Connecticut home sales heat up as New Yorkers flee
New Yorkers fleeing the city and cooped-up workers in cramped home offices are helping fuel a hot home sale market in Connecticut, with properties selling at a dizzying pace — the likes of which haven't been seen in the state for more than 15 years.
Despite the global coronavirus pandemic, experts say the Connecticut real estate market is not likely to cool through the end of the year and well into 2021, even as the state slogs through shutdowns, quarantine, hundreds of thousands of lost jobs and wages taking a hit.
"You can literally use the sentence, 'It was the best of times, the worst of times,'" Donald L. Klepper-Smith, an economist at DataCore Partners, said. "Traditionally, housing does not do well in a recession. To this point in time, one of the silver linings of this recession has been better than expected activity in housing, in respect to both sales and median pricing."
Buyers who can afford to jump into the market are finding one vastly changed from even year ago. Multiple offers are common in all price ranges, driven by the low number of properties for sale. And those bidding wars — often pushing up sale prices — are no longer just for properties that are in the best condition, experts say.
Klepper-Smith said this housing upswing is one of the most dynamic in his 40 years studying home sales and is playing out across the country. In Connecticut, it is particularly eye-catching because the state's housing market is still digging out from a sale price downturn of the last recession more than a decade ago.
In the first seven months of this year, the median home sale price in Connecticut increased 8 percent compared to the same period in 2019, to $288,000 from $267.000, SmartMLS said. Such an increase has not been seen for years, real estate agents said.
In Hartford County, sales of single-family houses were flat through the first seven months of this year compared with last. But the median sale price rose more than 5% to $245,000 from $232,500 a year ago.
"A lot of people said, 'If we are going to do this, we have to jump now,'" Joanne Breen, president of Connecticut Realtors, an industry group, said. "And they were ready to do that in January, and then we got hit with COVID, so it stalled us. But it didn't stop the market, it just stalled it."
Work life changing
The demand, experts say, is being driven in part by the changing nature of work life as offices in a broad array of industries have moved to remote footings — making the relatively affordability and open spaces of central Connecticut highly attractive.
In Connecticut, early signs in 2020 that momentum behind home sales was building came to an abrupt halt in March as COVID-19 gripped Connecticut. By late spring, though, residential sales got a jumpstart with the flight from urban New York.
At first, buyers from New York concentrated on Fairfield and Litchfield counties and along the Connecticut shoreline, with the commute to New York City in mind. Now, homebuyers from New York are now expanding their searches from the state's Gold Coast up the Connecticut River into central Connecticut.
"I just had a listing in East Haddam that was sold to someone from Brooklyn," Curt B. Clemens Sr., owner of Century 21 Clemens & Sons in Rocky Hill, said. "So, we are seeing that."
Agents also report scattered purchases in West Hartford, Avon and Glastonbury by buyers from New York, possible because of the pandemic-propelled move to more time spent working at home rather than in the office.
In a guide for New York urbanities ready to flee city life, The New York Times included a flattering mention of West Hartford as the sole Connecticut suburb on a list of the tri-state suburbs that should be under consideration. The story noted West Hartford's affordable home purchase market that is 'less than two hours from the George Washington Bridge' with a host of public amenities and a walkable center near Hartford's cultural attractions.
"To see The New York Times was touting West Hartford — that says to me the quality of life in Connecticut is still good relative to the rest of the Northeast," Klepper-Smith said.
The outmigration from New York is converging with competing buyers already living in Connecticut who are hunting for bigger homes with work spaces that could become more permanent after the pandemic.
Over the last several months, companies found productivity didn't suffer as much as was feared with their employees working from home. In turn, those workers started to consider they might be working from home more often — even after the pandemic passes — and might need a bigger house to do that comfortably.
Other buyers had been sitting on the sidelines for months, even years. Some millennials were ready to make the jump from apartment to house. Others who were already homeowners felt more confident they could get their asking price, especially if they bought at the last peak in the market in the mid-2000s, Now, they would finally be able to move on to their next house.
Mortgage rates also remained low, but it wasn't clear for just how long.
Breen, a longtime real estate agent, said the heat in the market is being fueled by the low inventory, or the number of properties for sale. And with an increasing number of buyers, competition for those properties can be fierce. It's not uncommon for properties that are in tip-top condition to draw a half-dozen bids, pushing offers above the listing price, Breen said.
"Back in 2005-2006 and in the late 1980s, when you would be writing on the hoods of people's cars, they wanted to submit the second they saw it," Candace Adams, president and chief executive of Berkshire Hathaway HomeServices New England Properties, said. "It's almost like that now, in fact, it is like that now."
William Rodriguez and his wife Zoe saw that first-hand in May when they started looking for their first house, after renting for a half dozen or so years.
The couple, with a one-year old and another on the way, checked out towns around where they lived and found at most 20 options in their price range of $275,000 to $300,000 across Wethersfield, Newington, Glastonbury and West Hartford.
"Once something gets listed, you have to go into that property as soon as possible," Rodriguez, a financial planner, said. "You need to get in. You're pulling in, and there's people coming out. And as you're looking at the property, there are cars pulling up outside. It's crazy."
When they did find a house in Newington, they made an offer for the 1,600-square-foot Colonial with a new kitchen and new roof, within two hours of walking through it.
"We didn't give the opportunity for competition," Rodriguez said. "We had an executed contract within four hours of our offer. In this environment you have to react very quickly."
One bump in the market has come when bids — especially on lower priced homes — push the agreed upon sale prices above where the appraised value later comes in. That is forcing a re-negotiation between seller and buyer, particularly if the buyer is financing with a mortgage.
John M. Zubretsky, president of Weichert Realtors-The Zubretsky Group in Wethersfield, said he believes comparable properties — used to develop appraisals — have not yet caught up to the realities and rising sale prices of the current market.
In the first seven months of this year, sales of single-family houses rose about 1.5% compared with the same period last year, according to SmartMLS, the statewide Multiple Listing Service.
But the competition for the houses that did sell pushed the median sale price — where half the sales are above, half below — by 8% for the same seven-month period, to $288,000 from $267.000, SmartMLS said. Such an increase has not been seen for years, real estate agents said.
Among the state's eight counties, Litchfield — a popular destination for those moving from New York City — led with an 18% gain in median sale price through July. Even in counties such as New Haven and New London that saw sale declines, the median price registered a 6% gain, according to SmartMLS.
In Hartford County, sales of single-family houses were flat through the first seven months of this year compared with last. The median sale price rose more than 5% to $245,000 from $232,500 a year ago.