What is the state of the real estate market in New Canaan, Connecticut?

We are still in a seller’s market moving toward a more balanced stateas prices rise by 3% annually. Affordability has decreased as a result of price and interest rate movement. Scarcity isdriving price appreciation.

What are questions and concerns potential buyers and sellers have?

Sellers want to know why some houses aren’t selling while others sell quickly in bidding wars. Buyers want to know where the deals are, and how they can compete successfully when they confront a multiple-bidder scenario. Deals can be found on properties that need significant work.

Does the number of days on market affect the sale price and buyer interest?

We have one chance to make a first impression in the market, and it is true that a listing will get the most views in the first two weeks. Most listings do not sell immediately, and many houses are selling for full price months later. In the last year, 214 sales of single family homes, the median Days On Market is 30 but the average is 65 days, selling for 98% of asking. The 7 houses which listed for the longest, 286 days, sold for 88% of their listing price while the rest sold at 98%.Some homes, even when fairly priced, just take longer to find a buyer. Case study: One of my recent listings below $1 million accepted an offer, it fell through. We got a better offer in the second month. It fell through. We got an even better offer in the third month and the house sold. Houses that close in less than 30 days almost certainly sold to cash buyers, which in my experience is not necessarily the highest bid, just the best bid. In this market days-on-market is a poor predictor.

When does the Spring Season start for real estate in New Canaan?

The conventional wisdom is Super Bowl Sunday, early February. The holidays are over, bonuses have been announced on Wall Street and new inventory is starting to hit the market. Statistically, Realtor.com says the best time to list is April 10-16. Is this true in New Canaan? We used to see contract signings peak in April resulting in May and June closings.When the contract is signed we are expected to mark the listing “Pending” Looking at the “New Pending” chart for the last 5 years we see less seasonality in the market with the peak months varying greatly. In 2019 the peak was July, then in 2020 it peaked inJune, maintained inJuly and hit a new high in September. During the pandemic 2021 the peak was May;in 2022 it was August, and this year it looks likeAugust. Contract signings are not even close to flat for the period May through September. There is great volatility which I attribute to low inventory and opportunistic buyers.

Is Spring season significant for buyers and sellers?

The Spring Season is the beginning of the wave. Sales increase by 75%for houses selling in March through May.The National Association of Realtors says the highest prices occur in April and May. Summer is the peak for closings increasing an additional 48%.Decisions in April close in June and the months of June, July and August represent 40% of total sales and 37% here in New Canaan. Homes that sell in July and August sell 5.5 days faster than average. Summer sales are the best time for sellers in a hurry. Fall comes in second to Summer for volume nationally, but Fall’s been about equal to Spring this past year in New Canaan. Nationally, while showing activity drops 44.8% between September and November the homes that do close in October and November sell for a few percentage points higher before dipping to their lowest level December through February.

Where are the buyers coming from?

Local, out-of-state, or international? I used to estimate 25% were local cross-town-moves, 25% were trade-up buyers from the surrounding towns, and 50% were from New York and beyond. I think that the pandemic has caused growth in the out-of-town segment at the expense of cross-town-moves and even trade-up buyers.

What are the top three things buyers are looking for in a house in New Canaan?

Location, land, and then a home that is updated. The market is discounting houses that need work. Houses that look like a magazine spread are finding multiple bidders. Many of us are turning to stagers to ensure that the initial presentation is perfect.

What is meant by location in New Canaan?

New Canaan is not as neighborhood driven as some of the neighboring towns because ofgeography. We are not stretched out over miles of highway (Darien on Rt. 1 or Wilton on Rt. 7) and we don’t have amost expensive coastal neighborhood (like Tokeneke, or Riverside) New Canaan is organized like a bullseye around the downtown shopping district. Instead of neighborhood we talk distance to town and whether you live in-town orthe 1 acre, 2 acre, or 4 acre zone. Buyers focus on shared driveway, distance to the station, road noise, sunlight, presence of wetlands, amount and location of flat land, proximity of neighbors, whether the road has a double yellow line in front and the number of swing sets in the neighborhood. These are just some of the not-so-obvious clues as to the livability of the location. In New Canaan two houses on opposite sides of the same street can have vastly different quality quotients. I once had a buyer shush me as he listened for the sounds of cars passing a quarter mile away. Expect this from buyers.

Notes from the Monday Agent Meeting:

Willingness to renovate, take on a major project, is at an all-time low. Partly, it is because of the labor shortage. Partly, it’s a lingering result of supply-chain problems. Partly, it’s a function of selling to a (Millennial-dominated) market with no experience renovating. Millennials (born 1981-1996) now represent the largest demographic, 72.24 million, and only 51.5% of them owned homes in 2022. By age 40 only 62% of them own a home (in contrast to 69% of Baby Boomers). We’ve got a few homes left for them here in New Canaan and not all need work. We get estimates to have the work done. Buyer estimates to renovate are usually higher than the seller’s estimate on the same renovation. Going through our listings this year we found our sellers are spending between $20,000 and $200,000 preparing their houses for sale. It’s common to see preparation start with a $10,000 staging budget and $10,000 of painting. Add some masonry repointing and maybe roof work and pretty soon we’re talking real money. In one case the lender requires $150,000 in renovation work before closing. Another seller is spending the minimum, about $50,000 on deferred maintenance. One seller is getting ahead of listing next Spring with $200,000 of work including new kitchen and bathrooms, asking us what the return on investment on each decision will be. It’s smart of her. She’s talented, and the house will appeal to a broader market at a higher price than if she left things unfinished.

New Pending Listings in New Canaan Over Five Years

In 2019 we peaked in July, in 2020 in September, in 2021 in May; in 2022 it was August and 2023 looks like August.

Check out John Engel’s Podcast, Boroughs & Burbs, the National Real Estate Conversation here.