It is our annual tradition to look at the full year of data each January to see how the market evolved over the prior year. This is the one time when we analyze price data, as looking at 12 months gives a very large data set and minimizes the impact of seasonality.
2021 was a very active year for the Hartford County real estate market, despite finishing with slightly fewer closed single-family deals than in 2020. Buyers and sellers maintained a pace that was well above the previous peak in activity from the mid-2000s.
Even more interesting was the sharp rise in median sale price. There was a 10% increase in 2020, and another 12% increase in 2021, which followed a decade of meandering median prices. The surge in value since the pandemic began pushed median values over the prior market top, and does not yet show any indications of leveling.
Unlike the strong market in the first half of the 2000s, property values were not driven upwards over the past two years by “innovations” in the real estate market. Instead, the real estate market responded to larger forces in the economy. The forces were both national and local, and they acted on the real estate market through supply and demand.
A dramatic reduction in the inventory of available homes was critical to the price appreciation. The chart below shows a common inventory metric for single-family homes in Hartford County for each month of 2018, 2019, 2020, and 2021. Local markets were strong from 2016 – 2019. Inventory hovered around the 3-month mark, which is considered the upper end of a seller’s market.
Inventory fell significantly during 2020. The chart at the top shows that transactions increased by about 15% in 2020. Other reporting found that the number of listing were down about 6.7% from 2019 to 2020. Both a decrease in supply and an increase in demand caused the downward shift in inventory in 2020. Listings fell by another 5% in 2021, putting additional pressure on the market as demand remained just as strong.
The overall result was that buyers competed for available homes in both 2020 and in 2021. During peak buying months the competition was fierce, especially for high quality homes. Since one of the main ways that buyers compete is on price, there was a sharp increase in the prices that buyers were willing to pay for Hartford County single-family homes.
Inventory finished December 2021 at its lowest level since we’re been tracking the market, so early indications are that 2022 will begin with an environment that heavily favors sellers.