Factors Explaining Decreased Availability of Homes for Sale in CT
A scarcity of available homes and rising interest rates are presenting a complex situation in the real estate market of Connecticut. Local experts in the field suggest that the limited housing inventory and high prices make it challenging for sellers to list their properties, contributing to the current dilemma.
Recent data from RE/MAX and the state’s multiple listing service (MLS) reveal a significant drop in the number of homes available for sale in Connecticut compared to previous years. Additionally, the high interest rates discourage many homeowners from entering the market.
The state currently has approximately 3,500 condos and single-family houses listed for sale, which translates to roughly two months’ worth of inventory. In the years leading up to the pandemic, the MLS recorded over 15,000 homes for sale.
The data also indicates an increase in median sale prices, accompanied by decreased days on the market compared to the previous year. In July, the median home price in the Hartford area reached around $345,000, marking an improvement from $321,250 in July of the prior year, based on RE/MAX reports.
According to MJ Agostini, a real estate agent with RE/MAX Right Choice in Berlin, the limited housing supply drives up prices, as the demand surpasses the available options.
Furthermore, the recent announcement by the Federal Reserve to increase its key interest rates to 5.4%, the highest level in over two decades, adds to the reluctance of homeowners to sell. Many individuals fear losing their lower interest rates, making it financially unwise to consider moving, further explained Agostini.
The current housing inventory equates to approximately two months’ worth of supply, indicating that if no new listings entered the market, everything would sell within that timeframe. Before the pandemic, about six months of inventory would typically be available, according to David Gallitto, president of the Connecticut Association of Realtors and a real estate agent at Huntsman, Meade and Partners Compass Realty Corporation.
Nationally, the housing inventory across 50 surveyed metro areas showed a nearly 21% decrease in July compared to the same period last year, as reported by RE/MAX.
Tammy Felenstein, a real estate agent with William Raveis and the former president of the state Realtors Association, describes the current situation as a “feeding frenzy,” drawing attention to the intense competition among buyers.
In summary, the Connecticut real estate market grapples with a shortage of available homes and high interest rates, resulting in soaring prices and limited options for both buyers and sellers.
After the housing market crash of 2008, there was a decrease in the construction of homes across various parts of the country. The situation worsened in Connecticut as the cost of building starter homes escalated, especially due to supply chain disruptions caused by the pandemic.
Connecticut witnessed an influx of people relocating from New York or Boston, and many also purchased second homes in the state, seeking an escape from city life during the pandemic. The shortage of available homes has affected all segments of the state’s market, as stated by Gallitto.
Needless to say, entering the homebuying market has become incredibly challenging for individuals. Properties are being snatched up within an average of 10 days after being listed, as soon as one property is available, another one is taken off the market once it’s under contract.
Multiple offers on houses have become commonplace, with many making high bids. For instance, Agostini recently received 36 offers for a listing priced at $399,000.
Felenstein advised that if you have a suitable place to relocate, now is an opportune time to sell your property. In a normal market, more houses would typically be listed for sale in early fall as people conclude their summer vacations. However, it’s evident that the current situation is far from normal.