Closing Comments: January 2016
The increase in December sales may well be the reason Wilton saw a drop in closings for January. However, the $265,000 increase (over 29%) in median sales price over this time last year can only be seen as encouraging. The $295,425 increase of the average price (better than 32%) was also exceptional. Inventory rose off the traditional low point on Jan. 1. The average list price rising is indicative of more higher-priced properties going on the market partially due to better weather. Only Feb. 1, 2012, has seen more inventory.
In the last 20 years this is one of only four Januarys that have seen single-digit sales. And only in 2009, coming off the crash of 2008, did we see fewer sales than in 2016. Until we see more of the inventory for the spring market, the discussion of absorption rate is not terribly meaningful. Some of the patterns of 2015 are helpful indicators. For the year, single-family homes sold for 96% of the last list price. However, many houses had price reductions often from much higher levels and over lengthy periods of time. Approximately 30% of the sales in 2015 were between $700,000 and $899,999 — part of the reason that we continue to see both average and median in the $800,000s. Buyers will need to perceive better value to bring the number of sales up and support higher average prices.
With jumbo mortgages still at or below 4%, along with the Fed’s promises that increases will be very gradual, we can’t ignore that the population, perhaps led by millennials, seems to be putting off home purchase. Some of this is geopolitical fears, some of it prudence and some lifestyle. While it is unlikely economic pressures will disappear immediately, there is very good value in much of the inventory and hopefully the number of buyers will pick up.