The Greater Hartford home sale market snagged a top-10 spot in a new national ranking of hottest housing markets in the country in June, adding to a string of similar flattering mentions since the start of the COVID-19 pandemic.
But how hot is hot?
Area real estate experts say the frenzy of buying and selling houses in Greater Hartford — and through much of Connecticut — that marked the first 18 months or so of the pandemic has slowed a bit, but just a bit.
For months, the housing market in Greater Hartford has seen a steep decline in the number of houses for sale as buying and selling cut deeply into properties on the market, prompting heated bidding wars.
Sellers then turned more cautious about listing their houses, worried they might not be able to find another home, further contributing to declines in homes for sale.
The number of houses for sale is now increasing, though 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 slackened slightly as mortgage rates nearly doubled since January, pushing some first-time buyers out of the market. But prices for single-family-houses that do sell continue to rise — signaling demand is still there, experts say — even though sales are easing because of the below-normal pipeline of new listings.
“It’s more of a slowdown than the pendulum swinging the other way,” Alexa Kebalo Hughes, an agent and the association’s past president, said. “Think about driving fast on the highway and thinking, ‘I better slow down.’ It feels really dramatic, but we’re not going in reverse. We’re still going 65 miles an hour. We’re still doing very well compared to where we’ve been in the past.”
For June, the median sale price of single-family house — with half the sales above, half below — rose 5% to $351,250 from $335,000 a year earlier on a 27% decline in sales over the same period, according the Greater Hartford Association of Realtors. The association tracks home sale trends in 27 towns stretching from Suffield to Rocky Hill and Canton to Willington.
Based on June sales and the number of houses on the market, the pipeline of homes for sale in the area the association covers was about 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 getting the upper hand when supply exceeds six months.
Real estate agents report that multiple offers are still common, but the number on any given property are fewer. So, for example, a house that may have drawn a dozen offers a year ago, may now get two or three.
Pandemic reshapes market
The pandemic dramatically reshaped the Greater Hartford — and Connecticut — home sale 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 sought to find bigger work-at-home spaces.
At the same time, historically low interest rates 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 curb inflation by raising interest rates, those moves are rippling into the mortgage market, pushing up the cost to borrow. As of last week, the average for a 30-year, fixed-rate home loan was 5.54%, compared with 2.78% a year earlier, according to mortgage giant Freddie Mac.
Mortgage rate increases coupled with the long memory of price drops in 2008 and concerns about recession have thrown uncertainty into the minds of buyers and sellers. Some wonder if another housing bubble lurks.
Jeffrey P. Cohen, interim director of the Center for Real Estate and Urban Economic Studies at the University of Connecticut in Storrs, said he sees the combination of relative housing affordability in Connecticut and and an overall housing shortage across many regions of the country as an upside to home sales in Connecticut.
“And so, I don’t see a big crash in housing prices in Connecticut in the near future,” Cohen, a professor of finance and economics at UConn, said, “You might see a slight correction or slight adjustment. But in at least the next six to 12 months, I see the housing market remaining fairly strong in Connecticut.”
Carl A. Lantz III, an agent at Coldwell Banker in West Hartford and the second generation of a family in the local real estate business, said he believes a bubble is not in the cards.
“The bubble that we had in 2008 was based on bad lending, and we are definitely not seeing that now,” Lantz said. “If you ask anyone who is getting a mortgage, there are a lot of hoops to jump through. People who are buying are qualified and unless they lose their jobs, they are good.”
Here are seven things to know about this summer’s home sale market:
1. Buyers should be in constant contact with their lenders
“Buyers absolutely have to be working with a reliable lender,” said Paula Fahy Ostop, a 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, that has had on their buying power.”
Swings in mortgage rates may mean that buyers may have to move to different price ranges, particularly if mortgage rates move upward, Ostop said.
2. Sellers need a pricing strategy
John M. Zubretsky, president of Weichert Realtors-The Zubretsky Group in Wethersfield, said sellers should consider the analysis of the market by their agent and pricing recommendations.
“Certainly, pricing it above that number is OK, but pricing it at that number will encourage more showings and multiple offers bidding it up as opposed to inflating it by 10% and have offers come in lower so you are basically negotiating down,” Zubretsky said.
3. Buyers shouldn’t necessarily shun homes listed for a second time
Nationally, the number of home sales that fell apart prior to closing came in at 15% in June, the highest number since the beginning of the pandemic, according to Kurt Potter, a real estate broker at RE/MAX Right Choice Real Estate in Glastonbury.
“Those are probably the homes you should go after because there probably isn’t anything wrong with the home itself,” Potter said. “You would ask, what happened at the home inspection, but those are the opportunities.”
In heated, often emotional, competitive bidding, some potential buyers may back out of a deal in the cold light of day, Potter said.
“When you come on the market a second time as a seller, you almost never do as well as the first time,” Potter said. “And those are opportunities for buyers when a property comes back on the market.”
4. Clean the dog hair out of the corner
Even with fewer choices and sellers still very much in the driver’s seat, making sure a property is shown in the best light remains one of the basics.
Rising interest rates and list prices are pinching buyers in a double whammy and buyers are turning a bit more picky. That is especially true if those buyers had retreated to the sidelines after losing out on multiple bids in the recent past.
“You have to have your house show ready, not like you live in it,” Lantz said. “You’re selling an image, you’re not selling reality because most of us have too much crap on the counter, our desk gets piled up with paperwork. There’s dog hair in the corner, 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 mind.”
5. Sellers need to know where they are going next before they list
Ostop said she has seen many sellers list their homes contingent on them finding a new home.
“That can sometimes impact the number of offers they receive, if they are looking for a six month, or later closing,” Ostop said. “So figure out where you are going to go, that is number one.”
6. Sellers can watch bigger trends, but real estate comes down to being local
Kebalo Hughes said it is key to know the competition in a specific town and even a specific neighborhood within a price range.
“We want to look specifically at what is happening in that rough price range because maybe there are zero houses in that price range, so maybe that would allow you to list it at the higher end, or maybe there are five listings at that price point,” Kebalo Hughes said.
7. Consider hiring an agent
UConn’s Cohen said the market can change rapidly 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 be focusing on those resources and you could be really undercutting yourself,” Cohen said.
Kenneth R. Gosselin can be reached at firstname.lastname@example.org.