Real estate by nature can be a very volatile business, ebbing and flowing based on supply, demand, market condition and mortgage interest rates.
The pandemic that began in March 2020 brought with it an unprecedented demand for homes not only here in Connecticut but across the country.
“In March of 2020 as the world shut down, we thought the real estate market was going to tank,” says Ryan Smith, CEO at Connecticut residential brokerage Tier 1 Real Estate. “Even industry experts were surprised to see that the exact opposite occurred and that the market took off.”
This was the result, Smith says, of a combination of factors, including low interest rates that were designed to stimulate the economy, a migration of people from city to suburbs as work from home opportunities increased, and an increased desire by potential buyers for additional space and amenities like home offices and home gyms.
“The demand led to an increase in home prices by more than 40% over the past three years alone,” Smith says. “The state of Connecticut, and specifically Hartford County, continues to face the challenge of a lack of available housing inventory leading to less homes available for sale, shorter days on the market and intense competition for the best properties. Home prices remain strong.”
While mortgage interest rates during the pandemic hovered around 3%, those rates have nearly doubled since, resulting in homeowners hanging onto properties longer. Smith says this is where realtors need to educate both home buyers and sellers on how to best navigate the market.
“Sellers need help navigating multiple offer situations to get the highest price and best possible terms,” Smith says. “Buyers need to know how to design their offers in a way that will give them the best chance of their offer being accepted.”
Operating in Connecticut and Massachusetts with a focus on Central Connecticut, Tier 1 was founded in 2009 in Bristol. In 2021, the company added a second office in Avon and its roster of agents has grown from 25 to 40 in the past two years. Tier 1 increased its sales volume from more than $100 million in 2021 to $115 million last year.
“The key to our growth has been our willingness to share our knowledge and expertise with others,” Smith says. “We are local market experts and know the ins and outs of the neighborhoods and market conditions where we work. We maintain our expertise by keeping a close eye on the local housing market and regularly monitor the inventory of homes for sale, median home prices, price per square foot and average marketing time to stay current with market trends.”
While 2021 and 2022 were record-breaking years for most people in the real estate industry, Smith says 2023 will present more challenges.
“Some realtors and real estate brokerages will go out of business during this time but the ones that remain will be in a stronger position to succeed into the future,” Smith says. “As interest rates and median home prices rise, reduced affordability threatens to put the goals of home ownership out of reach for a lot of Americans. As realtors we are helping our clients make one of the biggest financial transactions of their lives. That is a responsibility that I take very seriously.”