Saturday, December 15, 2012

Closing in on Year's End

As we close in on year's end there are a number of observations that can help to see where the market may be trending in the coming months and years. Firstly, in terms of sales there has been an increase in the number of sales in all of the towns that we normally cover along the coast and inland in the Mid-Fairfield county area. Of note are Wilton and Weston that each saw sizable increases compared to 2011, with gains of 28% and 22% respectively. Fairfield also had a healthy gain of 13%. Single family home sales in Westport saw a more modest gain. In terms of unit volume we are still slightly below what might be considered average numbers, and about 25% behind the peak periods that were reached in 2004-2007. Median prices are also lagging behind those numbers. However, worthy of note is the stability of median price numbers. In Weston and Fairfield, for example the median prices year to date are at nearly the same figures as were seen at this time of year in 2011, with $750,000 being the median sales price in Weston, and $549,000 in Fairfield. Interestingly, Wilton, which has had a strong year in sales has seen its median price drop to $723,000, below that of its very similar neighbor, Weston. Wilton had been well ahead of Weston in 2011, but this number may reflect a growing number of higher end sales in Weston, which was almost devoid of any sales above $1,200,000 in 2011. Westport has seen an increase in its median sales price to $1,200,000 year to date. This is actually slightly less than it had been at midyear. We may see some closings in the final weeks of December that may change these median prices. I will be posting those numbers just after the New Year. In November there was increased activity in all of the towns with more than 50% increases in accepted offers of single family homes in both Westport and Wilton. Fairfield also had strong numbers in November. Weston lagged behind with 9 properties going to escrow compared to 7 the previous year. Sales of new construction have been particularly strong in Westport. There has also been another somewhat paradoxical trend. The number of month's supply of inventory (a figure that is arrived at through a calculation of homes that have sold in recent months compared to inventory on the market) has dropped significantly in all towns, though less so in Weston where the supply of inventory currently stands at 20.8 months. Wilton's inventory now stands at 7.1 months, with Fairfield and Westport at 9.6 months. One might expect that marketing time (the time it takes for a property to go to contract) would decrease substantially in these circumstances, but in fact the opposite has happened. Marketing time has increased significantly in all towns compared to 2011. Wilton and Weston have the longest marketing times of 173 days and 175 days respectively, followed by Westport at 157 days, and Fairfield at 137 days. This can probably be attributed in part to higher buyer expectations of the quality and pricing of listings. It is also a factor of the amount of inventory. During the last peak inventory levels in units were lower, financing was considerably easier, and as a result inventory levels in month's (to replenish existing inventory) was around 3-4 months. Higher quality inventory continues to sell relatively quickly, while non-updated homes tend to linger for much longer on the market, or do not sell unless the pricing is especially attractive.