The COVID-19 pandemic introduced a “once in every 100 years” variable to the global real estate market, according to real estate broker Mary Poola. The impact and the lingering ripples it caused were profound, and especially challenging to buyers in New London County who wanted or needed an affordable home.

Affiliated with William Raveis’ Niantic brokerage, Poola has been a professional Realtor for four decades, so she has a long-lens view of the New London County market and how it’s changed in recent years, where prices have gone up, while inventory has gone down. The broker witnessed firsthand how competitive the residential market became, as buyers clamored to craft offers with concessions that would woo sellers, who were likely entertaining dozens of other offers.

Fortunately, Poola said “some of the steam has come out of the kettle,” and that the mid-2022 market is operating with “less intensity” than 2021.

Poola suggested to buyers in the market right now, “Go back to the fundamentals of good decision making in real estate. You don’t want to buy on the short. If you’re looking to turn around and sell the home in a year or two, is that really a great principle? Probably not, but if you’re coming here for a three-year job, does it still make sense to buy? Probably so.”

Despite the market challenges, buying a home in New London County remains a more affordable proposition in the under-$250,000 category, Poola suggested: “If a person is going to put out $1,600 a month for a two-bedroom one-bath rental … a $220,000 house is a slam dunk.”

“I tell buyers that their time will come, and it will be less manic, but for now, it’s still a quote-unquote sellers’ market,” Poola said.

As the CEO for the Eastern Connecticut Association of Realtors, Susy Hurlbert has a sharp view of the local market and can compare it to national stats and trends. Eastern Connecticut still suffers from low inventory.

“We still have a shortage of homes in Connecticut, and Connecticut generally trails behind national trends by a little bit. While the market may be softening across the country, my observations anecdotally from the Realtors who I’ve talked to here is that there is still high demand and low supply,” she told The Day back in mid-summer.

One of the factors that will influence the New London County real estate market in the years to come is the number of new employees Electric Boat plans to hire. EB’s president, Kevin Graney, reported to legislative leaders in January that the submarine manufacturer was seeking to hire about 1,500 new employees in Connecticut this year alone. A spokesman for EB said by email this past week that the company plans to hire 1,200 new engineers at their Groton/New London location next year and that the company would be providing The Day with a more complete hiring projection.

People being priced out

As of late July, properties were still selling at $20,000 to $30,000 above their original asking price, and buyers were pulling out all the stops to ensure their bids were accepted.

“There are still situations where escalation clauses compete with other escalation clauses,” she said.

Citing Lawrence Yun, the chief economist for the National Association of Realtors, Hurlbert expects median prices to continue to rise for the next couple of years. To illustrate how prices have been on the rise across the region, she offered some hard data.

“Every quarter, I track the median sale price for a single-family home in eastern Connecticut. For the second quarter of 2022, it was at $324,000,” she said. “But let’s go back to, say, 2007, when the market was at its peak. In the second quarter of 2007, it was $275,000.” The median low came after the 2008 housing bubble burst, when it was $190,000, she noted.

“Right now, that median price is certainly pricing people out,” Hurlbert acknowledged. “But rent growth is higher than home-price growth, according to Dr. Yun’s numbers. He has rent growth at 6.6% and [home] price growth at 5.1%. His stats also show that 74% of consumers think that buying is still a good financial investment. But for people who can’t afford either, that’s the real problem.”

She’s heartened by progress being made at the town level, with the adoption of affordable housing plans. She’d like to see creative solutions beyond new construction, like apartment complexes that have an affordable housing component, or “upcycling” former malls and schools, re-imagining them as affordable housing units. “Things like that are absolutely critical right now,” she said.

Buyers broaden their search

“Real estate remained a pretty safe investment during the pandemic,” according to Geoff Smith, an associate real estate broker with RE/MAX On the Bay in Niantic. However, buyers looking for homes under $250,000 and first-time home buyers have been at the greatest market disadvantage in New London County, he said.

While it varies from town to town across the county, Smith estimates that a three-bedroom, two-bath home with 1,500+ square feet of living space starts at around $300,000 today.

“From 2020 to now, we’ve seen about a 37% increase in [list] prices, on average,” he noted.

Competition is fierce, and buyers requiring a mortgage found it difficult to compete with buyers who came to the market with cash in hand.

“It’s been hard to be on the front lines with those buyers,” Smith said. “It’s disappointing. It’s not like they don’t love the house. It’s not because they can’t afford it. It’s not because they don’t want it enough. Sometimes they lose out just because another buyer has shown the seller that they’re ready to move forward immediately or are able to make concessions in their offer.”

In the sub-$250,000 single-family market, it’s increasingly difficult to find turnkey options. Instead, homes in this category often need work, from minor cosmetic improvements to major repairs.

“I’ve seen some buyers shy away from taking on a lot of projects because of the unknowns that come with hiring contractors right now — getting building materials at a fair price and within a timeline. Imagine owning a house and then having to wait six-to-10 months to get renovations done. That creates a lot more hurdles for buyers,” Smith explained. “People are putting a premium on the houses that don’t need a lot of work.”

Flexibility is a buyer’s friend in this market. Smith recounted working with a couple who’d had their hearts set on two New London County towns, because they wanted to be close to family. They came to realize they could get more home for their buck one or two towns away, with a negligibly longer commute to see their relatives.

“They’re under contract right now on a house they love, and it has everything they want, even a pool,” their Realtor reported.

Asked if he has advice to buyers who are in the market for a New London County home under $250,000, Smith suggested, “Be patient and diligent. Regardless of how fast-paced the market is, you don’t want that to dictate how quickly you move. You don’t want to overpay for a property or settle on something you’re not 100% satisfied with. So, stay focused, and take a hard look at your wish list, deciding on what you really need.”