Hartford County real estate continued the seasonal decline in activity with 830 single-family contracts in November. The total was essentially equal to the November 2020 count, leaving year-to-date activity down about 5% compared to last year.
It is clear that buyers and sellers are back to their traditional attitudes about when during the year they collectively want to be most active in the market. 2022 seems likely to follow the seasonal trends of 2019 and 2021 rather than the pandemic year of 2020.
With that said, there are still interesting questions to consider. Inventory has been a continuous problem since the beginning of the pandemic, and there are no signs of a resolution. The County is back down to about 0.8 months of homes available. This is approximately where we began the year, and far too few homes to accommodate the expected number of buyers.
Our main concern is that we may be running out of sellers who have a choice about whether or not to sell their homes and chose to do so because it was a strong market. Maybe they had two (or more) properties and wanted to simplify. Or maybe they had been thinking about downsizing for a while and decided that the hot market was a good chance to sell. There is often a modest amount of slack in the real estate market that agents have spent the past 18 months eliminating as they (we) looked for listing opportunities.
New construction is unfortunately not a viable solution to our inventory problem. The lead time for the number of new homes that would be needed is on the order of years simply due to the logistics of construction. A developer needs to acquire land, secure permits, and then actually build the structures. Even before the pandemic the economics of new construction in Greater Hartford was unfavorable for modestly priced homes. Supply chain issues, combined with rising material and labor costs, make it even more unlikely that any meaningful number of homes will be built at price points below $400,000.
The most likely way to rebalance supply and demand in the market is for buyers to suddenly become a lot less interested in buying. Since that would presumably only happen if something bad happened to the economy, we’ll not root for that “solution” to our real estate inventory problem.
At this point it appears that 2022 will continue to be a seller’s market. We’ll see how prices changed during 2021 once the year closes, though we expect that they rose this year and expect continued upwards pressure on prices next year.