Signs of the times

There’s a lot going on right now that could potentially impact the housing market, so let’s get right to it.

Indicators

According to the Warren Group, single-family sales in Connecticut increased 2.8% in February 2014. Compare that to 2013 while condominium sales decreased 7.2% in January. This is the 10th straight month that homes sales have increased in Connecticut. Realtors are seeing multiple offers in certain price points (low $2 million and under) in Greenwich. This is because of low inventory and interest rates ticking up.

The poor weather has impacted the amount of inventory this year. Typically, there is a rise in inventory in January and February and this did not happen. It is anticipated that the spring market will be compressed as a result. Realtors are expecting that home closings will start picking up in mid-April and continue through July.

In Greenwich, single-family home sales were down 71.43% when comparing February of this year to February of 2013. Condominium sales increased 100% when comparing February of this year to February of 2013. Weather and low inventory are the reasons for these developments as well.

The first quarter this year in Greenwich, however, saw an increase in average price of approximately 18%. Be mindful that the high end of our market was much better the first quarter of this year than last year’s. The median sales price increased about 20% for the same time period. Properties priced at or near their market values are selling while those priced higher in their ranges are languishing.

Flood insurance

Although Congress passed a law in March which would cap flood insurance premium increases, some buyers still have concerns about purchasing shoreline properties. The National Association of Realtors (NAR) supported the Homeowner Flood Insurance Affordability Act in early April. There are, however, several issues that still need to be addressed.

Although property buyers will be allowed to assume the policies and current insurance rates of sellers, FEMA must take steps to immediately implement this provision. Another issue is the refund to property owners who paid the full actuarial premium between July 2012 and now.

The third issue was the establishment of an office of the flood insurance advocate within FEMA to help consumers with concerns related to flood insurance rates, quotes and appealing designated flood zones. NAR wants to ensure the office is created and funded. The last issue requires FEMA to put in place a Technical Mapping Advisory Council to ensure the accuracy of flood maps. NAR will keep its Realtors posted with developments in these matters.

Separately, homeowners are not refinancing as much as they have been in recent years. In the first quarter of 2013, refinances comprised 71% of mortgage origination activity. In contrast, they are down 51% in the fourth quarter of 2013.

Mortgage originations for home purchases were up more than 20% in 2013. It is projected that more than 50% of the mortgage market will be originations for home purchases by the end of 2014. A buyer-dominated market was last seen in 2000, according to Freddie Mac.

 

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]

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