Higher-price real estate market will likely 'stabilize'

Brookfield CT

03 June, 2022

8:16 AM

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By Scott Benjamin CT Realtors president Tammy Felenstein says that when you add in the increase in prices and higher interest rates, homes are "55 percent more expensive nationally than one year ago today," but she believes the market will "stabilize" by the end of 2022. Felenstein of North Stamford said that would be largely due to the Federal Reserve Board's commitment to increase interest rates as it tries to contain the highest inflation in 40 years. "It's not going to collapse. It's just going to be more stable," she explained in a phone interview with Patch.com. The Wall Street Journal recently reported, "With a nudge from the Fed's recent interest rate increases, mortgage rates have risen almost 2.3 percentage points since November to 5.25% last week, the steepest rise in a six-month-span in decades." CT Realtors Vice President at Large Scott Cooney of Danbury said that he agreed that the market will not collapse. "The difference between now and the collapse between 2005 and 2008 is that back then there were folks who got access to mortgages that were not able to fulfill their obligations on mortgages," he explained in a phone interview with Patch.com. "Now the underwriting is stricter." "A lot of folks today who get mortgages are qualified for mortgages," added Cooney, who is a branch vice president in Danbury for Coldwell Banker Realty. "With the interest rates going up it already has stabilized the market. There isn't as much a frenzy and fewer people are looking to buy homes." Felenstein, who is the Strategic Growth & Sales Manager for William Raveis in the Southport office in Fairfield, said that although work-from-home has made the Connecticut housing market more attractive since the pandemic, her members are plagued by a lack of inventory. That has been a chronic problem. "We have plenty of people buying, we just don't have enough units to sell," she remarked. "When COVID first started happening and the real estate market first took off, it was really that people were fleeing Manhattan – looking for a safer place," such as suburban Connecticut, Felenstein said. "We have this extra level of demand because people can work from anywhere. I think this is going to continue. This is going to be normal." During her campaign a year ago, Stamford Democratic Mayor Caroline Simmons told Patch.com that nearly "30 percent" of the commercial space there was vacant and that it was "going to be difficult to fill the spaces unless we get creative." She indicated that some of it should be converted into residential. Cooney said, "That's a trend across the country in converting commercial to residential." Said Felenstein, "That's something that we're working on statewide," regarding efforts to update "zoning regulations." The New Haven Register has reported that David Lehman of Greenwich, the state commissioner of Economic and Community Development, recently said, "If you look at (annual) new housing permits, we've been stuck at about 4,000 for a long time. We need to be doing 10,000 to 15,000 new housing permits per year if we want to be economically relevant 10 to 15 years from now. And the type of housing needs to be broad-based." Felenstein said, "Every community needs affordable housing. It is especially needed in the urban areas." On another topic, she noted that although CT Realtors endorsed Republican Bob Stefanowski of Madison in the 2018 Connecticut gubernatorial race, "we ended up having a wonderful relationship with [Democratic governor] Ned Lamont." In particular, she pointed to his support during the early days of the pandemic. Felenstein declared, "If he [Lamont] had not allowed real estate to be considered essential in the beginning of the pandemic, we would not have been able to receive the exodus from New York City." Lamont of Greenwich and Stefanowski are poised for a rematch in the November 8 election. CT Relators, one of the largest trade organizations in the state, has been more politically active since it held a rally at Horace Bushnell Park in Hartford in 2017. The organization sponsored gubernatorial debates during the 2018 campaign. Felenstein said with a $956.5 state budget surplus for the fiscal year that ends June 30, Connecticut is "in a good spot" after a number of years of stagnant fiscal growth and tax hikes. However, she acknowledged that the state still faces some long-term pension debt obligations that will have to be funded. "We're not seeing the population decreases that we had seen," she commented. "That was a big issue a couple of years ago." Resources: https://www.wsj.com/articles/the-fed-searches-for-the-magic-number-to-cool-a-red-hot-u-s-housing-market-11653402996 https://patch.com/connecticut/... https://patch.com/connecticut/brookfield/ct-real-estate-plagued-modest-price-gains-low-inventory https://www.nhregister.com/business/article/Stamford-and-New-Haven-are-economic-17199199.php?t=5978acff16 https://ctnewsjunkie.com/2022/... https://patch.com/connecticut/...