2023 was another year of a transitioning market in Litchfield County, not unlike the tail end of 2022, only more extreme. There are some consensus facts around the single family home market which can be summarized as follows:
- Sales unit volume was down (-24%) vs 2022 and 2019 (-25%)
- Total dollar volume was down vs 2022 (-21%) but ahead of 2019 (+20%)
- Prices mostly held steady to slightly decrease above $2,000,000
- Properties below $2,000,000 generally saw prices increase
- The average selling price has gone to $500,000 in 2023 from $300,000 in 2018
- Interest rates nearly tripled
- Inventory continued to shrink
- Affordability remains challenging
- There was no recession in housing or stocks as was predicted by most of the gurus a year ago
These items help us have the following thoughts on what is driving the market today and likely for the rest of 2024.
Single family home inventory is beyond low - as we write this note there are 266 ACTIVE homes for sale in the MLS for all of Litchfield County. It was 344 at the end of 2022 (-23%). Remember this number was consistently well north of 1,300 at the start of 2020 and prior years. That’s an 80% reduction in available single family homes over 3 years.
- 80 are below $500,000
- 108 are $500,000 to $999,999
- 78 are $1,000,000+
- 32 of these 78 are over $2,000,000
This represents historically high percentages of the overall available inventory in the buckets above $500,000.
There are 3 factors we believe keeping inventory low:
- People love it here. Covid buyers are firmly entrenched in the area now. Many have moved here full time. Resales are a trickle.
- Owners are locked into low rates. We have many clients with 2-3% mortgages. Why walk away from that loan?
- Renting (short term) has allowed owners to cover costs on houses they are not using full time. Short term rental inventory has SOARED on platforms like AirBnB, HomeAway, etc. Our higher end 30 day or longer rental pricing is significantly weaker due to this, especially vs the 2020-2022 period. We see it at or below 2019 pricing today. 2023 did see several rentals go unleased and we are cautious about 2024.
- Construction costs have risen almost lock step with sales prices such that we still struggle to sell houses at or above replacement cost. Most are still well below. We do think this can be viewed as a sign of decent relative value vs some other markets (Hamptons/Florida) where pricing is at or above replacement. However, it is also a reason why speculative builders are not very active in our area. Luxury buyers here are generally not looking for cookie cutter houses where builders can try to value engineer a small profit margin.
The takeaway is we do not see inventory changing materially this year. Things will come on largely due to downsizing, death, divorce or lifestyle/work change. Buyers should remain ready and educated when appropriate properties come to market.
If the market feels any real price pressure today, it is largely at the $1,500,000 or more sector depending on property characteristics. This buyer pool is very picky again. They are largely waiting for newly renovated inventory to materialize. We have dozens of active buyers in this group. We predict the inventory they want to see is going to be thin in 2024. We are telling them to be prepared to make compromises to their wish lists and for renovations. Remember: Location, Location, Location! Come ready to look with an open mind, vision, and patience for renovation. We have excellent builders and designers in our roster who can help make this process as easy as possible.
We continued to expand our private listing business to accommodate our sellers who do not want their homes advertised on the MLS or to meet specific buyer demand via our deep owner relationships on reverse inquiry.
Here are some 2023 successes:
- Bridgewater - $3,000,000
- Washington - $2,818,750
- Washington - $2,650,000
- Washington - $2,422,500
- Washington - $1,662,500
With interest rates now off their peak and the stock market near all-time highs, we are expecting another busy year. Many of our clients begin the buying processes right after bonus season and those calls are happening now – January has been quite active with showings and new client inquiries. The best time to get deals will be before the snow is gone. Of course, nothing looks prettiest in winter, but buyers will be pleasantly surprised come spring!
Our firm continues to grow. We added a few new team members in 2023 and have one joining us already in 2024. The trust you put in all of us remains our focus and helping clients understand our market remains our driving priority. William Raveis Lifestyle Realty is proud to again be included in Litchfield Magazine's Reader's Choice Awards in the Real Estate Agency category.
Please reach out to us if you have questions concerning real estate needs in the coming year. We also cover northern Fairfield, northwestern New Haven, western Hartford Counties and NY state border towns through our brokerage. Keep in mind we have excellent agents covering NYC.