CTDirt

The Big Bailout. The Effect On Property Values?

As a homeowner in CT you may wonder what the proposed bail out really means regarding your property's value. Well, the details are still being worked out but here are some thoughts specifically related to real estate.

In real estate, a free market means that value is based on a true supply and demand theory - your home is only worth as much as someone would be willing to pay for it. Values go up and down according to many things. One thing that recently contributed to the spike in housing prices over the past few years was the availability of credit or the ability for people to borrow money from a bank to make a purchase. Many people were even able to get "sub prime" loans (at a higher interest rate or at an adjustable rate) meaning they didn't qualify for the standard loans since they were considered a greater risk (lower income or bad credit as the main reasons). However, once these loans were written they were then packaged and sold to such entities as Fannie Mae and Freddie Mac and some were held privately. Well, not surprisingly, many people have had a hard time paying their loans and have defaulted. Any entity holding these mortgages found themselves in trouble since they weren't receiving the payments they expected.

Any entity holding mortgages, especially the sub prime ones, knew there was a risk in doing so. The people applying for the mortgages knew they were stretching themselves (there has been little evidence that people "didn't know" what they were getting themselves into or were "scammed"). However, these institutions were willing to chance it since they were charging these people higher interest and it was a gamble they thought worth taking.

Well, the gamble didn't pay off. Those that received sub prime mortgages are defaulting in high numbers. The banks aren't receiving the payments they expected, are foreclosing on homes, and receiving much less than the value they lent out money for. The other effect is they don't have much money to lend out now so fewer people, even those well qualified, aren't able to borrow money.

Essentially, Wall Street wants American taxpayers to pay off their gambling debts. They took a risk, it didn't work out, and now they are claiming there will be wide spread effects if they don't get any financial relief. They may be right. However, the market always corrects itself. If the government didn't get involved some companies that took big risks would fail and some people who borrowed too much would lose their homes. However, Wall Street would learn to take more responsible risks and some people would learn the hard way how to live within their means. It may sound harsh, but this wouldn't be a bad thing.

So, what does the government bail out of 700 Billion dollars mean? Well, in the short term it may stop your property from losing value since there will be more credit available and more people can borrow money (therefore increasing demand). However, what will be the financial impact on taxpayers? It will be staggering. Also, there are no guarantees it will do anything for the long term except teach Wall Street they can take massive risks and if things don't work out the government will step in and pay off their bad debt. As for your home's value, the bail out isn't guaranteed to do anything except make people pay higher taxes and have less money to use to purchase property (therefore decreasing demand). Therefore, as you know, if the demand is gone, the values will drop. The bail out is a great victory for Wall Street but this may actually be a huge detriment to the average home owning American.

P.S. There is already talk about bailing out credit card companies and people having trouble pay their car loans...

East Windsor Connecticut Real Estate Update

How are things in East Windsor? Okay - there are currently 73 houses for sale by East Windsor Realtors and 17 are under deposit. That means there is a 4.5 month absorption rate in general (meaning if no new homes come on the market, it will theoretically take 4.5 months to clear out the current homes for sale). That is a bit longer than average.

In August 2008 there were 7 new homes listed for sale with an average of $256,139 list price. In 2007 in August there were 15 properties listed for sale with an average $260,753 list price. Also, in August 2007 there were 16 houses sold for an average of $288,230 and in August 2008 there were 9 homes sold for an average of $295,011.

What does this mean? Well you need to look at more than one month to get a full idea of what what the market is doing. Nevertheless, the real estate market in East Windsor is stronger than most of Connecticut. Also, there were fewer homes listed in August 2008 than August 2007 so hopefully as the supply diminishes, the value will increase.

Suffield Connecticut Homes Today

It is good to take a little look at our area towns. As a Suffield Realtor, I have seen the good times and the bad times. How do things look now? Lets take a look at last month.

There are currently 133 houses for sale in Suffield. In August 2007 there were 20 new listings by Realtors for an average $415,969 listing price. In August 2008 there were 27 new listings with $383,229 as the average listing price. In August 2007, 13 homes were sold by Realtors for $424,126 on average. In August 2008, 12 properties closed for $366,502 average.

Obviously, homes are selling for less and there are more homes on the market in Suffield. How do you get your property to stand out from the others so you can maximize the value you get? You need to make sure your property is in perfect condition and shows very well. Your Realtor should be able to guide you so you don't overspend but can focus on items that will really help your sell home faster and for more money.

New Construction Is Down! Great News!

The US Department of Housing and Urban Development reported housing starts dropped 33.1% compared to August 2007. The stock market reacted negatively but this is great news for the real estate market. As a Realtor I have seen new developments pop up in Windsor, South Windsor, East Windsor, Windsor Locks, Suffield, Granby, and East Granby. However, I kept wondering where all the people were going to come from. Well, as I learned in Economics 101, this is simply an issue of supply and demand. By lowering the housing starts, that means there is less competition for your house and therefore your increasing your value. This is great news, it means we are close to the bottom and things will improve.

Looking At South Windsor CT Houses

What's going with South Windsor real estate? Well, currently there are 97 houses listed by Realtors. There are 27 that are under deposit or under show status (basically just like under deposit). The current average price is $386,000. In August 2008 there were 24 new properties listed and 15 that closed for $320,540 on average. In August 2007, Realtors listed 33 new houses in South Windsor and sold 23 for an average of $294,139.

So... In South Windsor in 2008 there were 8 less properties sold for an average of $26,401 less or about 8% in value. Remember, real estate is a long term investment and just like the stock market it's all in the timing. Regardless, if you are selling in South Windsor make sure you get an innovative Realtor who can help make your property stand out. If you are buying in South Windsor, you will have many choices.

Four Town Fair - Somers, CT

My grandmother told me when she used to go to The Big E when she was little it was basically an agricultural event where people would show off their prize animals, prize vegetables, and people could check out the newest tractor equipment. I always thought that sounded nice since The Big E is interesting and fun but is more about food, entertainment, and "amazing mops". In comparison, the Four Town Fair held in Somers, Connecticut (the other towns that participate include Enfield, Ellington, and East Windsor) feels like a throwback to real fair days.

There are some merchants here but they do not dominate the scene. There are barns full of every popular farm animal to be judged and shown. There is another building full of prize winning veggies, pies, and other crafts (the prize winning sunflower was nearly 15 feet tall!).

 

It is truly fun for the whole family. From good food to good drink (yes, there is a beer garden) to carnival rides (including the classic ferris wheel) to animal shows to good time wholesome fun like the frog jumping contest, you will feel like you got The Big E experience without the crowds and commercialization.

The Four Towns Fair was held this year on September 11, 12, 13, and 14th. If you want to know the dates for next year, be sure to check their web site at www.fourtownfair.com. 

Oh, and grandma, we were also able to check out the new tractors.  

House For Sale In Granby CT

Here is a new property in Granby, Connecticut listed by Prudential Connecticut Realty. It has 4 bedrooms, 2 1/2 bathrooms, and over 3,000 square feet. Some of the nicer features include a first floor master bedroom, 3 car garage, and a large renovated kitchen (although the house is only 15 years old). The main picture probably should have been taken closer with a wide angle lens instead of having all those trees in the way. Here is cropped photo I did so you can at least see it a little better.

If you want to see this property or need a Realtor in the Granby, CT area, just let me know. You can also find out more at BradHastings.com.

Power Lines And Home Values In Suffield And East Granby

Connecticut Light and Power (CL&P) have decided they need to run high power electrical lines through Suffield and East Granby. CL&P has stated they don't care if the lines go overhead or underground although if they go underground it will be much more expensive and cost consumers more. Suffield has already recommended the lines go underground and East Granby will meet soon to make their decision.

Although there is much debate about the health hazards of high voltage overhead power lines there is no doubt they dramatically affect property values. No doubt, CL&P will work to convince the public they risks are minimal and going overhead will cost less, but residents of these towns should fight no waiver in making sure they go underground. As a Realtor in Suffield and East Granby, and having sold many homes here and across Connecticut, the most important factor in real estate prices is "perception". If potential buyers perceive the area to be nicer they will pay more. If potential buyers perceive power lines are a danger they will pay less. Reality has little to do with home values.

Bottom line - make sure those power lines go underground or it will cost you much more in your home's value than paying a little extra in your electric bill.

Big Al Anderson And Bus13 - September 13th

 Windsor is in the process of celebrating it's 375th anniversary. Yes, Windsor was the first town in Connecticut even though Wethersfield has attempted several times to prove they are but have come up short. Anyway, Big Al Anderson is originally from Windsor (my mom actually used to be his babysitter and I used to sell him hot dogs when I worked at Bart's when I was in high school when he was still with NRBQ). On Saturday there will be a free concert on the green and Bus13 is opening things up at 4:00 (I hope they get to jam a little with Big Al). Afterwards, there will fireworks down at Loomis. It should be a great time! You can get more info here.

It's Apple Time

  Today was the first day with that little bit of chill in the air and that means its nearly apple picking time. We always used to wait until October to find out that the kinds we liked best were already done. We like to visit Thralls off Kennedy Road in Windsor even though they are only open on the weekends. The Thralls, more well known for their large tobacco fields, and probably the largest owners of real estate in Windsor way back, have been doing the apples for a few years as well. It's not a huge orchard with all sorts of activities which make can make for a crowded weekend. This is much more relaxing and laid back. The hay rides and mazes are fun but sometimes it is nice to go where it is less hectic.