, and strategic defaults.

The good news is that luxury properties, second homes, and land are beginning to move. This tells me that investors, wealthy individuals and, and developers view us as nearing the bottom and are taking advantage of below market opportunities. The issue is that they are buying these properties with cash and at great discounts, thus lowering the values of surrounding homes and creating a greater downward push in value.

We should pay particularly close attention to land values going forward. Developers have historically earned a return of 25% on a project and that is very difficult to achieve in today’s market. Materials, labor, and costs to construct a structure have remained level….leaving me to believe that land values must drop in order to make construction a viable option. Of course supply has to be reduced and demand has to increase as well a drop in unemployment.

Average price per square foot for Mystic CT was $176, a decrease of 7.9% compared to the same period last year. The median sales price for homes in Mystic CT for Apr 10 to Jun 10 was $265,000 based on 15 home sales. Compared to the same period one year ago, the median home sales price decreased 7.3%, or $21,000, and the number of home sales decreased 44.4%.

There are currently 194 resale and new homes in Mystic. The average listing price for homes for sale in Mystic CT was $632,815 for the week ending Jun 30, which represents an increase of 0.1%, or $601, compared to the prior week.

Do you remember when you were a kid and you got a brand new bike. It was your mission to take care of it and make sure that it stayed in good shape. As time passed your bike began to show signs of wear but you still took pride in ownership. As adults we often times get wrapped up in our fast paced hectic lives that leave us little time to do anything but eat, sleep, and work. By the time we get home in the evening our minds have become soup and we have all we can do to get dinner ready, do a load of laundry and make sure that the kids have finished their homework.  Yet somehow it has become our passion to take care of our properties. After all, we have worked hard to put ourselves in a position where we are capable of home ownership and we are proud of our accomplishments. 

Our country has fallen on tough times as of late and most people have felt the pressure to some degree. Many home owners owe much more on their loans than the property is worth and feel that spending money on the upkeep of their home and yard is a complete waste of time and money....yet they still do it.  Drive through a neighborhood and take note of the properties free of debris, fallen sticks, loose hanging shutters and gutters. These home owners have what I call, "Pride of Ownership." It is my belief that the state of a person's home offers insight into the lives of the owners themselves and a set of beliefs and values that were instilled in them at a very young age.  I am not saying that the landscaping and finish work has to be elaborate, fancy, or expensive.....just neat, tidy, and taken care of.

As a real estate consultant, marketing professional, and realtor, I am able to say that properties offering pride of ownership are easier to market, seller faster, and for a higher price. These are the properties that I have elected to work with in my region regardless of price range. Do you have pride of ownership?

Watch closely for Wamphassuc Point Rd as it is easily missed when traveling between the Stonington Borough and Mystic. The community is distinguished by an old country road lined with rock walls. Very few of the 83 residences can be seen through the trees offering its owners privacy and a sanctuary from the hustle and bustle located so near. Take a left onto East Neck Rd and you will find large homes with immaculate landscaping on oversized lots. Few homes in this community are offered up for sale as they are passed down through generations. To fully appreciate this serene lifestyle you must view the East and West shore from the water.

East Neck Rd

East Shore

Private Drive

A recent article in The Day News Paper quoted an economist as says, “Connecticut housing has become more affordable relative to residents' income, declining from a high of 5.4 times income to a current level of 4.2 times income - still about a point higher than the national average.”

This was a great article and I think that it deserves a look.  Click here to view the article. We feel that the Mystic Country portion of CT is extremely unique and must be analyzed independently form the remainder of the state.

Homes selling at 4.2 times income levels are not necessarily a great thing. If we take a look at the Case-Schiller Index which states that equilibrium in a perfect world is 3 times household income then we still have a long way to go. Those figures become much less meaningful in towns where second homes are purchased and not just owner occupied primary residences are used for the calculation.

Many of the towns in the region appear to be close to equilibrium and a couple are actually below the magic number “3”...meaning that bargains exist.

Our next hurdle is the inventory. We must get rid of the inventory so that towns are absorbing the revenue streams from taxes. As soon as the towns are healthy then our budgeting gets cleaned up, schools are not shut down, roads get fixed, and town employees keep their jobs.  Unemployment is another topic that warrants discussion.

People then become more confident in our economy and maybe by then the commercial loan debacle that is about to land on our laps is less disastrous. Baby steps are needed to turn things around.  Activity breads results.

Tim Bray  B.S. Real Estate & Urban Economics (UConn)

Sotheby's International Realty

860-912-7137

tbray@brayconsultants.com

Entering the realm of Real Estate in South Eastern CT seemed like a natural progression when I moved here from Washington D.C. to be with my wife and her family. After all, growing up in a real estate family has made me passionate about the industry. As a child, I would listen to my father, Les, talk about real estate trends, valuation, spread sheets, and running a business in a moral and ethical way. Real estate was in my blood.

I knew when I entered the profession that it was going to be very difficult to gain traction and be successful over the long term in this industry. Statistics showed that 75% of all realtors leave the industry every 4 years. That was a huge failure rate and I did not want to be part of those statistics.

Early on, my father left his career as a very well known reputable Commercial and Residential Appraiser in Maine to join me in my quest for success. Together, we felt as though we were unstoppable. After all, he had been involved in over a Billion dollars in real estate transactions and I had a degree in real estate & urban economics from the University of CT. We had an edge over all the other agents in the region and we would use that edge to propel us into successful careers.

Looking back….it was scary. Most agents grew up in this region and had a sphere of influence to turn to for work and referrals. We had no one. The only edge we had was our knowledge of the industry, unique backgrounds, and our ability to represent clients to the best of our ability. We pushed our backgrounds to the news papers, bought radio ads, put up a website, and even placed signs on street corners. One of those signs we later learned was placed on the corner of another agent’s property. She was not impressed and rightfully so. We were exploiting our own attributes but at the expense of our reputations amongst peers in the industry. We were striving for a win-lose situation when negotiating with other agents. This was all in the name of giving our clients the best representation possible. Yes, we were gaining traction and quickly excelled to the top percentile in the industry, our clients loved us….but there was a cost. We lost the respect from some very well known and seasoned agents who deserve all the respect in the world. These agents were in the top 25% and had spent many years in the industry perfecting their craft. We want to sincerely apologize to these agents for our arrogance and disrespect.

Our business models are now parallel to Dale Carnegie’s teachings from the early 1900’s. We believe in a win-win philosophy where both parties leave the table feeling good about the transaction. We are here to guide our client’s and give them enough information to make the very best decisions possible. We are not here to exploit the short comings of our fellow agents but to help them become better through our own example.