Doug Milne’s Market Perspective

Sailing instruction in Darien

Welcome to my website!
After 30 years in real estate it’s time to enter the new age of technology and periodically share thoughts about our market and its impact on your home value. Your comments, questions and feedback are most welcome and may generate topics for future examination.

At the outset let me say how grateful I am to all of you for your trust and for your business over the years.

May 5 2009 … Dow Jones at 8512 … S&P 500 at 919 … 30 year mortgages under 5% …

What does this mean to our market?
First the obvious: Over a 50% drop in transactions year to date in Darien, New Canaan and Rowayton vs. 2008. Total transactions in 2008 were the lowest since I started in 1979. On average it takes 60% longer to sell and most sellers are seeing prices far lower then their expectations.

What about value?
There have been three periods in my career when clients have asked about the value of their homes and I’ve had to explain “sometimes there is no market for the value.” The last sale over $4,000,000 in Darien was last June.

Does this mean nothing is worth more?
Of course not; there just aren’t any transactions at that level.

When you hear prices are down an average of 25% keep in mind there are NO transactions to raise the average. In 2007 we had 23 sales over $4,000,000 and 5 sales between $7,000.000 and $13,100.000. That clearly affects the average.

A New York Times article May 1 indicates renewed activity where markets were hit the hardest and earliest. Predictably, this was the wide open spaces with rampant over building: Florida, California, Arizona, Colorado. This has created massive foreclosure activity and the opportunists are buying. Income sales in Sacramento are up 45% in the first quarter.

A 25% increase in the Dow since March has led many of us to believe the worst is behind us. As one of Larry Kudlow’s guests said last night, “we have gone from extreme pessimism to guarded optimism.”

Remember the Business Week article dated Sept. 25, 2008 that identified Darien as the #1 area likely to be hardest hit by the financial meltdown. Where are the foreclosures or fire sales?

I believe our local “housing tsunami” is like the swine flu media pandemic.

Fact:

• Interest rates are at a 40 year low
• First time home buyers get an S8000 credit
• Mortgage money with good credit and 25% down is plentiful and easily available
• Supply and affordability of entry level housing is at a generational high
• Darien, New Canaan and Rowayton are BUILT!
• What is left are parks, schools, golf courses and land trust property. We have a finite supply of housing units. Anything new is replacing something old.

What’s missing?
Consumer confidence.

Are you more confident today then you were in October? More confident than March 1?

We all felt the shell shock of the global financial meltdown. Twenty-four hour financial news makes us all wary. Did. you buy Bank of America at $3.45 or Goldman at $6?

We have averaged 351 home sales per year in Darien from 1997 thru 2007. Last year there were 178.

There is tremendous pent-up demand. The Fairfield County housing is a reflection of the financial services industry. We have heard endlessly of layoffs, bonus elimination and falling corporate profits. Wall Street is reporting first quarter profits, some non-Tarp institutions are reserving bonus money at 2007 levels.

Homes are not commodities. People buy and sell for life needs; marriage, birth, transfer, promotion, divorce, death, downsizing…. While everyone wants to buy at the bottom very few will and they won’t know it until 6 months later.

Is a 50% reduction in transactions permanent?
NO WAY.

People want to live where we do for great schools, low taxes, easy commutes and wonderful amenities. That will never change. We may not be at the bottom but I believe we can see it from here.