Building confidence increases

Realtor.com reported last week that housing inventory, meaning the number of homes for sale, continues to remain at record lows. The national inventory of all types of homes (single-family, condos, town homes and co-ops) is down approximately 19% in July from where it was last year. That means the real estate market is stabilizing as prices hold or rise in particular markets while inventories decrease.

Cities in California have experienced some of the more significant reductions in inventory because they have some of the biggest increases in sales prices. What drops the most typically increases the most. To focus locally, the Greenwich real estate market tends to lag in responding to economic down turns and also lags some in its reaction to economic recoveries.

 

Home sales prices in Greenwich have not significantly increased. Properties in good locations that are updated or nearly new are moving in most price points. The under-$2 million market is most active. Multiple bids are being received on properties in this market segment and often the terms of the offer and not the price are the basis of the seller’s acceptance.

Housing permits are an indicator for home building and they increased 6.8% in July from where they were in June according to the U.S. Census bureau. Building permits are up nearly 3 % from last year’s levels and housing permits reached their highest level since August of 2008.

Single-family housing permits across the country increased 4.5% in July. This was the best increase since March of 2010. The multi-family market, which shows more volatility, saw permits increase 11.2 % last month.

Developers and buyers wishing to build their own home in Greenwich are looking for land in preferred locations under $2 million. If these properties have access to or actually have town sewers, town utilities and natural gas access, they are more valued as there are less restrictions for development. If the property is a conforming lot (i.e. 1.0 acre in 1.0-acre zone) or a non-conforming lot in a positive way (i.e. 1.25 acre in a 1.0 acre zone) they are more valued as there are less restrictions in its development.

There are some explanations for why housing starts fell slightly or by 1.1% in July when compared to June according to the U.S. Census Bureau. For example, some developers in downtown Greenwich are building their inventory of properties and waiting for home prices to increase. While holding the homes, these builders are renting them. So when the home prices increase, they will raise or level these homes and build new to sell.

On a regional basis, builder confidence increased the most in the Midwest followed by the South.

Builder confidence decreased slightly in the Northeast and West according to The National Association of Home Builders/Wells Fargo Housing Market Index, which measures sentiment of builders throughout the country. It is understandable that the builders in the Northeast and in the West are still cautious as land is more expensive in these regions.

 

Mary Ann Clark is a Realtor with Coldwell Banker at 177 West Putnam Avenue in Greenwich. Questions or comments may be e-mailed to [email protected] or reach her directly at 203-249-2244.

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