Greater Hartford’s home sales market snagged a top-10 spot in a new national ranking of the country’s hottest housing markets in June, adding to a string of similar flattering endorsements since the pandemic began. of COVID-19.
But how hot is it?
Area real estate experts say the home buying and selling spree in Greater Hartford — and much of Connecticut — that marked the first 18 or so months of the pandemic has slowed down a bit, but just a little. little.
For months, the housing market in Greater Hartford has seen a sharp decline in the number of homes for sale as buying and selling have cut properties sharply on the market, sparking heated bidding wars.
Sellers then became more cautious about listing their homes, fearing they might not be able to find another home, contributing to the decline in homes for sale.
The number of homes for sale is now increasing, but not fast enough to even show up in the latest monthly report from the Greater Hartford Association of Realtors released this week.
Buyer demand has slowed slightly as mortgage rates have nearly doubled since January, prompting some first-time buyers to exit the market. But prices for single-family homes that are selling continue to rise — a signal that demand is still there, experts say — even as sales decline due to the lower-than-normal pipeline of new listings.
“It’s more of a slowdown than a pendulum swinging the other way,” said Alexa Kebalo Hughes, agent and former president of the association. “Think about driving fast on the freeway and saying to yourself, ‘I better slow down.’ It’s really dramatic, but we’re not going to back down. We’re still going 65 miles an hour. We are still doing very well compared to what we were doing in the past. »
For June, the median sale price of a single-family home — with half sales above, half below — rose 5% to $351,250 from $335,000 a year earlier on a 27% drop in sales over the same period, according to the Greater Hartford Association of Realtors. The association tracks home sales trends in 27 cities stretching from Suffield to Rocky Hill and Canton to Willington.
Based on June sales and the number of homes on the market, the pipeline of homes for sale in the association’s area was approximately 1.5 months, still firmly in a seller’s market. The market is said to favor neither buyers nor sellers at a 6 month supply, with buyers taking over when the supply exceeds six months.
Real estate agents report that multiple offers are still common, but the number on any given property is lower. So, for example, a house that would have attracted a dozen offers a year ago may now receive two or three.
The pandemic has dramatically reshaped the Greater Hartford — and Connecticut — home sales market. A surge in demand was sparked by house hunters seeking to flee urban areas, particularly New York City, combined with buyers already in the state, who were looking to find larger work-from-home spaces. .
At the same time, historically low interest rates have made the moves financially feasible for household budgets.
Connecticut’s housing recovery had lagged the country — and much of New England — for nearly a decade since the Great Recession of 2008 and 2009.
Now, as the Federal Reserve seeks to rein in inflation by raising interest rates, these moves are spilling over into the mortgage market, raising the cost of borrowing. Last week, the average for a 30-year fixed-rate home loan was 5.54%, down from 2.78% a year earlier, according to mortgage giant Freddie Mac.
Increases in mortgage rates, combined with the long memory of price declines in 2008 and worries about the recession, have created uncertainty in the minds of buyers and sellers. Some wonder if another housing bubble is lurking.
Jeffrey P. Cohen, Acting Director of the Center for Real Estate and Urban Economic Studies at the University of Connecticut at Storrs, said he sees the combination of Connecticut’s relative housing affordability and an overall housing shortage in many parts of the country as a plus for home sales in Connecticut.
“And so, I don’t see a big collapse in house prices in Connecticut in the near future,” said Cohen, professor of finance and economics at UConn, “You might see a slight correction or a slight adjustment. But in at least the next six to 12 months, I see the housing market staying pretty strong in Connecticut.”
Carl A. Lantz III, an agent with Coldwell Banker in West Hartford and the second generation of a family in the local real estate industry, said he believed a bubble was not in the cards.
“The bubble we had in 2008 was based on bad loans, and we certainly don’t see that now,” Lantz said. “If you ask anyone who gets a mortgage, there are a lot of hurdles to jump through. The people who buy are qualified and unless they lose their jobs, they are good.
Here are seven things to know about the home sales market this summer:
“Buyers absolutely must work with a reliable lender,” said Paula Fahy Ostop, team leader at Marshall + Ostop @ William Raveis Real Estate in West Hartford. “So as interest rates change, they know in real time what impact, if any, it has had on their purchasing power.”
Fluctuations in mortgage rates can mean buyers may need to switch to different price ranges, particularly if mortgage rates rise, Ostop said.
John M. Zubretsky, president of Weichert Realtors-The Zubretsky Group in Wethersfield, said sellers should consider their agent’s market analysis and price recommendations.
“Certainly setting it above that number is okay, but setting it at that number will encourage more showings and more offers by driving it up instead of inflating it by 10% and driving the offers down, so you’re basically trading at the decline,” Zubretsky said.
Nationally, the number of home sales that collapsed before the shutdown hit 15% in June, the highest number since the start of the pandemic, according to Kurt Potter, real estate broker at RE/MAX Right Choice Real Estate in Glastonbury. .
“These are probably the houses you should be looking for because there’s probably nothing wrong with the house itself,” Potter said. “You might ask what happened during the home inspection, but those are the opportunities.”
In heated, often emotional bidding, some potential buyers may forgo a deal in the cold light of day, Potter said.
“When you come into the market a second time as a seller, you almost never do as well as the first time around,” Potter said. “And those are opportunities for buyers when a property comes back on the market.”
Even with fewer choices and sellers still in charge, ensuring a property is presented in its best light remains one of the basics.
Rising interest rates and list prices are pinching buyers in a double whammy and buyers are getting a little pickier. This is especially true if these buyers had retired on the sidelines after losing several bids in the recent past.
“You have to have your house show ready, not like you live there,” Lantz said. “You’re selling an image, you’re not selling reality because most of us have too much bullshit on the counter, our desk is full of paperwork. There’s dog hair in the area, whatever.
That’s not what a buyer wants to see, Lantz said.
“They want to see the dream,” Lantz said. “They want to see HGTV in their minds.”
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Ostop said he has seen many sellers listing their homes on the condition that they find a new home.
“That can sometimes impact the number of offers they get, whether they’re looking for a six-month closing or later,” Ostop said. “So figure out where you’re going to go, that’s number one.”
Kebalo Hughes said knowing the competition in a specific city and even a specific neighborhood within a price bracket is key.
“We want to look specifically at what’s in that rough price range because maybe there’s no house in that price range, so maybe that would allow you to list it on the top end, or maybe there are five listings at that price. said Kebalo Hughes.
UConn’s Cohen said the market can change quickly, so he recommends hiring an agent.
“So many of these online tools like Zillow and Trulia, they don’t know the local market and in such a hot market you could focus on those resources and you could really undermine yourself,” Cohen said.
Kenneth R. Gosselin can be reached at [email protected]