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Updated: July 13, 2020

Low mortgage rates, supply ignite Greater Hartford homebuying bidding wars

Photo | The Miale Team A West Hartford home listed for sale by The Miale Team.

Bruce and Brianna Gasieweski were cautiously waiting to sell their beginner home in West Hartford until the COVID-19 pandemic hit Connecticut and forced many potential sellers to leave the spring and summer market.

As new Hartford County listings plummeted year-over-year by more than 33% in May, the couple was advised by friends in the homebuying industry to sell their house near West Hartford Center while there were few competitors.

Photos | Contributed
The ratio of Connecticut owner-occupied households to total households fell 1.4% between 2014 and 2019, making it one of only two states that showed statistically significant decreases over those five years

After the first two of 19 scheduled showings, the Gasieweskis received offers well above asking price and struck a deal in just eight hours last month.

“Once we heard how hot the market was, my wife had come around to my nudging that we should sell and get more land,” said Bruce Gasieweski, adding that he expects to close on the sale sometime this month. “As we were negotiating, more offers were coming in that we didn’t even pay attention to.”

Area Realtors say the Gasieweskis are among many local homeowners benefiting from bidding wars, in what’s turned into Connecticut’s first seller’s market since before the 2008 Great Recession.

That’s being driven, in part, by record low mortgage rates (in the low 3% range); pent-up demand as the state eases coronavirus-related restrictions; and a weak supply of inventory, which was already down entering 2020, among other factors.

Matthew Miale, CEO, The Miale Team of Keller Williams

Matthew Miale, CEO of real estate agency The Miale Team of Keller Williams, said there are far more buyers than sellers, which is mainly why median home sale prices climbed 2% to $246,750 in May. Closed sales dipped nearly 15% that same month, but Realtors say that number is misleading because there were 513 fewer new listings (1,029) year-over-year.

Homebuying supply and demand is also lopsided nationally as a Seattle brokerage estimated that more than 40% of U.S. homes faced a bidding war in the four weeks ending May 10. That’s up from 9% in the year-ago period.

“The market is eating inventory at a rate faster than it’s producing it,” said Miale, noting that urban migration from New York City and other nearby cities is not yet having an impact on Greater Hartford’s real estate market. “Due to the lack of inventory, we have double the amount of buyers than we do sellers.”

Greater Hartford home prices have increased each month since COVID-19 started to spread across Connecticut in mid-March.

The major dip in inventory comes during a time (spring and summer months) when the number of homes for sale typically far exceeds the number of interested buyers in Connecticut, which has suffered from one of the worst real estate appreciation rates in the country in recent years, according to multiple industry analysts.

That will not likely continue in 2021.

Miale and other real estate agents project median prices will continue to rise for the next six months before flattening. Prices could decline modestly next year if Connecticut still has a high unemployment rate, they say.

“Those in the market need to understand there’s very likely a temporary nature to this,” Miale said. “This is an impact of COVID that has created an upswing in the marketplace. This isn’t actually economically stimulated.”

Realtors optimistic despite pandemic

When Gov. Ned Lamont closed schools in mid-March amid the COVID-19 outbreak, Hartford area Realtors said they braced for a homebuying slump.

But that never happened. In fact, numerous brokers recently interviewed by HBJ said they are projecting higher year-over-year sales in 2020.

Adam Clemens, Vice President of Sales, Century 21 Clemens Group

Century 21 Clemens Group is seeing significant buying demand for everything from smaller, $100,000-to-$200,000 homes, to luxury dwellings priced $750,000 or above, said Adam Clemens, a Realtor and vice president of sales at the Glastonbury-based agency. But higher-priced homes, on average, continue to stay on the market longer, Clemens said.

“There are many towns in central Connecticut where you are seeing houses fly off the market in a matter of days,” he said.

Realtors say Berlin, Rocky Hill, Wethersfield, Glastonbury and Farmington Valley towns, among others, are the most competitive housing markets right now. Strong school districts, large yards, and garden, office and swimming pool areas were some of the top desired features for prospective homebuyers this spring, Realtors said.

“If homes are what the buyer considers move-in ready, they are lasting just days, or hours, on the market,” Clemens added. “The majority of our buyer clients are dealing with multiple bids, which is kind of wild.”

Vincent Verrillo, a broker at The Verrillo Group in Farmington, said homes listed $400,000 or lower are “literally flying off the shelf” especially after federal regulators in May clarified that borrowers in COVID-19-related forbearance can still refinance or buy a new home once they make up missed payments.

“As fast as we list them, they are going into multiple bids and I’ve had several clients lose out on several attempts,” Verrillo said. “It’s been purely insane out there.”

Vincent Verrillo, Broker, The Verrillo Group

Verrillo said economic damage caused by coronavirus got rid of “the window shoppers,” and brought out the serious buyers, including those purchasing their first homes. Many younger buyers, he said, are becoming more willing to purchase older homes in need of costly improvements. That’s because they have more leisure time to make value-driven upgrades to their home.

“Our biggest market right now is the entry level, move-up type of buyer that needs more space because they’re changing requirements with the work-at-home orders,” he said. “In the past, many of these older houses were left for the contractors to buy and flip.”

After a lull in April, Hartford County showings began to skyrocket in May from about 2,100 to 4,100 showings a day, according to MLS data provided by The Miale Team. That came as new listings spiked from 162 in the first week of April to 303 in the final week of May.

The increase in activity, according to Diane McAdams, a Realtor serving as president of the Greater Hartford Association of Realtors, coincided with Connecticut’s phased economic reopening, which started May 20. Realtors at the time quickly ramped up the use of virtual showings and other safety precautions — including the use of face masks, enhanced sanitation and social distancing — during in-person tours.

Low supply and high demand, McAdams agreed, are pushing the busy spring homebuying season into the summer months. She expects demand and prices to remain strong into the fall with a total potential 4% bump in prices by year-end.

“Because we missed some of the spring market, we might just keep on cruising throughout the summer,” McAdams said. “Sales slow down in August. But we may not see that this year.”

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