U.S. broke real estate records in 2021
Connecticut home prices up about 11% from 2020
Connecticut saw a shift from the norm in the 2021 residential real estate industry, as fairly steady prices morphed into a strong sellers’ market, experts said.
The change occurred amid a record year for the real estate market nationally. Median home sale prices hit highs, the overall supply of houses for sale plummeted, and mortgage rates dropped to historic lows, among other records, according to a report from real estate brokerage group Redfin.
Redfin’s report outlined 10 records the United States real estate market broke in 2021.
The market began heating up in 2020, and the trend continued last year.
“The middle to upperend is moving like it hasn’t since 2004,” said Paul Breunich, president and chief executive officer of William Pitt and Julia B. Fee Sotheby’s International Realty.
House prices in Connecticut had been relatively stagnant since the 2008 financial crisis, but they started to pick up during the pandemic, said Richard Ferrari, president and chief executive officer of Douglas Elliman’s New York and Northeast division.
Nationally, the median sale price for a singlefamily home hit $386,000 in June, up just over 24 percent year over year, according to the Redfin report.
Connecticut’s median selling price was at $350,500 for 2021, up about 11 percent from 2020, according to a yearly overview report from Berkshire Hathaway HomeServices.
“To me, the prices are going to continue to have upward pressure for the foreseeable future, and it’s all driven by the supply and demand,” Breunich said.
Demand has been heightened as people sought more space throughout the pandemic. More time at home pushed much of that demand, and many people migrated to Connecticut from New York and Boston in search of additional space.
Some of those people who moved early in the pandemic opted to rent and are now looking for a house to buy as they make Connecticut their primary residence for a longer period, experts said.
Low interest rates also drove up demand as people saw they could pay less long-term in mortgage payments, experts said, although studies and advocates have indicated there’s a nationwide lack of affordable housing and many families struggle to make an initial down payment on a house.
Interest rates hit historical lows in 2021, according to the Redfin report.
The average 30-year fixed mortgage rate fell to the lowest of all time during the week of Jan. 7, 2021 at 2.65 percent.
The Federal Reserve has announced its plans to raise rates in 2022.
Although interest rates are still low compared to historic levels, continued hikes may affect demand, which could cause prices to drop, Connecticut experts said.
“We also know that what goes along with interest rate increases is prices level off,” said Candace Adams, president and chief executive officer of Berkshire Hathaway for New England, New York and the Hudson Valley.
Months of heightened demand has absorbed much of the existing inventory. The state is down to about a month and a half of supply, Adams said.
The months of supply is a term used in real estate to describe the amount of time it would take for the existing number of houses on the market to sell in the current sales environment. Connecticut typically has about six months supply.
Several industry experts have said inventory will be the most important metric to watch in the first part of 2022.
“There was a constant reduction of inventory based on the excessive demand, more in the middle and upper end of the market,” Breunich said. “It affected all marketplaces, but it was more middle to upper and it was just a steady decline in inventory to where we are now.”