CT real estate strengthened this year, but improvements may now be slowing due to the property damage and flooding delivered by Hurricane Sandy, the largest storm ever to visit the Connecticut shoreline. The “Perfect Storm” came across the East Coast in October 1991 and was made into a movie but Sandy was much larger, flooding areas from Massachusetts to New Jersey.
Monster storm Sandy left 40 dead, 8.2 million without power and transportation shut down in six major cities. This time the hype was justified. What was billed as the biggest storm to ever hit the Atlantic coast delivered a crippling blow to the north east. The entire region and nearly half the states in the country were affected in some way.
Winds clobbered homes and businesses all along the Connecticut coast in the midst of blackouts and flooding. CT real estate agents retrieved their home for sale signs to keep the wind from turning them into missiles while lenders put sales transactions on hold until damage could be settled. As a result, the number of new home sales and applications for loans have deteriorated as lenders froze mortgages on battered real estate on CT’s shoreline until they’re assessed for damages. The magnitude of the damage is still not fully known.
Banks contacted property managers in advance of the storm requesting they check to see that their foreclosures in CT were secured. Freddie Mac suspended foreclosure proceedings for up to a year on all mortgages located in areas affected by the storm. For some damaged homes Freddie may also defer payments for up to 12 months, waive late fees and not report late payments to credit bureaus.
More than 3,000 CT foreclosures could be affected by the storm in New London, Middlesex, New Haven and Fairfield counties. In the long term, the storm could worsen conditions of foreclosures in CT where the occupants don’t have funds to repair the properties and banks don’t have the legal ability to maintain it. The CT foreclosure process takes the longest to sell a home and thousands of foreclosed homes were in Sandy’s path. This will add time to the average 661 days it now takes to sell a foreclosed home in CT, particularly where damage occurred to abandoned properties.
Commercial real estate for sale will likely also be negatively impacted. While commercial properties will likely be covered by adequate insurance, some could require considerable outlays and delays in going back on the market in cases of structural damage.
The Connecticut housing market had been recovering this year, with gains since July 2010, and some had projected a 1.9 percent increase for next year, but that may not happen now.
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In years past when real estate prices always went up and you were virtually guaranteed to build equity in a home, there was rarely a question if buying a home was the right thing to do. After all, 30 years later you would have no mortgage payment, be free from rent increases, and enjoy wealth from the fruits of your labor.
With the turmoil in real estate in recent years however, many people are re-thinking that idea. Not everyone is the ideal candidate for home ownership as statistics show today; foreclosures, short sales, upside down mortgages and more. So start with a few questions to determine if you are a good candidate to buy a home in Stonington today.
Do you have a down payment? Many banks today require 20% down to qualify for the best interest rates. There are other options, such as VA and FHA loans, but not everyone qualifies for those. With the median price of a single family home in CT now approximately $250,000 a $50,000 down payment could be required for a conventional loan.
Are you stable in your life? Stability in your life, relationship and your job can protect you from unforeseeable misfortune. You need a reliable income before committing to a long term mortgage and if you’re prone to relocate frequently renting might be a better short term option. While many foreclosures today resulted from overextending by borrowers and creditors alike, we all know someone that lost their job in recent years. With closing costs and other fees associated with buying a home, you want to spend some time in that home before looking for the next one.
Do you have a lot of debt? One measurement to determine your interest rate is your debt to income ratio. If your expenses consume more than 50% of your monthly income, you should consider paying your debt down before buying a home.
How’s your credit? Bad credit will either disqualify you from getting a loan entirely or limit you to only high interest, high fee mortgage options. High interest rates equate to high mortgage payments so you might be better served to improve your credit score before applying for a loan.
Is the rental market attractive? In some markets it may be smarter to rent than to buy. Many sellers in CT today are waiting for the value of homes to increase and renting the home to buy time. While rents have been increasing in many markets, if you can rent for half the price of a mortgage it might be best to postpone the purchase of a home.
Are home prices declining where you want to buy? Home values continue to fall in Connecticut albeit at a slower rate than recent years. The third quarter of 2011 brought prices only 2.2% lower, less than half the 4.7% decline in quarter two. While the deterioration seems to be slowing you do not want to watch your equity disappear if the market continues to fall. Every market is different and some may actually have turned around, but do your homework before you make the plunge.
For more information on what might be right for you as well as specifics on the the Stonington real estate market, please contact us.
National security and domestic programs face $1.2 trillion in spending cuts if a deficit reduction program is not agreed upon by year end.
It's not just the 7 Stonington defense contractors that are worried about the looming federal budget cuts scheduled to take effect on January 2nd under the name of sequestration. The construction industry will also feel the downturn according to a report issued by the American Institute of Architects and that could spill over to the Stonington real estate market.
Sequestration is the term associated with the inability of Congress to find spending cuts in the course of raising the debt ceiling last year. If Congress fails to agree on other reductions in spending, sequestration calls for automatic across-the-board cuts. Almost half the savings will apply to defense spending cuts and as much as $2 billion is directed at the construction industry. It's estimated that sequestration could result in more than 66,000 jobs construction jobs eliminated nationally and that will undoubtedly affect Stonington real estate.
Defense spending makes up almost 20% of all government spending and New London County is the home to 324 defense contractors that were awarded almost $33 billion over the past 10 years. A loss of revenue to that magnitude could have untold effects on the local economy. Government employees, veterans, military bases and millions of others will be directly or indirectly by such unprecedented cuts. Sequestration added to the declining number of contracts issued due to war funding winding down could spell disaster for the Stonington area. The Coast Guard station in New lond and the Coast Guard Academy account for thousands of jobs.
Pentagon spending is the gasoline in the New London's economic engine and funding of the Navy will be cut by nearly $12 billion. Groton's Naval Submarine Base employs approximately 7,500 military personnel accompanied by more than 12,000 family members with median household incomes of more than $78,000 will feel the cuts directly. The base narrowly averted the last round of base closings and a new round is not a question of if, but when currently anticipated in 2014 or 2015.
As Stonington Realtors we're looking forward to Congress working together and a robust year for local defense contracts, construction and the continued improvement in the Stonington real estate market.
This marks the fourth consecutive month in which more than 2,000 homes have sold in Connecticut, according to the Warren Group, a real estate and financial information company based in Boston. All eight counties in CT showed double-digit increases, except New Haven with sales rising less thajust under 2%.
While the real estate market nationally and homes for sale in CT were slow last year, a 12% year-to-date increase over last year is good news to Stonington realtors. The median sale price decreased 4% to $240,000 this year from $250,000 last year. However while lower prices may not be good news to those that have already sold their homes this year, all past housing recoveries began with buyers lured in by lower prices.
The latest data shows Connecticut as one of only six states showing price declines on a year-over-year basis. Overall home prices in CT declined 24% from the peak in 2006, but all signs now point to price declines easing and the housing market's future looks promising.
Sales of condominiums in CT are up 6% over last year, but the year-to-date median selling price dropped 8.6% from a median of $175,000 last year to $160,000 in 2012.
Erica and Kyle lived with their 3 year old son in a 2 bedroom rented condo in New Britain, CT. While craving a yard for their young son to play in, the onsite fitness center, heated pool and gourmet kitchen were just a few of the amenities they enjoyed. When joined by an ailing in-law to move in to live with them they quickly realized that additional living space would be necessary.
They began house-hunting but grew concerned with the closing costs, down payment and other expenses associated with purchasing a single-family home. So they decided to do something that's becoming much more common given the condition of the Connecticut real estate market. Instead of buying a house they compromised with a rent to own agreement, which required only the typical deposits associated with renting. Prices of homes in CT have been flat at best so more owners are choosing to rent a house they can't easily sell.
For those not convinced the recession is over and faced the largest investment they'll ever make in a time of economic uncertainty, renting to own offers flexibility to home buyers, a very appealing option. This couple, like others feel good about not having to pay out huge sums of money to confirm that the timing, the home, the location and investment is the best fit for their growing family. They needed more space, but appreciate the time they have taking this baby step approach to be 100% sure this is the right decision.
While the privileged lifestyle of the heated pool and fitness center have been traded out for shoveling snow and mowing the lawn, knowing that the hard work might pay off in equity is very comforting. The couple is reassured by the fact that they can elect not to buy, yet participate in home ownership and appreciation of the property if the Connecticut real estate market turns around in the meantime.
Stonington foreclosures remain relatively low compared to other towns in New London county and foreclosures in Connecticut, up 139% from last year. This August 1,317 Connecticut properties entered the foreclosure process while nationally nearly 1.5 million homes either in the process of foreclosure or already possessed by lenders.
It's been 8 months since the federal government compromised with the 5 largest lenders in a $25 billion settlement criminal practices like “robo-signing.” Carrying out any plan that involves the government moves slowly and this is no exception. In a nutshell the agreement is to negotiate with homeowners for loan modification while simultaneously processing forclosure proceedings. The result is a backlog that now takes lenders an average of 656 days to take back a home in CT.
Nationally the picture looks better than CT. Fewer homes were put in foreclosure this month since foreclosures hit a 17-year high in August of 2011. The stockpile of unprocessed foreclosures in states like CT that require the court to sign off continue to be higher than those not needing judicial approval. So increases of foreclosures are limited to 18 states, including CT, New York and Florida where courts slow the process down as foreclosures in 32 other states continue to decline.
In total more than 99,000 homes entered foreclosure nationwide this August, up 1% from July, but down 13% from a year ago. Connecticut's foreclosures are down only 8% from last year, while nationally the decrease is over 13%.
Stonington Homes For Sale
Homes for sale in Stonington are picking up due to low mortgage rates and home prices have increased in the second quarter of this year. The housing market in Stonington is recovering at a modest but constant pace with fixed mortgage rates at 3.27% for 30 years, 15 at 2.75% and adjustable 5-year is at 2.125%, for home buyers with good credit.
New home single family sales are also on the rise, welcome news to builders all across Connecticut. According to HUD and the U.S. Census Bureau, sales of newly built homes rose 3.6% to a seasonally adjusted rate of 372,000 units. "Sales of new homes have returned to the pace they set last May, says Barry Rutenberg, National Association of Home Builders Chairman, and that was the fastest rate we've seen in more than 2 years."
Consumers are becoming more confident in the Stonington housing market as they look to take advantage of today's very favorable interest rates and favorable real estate prices. Affordability at record lows remains a hot topic in today's market, but will they remain so? As prices continue to increase some homes will become market rate properties, out of the reach of moderate income households.
Pending home sales, an index that reflects contracts, but not closings continues above last years levels also, according to the National Association of REALTORS®. NAR is predicting the home prices will increase 10 percent over the next 2 years with sales projected to rise 8.5% in 2012 and 7.5% next year.
Like a good marriage, buying the right home may last a lifetime. But how can you be confident in buying a home, the single largest investment you'll ever make?
With so many homes for sale in Stonington it may seem difficult to select just one, especially the right one, particularly if you are a first time home buyer. Well deciding which home for sale is the best one for your needs might be settled on using some of the same ways you decided on who the right person was for you to get married to!
Some people never marry and sometimes it's because they're afraid to make the wrong decision. They don't want to experience buyer's remorse when deciding on a lifelong commitment and you don't want to make a mistake when it comes to buying a home. But you also don't want to get be so worried that you do nothing. Buyer's remorse can lead to not taking meaningful steps to purchase a home. You look at homes online, walk through with your realtor, and maybe even put in some offers. In the end however, you just don't close on the property. A lack of confidence can lead to a cycle of just looking, but never owning; clearly not what a serious home buyer wants.
So how do you know that the home you want to buy will meet your needs? Must haves, needs and wants when buying a home are 3 very different things and making a list of each is a good place to start. A shoreline home with an ocean view might be a want, and 2 bathrooms could be a need, but 3 bedrooms would be considered a must have depending on the number of people that will live in your new home.
The cost of the ocean view and two full baths might be beyond your realistic budget and you may have to revise the want, which could put you in a position where you're starting all over again. It may have been more efficient to have considered this at the beginning and you could consider a 3 bedroom, 1 1/2 bath located on a nearby lake.
A good place to start your list of needs is with the apartment or home that you're living in now. What do you like best about it? Are there things that you just can't tolerate? What is and what is not working where you live now is your starting blueprint for the home you are searching for. If you spent time and money on repairs or remodeling your current home and you've had enough, consider a home in better shape this time so you don't have to start all over again.
It's important that you discuss what is important to all parties before you start searching for your next home. Don't wait until you're inside a home for sale to begin the discussion as to what is important to you. Your time is better spent talking about your needs as you develop your list and reviewing it as time goes on. You want to look at properties that most closely satisfy everyone's desires to make the most of your time.
You'll need to plan ahead, especially when moving a family or if you're moving in with someone else. There will be lots of meetings and showings in finding the right home and if one persons schedule doesn't allow them to be there, the home buying process will be stalled. Plan, schedule and commit to insure that your home buying experience will be a success.
Call your Realty3 Stonington Realtor at 860-415-8199 for all your real estate needs.
Stonington real estate agents are optimistic about market conditions in Stonington, Groton, New London, Ledyard and Mystic CT.
A survey by the National Association of Realtors revealed that while CT realtors have some concerns about government regulations, 74% expect business to be much better 5 years from now and only 4% expect to be doing less business in 5 years.
The survey also suggests that real estate agents are focusing on providing superior service and adapting to change as evidenced by an overwhelming acceptance of new digital technologies. More than 93% of respondents have a personal Facebook profile, 75% use Facebook business pages and more than 60% are on Twitter.
Of the survey participants
Only 25% of participating agents grossed over $100,000 last year, 30% between $50 and $100K and 46% said they grossed less than $50,000.
What do you think; are real estate agents fairly compensated?
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