According to several sources on the New England real estate market, in 2014, the overall performance of the single family home and condo markets in Connecticut performed rather solidly and predictably. The sales volume and average sales prices matched those posted for the 2013 Connecticut housing market: 26,340 homes were sold in total, while the average selling price stood at $411,400 in 2014. Condo sales gained impressive grounds last year, on both counts: the average sale price went up by 0.6 percent and the number of sales increased by a hefty 1.47 percent on the year. Even a market niche that nobody expected to see stellar performances from, the luxury segment, went up. The total number of sales for this market segment increased by 10 percent – a percentage that strictly includes sales over $5 million.
The market’s past performance will definitely influence its evolution in 2015. According to several major realtors in Connecticut and New England, these are the most important factors that are likely to affect the evolution of the housing sales scene this year.
Important Factors of the 2015 Connecticut Housing Market:
- The solid performance of the state’s housing market predictions in Q4 2014. The number of home sales completed in Connecticut in the year’s final quarter increased by a fraction on a year to year basis, but they did go up. This occurred almost in spite of the decrease in sales price and was reflected by another index: the number of days that a home up for sale spent on the market, which remained fairly constant when compared to the same time in 2013.
- Pricing was trumped by quality. According to the report on home sales in the fourth quarter of 2014 prepared by Berkshire Hathaway HomeServices, homes that were ready to be shown and had fair prices for their respective market areas sold quicker than very competitively priced homes. This is a lesson that homeowners who plan on selling in 2015 need to learn as quickly as possible.
- The housing inventory in Connecticut is becoming increasingly low. The fourth quarter of 2014 saw a substantial decrease in the number of available houses in Connecticut. This might just tip the balance in favor of the sellers in 2015 – but only of those sellers who have already listed their homes on the market, in view of the rapidly approaching spring season and expected boost in home sales.
Aside from factors pertaining to the local market, there are several factors acting at national and global level that realtors expect to see influencing the Connecticut housing market this year. These include:
- An expected increase in mortgage interest rates. Real estate experts expect the currently low mortgage rates to increase in 2015. They have been maintained at historically low levels and this year, boosted by the moderate pace of economic increase, as well as by the associated increase in GDP. Realtors don’t expect this growth to be too massive – however, they do forecast that it will affect the pace at which homes are being sold nationwide, as well as these housing market predictions 2015.
- The long awaited return of first time homeowners to the market. Many expect 2015 to mark the return of first time buyers to the market, in a move that will encourage activity overall. Connecticut realtors in particular predict that this category, as well as that of potential buyers who have been renting for a while now, will see some great opportunities in 2015.
- More relaxed lending terms for mortgages. The lending institutions are likely to contribute to more home transactions, since they are expected to increase the maximum value of a loan to 97 percent (from the current 95 percent), while the FHA is expected to cut back their yearly premium for mortgage insurance by 0.5 base points. This way, more potential buyers will become eligible for loans.
The above views are shared by several real estate experts across New England in general and Connecticut in particular. They are basing their views on 2014 performances, which saw the local New England economy regaining momentum. This in turn, helped boost consumer confidence. The growing housing market that most of New England saw in 2014, with increases at a slow, but steady pace, is expected to be reiterated in 2015. It’s worth mentioning, however, that Connecticut is one of those areas where a relatively low inventory played a major part in terms of pricing – home prices went up consistently and will probably continue to do so, at least in the first half of this year. Another aspect worth taking into account in this sense is the increase in new housing permits awarded in Connecticut in the final quarter of 2014. On a year-to-year basis, this number grew by 15.4 percent in total, for both single family housing units and multi-unit residential constructions. The largest rates of growth were recorded in the category of building permits for 3-4 units and 5+ units: they increased by 90.2 percent and 41 percent respectively.
Although the New England housing market predictions remained very divided last year, with poorer performances than expected in the first two quarters, and an upswing in the second half, we believe that the area’s market is moving toward a more normal evolution. They concur in saying that the dramatic upswings and downswings of the housing bubble and ensuing downturn are now a thing of the past. In what concerns Connecticut specifically, the 2014 market was very similar to the 2013 market, says data from CTMLS and CMLS.
Though there were some 40 fewer homes sold in Connecticut last year, compared to the one before it, the number of pending sales increased by a large margin. On a year-to-year basis, this percentage doubled from January to the end of October 2014. Data provided by the CTMLS says that pending single family home sales grew by 2.0 percent and that condo sales saw a 3.2 percent increase. The median price of a single family home took a subtle drop, down to $190,000, or 2.6 percent lower than the median price recorded in 2013. Condos saw a more significant drop, of 11.6 percent on a year-to-year basis, down to $78,700 from the $89,000 posted in 2013.
One RE/MAX expert attributes the slight downturn in prices to the fact that Connecticut still doesn’t feel safe enough, where home buyers are concerned. Since the state’s economy didn’t add that many jobs over the past year, consumer confidence, especially within the lower income segment, remains low. In fact, the same source explains that Connecticut may be evolving at a slower pace than the national average, in what concerns the economic rebound. Luckily, though, the market in Connecticut is being sustained by stable mid-to-high income earners, who are moving up and who come with good credit ratings. Glastonbury and West Hartford Connecticut real estate remain their top choices despite high price tags such as $400,000 to $600,000. They are seeing several offers and, in return, potential buyers expect the homes to be in mint condition. However, such areas remain exceptional in Connecticut, which is not seeing similar levels of activity on the housing market at state level.
More data from the CMLS explains that the Greater Fairfield County in Connecticut, for instance, is one relatively poorer performer. The volume of transactions there dropped in 2014 by 5.9 percent and the county is expected to display a similar evolution in 2015 as well. The median selling price remained relatively stable both last year and the year before that, at around $400,00, while the condo market saw an increase of 1.5 percent, with a median price growth of 4.7 percent, up to $225,002. According to local experts on the housing market predictions 2015, its evolution is directly tied in with activity on Wall Street. In 2014, the addition of new jobs to the financial industry allowed the market to evolve in somewhat positive terms. The condo market was primarily driven by first-time buyers, who have come to realize that it is now more affordable to own a home, rather than to rent it. Many of them also took advantage of the relaxed lending conditions and they are expected to continue doing so in 2015. One effect of hurricanes Sandy and Irene was an upswing in the number of new homes built in their wake. Their emergence will continue to drive the new home buyer segment of the market in 2015 as well.