Have Connecticut Home Prices Finally Stablized?
Tom Burland www.Ct-Shore-Homes.com
The latest Standard & Poors/Case-Shiller index was just released (8/25) indicating that home prices for the 2Q2009 have shown improvement for the first time in several quarters (3 years.)
Traditionally the Media has relied on Median Home Prices to represent rise and fall of values, however the flaw in this approach is that this only represents the Median Price of the inventory that sold - so if a lot of smaller house sell the median reflects a lower median price.
Why is the Case-Shiller index a better indicator - because it uses repeat sales of the same house over a period of time and then appropriately adjusts, using a weighting factor, to smooth out large spikes in value between sales that could be from additions/renovations, and to account for larger periods of time between sales.
Connecticut (Fairfied/New Haven Counties) is included in the original 10 Metro Areas (cities) under New York. The Quarter ending June'09 showed a modest 0.4% increase over the 1Q09 and a -11.9% decline in values from the previous year - which is also an improvement.
On a national bases there was an approximate 4% value increase Q2 over Q1, but this also represents an improvement on a greater negative impact - the national 20 City (Metro Area) is still showing a -15.4 decline in value vs a year ago. Keep in mind these are trends, and real estate is local - but we have seen the national trends have significant impacts on local markets. While specific measurements are going to be different in our own market it is primarily going to be degrees of difference, not alternate trends.
Why is a -11.9% and -15.4% decline cause for celebration? Because it shows a reversal in trends.
For Buyers - for those waiting for the bottom before buying, many economists are using this report coupled with recent over all economic improvements to say this may signal the bottom has been hit on home prices. This doesn't mean that all houses on the market are priced right, but if you look at recent sales you will have a better feel for what the true values are.
For Sellers - Before you run off and tell your Realtor to increase your listing price, you need to really understand what this means. Many sellers look to the houses on the market that have not yet sold to feel comfortable with where they are priced - in the end they are making sure there house is priced similarly to the other houses on the market that have failed to sell. This report should indicate to sellers that a percentage of buyers are going to re-enter the active search mode and make a decision. They are going to make that decision based on their best perceived value benchmarking listings against recent sales (within last 3 months).
With our current inventories not everything will sell, there is just too much on the market. What will sell are those homes that represent the best value from a Product, Presentation and most importantly Price Perspective. So this next 8 weeks are more important than ever to price your home right - because chances are a higher number of homes will go under contract in the next few months than would have if the media was not reporting good news.
The actual report can be downloaded at http://www2.standardandpoors.com/spf/pdf/index/CSHomePrice_Release_082562.pdf
More information on the Case-Shiller Methodology http://www2.standardandpoors.com/portal/site/sp/en/us/page.topic/indices_csmahp/2,3,4,0,0,0,0,0,0,2,1,0,0,0,0,0.html