With energy prices rising and the threat of a recession looming, house purchases stalled last summer. The only people who were really happy about the situation were the buyers who, armed with news ripped from the Internet, could suddenly get very, very choosy. No one wanted to make an offer, because who knew if the prices would tumble even further next week?
The New York Times was only too happy to leap on this story and beat it to death like a scandal du jour. Anyone selling a house began to wince and whimper every morning when the paper landed.
Then came the Wall Street bonuses, which brightened at least one corner of the market. In the higher realms, involving houses that sell for more than $3.5 million, there really had never been that much of a slowdown anyway. It was in the middle ground where suddenly a stockpile of inventory appeared (let’s not tell our friends in Iowa that “middle-priced” means $1.5 million to $2 million). And in what passes for a lower market in Westport and Fairfield, there suddenly returned that long-gone apparition: the $700,000 house.
By the close of 2006, total house-sale numbers were markedly down. In Fairfield, where 837 houses sold in 2005, last year 650 sold. In Wilton, 333 houses sold in 2005, then 250 last year. In Westport, 488 houses sold in 2005, then 399 in 2006.
But by February of this year, the market seemed to be gathering steam again. “No snow on the ground was a key component of a great winter,” laughs Michael Daversa of Atlantic National Mortgage.
Darlene Letersky of Prudential Connecticut says: “The spring pickup started very early this year. It’s a very hot market. I’ve sold $23 million already this year.” (Note: While a local Realtor can do that kind of business with merely a couple of beachside house sales, Darlene acknowledged she had to sell eight to get that number.) “In 2006, we sold fewer houses but the market price was up.”
Even the Weston market, which seemed to be suffering due to its rise in real estate taxes, incurred by the new school construction, has picked up. Now that Westport’s median house price has moved past $1.3 million, suddenly Weston is attracting house shoppers who at least want to be in this neighborhood.
While the real estate market is gaining momentum again, there are other signs of a new sobriety in various precincts. Although the “fuel crisis” seems to have slightly receded in urgency, the nation has gotten a wake-up call on the environment; suddenly, customers are getting a little wary of the gigantic house. “My clients are going green,” says Prudential’s Debra Gailhard. “And I have a couple of builders who have gone green, too.”
“I think mega-mansions are a thing of the past,” says Chris Simmers, vice president at Prudential. “New Canaan is loaded with them and they’re not moving. People want the houses smaller now, but done to the nines. They want the best hardwoods, the best molding, the best marble and they want to have all the toys in it.”
Many other Realtors note that square-footage for its own sake is getting passé. But, at the same time, the younger customers, who all insist on buying new, are still driving the demand for grandness.
“People like grand foyers, because that’s the showoff room,” says Ed Magi of Nicholas Fingelly Real Estate. “They like high ceilings, even with high heating costs, and hardwood floors, even in the kitchen, which you never saw ten years ago, and they’re made of Brazilian cherry and quarter-sawn oak.” Closet systems are more elaborate. Mudrooms are essential, and wine cellars and cigar rooms are also on the list.
However Michelle Genovese, of Michelle & Company, notes, “People are living more informally. The dining room is out.”
One thing witnessed by all Realtors, the younger market has a strict preference for new. And nobody wants to stuff all their new, can’t-live-without-it gadgets into some charming antique. Thus, says Pat Abagnale of Country Living Associates, the business of knocking down capes and putting up the $1.9 million showpiece is still very active. “A lot of builders and investors are putting up houses, so that has created a lot of inventory. But there are buyers out there. I’m very optimistic.”
There is good reason for optimism. While the rest of the country deals with a general softening of the market (some parts of California fell more than 40 percent) and a more careful market psychology, our corner of Fairfield County still retains the privileged buffer-zone status it derives from its location. If the influx from Manhattan keeps going at its present rate, we’ll no longer be considered a suburb of the city but rather some sort of Manhattan annex. “New York is still very high. And that influx from Manhattan pushes our market,” says Pat Abagnale. “Last year, Westport was up 13 percent, even as other towns were down.”
“The prices are still a little high for a buyer’s market,” says Pat. “In spring, everyone wants to list a little high just to see what happens. However, the buyers feel that the prices are still high, and they are reluctant to come in close to the asking price because they feel that the market isn’t bearing what they’re asking.”
If you’re thinking of selling and your real estate agent is advising you to consider a “realistic” price, listen to what he or she is saying. “Listing a price accurately sells the house,” says Richard Maybruck of William Pitt Sotheby’s International. “If you price it a little lower, you’ll get multiple offers.”
As Daversa notes, with mortgage rates so low (about six percent on a thirty-year fixed), people know it’s a good time to buy.
“Overall, the market was not off that much,” says Melanie Smith of Jensen-Smith Real Estate. “It was the second best year in the history. The bottom has already bottomed; last year was the end of the decline.”