May 25, 2015

Realtors bullish as home-buying season kicks off

Candace Adams, president/CEO, Berkshire Hathaway HomeServices New England Properties

Memorial Day weekend typically is the unofficial launch of America's annual home sales and buying season, and Connecticut's residential brokers and lenders say they have plenty of reasons to expect this will be a strong one.

Borrowing rates still near historical lows, a wide inventory of houses for sale, and plenty of pent-up demand from a broad age demographic are driving factors, industry pros say.

Candace Adams, president/CEO of Wallingford's Berkshire Hathaway HomeServices New England Properties, with 1,480 brokers and 48 offices statewide, said the Connecticut housing market displayed similar positive signs early in 2013, before sputtering.

This year, late winter snow and fickle spring temperatures have gotten the sales season off to a slower than usual start, Adams said, but momentum lately has begun to build. Strong home sales ripple throughout the broader economy, impacting everything from providers of home-improvement and home-care supplies and services to furniture and appliance retailers. Refinancings free up consumer cash to buy cars or go shopping or on vacations.

"We're in a good spring sales market that will extend into late summer,'' she said. "We're not only seeing more first-timers, of course, we're also seeing people on the move-up side of the market.''

Berkshire Hathaway's recent first-quarter survey showing an increase in house and condo sales the first three months of this year vs. a year earlier generally jibes with surveys from Hartford area Realtors and Boston publisher The Warren Group.

The Greater Hartford Association of Realtors last Tuesday reported the region's house sales rose 5 percent in April with only a modest gain in median price. But it was the 16 percent climb in houses under contract but not yet closed that bodes well for May and June sales, and that has sales agents and brokers beaming, says association CEO Jeff Arakelian.

Through the first four months of 2015, pending sales are 11 percent higher — more evidence, experts say, the sales market is trending upward.

"They're ecstatic about the pickup in the marketplace,'' Arakelian said. "They've been through a lot the last few years.''

The region's best year for home sales was 2005, eclipsing 11,941 units sold, GHAR data shows. Three years later, sales slumped to 8,463 amid the near global financial meltdown and looming Great Recession.

But all of that is in the rearview mirror of the state's housing and mortgage industry. Single-family and condominium sales are up across a broad swath of Connecticut, particularly among first-time buyers, lenders and Realtors say.

However, they caution that along with young people buying their first house, "first-timer" also applies to older buyers who may have lost a house to foreclosure or been forced to sell due to a lost job. Anyone who has not owned a home in the last three years technically qualifies as a first-time buyer, industry observers say.

Chelsea Groton Bank, a mortgage lender active mostly in Norwich and New London counties, is pressing regulators for the greenlight to open a mortgage loan-production office in Glastonbury. The bank says the relatively high percentage of renters there, plus others in the region, offer a lucrative source of new homebuyers and borrowers.

Michael Sheahan, retail lending manager for Chelsea Groton, said its first-quarter volume of purchase and refinance mortgages is running ahead of the comparable period in 2014.

But compared to the first quarter of 2013, refis are down. Other lenders report a falloff in refis as homeowners eligible to exploit record-low interest rates already have.

"We are excited about the level of purchase transactions transpiring to date, including first-time homebuyer and home construction projects,'' Sheahan said.

The mortgage industry, too, is showing sensitivity to the plight of Millennials and other potential homebuyers saddled with student-loan debt. According to Sheahan, at least one private mortgage insurer is offering to medical- and dental-school graduates a mortgage insurance product that enables them to qualify for a mortgage despite their student debt. Lenders typically require private mortgage insurance on loans with less than a 20 percent downpayment.

Amid the good, this housing market has some dark spots, observers say. Berkshire Hathaway's Adams said demand is weakest for luxury houses priced $1.5 million and up.

The reason is that buyers are drawn to more affordable inventory, while potential buyers in the target move-up market remain on the sidelines either because they won't or can't sell their existing home.

Arakelian said his members have adequate inventory of houses for sale. Nothing's worse, brokers say, than not having ample supply.

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