Inventory Rises, Prices Moderate—

Buyers’ Market Returns To Newtown Real Estate

By Nancy K. Crevier

According to an RIS Media real estate industry report of July 31, figures released by the US Commerce Department show sales of new single-family homes were down three percent in June, reflecting a slowdown that builders have been reporting for several months. In the Northeast, sales were down 11.3 percent and the inventory of new homes for sale rose accordingly.

In Newtown, real estate offices report an increase in the inventory of both new and resale homes for sale, but hesitate to say that the market has become “soft.”

“New home sales are down 28 to 30 percent overall January to July of this year since January to July of the previous year,” said Rich DeLollis, president of the Newtown Board of Realtors. “Inventory is increasing, prices are down, but we are really back to a more traditional market. Right now there are 310 units for sale in Newtown. There were 265 a year ago, 190 two years ago, and 175 three years ago, so the inventory is creeping up.” That makes it a stable, buyers’ market, he said.

Century 21 Real Estate on South Main Street is carrying an inventory of nearly 50 percent more than a year ago, said sales manager Anne Stark on July 31. “The market has moderated within the last year,” said Ms Stark. The regional percentages reported are about in keeping with sales in Newtown, but what was experienced the past several years was more of a “fast” market, explained Ms Stark. “We’ve had a little more of a reasonable market [in recent months.] Houses are on the market longer than last year,” she admitted, but added that the length of time is dependant upon the pricing.

With buyers having more choices, sellers need to be realistic in pricing a home, she said. “In this market, trying to sell a home at a higher price doesn’t work. A year ago, if someone said that they wanted to try a little higher pricing, we would have said, ‘Go ahead and try it.’ That doesn’t work now. People need to take [the real estate agents’] advice and deal with the facts.” Buyers, she said, can be more selective right now, whether they are looking to purchase new or resale property.

In their hearts, said Ms Stark, sellers want to hear an agent tell them that their home is going to go at a high price in record time. “Most people come into the office still expecting to go on the market about ten percent higher than is recommended. Sellers still have high expectations of the worth [of their property], the time it will be on the market and the amount of exposure they will receive.”

Sellers intent on moving their property need to find ways to make their offering more attractive to the buyer, said Ms Stark. She noted some of the techniques sellers are employing. “Some sellers are offering a home warranty. A builder now might offer to do extras on new construction.” Repainting and taking care of small issues that could make a home unattractive are more important in a well-stocked market than ever.

Less is always more, when it comes to making a property attractive, said Ms Stark, particularly when it comes to clutter. Too much of a personal theme, such as the “country” look, or the “contemporary” look can deter buyers, she said.

What is effective when selling a home, said Ms Stark, is the overall curb appeal. “Landscaping attractively is always a positive,” she said. “An updated kitchen and bath will help. Granite in the kitchen is almost a standard now.” A freshly painted interior and exterior in neutral colors can give a seller the edge over other properties, particularly when two or three homes in the same neighborhood are on the market.

It is not just sellers and builders who are putting more effort into preparing their homes for sale. At Century 21, the office is offering a special incentive to customers who purchase from one of their agents in the next three months — the opportunity to be placed in a drawing for a new television. It is important, said Ms Stark, for the office to draw in customers in order to support their agents.

At Flagpole Realty, Inc on Main Street, agent Kathi Weller said that the office has expanded their advertising area in the last year. “We’ve always had a color spread on the inside page of Fairfield-Litchfield Homes magazine, but now we send that ad to Westchester Homes magazine, too, because a lot of our customers come from that region,” she said. Flagpole Realty also sees motivated sellers more willing these days to do multiple price drops of much more dramatic numbers than they would have seen two years earlier.

Market Returns To ‘Normal’

Inventory has definitely increased in the town, Ms Weller said, but it is actually more of a normal market. “We have 52 homes listed between $425,000 and $500,000,” she said, and many more in other price ranges.

A lot of inventory and creeping interest rates mean that the market is very price driven, said Ms Weller. “Prices listed are lower than last year and the average time on the market is about four months now.” That compares with an average of one to two months on the market in Newtown a year ago. Higher end homes, she said, may stay on the market now from six to nine months, or even a year. “Sellers really need to be coached to get a house ready in a competitive market,” she said. “The sellers do get a little impatient, but very competitively priced homes are getting deposits within 30 days.”

Like other real estate offices in town, Flagpole Realty also highly recommends that sellers do what they can to make their home stand out in a market that she sees as well inventoried, but not saturated. A fresh coat of paint before a home is placed on the market is a good idea, said Ms Weller. “We might recommend that a seller replace or update old mechanical equipment like air-conditioning compressors or furnaces,” she said. “Putting money into kitchens and bathrooms is a good idea, and if a hardwood floor is worn, we would suggest that it be refinished. Carpets should be cleaned, or even replaced.” Packing away personal photos and knick-knacks is a must to achieve a crisp look, and basements and garages must be straightened up and cleaned. “Buyers,” she said, “are looking for a very clean, well-maintained property. Buyers hold the trump card in this market. Now, the slightest thing can be a turn-off for the buyer.”

Activity is still good in Newtown, though, said Ms Weller. “We still have buyers: relocation buyers, in-town moves, or people moving in from nearby communities for our community amenities and our schools. They realize they can still get wonderful house value in Newtown.”

Financing a home has altered a bit this past year, too, Ms Stark and Ms Weller noted, and that affects how quickly homes move. “The people most affected are those with adjustable mortgages,” Ms Stark said. “Some programs that increased buyers’ abilities to purchase are not as viable.”

As more homes glut the market and buying slows down, bankers notice the impact, too. “The bank is definitely seeing fewer mortgages requested for new purchases in the past several months,” said Tom Lutz, vice president of mortgage banking at Newtown Savings Bank. “A year ago people were still refinancing, as the interest rates were still pretty low.” This year, a fixed mortgage rate is around 6¾ percent and a five-year adjustable is at 63/8 percent, so more people are taking the less risky fixed-rate when they are buying homes, he said. When there was a big range between mid-range adjustable mortgages and 30-year fixed mortgages, as there was last year when the gap was one to one and a half percentage points, more homebuyers were playing with the adjustable mortgages. “Now that the 30-year fixed rate is so close to the five-year adjustable, it is not a good risk,” Mr Lutz said.

It is true, said Mr Lutz, that on a fixed mortgage rate, buyers tend to qualify for less, one of the reasons realtors are seeing fewer buyers, but it does not necessarily mean that people are putting their dream homes on hold. “With good credit scores and good credit history, people can still stretch,” he said. Also, the number of high-end homes on the Newtown market — about 20 percent of the inventory in May was for homes above $900,000, according to Board of Realtors president Rich DeLollis — means that Newtown Savings Bank continues to draw in a number of customers looking for the jumbo mortgage, those mortgages over $417,000.

Overall, Ms Weller and Flagpole Realty see the real estate market in Newtown as, “Still healthy. We’re still moving homes. People are still getting equity for their homes here.”

 “Put a good value price on your home,” Mr DeLollis advises sellers. “Having the right price is the secret in this buyers’ market.”