Are we in a housing bubble that’s about to burst? Despite the fact that Connecticut home price growth has more than quadrupled income growth over the past two years and many believe a recession is on the horizon, we anticipate demand in fabulous Fairfield County to remain strong. Here are a few reasons why:
Home Equity. Over the past 2 years, Americans who own homes have gained more than $6 trillion in housing wealth! Many are still seeking to lock in those gains & right size into their “forever” home. Loving where they live, many buyers are already Connecticut residents.
Millennials. At age 30, millennial home ownership hit 42%, compared with 48% for Gen Xers and 51% for baby boomers at the same age. Although nearly 18% of the 72 million Millennials believe they will rent forever, many more are aggressively pursuing the American dream of home ownership. The draw of CT? Award-winning schools, entertainment, culture, world-class shopping, pictorial landscape - both countryside and coastal.
New and Growing Demand. Gen Z, 65 million strong, is entering the housing market now, fueling a surging demand for rentals. Furthermore, the trend of single person households is growing. According to census data, there were 37 million one-person households in 2021, 28% of all U.S. households. In 1960, single-person households represented only 13% of the total.
Money. As rental rates rise, home ownership becomes more attractive as it has a similar or even lower cost, assuming you have the necessary down payment. Both Millennials and Gen-Z-ers are inheriting, or being gifted, money to help with housing. The Greatest Wealth Transfer In History is underway, and it’s happening often well before death. Interestingly even as the risk of recession rises, employment is high with even higher demand. Many are earning much more than 2 years ago, giving them greater buying power.
New Interest. Lots of areas around the US have been exposed to new, wealthier audiences over the past 24 months seeking refuge outside of cities. This is true in Connecticut too, where competitive bids have driven sales prices above asking. In May 2022, the median sales to list price ratio was 103.6%! Work-from-anywhere is here to stay and many seek multiple abodes from which to work.
Shortage of Supply. The US has been under-building for the past decade-plus. Home construction peaked in 2005; now with a deficit of about 3 million homes, it could take a decade or more to catch up. The inventory level of single family homes for sale in Fairfield County is 67.8% lower today than it was in May 2019 — Westport has 74% fewer homes for sale, Weston 73% and Fairfield 67%. Many communities are looking to higher density planned and mixed use developments to help solve the housing shortage. See proposals in Weston and Westport currently in planning stages.
Aged Housing. The median age of a US home is about 44 years; Fairfield County homes are, on average, 53 years old. The demand for brand new or renovated homes keeps growing. Many homes will need massive repairs or replacement. Historic homes in CT offer charming appeal, particularly when renovated, blending in necessities for today’s lifestyle.
Will there be re-balancing in Fairfield County with some home prices coming down after irrational and unsustainable gains? Probably. Will others go up? Probably. Will there be some jitters, causing buyers to pause and wait to see what happens? Probably. Will some look at the bigger, longer term picture? Yes!
It is our job is to help guide you into a home that is comfortable both physically and financially, at your pace. Please reach out if we may be of any assistance.