Although we all feel locally that prices are going through the roof, we are not out of line with the rest of the country. Residential home prices are rising all over, and we are right in line. So, despite the fact that it has been theorized that our increases are due in large part to a demand from people seeking to leave NYC, it seems to be a broader trend.
The evidence has suggested, even before the pandemic, millennials have been moving toward lifestyles very close to what their parents wanted. There have been some changes--among them the desire for walkability and smaller lots with smaller homes--the general trend has been for buying homes, often in suburban areas, with outdoor space and good schools. This was true before the pandemic, and has only increased with remote working and family bubbles during COVID. Generations before this age group have largely done the same thing, but now the people buying span a bigger age range. Student debt, poor job prospects after 2007, and protracted adolescences have caused first-time buyers to wait longer.
That cohort is now a broader spectrum, from the 20s to early 40s, and it is colliding with baby boomers who are looking to downsize. Given the differences brought about by changing tastes, it is putting mid-size homes in walkable neighborhoods at an incredible premium. This means that the rapid rise in prices would be driven primarily by a lack of supply, fueled by a postponement of sales for a decade prior. Americans are staying in their homes longer than was customary, and the backing up of the supply chain is causing shortages now, just as it has with paper towels and outdoor equipment.
What will happen next? Well, it doesn't seem that Connecticut is in a bubble by itself, which is good news. And the death of cities may not occur, although the trend toward smaller ones may continue, especially with the likely permanent increase in telecommuting, at least for part of the time. So prices will stay high for the intermediate future, as long as mortgage rates cooperate, and our region will go on doing well. It won't be about the pandemic, but about lifestyle, normal life cycle changes, and job opportunities.
If you are a buyer, you will be paying more, but at an affordable monthly cost that is comparable to what has been paid in years past, with higher interest rates. If you are a seller, now is your chance!
