New Haven Register (Sunday) (New Haven, CT)
Zillow: Home prices to rise in all but 1 Conn. metro area
While home prices in most major metropolitan areas in Connecticut are predicted to go up in 2023, prices in the Bridgeport metropolitan statistical area (MSA) are expected to see a significant decline, according to a new report by Zillow.
Home prices in the Bridgeport-Stamford-Norwalk metro area are expected to fall -1.9 percent in 2023, Zillow’s 2023 yearahead “Home Value Forecast” reports. That MSA encompasses all of Fairfield County. However, in the Torrington, New HavenMilford, Norwich-New London and Hartford-East Hartford metropolitan statistical areas, home prices are expected to increase.
Nationally, the metropolitan area with the largest increase in home prices is Tampa, Fla., with an increase of 3.8 percent, while the metro with the largest decline in home prices is San Francisco, Calif., at -3.6 percent. Statewide, Connecticut is expected to have a 3.73 percent increase in home prices in 2023, making Bridgeport an outlier in the Nutmeg state. A large part of the Zillow Home Value Index (ZHVI)
However, Dr. Katsiaryna S. Bardos, Associate Professor of Finance at Fairfield University’s Charles F. Dolan School of Business said that Zillow’s projection for a decline in prices is more attributed to smaller market changes rather than an actual steep decrease in home values. She said that the current mortgage rates have made it a tough market to be either a seller or a buyer in Connecticut right now, and so no one wants to do either. Given that prices drop when demand is met, Bardos said if the mortgage rates fall, inventory will open back up, which could contribute to that price decline that Zillow is projecting.
Some realtors in the Bridgeport MSA are hesitant to get behind the Zillow projections given what they have seen over the last year, with one calling the projections “meaningless.” Additionally, not every real estate and investment company is behind Zillow’s forecasts. For example, the Hong Kong-based ESR Group predicts the U.S. will see a -1.5 percent overall decline of home values in 2023, while Zillow’s data predicts a 1.2 percent increase.
The Bridgeport-Stamford-Norwalk metropolitan is a pricey market to begin with, as the No. 58 most expensive metro in the entire nation, with an average home price of $562,498. It is the only Connecticut metro in the top 100, and its home prices are 37 percent higher than the next most expensive Connecticut metro, the Torrington MSA, which encompasses all of Litchfield County, has an average home price of $354,291.
In terms of current and projected prices, Bardos said that she is not surprised by Zillow’s data given that home prices are “generally sticky downward.” Bardos also said that her own work has revealed large shifts that she feels will affect the market moving forward.
“A couple of years ago, there were conversations that ‘millennials don’t want to move to suburbs, and they want to be in ecofriendly green buildings, and they don’t want to own a car and they want to be close to transportation,’” Bardos said. “Now, none of that is true. They want [a] bigger space because they are working from home and spending more time at home in general. They are moving to suburbs and they are having kids, so we are seeing a full reversal on that trend we were expecting earlier.”
The Zillow projections come as home prices have been rising month-overmonth in Connecticut. Even in the Bridgeport MSA, home prices rose consistently until they peaked at the end of September and began to fall in October.
However, even with home prices on the decline in Connecticut’s most expensive metro, Bardos said the numbers are not yet reflecting pre-pandemic numbers and are still feeling the aftermath of the COVID housing market craziness.