Closing Comments: Feb. 20

January closings brought a pleasant, and somewhat surprising, start to 2014. The 15 closings were the highest since 2005. The median sale rose a rather nominal 3.5% ($22,000). However, the average sale rose more than 18.5% (over $125,000) above the previous year. Some of that is accountable to a single sale over $3 million. This combination of factors left the overall revenue almost 37% ahead of January 2013. Inventory is at the lowest Feb. 1 point since 2007. The average listing price is over $1.5 million, while down from the previous month it is more than double the median sold price.

As we leave 2013 in the past, it is interesting to note the comparison in trends between bordering towns and Wilton. Few would dispute that 2013 was a good year for Wilton and Fairfield County in general. It is perhaps surprising to see that Wilton had the smallest increase in closings compared to 2012 of the towns by 5%. Norwalk’s 23.4% increase was the next lowest. Meanwhile, Wilton had the largest increase in median price, 10%, with Norwalk at 7.4% second. No other town was up more than 4%. Weston was behind the other towns with a small 1.7% increase. Average sale price was even more marked. Wilton was up 16% aided by more than triple the number of sales over $2 million. Westport was up almost 9% — the increase there was due in large part to 75 new construction houses and two waterfront properties ($34 million between them) that accounted for 30% of the total single-family revenue. New Canaan trailed the other towns with a minor 1.3% increase over 2012.

Due to weather, extremely low inventory and some revisions in mortgage guidelines, 2014 is hard to predict despite the strong start. For the upper end of the market, jumbo mortgage rates are extremely attractive for now. With the new federally mandated “Ability to Repay and Qualified Mortgage” Rule, applicants cannot exceed a 43% debt ratio — it had been 50%. While some lenders will have the ability to exceed the restriction, this new rule may have a significant impact on buyers. Another factor in the mortgage equation is the commencing in December of tapering by the Federal Reserve. In February the Fed reduced its monthly purchases of T notes and MBS (mortgage backed securities) by an additional $10 billion to $65 billion. As this trend continues it is highly unlikely that mortgage rates will go lower.  We should expect to see increases.