What the Heck is Going On in the Central Connecticut Real Estate Market?!

Do you really want to know how bad the real estate market is?  Are you sure? 

OK. You asked for it.

The Towns & Median Sales Prices

I chose to feature three towns in my area of expertise: Manchester, Newington & Glastonbury.  In 2007, the median sales price for a single family home in Manchester was $219,900; $249,900 in Newington & $399,900 in Glastonbury. Two are east of the river, one is west and they represent the middle of the market. 

As you can see, the prices have either stayed stable or risen from 2006 – 2007. But, the prices only tell you part of the picture. 

Supply & Demand

Sales price is just one method used to analyze the market.  A look at supply & demand is another tool and is used to predict market activity in the future based on past number of sales and how many homes are currently for sale, or the Absorption Rate.  To illustrate the absorption rate, let’s look at Glastonbury.

In all of 2007, 371 homes sold, or about 31 homes per month sold.   Currently, there are 132 homes on the market and assuming that about 31 homes will sell per month, it would take 4 months to sell the current inventory (Or 371/12=31, then 132/31=4, the estimated number of months it will take for a home to sell).

Generally, it is considered to be a seller’s market when there is less than 3 months inventory on the market.  3-6 months of inventory is considered normal or balanced, while anything above 6 months is considered to be a buyer’s market. 

Based on this, Glastonbury is generally experiencing a Normal & Balanced Market. 

How about Newington?

In 2007, 241 Homes Sold.  There are 71 on the market.  There is a 4-month supply of homes on the market.

 And Manchester?

In 2007, 513 Homes Sold.  There are 173 on the market.  There is a 4-month supply of homes on the market.

Slicing & Dicing

Let’s dig a little deeper into the numbers.  This time, I’ll look at the absorption rate over shorter periods of time and I’ll look at condominum sales, too. Instead of using the total # of homes sold in 2007, I’ll only go back 6 months and then three months, so the sales data is the most current.

 Glastonbury: 6-month & 3-month for single family homes

6 Months: Three months worth of inventory or normal market.

3 Months: Six months of inventory or normal market.

 Glastonbury: 6-month & 3-month for condominums

6 Months: Two months worth of inventory or Seller’s Market.

3 Months: Four months of inventory or normal market.

Newington: 6-month & 3-month for single family homes

6 Months: Three months worth of inventory or normal market.

3 Months: Four months of inventory or normal market.

Newington: 6-month & 3-month for condominiums

6 Months: Two months worth of inventory or Seller’s Market.

3 Months: Two months of inventory or Seller’s Market.

Manchester: 6-month & 3-month for single family homes

6 Months: Three months worth of inventory or normal market.

3 Months: Five months of inventory or normal market.

Manchester: 6-month & 3-month for condominiums

6 Months: Three months worth of inventory or normal market.

3 Months: Four months worth of inventory or normal market.

But you thought the market was Teribble?  And that I was going to confirm how bad it was? 

It’s not great but it’s not bad – it’s normal.  We just haven’t seen normal in a while and we don’t remember what it looks like. 

I caution you on trying to use this info, which is general in nature, to apply it to your situation.  The most accurate way to utilize absorption rate is to compare similar properties (number of bedrooms & price range) and determine what type of home is selling and what isn’t, because it can differ.  With that said, these three towns are experiencing a balanced market over all- not a selling frenzy! 

Let’s look into my crystal ball…

It looks like Glastonbury is moving into more of a buyer’s market, at least for single family homes.  This makes sense since Glastonbury’s price range is above the median price range for the area and this price range is having more difficulty in most parts of the state. 

But Newington is in a seller’s market for condominums.  This also makes sense since condominiums in a “just around the median” town like Newington attract first time buyers who are almost always buying, regardless of the market. 

If you are selling or buying…

Make sure your agent gives you an analysis of the absorption rate in the town and price range you are buying/selling in.  Without this information, you cannot accurately price your home for sale or present an offer.