What is causing the market conditions that we are seeing?

It’s always dangerous to postulate about why certain market conditions exist, but I think I’ll take a crack at it, since our market is changing. To begin with, our market has been lagging behind nearly every other market in the country. At some point, we all knew that Connecticut sales would get lifted, at least to some extent.

We also know from history that activity ramps up when interest rates rise. Although this seems counterintuitive, it occurs because people don’t believe that rates will rise until they start doing so. It’s probably really more like a hope that they will continue to go down, than the real sense that buyers are ignoring the bottom of the curve. Plus, they think, and they are correct, if the time it right, that 4 percent on the way up is the same as 4 percent on the way down.

Experts have been talking about the lack of supply for a few years elsewhere. Part of that is because of the lack of new supply, and that was more acute in Connecticut because of our poorer economy. Also, the bad market has caused sellers to hesitate before selling, and buyers now face a dearth of choices in many areas and price ranges. This is particularly true at the lowest price points. Many sellers also wait for spring before listing, and this year’s endless winter made that more likely. Buyers in our region tend to want to buy sooner than sellers want to sell.

Employment is also tightening, which is driving up wages. More people can then afford to buy a home, and those who already own homes can afford to trade up more easily. Rising wages also increase the consumer confidence index, which has long been an important predictor of real estate activity. In turn, that makes buyers believe that their wages will continue to rise. There are reasons for that to be so; one is that there are fewer undocumented aliens and immigrants filling those jobs; in addition, boomers are retiring.

The new tax rules are so complicated for many taxpayers that they may be helping also. Since it’s hard to know what effect the new provisions will have on any given individual or family, some are choosing to buy now, especially since this year’s taxes were not affected.

These factors seem to be driving the market, despite the old saws of bad weather and wrong season. Let’s hope that the standard spring market kicks in anyway, and continues throughout 2018!