Real Estate Market Analysis January 17, 2024

Southern CT | Real Estate Market Analysis | September 2023

In preparing this report every month, I keep myself up to date on the market economics for all Southern Fairfield County. I have a financial background (MBA in finance), and I enjoy analyzing detailed financial data so I can maintain a good understanding of the market. I then use this knowledge to help my clients (both buyers and sellers) understand the market and get them the best deal possible.

Single family home sales in September 2023 for Stamford, Greenwich, Darien, New Canaan, and Norwalk were 160 units vs. 226 in August 2023 along with 220 and 298 from September 2022 and 2021. The best leading indicator for future sales is homes with accepted offers/under contract. As of October 9th, this leading indicator is about the same as last month, but well below both 2022 and 2021 (75 vs 73, 112 and 165). Overall, pricing has remained firm the last several months due to the lack of inventory, the largest factor influencing sales. A comparison of the September 2023 inventory of 484 versus the September average inventory from 2011 – 2020 of 1,992 shows the vast change in market dynamics.

Stamford condo sales in September were 43 units vs. 53 for August 2023 and 67 in September 2022. In Stamford, condos with accepted offers/under contract as of October 9th was 86 versus 89 last month and 90 September 2022 and 134 in September 2021. As reported the last several months, condo sales have also been impacted by the lack of inventory. Similar to single family homes, condo prices did soften in July, but picked up in August and remained firm in September.

Last month I discussed the impact of a decrease in interest rates. Monthly mortgage payments would be reduced between 10% and 11% for each point that the interest rate is reduced. Alternatively, the mortgage amount could be increase around 11% for each point of interest decrease and keep payments the same. The big question is what happens to selling prices if interest rates go down. I have talked to a lot of real estate professionals, and most believe it will prompt higher selling prices. We all doubt that a one- or two-point change would have any significant change in inventories. Buyers would have more purchasing power which would probably result in higher selling prices. Therefore, in my opinion, lower interest rates will not be a financial benefit to buyers. If I were in the market today, I would try to purchase today, and then refinance whenever interest rates came down.

Looking forward, I still expect inventories for both single-family homes and condos to increase modestly. The market will continue to be a very strong sellers’ market as demand remains high. During August and September, prices have remained firm. In fact, during August and September 112 single family homes were sold in Stamford, and 76 of them (68%) were at, or above the list price. I cannot think of any reason why this would change while inventories are so depressed. The real estate market is driven by supply and demand, and with a high demand and low supply, prices will increase.

With so many homes selling at, or above, the asking price I have to believe that most of these sales were multiple offers. This is when buyers are being asked to submit their highest and best offer. In many cases, the highest offer may not get accepted if a lower offer has better terms. For example – a home with a list price of $800,000 receives 2 offers. One for $840,000, subject to mortgage, appraisal and inspection contingencies while the second offer is $835,000 cash with no contingencies. The majority of sellers would take the lower offer because there is less risk of the deal falling apart, and the buyer is committed when the contract is signed (as opposed to waiting for the bank to approve the mortgage). Therefore, when submitting offers there are ways to improve the quality of your offer. Some points that should be considered are:

1. 20% or more down payment – a larger down payment is attractive to a seller because it helps mitigate the risk of the appraisal not coming through.
2. Consider a certified pre-approved mortgage. A pre-approved mortgage has already been reviewed by the underwriter, and the only step that needs to be done is the home appraisal. This should reduce the time significantly to have a clear -to-close for the mortgage.
3. Waive the appraisal contingency – if you do this, you must be prepared financially to cover an appraisal shortfall.
4. Waive the inspection – this could be risky particularly for older homes, but is certainly attractive to the seller.
5. Waive the mortgage contingency – only consider this if you either don’t need a mortgage, or you know for certain that a mortgage will not be a problem.
6. Cash with no contingencies – obviously the best option for a seller.
7. Close at the seller’s convenience – possibly even rent the home back to the seller if they need time to find a new home.

All of these options do have a certain amount of risk, and as your agent, I will help explain all the angles and pressure-points for you.

If you have any questions regarding this report or are interested in buying and/or selling a home, please contact me anytime. If there is anyone you know who is interested in buying or selling a home, I would very much appreciate you giving them my name or sending me their email address and I will contact them.

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Howard Dubman
Mobile 203-981-7047
License in Connecticut and New York