Hartford County finished July with 868 single-family home contracts, a decline of more than 15% from the July 2017 total. On a year-to-date basis the County is a little less than 4% behind where it was at this point last year.
The comparison month, July 2017, was an outlier in last year’s data. The chart above shows that the deal total unexpectedly jumped last July, unlike the total from July 2016. Because of the odd behavior in the 2017 data, we’re inclined to not worry about last month’s result appearing to be such a big miss. 2018 continues to be a solid year, if not quite as active as 2017.
Scanning through the year-to-date performance by town in the table below, it looks like most of the towns in the Farmington Valley are having a better year than last year. On the other hand, some of the urban towns that we repeatedly highlighted last year as strong performers are showing signs that this year is a step backwards.
Inventory levels vary widely from town to town, but remain on the lower end of the spectrum. It’s possible that low inventory levels are acting as a drag on the market.
Consider East Hartford, which is more than 22% behind last year’s pace for deals. They are currently at 2.3 months of inventory, which is a seller’s market. Buyers need a reasonable selection of homes to choose from as they consider their options. And perhaps there just isn’t a good enough selection in some of the towns with low inventory. Greater Hartford is unfortunately not the type of market where people will buy any property at any price.
All of the towns that have more than 10% gains in the deal count have inventory levels of at least 4.8 months, putting them in the neutral market category. It’s a trend that we’ll monitor as we think about how to put the decrease in deals in proper context.
Halfway through the year, the real estate market is in good shape. Activity levels are in line with the previous two years, which were both strong years for the market.
Hartford County finished the month of June with 969 single-family contracts, which was about 3% fewer than the total from last June. On a year-to-date basis the first half of 2018 was about 1.6% behind the first half of 2017.
One of the important trends of the first half of the year was an increase in mortgage rates. We started 2018 with buyers getting mortgages with interest rates at about 4.0%. Rates jumped to just below 4.5% in the first quarter, and crept up a little more in the second quarter. We’re seeing rates in the mid-to-upper 4% range right now.
The increase in mortgage rates is relatively modest in the overall scheme of things, and rates are still at very low levels historically, but these types of changes do have an impact on buyers. Monthly interest payments tick upwards, reducing the monthly budget available for actually buying the house or covering the other costs that go along with home ownership. At the margin the change in rates will have a cooling effect on prices.
Despite the increasing rates, we fully expect the real estate market to continue to be active for the remainder of the year.
2018’s monthly deal count increased in May. The 1,089 total was slightly less than the May 2017 total, but a solid increase over the April 2018 count. On a year-to-date basis there have been 1.3% fewer Hartford County single-family home contracts in 2018 than there were through the end of May 2017.
May is traditionally the single busiest month of the year. It is also far enough into the year that the town-by-town results have enough data to be interesting. Most of the towns in the County are within 10% of their 2017 performance on a year-to-date basis. Rocky Hill, Avon, Granby, and Burlington all outperformed last year by more than 20%, while only East Granby, Marlborough, and Manchester lagged last year by more than 20%.
Taking a more detailed look at Manchester, it appears that their 21% underperformance can be directly attributed to a lack of inventory. The Manchester market is busiest in the $100,000s, where 148 homes went under contract through the end of May 2018. That’s about 30% fewer than the 213 that had gone under contract by the end of May 2017. There is currently only a 2 month supply of listings in that price band, making it a strong seller’s market.
Inventory levels continue to be low throughout the County. There were only 3.2 months of homes available as of the end of May, which is barely above the level that is considered a seller’s market. June should continue to be active before the pace of deals begins to slow down in the second half of the year.
Greater Hartford arrived in the heart of the spring real estate market during April with 1,026 deals reached during the month. It was a 6% increase over last year’s number, and brought the year-to-date deal total to within 1% of the prior year. 2018 is another very active real estate year.
Inventory levels remained low, continuing the trend from the first quarter. At the end of April the metric stood at 3 months. A market is generally considered a seller’s market when inventory dips below 3 months, so Greater Hartford was right on the line.
The other trend to watch is mortgage rates. There have been a couple steps upwards in rates so far this year, and there continue to be fears that rates could move even higher. Despite the uptick, mortgage rates continue to be near historic lows. Buyers may feel the pain of incrementally more interest in their monthly payments, but the total deal counts for April clearly show that the changes have not been enough to discourage buyers from putting homes under contract.
May is traditionally a very active month, and we see no reason to think 2018 will be any different. Happy spring everyone!
The Hartford County single-family market finished March with 919 contracts signed, which represented a nice step up from the February total as the market moved into the prime spring selling season. The monthly total was more than 6% behind the unusually active March 2017 count, and on a year-to-date basis the County is about 3.5% behind the 2017 deal pace.
The March total shows that 2018 is progressing nicely. Hartford County has basically maintained the pace of the past two years, which were both very active for real estate deals.
Inventory levels continue to be quite low. At the current pace of deals it would take buyers about 2.8 months to put all the available homes in the County under contract. That’s a guide rather than a rule, unfortunately, as the supply and demand dynamics vary widely between towns, and even between price points within each town.
It’s interesting to look back and see what the inventory levels were at this point in previous years. We reported inventory as 2.8 months right now, 3.0 months at this point in 2017, 4.0 in 2016, 4.8 in 2015, 5.0 in 2014, 4.6 in 2013, 6.5 in 2012, and 7.0 in 2011. A clear trend is visible over that time, as the balance between buyers and sellers moved from a buyer’s market in 2011 to a borderline seller’s market in 2018.
This is the time of the year when properties tend to move quickly. If you’re in the market looking to buy, then be sure to have your financing in order and pay attention to new listings as they pop up. Owners considering a sale need to decide if this is the year, and get their home on the market quickly if they want to go for it. This is about as favorable an environment as we’ve seen in a while, and nobody knows how long it will last.
Feel free to reach out, we’re happy to advise.