There have been encouraging signs this winter — increased foot traffic at open houses, a more stable local economy — that have realtors in the Hartford region optimistic about a busy selling season.
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There have been encouraging signs this winter — increased foot traffic at open houses, a more stable local economy — that have realtors in the Hartford region optimistic about a busy selling season.
While year-over-year Greater Hartford home sales were down 20 percent in January, according to the Greater Hartford Association of Realtors, Paula Ostop, a realtor with William Raveis in West Hartford, said an increased inventory of homes this spring — typically the busiest time for homes going on the market — is going to correct that.
“What's on the market [currently] is not fitting the needs of buyers in the market at the moment,” said Ostop, who largely serves clients in Hartford, West Hartford, the Farmington Valley and Glastonbury. “But it's a great time to buy a home because prices are still a bit depressed, interest rates are still low and moving into a larger home is more affordable than it was a few years ago.
That combination of factors has created pent-up demand. At the same time, says John Glascock, director of UConn's Center for Real Estate and Urban Economics, sellers have come to accept that their homes won't likely recapture the full amount of their property's pre-Great Recession values and are willing to sell at a lower price point. In fact, a decade removed from the bottom of the recession, Greater Hartford's median home sales price last year ($221,000) was still lower than in 2007.
Glascock said the greatest impact of Connecticut's post-recession economy has been on the upper-end of the real estate market.
“The state lost a lot of six-figure salary jobs [after 2008] and the jobs that have replaced them are lower-wage jobs — in the $50,000 to $85,000 range,” he said. “It creates a very different profile of a [prospective] buyer in the state.”
And it's making higher-end homes — $700,000 and up — more challenging to sell. In Avon, for instance, while the average price of all homes on the market was around $766,000, the average sales price was just over $474,000, according to Hartford County MLS data.
Kathleen Shippee, a realtor with Coldwell Banker in Simsbury, who predominantly serves Farmington Valley clients, has seen that impact firsthand.
“Buyers in the 5,000-plus square-foot range still exist, but some are realizing they may not need that extra space, nor do they want the increased costs to heat the property, furnish it or pay higher taxes,” she said.
While property taxes are often a consideration in a home purchase, the recently overhauled federal tax code — which includes a provision that caps property tax deductions for homeowners — is making Uncle Sam's cut an even bigger factor for buyers.
“I'm not sure the new tax law will be a deterrent to people buying a new home,” said Dale Stevens, an Enfield-based realtor with RE/MAX and president of the Greater Hartford Association of Realtors. “But it's possible that towns with higher property taxes may not be as favorable as those with lower [ones].”
But the biggest driver of home sales is move-in condition, unless the buyer sees the value in a particular home, says Shippee. “Most buyers are not looking to do many updates, so [for sellers] investing in home improvements should help create a better return,” she said. “Homebuyers are still very cautious [about purchasing] and are not as willing to jump at homes unless it's the right situation.”
Ostop agrees.
“Many buyers have already done renovations to put their house on the market and they don't want to purchase a larger home and do all that work again,” she explained. Today's tech-savvy buyer's, says Ostop, are also educated and know what comparable homes in a neighborhood have sold for.
In 2017, while the total number of homes sold in Greater Hartford increased by 2.8 percent from the previous year, the median sales price was basically flat at $221,000, according to the Greater Hartford Association of Realtors. That, along with the low interest rate environment, has also driven more first-time buyers to explore the market.
Meantime, while interest rates are expected to rise, Ostop said that can be a motivating factor for buyers to make a decision to lock in lower rates.
She said she expects this spring's selling season will be busy. “With what we're seeing at open houses, I am confident we're going to have a really great spring market,” Ostop said.
