As the chart above clearly shows, the month of April did not conform to traditional spring market trends. Instead of the surging towards peak activity in April and May, the 2020 market reversed direction and recorded fewer contracts than were observed in January.
For those interested in the magnitude, April lagged the same month in 2019 by about 37%. Despite the reversal, on a year-to-date basis the County is only trailing 2019 totals by 2.5% for single-family home contracts.
We saw the writing on the wall at the end of March. During April we noted opportunities for sellers, and how a decline in the pace of listings was an important indicator. We continue to believe that new listings is the best metric to gauge the potential of the market. Activity is more limited by the number of sellers in the market than by the number of buyers.
A market is generally considered to favor sellers when there are fewer than 3 months worth of inventory available. It doesn’t begin to favor buyers until inventory gets above 6 months. Greater Hartford has seen falling inventory levels for the past few years as the local real estate market strengthened. This month’s measure showed only 2 months of inventory available, which not only signals opportunity for sellers, but also goes against typical spring trends.
Despite the dramatic chart, the local real estate market continues to operate smoothly. At this point we have new processes related to showings, inspections, and closings that allow each step to occur … just differently. A good percentage of the transactions in a given year involve people who genuinely need to buy or sell a home. Comparing the actual contract total for April 2020 to the total we expected based on data through February (1,000 to 1,200 contracts in April), about 55% to 65% of folks felt that they had a serious housing need.
Reach out for a private consultation to understand your opportunities in this unusual real estate market, where experience, analysis, and advice is even more important than normal.