Wealthier homebuyers still in the housing market
As homebuyers beat the bushes in Connecticut, no towns have seen a more concentrated group of opportunistic sellers than New Canaan and Darien in the first six months of 2023 — with many of those wealthier property owners able to buy new homes, undeterred by higher interest rates that are prompting others to sit tight to create an ongoing squeeze in the Connecticut real estate markets.
Connecticut saw unusually low numbers of houses and condominiums put up for sale in the first half of the year, helping constrict sales by 26 percent from a year earlier to about 21,950 units, according to preliminary data from Berkshire
Hathaway HomeServices New England Properties.
But homes are selling at just as quick a pace as a year ago — at four weeks on average statewide and less than two weeks in select towns — and prices remain elevated as wealthier buyers cherrypick the best properties, and bidding skirmishes continue to break out on those deemed to carry the best values across price brackets.
The boom market sparked by the COVID-19 pandemic prompted many Connecticut homeowners to sell at prices they could not have gotten a year earlier, but higher interest rates have kept some sitting tight in the next wave of potential sellers, despite ample numbers of people looking to buy.
“In the middle of last June, there was a line in the sand that happened in activity — and it was when the Fed started their aggressive raising of rates,” said Amy Barsanti, a broker in the Darien office of William Pitt Sotheby’s International Realty. “It was like ‘boom’ — wind out of the sails, and we had a very sluggish back half of the year. So when you start comparing the back half of ‘23 to the back half of ‘22, we’re going to start to look much more positive.”
Barsanti added that while many buyers have made the adjustment and are factoring in higher interest rates into their house purchase budget, potential sellers have been slower to follow suit, particularly in instances where they are paying down mortgages on their existing homes at far lower rates than what they would get for a mortgage on a new home for themselves.
“They’re saying, ‘I am not selling this house because ... whatever higher pricing I think I could get on selling this house is totally eroded on what I think I can now purchase,’ ” Barsanti said. “That is hugely contributing to why inventory is at these record lows.”
New York City buyers
In the first week of July, mortgage rates hit their highest mark of the year as tracked by Freddie Mac, with the average rate for a 30-year loan at 6.8 percent, up from 5.3 percent a year earlier. Rates peaked last November just above 7 percent, their highest level since 2000.
“The impact of interest rates always have a lag,” said Daniel Pinto, president of JPMorgan Chase, speaking last month at a Bernstein investment conference. “Credit conditions are tightening but loan demand is also coming down — the biggest part of that is mortgages.”
In its first-half report William Pitt Sotheby’s notes that New York City buyers continue to prop up prices in the wider region
as young families look to move to the suburbs, in contrast to much of the rest of the United States where prices have begun to ebb as tracked by the National Association of Realtors.
Connecticut’s median home sold for $350,000 in the first half of 2023, up $15,000 from a year earlier for a 4.5 percent increase. Nearly 300 properties sold for that figure, from a fixer-upper antique on Main Street in Stonington with seven bedrooms, eight fireplaces and a view of the upper reach of the Mystic River; to a cabin escape along Mudge Pond in Sharon near the northwestern juncture of the New York border.
Cromwell had the biggest increase in median prices among Connecticut towns and cities with at least 50 transactions in the first half, with the median home there selling for just under $300,000, a third higher from the median property in the first half of 2022.
If ranked according to new listings as a percentage of all housing units, Fairfield County remains the most active real estate market in Connecticut. In New Canaan, just over 400 homes were listed in the first half of the year, equal to 5.3 percent of the total housing stock as calculated by cross-indexing
the Berkshire Hathaway listings data with U.S. Census Bureau estimates of housing units. Darien saw 4.7 percent of its housing stock put on the block, for about 340 houses and condos in all.
Weston was the only other Connecticut town to crack the 3 percent mark for new listings as a percentage of all housing units. Of the 20 towns with the highest percentages of homes for sale, half were located in Fairfield County and three more in close proximity in Southbury, Beacon Falls and Roxbury.
Stamford continues to lead Connecticut for total home sales in 2023, with more than 530 transactions according to Berkshire Hathaway. But sales were down a third from a year earlier, a sharper drop than in the next six busiest real estate markets in Waterbury, Norwalk, Bridgeport, Hamden, Greenwich, Fairfield and West Hartford.
Multiple bidders
Brokers continue to say that sellers are having success set their prices according to what comparable properties are getting — with many drawing in multiple bidders to jack up the final figure.
Madison has seen the
biggest “auction premiums” — the amount buyers are paying that is higher than the asking price — to date this year, with Berkshire Hathaway calculating an 8 percent premium on average over their most recent asking prices.
But even there, some of those properties absorbed price reductions along the way to closings. As one example, a Soundview Avenue waterfront house with a private “beach” — laid out at yard level above a seawall on Long Island Sound — sold on the final day of June for $1.7 million, a 15 percent discount from its original asking price in April.
Still, Madison was among the dozen Connecticut towns where sales have increased from a year earlier, whether for primary residences or vacation homes. Barsanti said that she would not be surprised in more Connecticut towns end up in the plus side of the ledger in the back half of this year.
“What we benefit from is just sheer volume of numbers in the exodus from New York — just the people who are ready to form households saying, ‘I’m ready to go to suburban life,’ ” Barsanti said. “Those numbers are still so high that we get bailed out.”