A low inventory of homes for sale and high interest rates are creating a catch-22 in Connecticut’s real estate market: to push prices down would require more houses to go up for sale, but people don’t want to list their houses because prices are high, according to local real estate experts.
The latest data from RE/MAX and the state’s multiple listing service, or MLS, shows that the number of homes for sale in Connecticut is down dramatically from past years. Interest rates are high, meaning that for many it doesn’t make sense to sell their homes.
Connecticut has just over 3,500 condominiums and single-family houses marketed for sale, about two months of inventory. In the years leading up to the pandemic, there were typically more than 15,000 homes for sale, according to MLS data.
Median sale prices are also up, while the number of days on the market is down compared to last year, data show. In the Hartford area, the median home price was up to about $345,000 in July, compared to $321,250 in July of last year, RE/MAX data show.
“When there’s only a few homes for sale, you have all the bees to the honey, and that’s where you get your high prices,” said MJ Agostini, a RE/MAX Right Choice real estate agent in Berlin.
And the Federal Reserve announced late last month that it was increasing its key interest rates by 0.25% to 5.4%, the highest level in more than two decades. This means that many homeowners who may be looking to move don’t want to lose their lower interest rates, real estate agents said.
“It doesn’t make financial sense to move,” Agostini said.
The number of homes for sale now equates to about two months of inventory, meaning that if nothing new went on the market, everything would be sold in about that time. Before the pandemic, there was typically about six months of inventory at a given time, said David Gallitto, a real estate agent with Huntsman, Meade and Partners Compass Realty Corporation and president of the Connecticut Association of Realtors.
Across 50 metro areas surveyed nationally, the housing inventory in July was down nearly 21% last month compared to July 2022, according to the RE/MAX report.
“It’s sort of like a feeding frenzy,” said Tammy Felenstein, an agent with William Raveis and the past president of the state Realtors Association.
Following the housing market crash of 2008, fewer homes were built in many parts of the country. And in Connecticut, it got more expensive for developers to build starter homes, particularly as supply chain delays erupted during the pandemic.
Connecticut also saw an influx of people moving from New York or Boston into the state as well as purchasing second homes during the pandemic as people looked to get out of the city.
The lack of inventory has spread across all types of markets in the state, Gallitto said.
“Needless to say, it’s a very tough situation for people out there that are trying to enter into the homebuying market,” he added. “What’s happening is as soon as a property comes on, another one is going off. They are staying on the market an average of 10 days before they go under contract.”
Houses are also getting several offers with many putting in high bids. Agostini said earlier this week she had a listing for $399,000 that fielded 36 offers.
“If you have somewhere to go, it’s a great time to sell,” Felenstein said.
A normal market would likely see more houses go up for sale in the early fall as people finish up their summer vacations, Felenstein said.
But, she added, “it’s not a normal market.”