Rent, house prices up in CT since last year, new reports show
Rent and house prices are still up in Connecticut compared to last year, although the real estate market may be slowing down from earlier in the year, new data shows.
Average rent prices for two-bedrooms in Connecticut were $2,349 in October, up about 17 percent from October of last year. For one bedrooms, the prices increased about 13 percent to $1,862, according to a new report from Apartment Guide.
And the House Price Index showed a nearly 18 percent increase in house prices in Connecticut for the July, August and September quarter. The jump was the 22nd-highest increase in the nation.
The measure is derived from an average of repeat sales and refinances.
But that’s down from the increase Connecticut saw in the second quarter, which ranked it among just 13 states that experienced a more than 20 percent rise.
That likely stems from the timing of the pandemic and early lows in real estate activity during the onset of the virus’ spread, said David Sacco, a practitioner in residence in the University of New Haven’s finance program.
“If you think about where we were in the second quarter of 2020, the lockdowns and pandemic basically hit us at the end of the first quarter,” Sacco said. “… We really weren’t seeing some of the economic activity that led to home prices going up. My point is we were still at a relatively low base number.”
The Fairfield County area — Bridgeport, Stamford and Norwalk metro areas — saw just over a 19 percent increase, according to the federal report.
Idaho had the highest increase in the country at almost 36 percent. The national average was 18.5 percent and the lowest increase was 8 percent in Washington, D.C., according to the report.
New England’s regional growth ranked fourth out of nine in the nation at just over a 19 percent increase.
“House price appreciation reached its highest historical level in the quarterly series,” William Doerner, supervisory economist in FHFA’s Division of Research and Statistics, said in a news release statement. “Compared to a year ago, annual gains have increased in every state and metro area. Real estate prices have risen exceptionally fast, but market momentum peaked in July as month-over month gains have moderated.”
Meanwhile, rent prices have been steadily rising for months, and will likely continue to go up. There’s heightened demand for rental housing in many places as people who sold their houses hoping to earn some money look for places to rent and some are waiting for the hot housing market to cool before buying, said Brian Carberry, a managing editor at Apartment Guide.
“The recipe is there for prices to kind of stay up at least in the short term,” Carberry said. “… There’s a lot of demand for people looking for apartments.”
The report showed that rents had risen in every state for one-bedrooms. All states except South Dakota also saw rent rises for two-bedrooms.
The coasts tend to have higher rents than other parts of the country, Carberry said.
It’s not clear how long heightened prices for housing will persist. Some economists have estimated that rent prices will keep going up into 2023, and while the real estate market has cooled off from its peaks, the prices are still higher than pre-pandemic.
But even with the uncertainty, there are early indicators that the market may begin to level off, experts said.
For apartments, construction is beginning again in many geographies, which could increase the housing stock. Recent supply chain issues may delay work in some cases, Carberry said.
“The question is whether they’re going to be luxury units or if they’re going to be more affordable housing units,” he said.
And in addition to the natural ebb that comes after a frenzy such as the one the real estate market saw at the start of 2021, recent inflation could cause the Federal Reserve Systems to raise interest rates, or utilize other measures that tend to slow the economy, Sacco said.
“You would expect it to naturally happen,” he said of a market slow-down. “I do think there's going to still be continued strength in suburban markets, not so much because people are afraid of the pandemic. But because of some of the structural changes to society.”
Those changes, he said, are the continued practice of work from home, which allows people to work from anywhere they want rather than keeping them tied to a particular city.