Demographic and economic changes are two big factors that impact the housing market and home requirements.
Not so long ago, some residents and our Planning and Zoning Department were dealing with the growth of “McMansions.” But today we have a shortage of new-construction homes as many more people are seeking rentals than going out there seeking homes. Renting gives people mobility and more flexibility by providing the time necessary to find a home to buy that truly fits their needs.
According to a 2011 study from the Department of Housing and Urban Development, former owners of homes in rental properties have found problems with older, attached homes. Primarily they do not have floor plans that meet today’s needs.
Meanwhile, an increasing number of baby boomers are downsizing and are looking for smaller homes that accommodate an active senior’s needs. Homes in central Greenwich that are close to restaurants, stores and the train are in demand at various price points. Denser communities suit those seeking a more social lifestyle. These communities also appeal to buyers coming from New York City as well as the environmentally conscious.
Due to the rising cost of energy, buyers are looking for homes that are the size that meets, and does not exceed, their needs. They are also seeking homes that are heated by gas and not by oil or electricity. Among the questions buyers ask is if the windows are doubled-pane.
Another question that is regularly posed is, “Does the home get water in storms?” This is even an issue in renting a home. The impact of Hurricane Sandy has raised a number of concerns with homes in low-lying areas and/or flood zones. Elevations and drainage systems, hopefully supported by generators, have become a part of buyers’ due diligence in purchasing homes in areas of risk.
While these questions and concerns are being explored by potential buyers, home prices rose 9.3% in the month of February across the nation, according to Standard & Poor’s/Case-Shiller. Some areas registered double-digit gains in prices. The New York area registered a 1.9% gain from a year earlier, but it was down 24.9% from the peak of the market.
Additionally, the supply of homes continues to be low and there is pent-up buyer demand.
Rents are increasing while mortgage rates remain low, enticing people to buy. All 20 cities a part of this survey posted year-over-year increases for the second straight month, which has not happened since the economic downturn.
Existing home sales increased by 10.3% from one year ago in March, despite the available inventory having fallen by 16.8%. A Wall Street Journal quarterly survey conducted in 28 metropolitan markets showed some areas had less than a three-month supply in about 12 markets. The markets that fell the most from the peak, San Francisco, Calif., and Phoenix, Ariz., are reporting the largest price gains.
There is still concern that the traditional buyers are facing conservative lending requirements and are being shut out of the market. Often investors with cash are winning bidding wars.
They are still converting properties into rentals to benefit from the strong rental market. Many analysts are projecting home prices to increase, but interest rates may as well, making them less affordable.
Mary Ann Clark is a Realtor with Coldwell Banker at 177 West Putnam Avenue in Greenwich. Questions or comments may be emailed to [email protected]