CT housing market: House prices up nearly 10% over last year
House prices in Connecticut were up nearly 10% year-over-year in the first quarter of 2024, a trend of increased prices that’s stretched across the past couple of years as housing stock remains historically low.
Connecticut saw the seventh highest appreciation in price across the country. Every state had year-over-year increases, and the United States as a whole saw a nearly 7% increase in house prices, according to the latest House Price Index report from the Federal Housing Finance Agency.
“Right now there’s not enough houses even for people who have to move, let alone people who want to move,” said Carl Lantz, president of the Connecticut Association of Realtors and a real estate agent with Coldwell Banker Realty.
The median sales price for May is $440,000 statewide, Lantz said.
Vermont had the highest increase at about 13%. Washington, D.C. saw a slight drop in prices, according to the House Price Index.
“U.S. house prices continued to grow at a steady pace in the first quarter [of 2024],” said Anju Vajja, deputy director for FHFA’s Division of Research and Statistic, in a press release. “Over the last six consecutive quarters, the low inventory of homes for sale continued to contribute to house price appreciation despite mortgage rates that hovered around 7%.”
Connecticut real estate agents said they expect high prices and low inventory for the foreseeable future.
“I think it’s stabilizing so it won’t be such a frenetic market, but I think that we still have and will continue to have a constant flow of demand based on the demographics,” said Tammy Felenstein, the 2022 president of CT Realtors and strategic growth and sales manager at William Raveis in Fairfield.
In June 2023, there were 3,234 new listings in Connecticut. As of Thursday, there had been 3,232 new listings posted to the Multiple Listing Service in May. The service is a platform available to real estate agents to see houses for sale.
The new listings this month make up about a fifth of the listings that were posted in Connecticut before the COVID-19 pandemic, Lantz said. Before 2020, there were often between 15,000 and 18,000 listings online on a given day, he said.
As interest rates and costs have risen, fewer homeowners are willing to risk buying a new place because they fear they’ll be paying more, even if they downsize.
“Sales are currently taking place, but with the problem of low inventory, an increase in sales volume is unlikely,” said David Gallitto, past president of CT Realtors and an agent with Compass Realty Corporation. “Mortgage interest rates for a 30-year conventional product range between 7 to 7.25. That’s better than a year ago but not enough for people to jump into the market to sell their home.”
While the number of listings is about the same as it was last year, the number of homes that have sold is down, Lantz said. In June 2023, homeowners sold 2,930 single-family homes or condominiums. So far in May, they’ve sold 1,756.
Lantz said that may be because of homes that are listed at too high of an asking price. People are more likely to bid quickly and bid higher if they believe the house is a good deal, he said.
He said homes are typically selling within just a few days. “You could list it on Christmas Day and you would have showings,” he said.
Luxury homes tend to sell a little more slowly, Felenstein said.
Many millennials are losing out on smaller houses to baby boomers who are downsizing. Baby boomers have more cash wealth and can make all-cash offers, she added.
“The baby boomers that are deciding to sell and downsize — they have a lot of equity at this point, and they’re very cash rich,” Felenstein said. “… Millennials and baby boomers are both shopping at the same price point for the most part.”
This can keep millennials in apartments longer, meaning pressure trickles from the homebuying to the already tight rental market. It’s part of a larger problem across the state; experts say there hasn’t been enough housing built in the past several years, particularly multi-family housing.
The lack of housing supply paired with high demand drives costs up.
It’s often not profitable to build smaller homes because of higher costs of land value and building materials, agents said.
This means builders are more interested in constructing larger homes that sell for more profit. Lantz said the U.S. has seen underbuilding of housing for years, particularly after the 2008 recession.
“The math does not work in 99 out of 100 towns,” Lantz said. “Starter homes are definitely not economically viable right now. It’s very difficult.”
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