For all all single family residences sold in Brattleboro in Calendar 2010 median sale price was 183,000, just $4,900 off from the median asking price of 186,900,

In 2011 the median asking price was 184.000, and median sale price was 165,000. This is a one-year drop of 9.8% in sale prices for for Brattleboro Homes, which parallels the drop for the same period in Windham County.  CHART COMPARING 2011 YEAR-END HOME PRICES WITH PREVIOUS YEAR

Market conditions for 2012

It is very difficult to project year-end totals from first quarter sales figures because typically, less than 18%  of the total sales for any given year take place during the first quarter.

In Brattleboro, only 13 single family homes sold during the first quarter of 2012, 14 in the first quarter of 2011, and only 9 during the first quarter of 2010.   Windham County gives us a better sample size. Let’s look at the first quarter figures:

The small sample size of the Brattleboro figures makes them almost random. The county figures seem to indicate an upward shift.

Together with national news about strengthening economic indicators, such as consumer confidence and lower unemployment, lead me to feel cautiously optimistic that local home prices hit bottom in 2011 and that we are now in the very early stage of a recovery.

Bill Lowery [a fictional name] at ABC Realty was doing his floor time when Mike and Mary walked in. He took them to the conference room.

 Before beginning the conversation, Bill gave them the Vermont Required Consumer Disclosure, and made sure that Mike and Mary understood that — until and unless they would enter into a buyer agency agreement — Bill would be representing the interests of sellers. Mike and Mary would not be his clients, they would be his customers.

 Having taken care of the formalities, Bill asked them what they were looking for.

 Without hesitation, Mike replied:

 “We are looking for a 3 bedrooms house with 2 baths on 5+ acres on a quiet dirt road, with a maximum price of $250,000.”

Bill entered Mike and Mary’s criteria into an MLS search, and located 7 properties within 30 minutes of Brattleboro. He scheduled showings to fit with their schedule, and over the next 5 days they were able to see all of the prospective properties.

 A couple of times, Bill came close to making a sale. First there was the cape with a nice view and the incredible kitchen. When Mike, a gourmet chef called it “the kitchen to die for,” Bill thought, “this is it!”

“But where will I put my lathe and table saw?” objected Mary.

 A couple of days later, they saw a house with a large, insulated barn which Mary loved. But Mike said that the house “has no charm.”

None of the 7 houses were quite right, so they agreed that Bill would notify them when other houses fitting their criteria came on the market. During the next month and a half, Bill showed Mike and Mary 2 newly listed homes fitting their criteria, but again, none of them were right.

The phone rings a lot in a big real estate office, buyers walk in off the street, a lot happens; and after awhile, despite the occasional phone call or email, Bill lost track of Mike and Mary.

So when Bill found out that they had started working with Sol Rivers, a Realtor® from XYZ Real Estate and had put a house under contract, he was shocked and dismayed. When it turned out to be an in-town property on less than half an acre with an asking price of $349,000, he was totally confused.

What had happened?

One day at the lumber yard, Mary had run into a friend and the discussion turned to real estate. Her friend, Tony, also a woodworker, had just bought a house and recommended calling Sol, who had represented Tony as a buyer’s agent.

Mary and Mike felt very comfortable talking with Sol, and decided to retain him as their agent. Knowing that as their agent, Sol would protect their confidential information, Mary told him to set the upper end of their search criteria at $250,000, but added:

“If the house is really nice, we could go up to $350,000.” Sol said that he would never try to push them past their comfort level, but said that, “since the computer cannot tell if a house ‘is really nice,’ wouldn’t it make sense to set the upper price criteria at $350,000?”

They agreed. Further discussion lead them to realize that — while they had thought they wanted to be in the country — when they actually had visited homes in the country and visualized living there, they were not so certain any more.

In discussing Mike and Mary’s home buying needs, Sol did not focus on real estate: Instead he talked about lifestyle. During these discussions it came out that — in addition to Mike’s wish to have a gourmet kitchen and Mary’s need for a good workshop — there were other desires about the style and design of the home which Bill, the first Realtor® , had not been aware of.

Sol knew that real estate is not the goal: Residential real estate is a means toward achieving the goal. The goal is the lifestyle and comfort that you desire. It also helped that, because Sol was their own buyer’s agent, Mike and Mary felt comfortable being candid with him.

Two years ago I represented two women who bought land in Farmington, NH, which is over two hours from Brattleboro. We had continued our agency relationship after a failed transaction in Cheshire County which I terminated after discovering a permit problem that the seller refused to cure.

Had they been working with an ordinary agent, it is almost certain that they would now be the proud owners of a lovely property with a “sleeping” cloud on the title.

It was a really nice 15 acre, mostly flat parcel with a driveway, a nice homesite, and pleasant views. But on a plot plan, which I found in the Registry of Deeds, I saw a wetlands within 25 feet of the driveway. In order for this to be a legal building lot, a variance would be needed.

In the town records, I found the variance, but there was a technical defect on it, which the Zoning Board of Adjustment (ZBA) normally would correct upon request.

On behalf of my clients, I asked the listing agent to have the seller go to the ZBA to correct the error. To our amazement, they refused. According to the listing agent, there is a stubborn old man on the ZBA whom they were afraid to approach.

She said we should let sleeping dogs lie because it was just a filed document which no one would ever notice.

The problem was, that if my client’s were to purchase this property with the title problem uncured, then if in ten years they wanted to sell it, they might find that they were stuck with an unmarketable title.

My clients’ attorney agreed, and with her help we terminated the deal and got their deposit back.

In addition to the title defect for this particular property, my clients felt that if that local town government is so dominated by the “ol’ boys” that people are afraid even to make normal requests, then perhaps it would not be such a good idea to live there.

They switched gears, and ended up looking in Farmington, where I continued to represent them. The land they purchased was charming… I remember finding wintergreen berries all over the place, bending down, picking them, and popping them into my mouth!

Despite this inherent shortcoming: A sound statistical analysis can still give us a valuable perspective on trends. The most straightforward analysis would be to compare current year-end figures with last year’s; and to compare local trends with national trends.

Statistics never fit into perfect theoretical models: In fact statisticians know that if a report of the results of 100 coin flips do not have a string of 6 or 7 head or tails in a row, then the results were probably faked. But this year, our real estate statistics have certain unexplained, anomalies too great to shrug off.

Median home price in the past year went down 3.4% nationally, down 8.78% in Windham County, and up 4.21% statewide. Generally, Windham County and the state as a whole have followed national trends, only with considerably less magnitude. When national home prices were down 30%, for example, Windham County prices tended to be down 5% – 10%.

CHART COMPARING 2011 YEAR-END HOME PRICES WITH PREVIOUS YEAR

But last year’s precipitous drop means that Windham County median home prices have now fallen by greater than 15% from their peak. That is still just under half of the national percentage drop, but that is a dramatically different picture than in years past.

Anecdotally, this past year I have been surprised at how much lower asking prices often were, and I have also seen that buyers are particularly firm, so that in many instances if a seller wants a deal, they must compromise a lot or else end up with nothing. OK, so Adam Smith’s unseen hand is at work, but why so strongly in Windham County?

Where is local residential real estate heading in 2012? I am planning to write about that with great accurancy in 2013.

On January 25, 2011, the New York Times ran a story titled: “U. S. Home Prices Slump Again, Hitting New Lows.” The same day, the headline of the lead story in an online Realtor® newsletter was: “New Home Sales Surge.”

Both stories were true. Each emphasized different facts.

For our local real estate market, “Mixed Indicators” might be an accurate description. Median price reported in MLS for single family homes sold in Windham County in 2010  was up over the previous year by 2.6%. But the number of sales were down: -2.5%

When we examine the actual numbers, the difference in Windham County residential sales figures between 2010 and 2009 may not be significant. The 2.6% rise in median price was up from $195,000 to $200,000. And the -2.5% drop in number of sales was from 522 to 509, which is a difference of only 13 sales. If someone had sneezed or scratched their nose; what was up might have been down, and down might have been up.

When we look at the figures [shown on the accompanying chart] what we really see is that, since the crash of 2008, our local residential real estate market has shown little change: either in median prices, or in number of sales. In the context of the national recession, holding steady may not be so bad.

Windham County Vermont Home Sales: 2005 – 2010

The Standard & Poor’s Case-Shiller Home Price Indices show a dramatic contrast between local and national trends. According to Case-Shiller: “Measured from June/July 2006 through November 2010, the peak-to-current decline for both the10-City Composite and 20-City Composite is -30.3%. The improvements from their April 2009 trough are +4.8% and +3.3%, respectively.”

Compared with the -30.3% national decline: From our 2007 peak median price, the total drop in Windham County has been -7%.

What is in store for local real estate in the upcoming year? I plan to address that question with 100% accuracy: That article is scheduled for publication in January, 2012.

Third quarter figures show that Brattleboro residential real estate sales have “bounced back,” from the May decline, so that we are at about the same lackluster level as this time last year.

Number of sales are up slightly, average prices down. But due to the low sample size, and to the fact that the overwhelming number of closing occur in the last quarter of any given year; slight fluctuations from this time last year, are hardly predictive of 2010 year=end figures.

The numbers speak for themselves, my interpretation is not likely any better than yours. So here is the data:

Brattleboro Third Quarter 2010-3

This year, the end of the federal home buyer tax credit was a wild card.  Buyers who put a home under contract before April 30, and closed before the end of June were eligible for up to an $8,000 benefit. 

Although the expiration of the tax credit was expected to prompt a drop in home sales, the actual numbers were dramatic.

Following the expiration deadline, the National Association of Realtors® (NAR) Pending Home Sales Index (PHSI) dropped 33.3 % for homes put under contract in May of this year compared with May of 2009. (Using seasonally adjusted figures, the drop was 30%). 

Chief economist for NAR, Lawrence Yun, believes that home buyers rushing to buy homes before the expiration, meant that the high April figure “borrowed” from what would have been May demand, and that sales figures will re-adjust. Critics say that this is industry happy talk.

Vermont real estate experienced a similar uptick followed by a plunge  Northern New England Real Estate Network (NNEREN) Multiple Listing Service (MLS) statistics record that 496 Vermont homes went under contract in May of 2009, as compared with 349 homes during May of 2010: A drop of almost 30%, similar to the national figure. 

For Windham County, 49 homes went under contract in May last year, as compared with 23 in May this year: A 53% decline. For June this year compared with June a year ago, the number fell from 43 to 37, a dip of just 14%. 

One optimistic sign is that, even with the downturn in May and June, the total number of homes going under contract in Windham County for the first half of 2010 was up — if only slightly — compared with the same period last year. From January 1 to June 30 of this year the number was 249, up from 231 last year: a 7% rise.

Although the tax credit expiration is an anomaly which makes it difficult to interpret real estate demand; other figures are unambiguous: Home sales are up, prices are up. 

During the first half of 2009 in Windham County, 194 homes closed at a median price of $185,500; for the same period this year 242 homes sold with a median price of $195,500, which is a  5% increase.

Of note is that, despite higher sale prices this year, asking prices were lower.  Last year the median asking price was $207,000, but this year the median asking price was $200,000. 

Look at those numbers… they should raise eyebrows! It shows that during the first half of 2009, homes in Windham County typically sold at $21,500 below asking price. During the same period this year, asking prices were more reasonable so that, on average, a concession of only $4,500 was sufficient to clinch a deal.

Reading the tea leaves, it appears that sellers are pricing their homes more realistically so that there are fewer deadlocks and more successful transactions.  
Steven K-Brooks

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