Tolland Home Sales Lag, But Beat Average Statewide Sellers

The year 2010 was certainly no joyride for homeowners across the country. But what exactly is the state of our own real estate market, right here in Tolland, CT?

HOW THE REAL ESTATE MARKET IN TOLLAND FARED IN 2010

A total of 111 homes sold in Tolland in 2010. As of January 2011, there are 106 homes listed for sale in town. What this means for homeowners is that it would take almost a full year to sell all the homes currently on market—assuming no more homes go on market all year.

If this trend continues, we can expect 9 percent of the homes available in Tolland to sell in any given month. This runs right in line with the statewide monthly absorption rate of 9 percent.

Interestingly enough, 109 homes in town expired last year. A home “expires”  when it is listed, then simply fails to sell at all and eventually goes back off market. Almost as many homes expired as were sold in Tolland. Again, this runs right along the statewide expired listing average of 51 percent.

The most common reason homes expire? Improper pricing. Despite the widely broadcasted declines in home values, home sellers continue to live in denial of falling values and price their homes too high for our current market, setting themselves up for failure:

• Homes that were listed and expired in Tolland were listed at an average price of $361,464.
• Homes that sold in Tolland were listed at an average of $302,107 and sold at $293,054, going under contract within 66 days of going on market and at 97 percent of asking price.

The fact that the current average listing price of homes on market is $351,646 tells me that there is still a huge disconnect between what sellers want for their homes and what buyers are actually willing to pay. This may very well forecast further lagging home sales and a lack of recovery in town until buyer and seller expectations reach a more common ground.

Tolland did however fare a little better overall in sales than the average seller statewide. The average sold price in Tolland was $293,054, where statewide it was $260,218. The time on market was also significantly lower in Tolland at 66 days compared 91 days statewide.

THE ROLE OF FORECLOSURES AND SHORT SALES

Foreclosures and short sales have played a large role in our real estate market in the most recent years. These types of sales are commonly referred to as “distress sales”.

A foreclosure is when the homeowner has lost legal possession of their property to their lender (usually for non-payment). Once a bank gains possession, the property gets sold to the public by the lender. These homes are sometimes called “REO” (real estate owned), or simply “bank-owned”.

A short sale is the term used to describe the process by which a home is sold for less than is owed on the mortgage. Short sales are generally attempted as an alternative to foreclosure. Short sales allow the homeowner to sell the home for a lesser price than necessary to satisfy the mortgage and the lender an easier and cheaper exit than a foreclosure.

Short sales minimize losses for both parties, but both the home seller and the lender holding the mortgage must agree to "sell short".  This is accomplished through a documentation and negotiation process and is generally facilitated by a real estate agent or attorney experienced in the short sale process. 

Distress sales in Tolland, CT made up 14 percent of all home sales in 2010, running below the state-wide rate of 22 percent.

Four Tolland homes sold as short sales in 2010, with an average of 53 days on market and a sold price of $317,500. This is unusual as short sales generally sell for slightly less than market value. However in this case, the statistics may be misleading due to the low number of short sales in town overall contributing to the limited data available.

Bank-owned homes accounted for nine home sales in Tolland last year, going under contract in just 46 days with an average selling price of $261,211. Sold prices much less than market value are very common in bank owned homes as foreclosed homes often suffer from neglect and are generally in need of repairs.

Out of the 106 homes currently on market in Tolland, 14 percent are distress sales. Thirteen short sales listed at an average of $236,981, and four bank-owned homes listed at an average of $166,175.

You’ll notice these prices are significantly less than the average listing price of all homes in town, which is currently $351,646. This is expected, as distressed homes often sell faster and for less than other homes, due to their more attractive pricing.

What does 2011 have in store for our local real estate market? While my money is on more of the same, only time will tell for sure.

Minna Reid is a full-time, full-service, Connecticut REALTOR®,  specializing in short sales, serving central and eastern CT including, but not limited to, Ellington, Mansfield, Somers, Tolland, and Vernon.