Nate Yovina

BUYER’S MARKET YET?                                              LINK TO INVESTOR LISTINGS

The National Association of Realtors (NAR) has stated that nationally 2005 was the best year ever in Real Estate.  The second best, they indicated, was 2006 and the third best was 2004.  This graphically demonstrates that sales rose from 2004 to a peak in 2005 and then dropped back down in 2006. 

That is very interesting information, but Real Estate is a localized market.  What affects Houston may not be felt in LA and visa versa.  Since I primarily broker Real Estate in Waterbury, Connecticut I tend to research what is happen here and base my conclusions more on local conditions rather than on national trends.  

Disclaimer:

Please bear in mind that my crystal ball is just as accurate as the next investor and that what I am about to express are my opinions and not presented as absolute fact.  Investors are strongly urged to perform their own independent research before formulating a conclusion.  If you like, you can contact me with specific questions that I will endeavor to answer with the research tools that I have at my disposal.

 Observations:

2005 was indeed an exceptional year here in Waterbury.  Of the 681 multies listed, 540 closed and 13 are still under deposit (Why so long? I do not know.).  In other words 80% of the properties listed closed the same year.  Of the remaining listings, 125 expired, were withdrawn or were cancelled.   

2006 shows a marked change, more properties hit the market, but less sold.  Of the 1050 properties listed only 311 closed and 48 are currently under deposit.  That’s a drop from an 80% ratio in 2005 to 30%.  Significant to note here is that of those 1050 properties listed 515 listings, nearly half, expired without selling.  A stark contrast to what happened in 2005.

 2007 during its first 3 month saw 251 multi family properties added to the inventory.  Adding those listed and still active from 2005 and 2006 that brings our current inventor to 293 properties.  Why aren’t they moving?  Read on.

Not Everyone Can Be a Landlord:

A lot of these properties were bought by first time investors who are now finding out that managing a property is not as easy as it may first appear.  They are ill equipped to handle the various duties necessary to have their rental run at a profit.  As a consequence they now want out.

Nobody Wants to Lose Money:

I am of the opinion that a good deal of these first time investors got in to this business expected to do a quick flip, but arrived too late and bought in at the height of the 2005 market.  So in the hope of covering their closings costs and in an effort to make a profit they are listing higher than the current market will support.

Conclusion:

When analyzing a property investment I use the Section 8 Fair Market Rents as benchmarks.  Recently, the Waterbury Housing Authority raised their FMRs for all bedroom counts.  Experience has shown that this tends to have a positive effect on the rental rates in general.  Although there are a number of overpriced properties in the market there are still many bargains to be found that yield acceptable returns. 

I hope that you found this information useful.  If your are considering an investment property any where in Connecticut kindly contact me so that we can arrange a time to discuss your particular investment requirements.

Nate Yovina

203 759-0441 cell

 LINK TO INVESTOR LISTINGS