In a normal year, fall would be a slow season in the housing market. But 2020 is far from being a normal year, and so is the real estate market in Connecticut. The pandemic changed the work/life balance priorities for many families all over the country. It has also changed the needs of many buyers.
During the pandemic, most people got stuck inside the house, being forced to juggle meetings and home-schooling needs. Buyers started rethinking their priorities, looking no longer for lower commute time and proximity to the office. Their dream homes now must have bigger backyards and flexible office spaces to adjust to the new needs of a pandemic and working and learning from home.
According to research done by Stanford University in June 2020, 42% of the United States labor force transitioned into full-time working from home. These numbers explain the surging home prices, suggesting that many of these remote employees are now looking for a bigger house.
In November 2019 Fairfield County had 613 closed sales and jumped to 1,064 in 2020. The area also had an increase of +22.2% of the median sales prices, according to data from SmartMLS.
“If anyone had asked me this time last year what we could anticipate in the local real estate market for 2020, never could I have ever expected something to transpire like it has this year,” said Rick Higgins, Higgins Group’s CEO. “I have been doing this for almost 50 years. During that period of time, I have acted as a broker, builder and real estate attorney and thought I have seen at all.”
Most of all of Fairfield County has boomed, according to Higgins. “The interesting thing to me is the seismic shift in certain areas like Easton, Weston, Greenfield Hill and Wilton. I don’t know if it’s a coincidence, but years ago, when gas prices shot up to almost $5 a gallon, there was a real shift, and areas north of the Merritt Parkway lost their luster to the typical home buyer. Everyone wanted to be closer to town, transportation, restaurants and stores.”
The 2008 Great Recession further decimated the suburban housing market, along with college debt which all conspired to slow Millennials from buying houses. The same once-desirable areas languished on the market, lost a lot of value and took a very long time to sell. Then COVID-19 and the quarantine came along and suddenly there was a reversal of what people were looking for in a home.
“Large houses, land, privacy, in other words — to use the title of Thomas Hardy’s novel in 1874 — people wanted to be ‘Far From the Madding Crowd!’” Higgins said. “Especially with the thousands of buyers from New York City. When I moved to the northern part of Greenfield Hill near the Easton border and built my house, it was considered very desirable.
“Over the last decade-plus values had eroded, and it was increasingly hard to sell a house. The reason being that all the aforementioned distinguishing characteristics that defined those towns weren’t desirable anymore. COVID 19 came along and almost overnight changed everything. What these towns offered was exactly what a lot of people want now and are anxious to buy.”
Easton has had busy months in the real estate market, according to the realtors who sell here. Gayle Worthington, a realtor with William Raveis Real Estate and an Easton resident of 20 years, said, “I take pride in focusing my business on my hometown. Recent years have been tough on sellers because the market had gotten slow.
“Buyers preferred locations close to town/train/beach over more rural settings like Easton. But since March there is been an uptick in interest in Easton and other more rural locations because they generally include more places for Zoom calls, larger back yards, and room for a pool. Buyers are looking for homes where they can live, work, learn and play — this generally requires extra space, which Easton provides.”
Stacy Varvaro, also a realtor with William Raveis Real Estate, said, “The real estate market in Easton has been very active this fall/winter season. The medium prices of homes are up over 22% from last year and inventory is down over 27% from last year. Days on market are also down over 55% from last year. If houses are priced right they are going for asking and sometimes above asking.
“There are a generous amount of buyers out looking, and with mortgage rates being low, purchasing a home is both beneficial for buyer and seller. For obvious reasons, some people are moving to Connecticut because we have lower taxes than other Tri-state areas, and in some of the towns, such as Easton, social distancing is not a problem.”
Higgins compared the number of houses that were on the market in November this year with last year. “In Easton, there is almost half the number of houses on the market this November as were on the market last November,” he said. “Instead of taking 143 days on the average to sell a house like this time last year, it’s only taking 72 days. Also, remember it is actually faster, because that is a closing date, not when there was an accepted offer. In the last year sales in Easton are up 44%. “
“My post-shutdown listings have all sold in only a few days, several of them enjoying multiple offers and offers over asking,” Worthington said. “A few of the offers have come from buyers who haven’t even seen the property in person. This is an incredible turnaround, unlike anything I’ve ever seen in the real estate market in my experience. I’ve seen downturns this dramatic and this quickly several times before but never an uptick like what we are experiencing in 2020.”
Low Mortgage Rates
The desire for larger houses isn’t the only factor that has led buyers to start searching for new houses but also the interest low rates have been motivating many people to upgrade their houses. The rates have encouraged others to refinance their homes with a lower mortgage payment.
According to Jay Tolisano, originating branch manager at CrossCountry Mortgage, “The current interest rate environment is providing for the lowest mortgage rates in history. This has caused a huge uptick in refinance applications where homeowners can improve their cash flow, shorten the term of their mortgage, or among other things pull money out to complete some improvements and renovations to their home. At the same time, the low interest rate environment has also helped the home-buying market as home buying has become much more affordable.
Buying power has increased by roughly $60,000, meaning that someone buying today can afford $60,000 more than roughly one year ago, Tolisano said. “In comparison to years past, our rates today are about half of what they were back in 2006, and existing home sales are on the rise, however, not at the levels of 2006 at this time. It appears that there are buyers out there but not enough homes on the market to pick from.”
The market has been great for sellers, but many of them are still uneasy about putting their houses on the market. Easton’s future owners have little inventory to pick from. In October 2019 the town had 89 houses in the market, going down to 62 listed homes in 2020. One of the reasons for the scarce inventory this year is the increase in the number of COVID cases in Connecticut.
Many sellers and tenants are nervous about hosting multiple showings during the pandemic. Another important reason for the current low inventory is the fear of having nowhere else to go. In a market where the prices are up 42% in Fairfield County, the big question for sellers is: Where to go next?
Spring Market
The spring market is just around the corner. When asked about the new year’s predictions, Varvaro said, “The predictions are these statistics will carry over into the new year and hopefully we will have a strong spring market ahead. If you’re thinking of selling your house in the spring, now is the time to get it ready.”
Worthington said 2021 is expected to be a continuation of 2020. “Ongoing low inventory, low rates, and demand for space should continue to drive the market. Homeowners whose homes had gone down in value during recent years may want to look into selling in 2021. Just be sure you have somewhere to go – because your house is likely to sell fast!”
These are uncertain times. No one knows what tomorrow holds. Will the vaccine change buyers and sellers’ perspectives? Will the promise of normalcy shift the housing market again?
“I don’t know how long this will last,” Higgins said. “Nothing is ever permanent in real estate. I wouldn’t call this a bubble nor am I afraid of it bursting. I only feel a bursting bubble is when there is a bubble. Houses have gone up in value but not like they did in 2005, ’06 and ’07 when the economy collapsed. Real estate lost approximately 30% in value almost overnight. The same thing happened in 1989 with the same 30% loss. I frankly think that we are just getting up into the values of 2007, pre-crash, 13 years later.”
