home prices are finally falling. here's what to expect with the CT real estate market
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By Alexander Soule | Published on September 29, 2022
With the New York City region continuing to hold its own on real estate prices, Connecticut home owners are testing the autumn market with new listings — though some with existing listings are cutting their prices as buyers cope with higher mortgage rates and the overall impact of inflation.
An American Enterprise Institute Housing Center index that tracks real estate prices monthly dropped for the first time since the start of the pandemic, with sale prices nationally dropping 1.5 percent between July and August. Freddie Mac reported an average 6.3 percent mortgage rate last week, up 3.4 percent over the past 12 months after a succession of interest rate hikes by the Federal Reserve.
Connecticut misses the cut of the largest 60 metropolitan areas that are included in the AEI Housing Center index. Prices held steady in the New York City region in August and inched up in a dozen other population centers nationally, but dropped in 35 others including metro Boston and Providence, R.I.
"Prices probably peaked in July," said Ed Pinto, director of the AEI Housing Center, in a recorded interview this month with AppraisalBuzz. "If you're looking for a house in the high category and interest rates go up and you can no longer afford that house, you have a couple of choices. ... You could not buy another house, or you could go down in price."
Buyers have fared best this spring and summer in Seattle and San Jose, Calif., according to the AEI Housing Center study. For much of the pandemic, Silicon Valley had been one of the hottest markets in the nation as tech companies extended remote working allowances for many people.
Home sellers in the Charlotte, N.C. region had been on the longest winning streak in the nation. Prices increased monthly between December 2019 and this past July, finally hitting the wall in August with a 0.6 percent decline.
Pricing is an elusive science to gauge, with factors including location, size, condition and setting for any one property; the direction of mortgage rates and financial markets; and seasonal fluctuations in buyer demand, particularly after the start of the school year when the holidays loom larger on the calendar.
For now, the Connecticut market appears close to the even balance that AEI's study suggests the larger New York City region was at in August, given the large numbers of municipalities where bids are coming in above listing prices on average.
Just over 2,800 Connecticut homes listed for sale on the Zillow website in the past 30 days remain on the market, with Zillow tracking roughly 4,900 sales transactions over that stretch.
In Stamford, where sales boomed during the COVID-19 pandemic, buyers continued to land new homes in August with bids 2 percent above the listed prices for houses they were considering, according to William Pitt Sotheby's International Realty which has its main office in Stamford.
But not all sellers are getting bids above asking prices. Of just over 25 Stamford houses and condos that had yet to be sold after being listed for sale in July or August, only a half dozen had stuck to their original listed prices — with the rest reducing their prices by nearly 5 percent in the aggregate.
And a house on Stamford's Blackberry Lane sold this week for $1.15 million, $30,000 below its last purchase price in August 2021 for a 3 percent discount.