As families took advantage of remote work and flocked to the suburbs during the height of the pandemic, Connecticut’s housing market was one of the big winners. But that momentum came to a halt last year, with the state’s population growing by only 2,850, or 0.08%, according to the U.S. Census Bureau.
Gov. Ned Lamont on Monday enlisted the Connecticut Association of Realtors to recapture that magic by telling “Connecticut’s story” to potential buyers.
Realtors say there’s one major problem — there are no homes to buy.
“When any property of value or worth comes on the market, you have a number of showings and, oftentimes, a number of offers,” said David Gallitto, association president.
Black Knight, a data provider for real estate and mortgage companies, said the number of homes listed for sale nationwide amounts to roughly two-and-half months of sales. That’s below the historic norm of at least six months.
The picture is even worse in Connecticut. Gallitto estimates the state has 3,100 single-family homes and condominiums listed, an inventory of about a month-and-a-half.
“First of all, you need more housing inventory,” Lamont said during the assoication’s Riding the Brand conference in Hartford. “Let’s start with that.”
Lamont laid out what his office is doing to help boost inventory, including $600 million over the next couple of years to build more homes. Lamont says the money will fund affordable, workforce, and market-rate housing.
After speaking at the conference, he told reporters he also wants to leverage the money as an incentive for cities and towns to relax zoning rules or designate areas for more affordable housing.
“I want them to show us where you want housing in your downtown area, hopefully next to a train station or transit-oriented,” he said.
But Lamont also said he doesn’t want to force towns to change their zoning to allow, or even encourage, the construction of more homes. He pointed to a state law requiring towns to ensure that 10% of their housing is “affordable.”
It’s a threshold many towns fail to meet. Meanwhile, homeowners aren’t putting up their homes for sale, opting to stay locked into mortgages with interest rates well below the current market.
And Gallitto says new construction isn’t offering an affordable alternative, estimating the average cost to build a new home in Connecticut is $275 to $300 per square foot.
Realtor Joseph Broaden, of Rovi Homes, agreed.
“We are seeing more properties being built,” he said. “I think they’re more slated toward luxury living, not really the affordability side.”
That lack of more affordable homes is forcing buyers to compete, realtors at Monday’s event said. That means prices will continue to climb, pricing out more and more would-be buyers.
“If there [are] only 20 properties available on the market, those, of course, are going to get bid up,” Dhaval Patel, also of Rovi Homes, said.
Still, realtors were complimentary of Lamont’s efforts to help. Patel praised the Time To Own program launched by the state last year.
The program gives low- to moderate-income homebuyers up to $50,000 for a downpayment and closing costs. The program is open to first-time homebuyers and residents who have not owned a home for at least three years.
Meanwhile, Broaden said many younger homebuyers want “condominiums, amenity-rich communities, PUDS (planned urban developments),” the kinds of development Lamont said he wants to support with the $600 million in funding.
Gallitto did have one suggestion, saying a reduction of capital gains taxes at the state and federal level might entice a few owners to put their homes up for sale.
