why connecticut’s real estate market is still hot
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By Amy Coval | Published on February 17, 2023
By the time the open house at 33 Hollow Tree Ridge Road in Darien began on Saturday, Feb. 11, it had been saved over 300 times on Zillow. As the clock struck noon, cars with first-time home buyers, families with small children and curious neighbors alike began rolling up to the 1963 colonial home listed at $1.19 million in the Noroton area.
“I wonder where they are all going to park,” laughed Berkshire Hathaway listing agent Maria Reciuga.
The four-bedroom, four-bathroom home brought a mix of local lookers, Westchester County residents and New York City escapees. Neighbors looking to upsize came with teens boasting Darien “Blue Wave” sweatshirts, and couples searching for their first home drove up from Manhattan. One couple told the listing agent they were aware of how “not creative” their move from New York to Connecticut was, but here they were.
The busyness of the open house represented a bigger picture of Connecticut real estate — there is a lack of housing inventory in the state. The high interest rates have made selling undesirable, as refinancing a new home at the current rates means potentially forgoing a 2.5 or 2.9 percent rate for what is 6.6 percent as of Feb. 17.
With little to choose from on the market, a lack of supply and an increased demand has caused home prices in the Nutmeg State to increase 10 percent in the last year alone, according to Zillow. Sellers know that serious buyers will pay more to get into a market that has pushed many home-buying hopefuls out, and the prices reflect that.
That is why Zillow data shows that 48.6 percent of homes sold in Connecticut between December 2021 and Decmber 2022 went for over asking price. Buyers have little recourse when it comes to making the best offer against the person next to them. Many buyers find themselves offering over asking price for homes, telling sellers they are ready to move immediately or dropping a mortgage contingency. With so few homes to choose from, this is how the market has been operating as of late.
The speed at which the homes are going means agents like Reciuga can set deadlines for offers. At the Darien open house, she planned to honor all showings at the property through the weekend and then would set a deadline of Monday, Feb. 13 for all offers. On a normal weekend, she would have asked for all offers to be in sometime Sunday evening, but because of the Super Bowl, Monday evening would be the date.
Because of trends like this, Zillow's one-year market forecast notes that, on average, homes in the Nutmeg State go from listed to pending sale in under two weeks. Anne-Lise Brown, a real estate agent for Brown Harris Stevens, said that she used to prep her seller clients to have their homes on the market for a full year. Now, the market has completely shifted to prioritize speed and how buyers can stand out among multiple offers over asking. That being said, how much over asking people are going has calmed since the pandemic.
Brown said that although people may be stretching their budgets to find a home in this market, huge offers over asking have become fewer and farther between. During the pandemic, she said, it was normal to see multiple offers on one home, all anywhere from 10 to 15 percent over asking. Now, the numbers are not that high. For example, Brown recently had a Rowayton home sell for over asking price, but at 3.5 percent over. She feels that the pandemic-era buying trends left many buyers feeling regretful. Now, people may stretch, but they do not want to end up like their home-buying counterparts of a few years ago.
"30 percent of people who bought in the pandemic have buyers remorse that they paid too much,” Brown said. “And [current] buyers are reading that stuff. [They] have heard the stories and they don't want to find themselves in those situations."
John McGonigle, 28, was among the crowd of potential buyers at the Darien open house. He works in the finance industry in New York City but currently lives in Stamford with his wife. McGonigle said that the pair has been seriously looking for a starter home for a bit over two and a half months, but is finding current offerings hard to navigate.
In their search, McGonigle said he and his wife have seen how the lack of inventory has made homes sell fast. These market trends have spurred conversations around what the couple is willing to compromise on when it comes to buying a home.
“There have been a lot of good homes that we have seen; some of them are out of our price point,” McGonigle said. “The question is if we would like to stretch [our budget] to find exactly what we want or if we are looking for more investment-type properties that need some work but get [us] into a neighborhood that we really like."
Current buyers like John McGonigle, 28, can relate to this sentiment; they do not want to be burned by playing “the game.”
"On one hand, we want to be very prudent with where we go and how much we spend,” McGonigle said. “But on the other hand, we know if we don't move quickly, we are not going to get what we want; we are going to be left in a worse position."
“Many things that we have gotten excited about have gone over asking and it's been quite competitive," he added.
Though these intense market trends are expected to relax as interest rates lower, for now, buyers who want to move in Connecticut are forced to make the fastest and the best offers they can to be in the running for a home.
As Reciuga expected, the sellers at 33 Hollow Tree Ridge Road have accepted an offer, just five days after the open house. Reciuga said over 70 groups saw the home in the two days of open house and she received several offers by the Monday deadline — all over asking price.