Thoughts on the Case-Schiller Index and the Upcoming Spring Market

	EffectiveDate	Index Level	1 MTH	3 MTH	12 MTH
Index Levels
S&P CoreLogic Case-Shiller New York Home Price NSA Index	Sep-2018	199.65	0.23 %	0.78 %	2.62 %

As lower Fairfield County is directly impacted by real estate trends in New York City, I keep an eye on these figures both for looking ahead to get a sense of where we may be heading, and to have a look back at the past to have a sense of perspective. In August 2008, (just after the stock market crisis)  for example, the New York index level was at 161.94 compared to 199.65 today. To get some additional perspective, the levels we are seeing today are quite similar to the July 2005 level of 199.86.  Case-Schiller saw its highest levels in New York in June 2006, at 215.25. After the crisis of 2008 the levels went through a roller coaster of dips and rises through April 2012 when the nadir of 157.95 was reached.  Since that time we have continued to see periodic small swings in the market with a general move upwards. The Fed raised interest rates in September and most of my colleagues in the mortgage business expect them to rise further. What is the likely impact going to be on our real estate market? 30 Year Fixed mortgages (for those with good credit) are still below 5%.  When I entered the real estate business rates were above 8% and we were thrilled when they went down to 7%. Mortgage rates are still historically low, as is unemployment, and inflation. We live in a world where we are bombarded each day with information. So much so, that it can be difficult to see the larger picture. There are some analysts who feel that the real estate market will further correct itself.  Some home sales in our area have been motivated  by sellers who are of that opinion. As mortgage rates are likely to rise slightly, that will make make home prices somewhat more expensive, so I wouldn't be surprised to see a slight adjustment if that happens in the spring.  On the other hand, pricing is also linked with inventory.  If inventory is low and demand is high we should see stable pricing. Inventory levels in the high end of our markets remains high, and pricing for homes over $1.5 million in some markets and higher in others, has been directly impacted by that. Each market is different, but in general, homes in excellent condition under $900,000 have been selling well. Inventory levels are still above the levels that we saw in the period of 2003-2006, though, including on the lower end of the market. In our area, towns that are not directly on the New Haven train line have seen their prices more negatively impacted during the past three or so years.  Rising taxes in those towns have also impacted selling prices. Our values still appear to be relatively reasonable when compared with the cost of New York apartments.  Our great schools, diverse housing stock, great amenities, and beautiful countryside should soon be attracting those millennials reaching their 30s who will soon be having children, and will be reconsidering the costs of living in the city and private schools versus commuting from the suburbs.

Mid Fairfield Update Through October, 2018

It should be interesting to see how the results of tomorrow's elections will affect the real estate market.   Results in the area have been mixed. Volume has been down slightly over the past 12 months, but it appears that prices have held steady, and listing inventory has been tightening. In Westport,  sales were down less than 1% through October,  with 354 single family sales compared to 359 through the same time period in 2017, while the median price has increased  16.67% to $1,370,000.  Weston had the same number of sales, 138, in the first 10  months of 2017 and 2018, but the median price decreased  by 22% to $661,000.  Wilton saw the reverse effect of its neighbor to the east, with 179 sales in 2018 compared to 193 in 2017, but the median price increasing by 26.56% to $965,000.  The latter number is somewhat skewed by one sale of $8,000,000-the highest sales price ever recorded in Wilton. Fairfield, the most affordable of the towns, also saw a slight decrease in sales volume (5%) from 672 single family sales to 641, but the median sales price increased 13.88% to  $640,000. For additional data points please see the links below: Westport: WestportMarketreportback3monthNov.1,2018.pdf Weston: Westonmarketactivityreportback3monthNov.1,2018.pdf Wilton: WiltonMarketActivityNovember1,2018.pdf Fairfield: FairfieldMarketareareportback3monthsNov.1,2018.pdf

Mid Year Sluggishness

Early indications of sales volume increases in Westport were not realized as the season reached the midway mark.  Total closed single family home sales were down 2%, from a total of 205 in 2017 through June 30, to 201 in 2018.  The 2017 median sales price through June stood at $1,436,000.  It is currently at $1,236,000. The decrease is likely being influenced by a greater number of sales under $1 million, 68 this year compared to 60 at the same time last year. There are currently 96 single family homes listed under $1 million.  My suspicion is that the limits imposed by the new tax laws in terms of allowable mortgage deductions and real estate taxes is playing a role in the lower median sales values.

The sales break down for some popular areas of town were as follows for 2018:

18 sales at Compo Beach compared to 25 in 2017.  Paradoxically, the median sales price increased from $1,737,000 in 2017 to $2,200,000 in 2018.

28 Sales in Greens Farms compared to 17 in 2017, a healthy increase, though the median price decreased from $1,867,500 to $1,512,500 through June.

Lastly, Saugatuck Shores sales are down from 11 in 2017 to 8 in 2018. The median sales price has been $1,025,000 compared to $925,000 in 2017, though these figures are not representative because summer sales are common in this part of town, and these numbers are likely to change significantly by year's end.