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Optimistic About New Canaan Real Estate

A statistical snapshot of the New Canaan Real Estate market and our outlook for 2012 including breakouts for single family homes, land sales, condominiums and rentals.

"People will generally accept facts as truth only if the facts agree with what they already believe." Andy Rooney

This is the statistical snapshot of the New Canaan Real Estate market and our outlook for 2012.  

YEAR END REPORT 2011  

The real estate market has stabilized. We are getting more of the distressed properties sold and out of the bank system. It was predicted that "shadow inventory" (foreclosed or ready for foreclosure homes) would flood the market. Well, it never happened. Foreclosure filings in Connecticut dropped sharply in 2011 compared with the previous year, plunging 48 percent, according to RealtyTrac. 

New Canaan saw year over year increases in every category, a trend suggesting a growing optimism on the part of sellers for 2012 market conditions. Here are some important numbers for the past year:

2011 Single Family Homes:

  • Median Price: $1.60 million as compared to $1.46 million in 2010, up 9.4 percent
  • Average Price: $1.90 million as compared to $1.69 million in 2010, up 11.9 percent
  • Homes Sold: 214 homes sold in 2011 as compared to 195 a year ago, up 9.7 percent
  • Absorption Rate: 10.7 months of inventory compared to 15.38, down 30.4 percent
  • Active Inventory: 207 houses for sale compared to 236 a year ago, down 12 percent

2011 Condominiums:

  • Median Price: $657,000 as compared to $595,000 in 2010, up 12 percent
  • Average Price: $711,000 as compared to $656,000 in 2010, up 8.2 percent
  • Condos Sold: 62 condos sold in 2011 as compared to 39 a year ago, up 59 percent
  • Absorption Rate: 7.88 months of inventory compared to 21.94, down 64 percent

2011 Land Sales:

Perhaps the most dramatic increase has come in the market for land sales, again indicating an increased optimism on the part of builders and their customers.

The median sale price for the three lots sold in 2010 was $1,025,000.  For 2011 the median price fell 31 percent to $700,000 and builders did respond, buying 19 lots this past year, an increase of 533 percent in volume.  New construction activity has picked up as a result; builders are buying land at a cost that makes sense to build, primarily mid-range homes.

2011 Rentals: 

The rental market has improved. The absorption rate for rentals has dropped from 7.4 months to 4.1 months. That is how long the current inventory of properties would last at the current rate of sales. The number of rentals closed in 2011 increased 16.5 percent to 120 from 103. And, while the average rental price has increased 40 percent to $3,550, the median rental price has increased 162 percent to $4,200. The rental market tells us a good deal about the broader market. The reduction in the rental inventory and higher rental rates is due to the following factors:

  1. Owners losing their homes due to foreclosure and short sales can only rent.
  2. Tough lender qualification requirements, causing fewer buyers and more renters.
  3. Many have lost their equity in real estate and stock market = no down payment to purchase.
  4. Many have damaged their credit and will not qualify to purchase.
  5. Many have lost their job and are not able to get a loan.

The rental market is staring to produce much better cash flow and investors are actively purchasing more rental real estate.

2011 Interest Rates:

Interest rates broke their historical lows of 2004-2005.

The rates on average are about .5 to .75 percent below last year's rates. A sample of rates as of first week of November 2011 with zero points:

  • Loans under $417K=3.87 percent (conforming loans)
  • Loans between $417K to $625K=4 percent (this is the new Jumbo conforming)
  • Loans above $625K=4.5 percent (this is Jumbo loans)

This year was a much better year than last year and we expect it to continue to get even better next year. The reason? We're experiencing an improving economy, lower interest rates and an upcoming presidential election. Historically, presidential elections bring about increased real estate activity, and coupled with low interest rates and increasing consumer confidence, it will help the New Canaan market to continue to grow in the coming year.

If you'd like to get updates to these statistics quarterly, or would like your own home evaluated, send us an email or call.

John Engel and Susan Engel @ Brotherhood & Higley, 203-966-3507 

This post is contributed by a community member. The views expressed in this blog are those of the author and do not necessarily reflect those of Patch Media Corporation. Everyone is welcome to submit a post to Patch. If you'd like to post a blog, go here to get started.

J Bauer February 07, 2012 at 07:13 PM
Mr. Engel, I hope that you are right in your optimism. I, unfortunately, do not share your optimism. With such a high percentage of New Canaan residents working in the financial services industry, I think that the best we can hope for is a flat real estate market, but even that is an optimistic possibility in the near term. Financial services is a disaster industry right now with declining employment and dramatically lower levels of cash compensation. With the federal government constantly attacking the entire industry and new regulations taking effect, there is little chance for a material improvement this year and maybe not for several years. I am ever optimistic about the town of New Canaan and the people that live here, but as for the real estate market here... instead of having as a title "Optimistic about new canaan real estate" I may have chosen something more along the lines of "new canaan real estate: fasten your seat belts and get read for a bumpy ride"
John Engel February 08, 2012 at 01:53 PM
You are correct. My title for this article was, "How Did New Canaan Real Estate Perform? Our Year End Review" I stand by my prediction that the New Canaan market will continue to grow in this election year: more transactions at a higher average price. To your point it is interesting to note that while average home price was up we had more sales in every category above $1.8 million, and fewer sales this year in the categories between $1.3 and $1.8 million. The former is a result of compression (higher priced homes being reduced and then selling) and the latter perhaps reflective of what you said, "declining employment and dramatically lower levels of cash compensation" for buyers of homes below $2 million. Thanks for your thoughtful reply. See also http://www.johnengel.com
Ty Webb February 09, 2012 at 08:43 PM
Thanks zira! I mean Teri!
Paul Devlin February 09, 2012 at 10:15 PM
Comment deleted. Inappropriate.
PioneerTraining September 14, 2012 at 07:16 AM
A very nice illustrations of the real estate movement. The figures show how the market has been progressing. You must get familiar with these terms. http://www.pioneertraining.org/

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