2014 Wrap-Up: Single-Family Results

The headline trend in the Hartford County single-family real estate markets in 2014 was that there was no prevailing narrative. After a few years of uncertainty in the late 2000s following the financial crisis, the markets enjoyed a few years of obvious recovery. The results of 2014 cannot be explained in comparable terms.

The simple way to explain the year is to say it was a repeat of 2013. The number of single-family deals recorded in the CTMLS was nine higher in 2014 than in 2013. That’s a surprisingly small difference for a market with over 7,000 total deals. The chart below shows the single-family deal counts since 2001.

2015-01-15 Hartford County Single-Family Deals by Year

January is the only time of the year when we review pricing in the real estate market. Other analysts look at median and average prices on a monthly basis. We feel that the lumpiness of the market makes it difficult to trust data sampled over narrow time intervals.

The number of homes that close in a month varies wildly throughout the year. The types of homes that are available in the spring market seem different than those available in the winter. All of those factors, and more, could be addressed with a complicated model. And maybe the other analysts have the computing power and creativity to overcome those challenges. We don’t, so we stick with full year data. But I disgress…

Average prices were basically flat in 2014, while median fell by about 3%. The chart below shows average and median prices for single-family homes since 2001.

2015-01-15 Hartford County Single-Family Prices by Year

Why didn’t the average and median prices move in the same direction last year? Looking at the number of deals by price band seemed like a good place to start addressing that question.

There was a 4.9% increase in the number of deals in the $100,000s and a 4.7% decrease in the number of deals in the $200,000s. We believe that this is evidence of falling home prices during the year. Properties that used to sell in the low $200,000s fell into the high $100,000s.

There was an increase in the number of deals that closed at prices above $700,000. In fact, there was a 25% increase in the number of properties that sold for between $700,000 and $1,000,000. This was the second year in a row of strong deal count growth in that price band. It is important to note, however, that the price band only contributed 155 deals to the County’s total, so it is not a fundamental driver of the market.

2015-01-15 Hartford County Single-Family Deals by Price Band

West Hartford Stats: The Summer Season

July was an active month in the West Hartford single-family real estate market, but not quite as exciting as June. There were 86 closings in July, which was modestly above the 2012 count, and on a year-to-date basis we are about 12% ahead of 2012 in the total number of closed deals.

2013-07 West Hartford Transactions by Month

The statistics can shift a lot over the summer months. Buyers that put properties under contract in the spring close on those deals and move in to their new homes over the summer, so June and July tend to be the peak for closings. At the same time, the number of homes under contract will begin to shrink – there was 158 under contract in June versus 144 right now. The change in the number of active listing is less predictable, and it has remained almost identical to what we reported in June.

The charts below show that the inventory of active listings in the $200,000s has increased since the June report. This is the most active price band in town, and is just below the median sale price for West Hartford MLS deals – the median price in town was pretty consistently right at $300,000 for 2010, 2011 and 2012.

You can find lots of different types of homes with prices in the $200,000s. There are nicely updated smaller homes in many neighborhoods, medium sized homes in very good condition in a few neighborhoods, homes that are a bit dated, and homes that need a complete overhaul.

It’s not yet clear why inventory is increasing in this price band, especially because there is less available in the $100,000s, the $300,000s and the $400,000s than there had been in June. Our guess is that buyers have slowed down on buying homes that need updating. It also looks like there are a few properties in the price band with quirks that will require waiting for the right buyer.

At upper West Hartford price points, sales activity continues to be taking a slower pace. There are many fewer listings with asking prices of $700,000 and the market dynamics are distinctly different.

Overall, West Hartford has had a strong year in 2013, and it will be interesting to see what kind of fall market develops in the coming months.

2013-07 West Hartford Transactions by Price

2013-07 West Hartford Listings Under Contract

2013-07 Active West Hartford Listings

Hartford County Real Estate Closings in 2012

Most of our ongoing analysis of the real estate market is focused on contract data. We like to track contract data because it represents an important milestone, it is more immediate than closings, and it is a strong predictor of closings. But at the end of the year it is also interesting to take a look at the closing numbers since those data points have a meaningful price associated with them.

Hartford County Single-Family Transaction 2012

In 2012 the number of single-family transactions in Hartford County increased by 19.3% over the previous year. This was the first meaningful increase in the number of deals since the peak of activity in 2005. At this point we are at about 30% below the 2005 number.

Hartford County Single-Family Prices 2012

Prices were down from the previous year both when looking at the average and median sales price. Since the dramatic fall from the peak at 2007 to the initial bottom in 2009, prices have been bouncing around the 2004 level.

Hartford County Single-Family Sales Distribution 2012

Breaking the sales data down by price band, we can see that the increase in activity was spread across nearly the entire range of price points. The exception was the $700,000 to $1,000,000 band, which saw a slight decrease in the number of sales. The change in the sales mix contributed to the decrease in average and median prices but we can’t quantify how much of an impact it had versus prices actually falling.

Have we passed the bottom of the market and made it to the upswing?

Activity is certainly rising, and we have already seen increasing prices in some of the more active towns in the County. Right now the main drag on activity is the lack of interesting homes for sale. Buyers in some towns are anxiously waiting for new (high quality) listings. Just this week a property was listed in West Hartford that received 5 offers on the first day, with the highest being about 5% over asking price – and everyone who was interested in the home hadn’t even seen it yet. Very exciting for that seller!

2011 Average Prices and Sales Mix

Warning: What follows is quite dorktacular. You have been warned.

Last week we looked at the really big picture transactions data for Hartford County in 2011. The main concern we had with how the numbers turned out was that the average single-family home price appeared to rise slightly from 2010 to 2011, which was not what we saw in the market on a house by house basis.

There is no easy way to track the price trends in a region because every house is unique. Repeat sales is the best method I know of, but it’s too hard for us to use. Anyway, we were talking averages in the post. Our hypothesis as to why the average might be misleading in this case is that averages can be influenced by a change in the mix of homes that sold between the two years. They are especially susceptible to sales of expensive homes since one million dollar property contributes as much to the total sales volume as five $200,000 homes.

The first step we took to test our hypothesis was to look at how the mix of sales changed between the two years.

Hartford County Single-Family Sales by Price Band

The chart shows that the number of sales increased in the sub-$100,000 price band and also in all three price bands above $500,000. It also shows that the $100,000s remained almost exactly the same. Finally, the number of deals in the $200,000s fell by about 20%, while both the $300,000s and $400,000s fell by about 12%. The chart confirms our anecdotal observation that there is was more interest in high end properties in 2011, but doesn’t address our hypothesis in a convincing manner.

What if we plotted the total sales volume for each price band instead of the number of deals? That would put each of the price points on equal footing in terms of their contribution to the average.

Amount Spent on Hartford County Single-Family Homes

This chart shows that the homes that sold for less than $100,000 matter very little in the average. But otherwise the chart is not conclusive about whether the average remained the same due to prices holding steady between the two years or some other reason.

Maybe we should just throw in the towel on the average as a proxy for home prices and move over to the median. Between 2010 and 2011 the median single-family home price in Hartford County fell 3.3% from $230,000 to $222,500.

Or we can just trust our observations of the market … home prices fell in 2011.

A Decade of Hartford County Real Estate Transactions

Yes, we know we are dorks. You know we are dorks too and it doesn’t hurt our feelings if you call us that. And we also know that you like these data posts, so you are at least a little dorky too. Don’t worry, we won’t tell anyone…

The local MLS that we are members of has been collecting data electronically since 2000. We thought this would be a good opportunity to do a data dump and see what’s happened during the last 10 years with single family real estate sales in Hartford County.

One of us (not Amy) had the enviable task of downloading 83,605 records regarding closed single family sales in Hartford County from the period of January 1, 2001 through December 31, 2010. As always, all of the data we’ll talk about is from the CTMLS and is deemed reliable but not guaranteed.

What was the most expensive home sold (publicly) in Hartford County during the last decade? Well, that sale took place in September 2003 when Mike Tyson sold his Farmington home for $4.1 million. That house, currently owned by the rapper 50 Cent, is now listed for sale at $9.999 million.

Yeah, yeah, we know all about 50 Cent and the smack people talk about his house. What was the second most expensive house then? The second most expensive house publically sold in Hartford County went for $3.92 million in Avon in May 2007.

How many houses sold over $1 million in the last decade? Five hundred twenty six houses sold for $1 million or more since 2001 in Hartford County. The top ten most expensive homes sold were all in Farmington or Avon. Out of the top 25 most expensive homes sold, all but four of them were located in Farmington or Avon. So, if you need a really expensive house in Hartford County, it’s probably best to start your search in Farmington or Avon.

Alright Amy, we’re not all millionaires here. How about some charts about how sales prices and sales volume changed in the county over the decade…

Average Hartford County Prices for Single-Family Homes

Hartford County Single-Family Real Estate Transactions

1. Average prices peaked in 2007.
2. Average prices bottomed in 2009 and rebounded in 2010.
3. Transactions peaked in 2004-2005.
4. Have we seen the bottom for the number of transactions?

Why do prices continue to rise in 2006 and 2007 even as sales volume was already falling? We have some theories, but need to do some more research. Is it herd mentality? Was it new construction continuing to come onto the market? Do other markets (like the stock market) also exhibit this behavior?

What does this imply for buyers sitting on the sidelines waiting for the bottom? Have they missed it? Or is the price increase in 2010 attributable to mix of sales?

It seems as though people just aren’t moving as much as they used to. The recent trend of 6,000 deals per year in the County is well below the nearly 9,000 deals per year that were happening from 2001 through 2006. Maybe people used to move hither and thither for jobs, but now they don’t. That’s a lot fewer real estate deals for us agents to divide up amongst ourselves.

As often happens, we came out of this with more questions than answers. What do you guys think – any theories? Maybe we’ll follow up on some of these if we reach any conclusions.

Also, we have this data broken down by every single town in Hartford County. If you’re interested in a specific town, email us and we’ll send you the charts.