Recent analysis of Realtor.com data found four Connecticut cities among the 20 most in-demand markets in the nation even with an inventory shortage driving price increases across the state.
The metro areas around Hartford, New Haven, Bridgeport, and Norwich all ranked among the website’s 20 “hottest markets” in May. That distinction was based both on unique pageviews for property listings as well as on the number of days those listings remained active.
By those metrics, Hartford ranked number three in the nation, following the New Hampshire cities of Manchester and Concord.
Meanwhile, the housing stock in Connecticut cities has dwindled. According to statistics published by the Greater Hartford Association of REALTORS in May, the number of homes for sale in the Hartford area declined by more than 36% between April 2022 and April 2023. New property listings fell by more than 41% while the sale price of single family homes increased by nearly 5%.
According to a Wednesday report by real estate brokerage Redfin, the number of homes for sale nationwide dropped in May to 1.4 million on a seasonally adjusted basis, its lowest level since the brokerage began keeping track in 2012.
Although median sales prices still declined year-over-year in some 40 metro areas analyzed by Redfin, that was not true in the Hartford area, where prices climbed by 10%, the largest increase identified in the report.
“It’s really just a supply and demand situation,” said David Gallitto, president of the CT Realtors industry association. “You’re still finding multiple offers on properties and those offers are going well above the asking price.”
As of Wednesday, Gallitto said there were 3,464 active listings for single family homes and condos. That’s down from a pre-pandemic high of around 22,000 and a normal average of between 14,000 and 15,000, he said.
“No matter what area of the state you’re in, they’re all beset with the prospect of low inventory at this point in time, which is undoubtedly having an impact on our market,” Gallitto said, “especially for those first-time homebuyers. It’s a difficult prospect for them to jump into the market at this point because of the low inventory and the lack of choices out there.”
The illustrations of Connecticut’s housing shortages followed a legislative session marked by the failure of zoning reforms intended to bolster the state’s available affordable housing options.
U.S. Sen. Chris Murphy urged more aggressive action on social media Monday, when he reacted to a Tweet by Fortune Magazine’s Lance Lambert who reported housing inventory had shifted downward by 80% in Hartford between 2019 and 2023. Similar shifts had occurred in Bridgeport and New Haven, Lambert said.
“This isn’t an advertisement for minor shifts in state housing policy,” Murphy wrote. “Connecticut’s housing shortage is our biggest economic liability and local rules making it hard to build new housing are hurting us.”
State policymakers did take some steps to help prospective homebuyers, however. For instance, a forgivable assistance program to help first-time buyers with down payments and closing costs will receive another $150 million more over the next two years.
Additional funding for the “Time To Own” program was included in the $51.1 billion state budget and is expected to help offset closing costs and downpayments for more than 2,500 home purchases in a two-year period, according to Gov. Ned Lamont’s office.
The program offers interest-free lending to qualified first-time buyers who receive a loan from the quasi-public Connecticut Housing Finance Authority. The loans are fully forgivable after 10 years and can range from up to $50,000 for properties in “high opportunity” areas to up to $25,000 in other areas of the state. The money is intended to offset 20% of down payments and 5% of closing costs.
In an interview Wednesday, Lisa Hensley, who manages the program at the Connecticut Housing Finance Authority, said it had helped first time homebuyers compete with market trends which have made buying a home more expensive.
“With prices going up and interest rates going up, it’s really made an impact,” Hensley said. “It’s helped people purchase who wouldn’t otherwise be able to… People are able to buy more house or they’re able to purchase with lower income.”
The scheduled infusion of additional support comes as available funding for the popular program begins to dwindle. As of Tuesday, roughly $6.3 million was available for loan reservations under the program. Hensley said the CHFA received an average of about $1.7 million in reservations each week.