above: 1090 Westover Road, a 4,500-square-foot home with four bedrooms and 4.5 bathrooms, sold for $2.275 million by Staci Zampa, Compass. – Photographs: Greenwich photo
The Stamford real estate pendulum swung in perfect balance for most of the last five years of the past decade. Transactions frequently occurred smoothly, inventory remained consistent, and the city’s popularity grew. Between 2010 and 2020, the population increased by more than 10 percent and, by the end of the decade, more than 135,000 residents called Stamford home.
The global pandemic sparked a buying surge, but for most of 2021 and 2022, Stamford’s inventory of homes stayed mostly consistent with demand—and the pendulum remained steady. And then, in 2023, a lack of inventory coupled with surging interest rates disrupted Stamford’s real estate equilibrium, and the smooth-swinging pendant moved wildly in the direction of sellers.
Though demand remained strong, would-be buyers found fewer homes available for purchase. In many cases, they had to offer well above asking price. Even then, they needed luck. Offers flooded in, and some found themselves in bidding wars, frequently on the losing end. Many had to bid on 15-plus houses before they finally found a home. An entirely new dynamic came into play as realtors navigated buyers and sellers through appraisal gaps.
“Everything was difficult,’’ says Barbara Hickey of William Pitt, who has been selling homes in Stamford for more than two decades. “Sellers believed they could name their price, and then you’d get buyers who were flooding a listing and fighting each other to win the bid.”
The inventory hurdle was no small thing. At the end of 2020, Stamford saw 190 homes on the market and 941 transactions closed during the year. At the end of the third quarter 2023, inventory stood at 121 homes with just 402 transactions. The year-over-year number of transactions declined 34 percent through September, and dollar volume dropped 32 percent. The median sale price rose 5 percent, to $790,000. Meanwhile, the average days on the market stood around 50 days, a ridiculously low number.
“Since Covid, Stamford has just been an insane market,’’ says Staci Zampa of Compass. “I think it’s starting to regulate. The market went up so quickly. I think we’ve seen the peak of weak inventory. If we get more inventory, and I think we will, I think we’ll see a more balanced market.”
Heading into the spring market for 2024, many variables will continue to influence market conditions. How it plays out is anyone’s guess.
“I’ll be watching rates,’’ says Vikktoria Cooper of Coldwell Banker. “If rates pull back a bit, it will encourage a return of those buyers who had to step back. An additional wave of buyers will also be making their way into the mix. Those who sold their homes and are renting will also come into the marketplace. In short, it could look like a tsunami. It will continue to be a seller’s market.”
Pandemic Frenzy
The current Stamford real estate landscape can’t be analyzed without addressing the consequences of the pandemic. After a stable stretch, Stamford ushered in a whole new set of buyers. The table was set for the frenzy that occurred in ’23.
“The pandemic drew people running hysterically out of the City, desperate for elbow room,’’ Hickey says. “The manner in which businesses are running changed everything. They no longer have to rent expensive office space and workers wanted to move to places where they could find space. So now people can look to other communities to set up their homes. They don’t need to be tied to the railroad and it just continued to bring people out.”
But it wasn’t just the City from which more residents flocked to Stamford. Homeowners from Westchester County found they could get more house and pay less in property taxes by moving just a few miles. Former Long Island residents were drawn by the same reason. Young professionals also continued to move to Stamford. Even residents of some far-flung Western states migrated East. Stamford’s vast cultural and recreational opportunities, along with good schools, value and proximity to the City for occasional forays drew unparalleled interest.
With so many people anxious to call Stamford home, inventory dwindled rapidly. The number of available homes has declined every quarter since 2021.
“We still don’t have any condos,” Zampa says. “We have a lot of rental properties. There are so many rental properties now I can’t even name them all. I’d like to see more condos and fewer rentals. That means people are putting roots down. We don’t have that entry level condo.”
Finding A Solution
Of course, sellers benefit from the reduced inventory. But buyers can still get the home they adore if they have the puzzle pieces in place before entering the market.
“The first thing buyers need to do is surround themselves with a team,’’ Zampa says. “Talk to the bank and find out what you can afford and what you want to pay. Then go look for a house in that price range.”
Buyers could also wait for more favorable interest rates or continue to pay rent. One alternative is to seek out an adjustable mortgage instead of a fixed rate. The gamble in waiting, of course, is that prices could move higher. And so could interest rates.
“You have to do the analysis,’’ Hickey says. “We all know prices and interest rates can’t go up forever. You really have to ask yourself what you can afford. Patience is the best possible course and cool heads must prevail.”
Looking just outside of Stamford was a short-lived alternative for many buyers. The masses quickly moved into Norwalk, driving those price points higher. With no relief in sight, many buyers dug their talons into rentals and prepared for the next round of inventory in 2024.
Frustrated Buyers
Stamford has wrestled with housing affordability for decades. Politicians have tried multiple initiatives to mitigate the crisis, but those solutions usually involve rental properties. Potential buyers faced terrible conditions in Stamford in 2023, and many walked away frustrated and upset.
Escalating interest rates certainly impacted the market. The difference between a 3 percent interest rate and a 7 percent interest rate on a 30-year fixed loan of about $500,000 is about $1,200 a month. Interest rates stayed steadily below 4 percent for most of the past ten years, and experts warned people that the low interest rates would not last forever.
They were right. Rates have swelled considerably since 2020. The Federal Reserve Board raised the interest rate 11 times between March 2022 and October 2023. Rates at the end of 2023 were the highest they have been in nearly 20 years. The Federal Reserve Board’s attempt to wrestle down inflation has been met with a collective yawn.
Moreover, cash buyers frequently came and purchased many of the homes. Sellers preferred cash transactions, as there are fewer hurdles to navigate during the closing process.
“Cash is king,’’ Hickey says. “A lot of buyers are losing to all cash. When you’re working with lenders, there are so many things that can go wrong along the way.”
Some have circled the wagons and pulled resources from family and friends and entered the market as cash buyers in hopes of wooing a seller’s favor.
Sellers also recognize they have the advantage. Zampa says “aspirational pricing” cooled toward the second half of the year, but there are still some buyers who are setting very high bars.
Even in this market, sellers have to be cautious about overpricing their homes. “If you’re a seller, you are still wise to properly prepare your home for the market, properly present to the market and accurately price it,’’ Hickey says. “Go away for the first weekend and let me manage the stampede of people coming through the house. Within a week, we could be discussing several offers. Buyers want homes, but they are not completely foolish.”
Concerns about what inspections might turn up and appraisal gaps tempered “as-is” purchases during last quarter of 2023. Pricing strategy became very important.
“You have to be on point with your pricing,’’ Zampa says. “The best thing for a seller to do is to get their house on the market and if it’s priced too low, people will bid it up.”
What To Watch
A reduction in interest rates could start to shake the market loose. There are other signs, however, that could indicate the Stamford real estate pendulum is swinging back to a steady state.
Additional inventory will be one key figure. The other statistic real estate agents will watch is Days on Market. If that ticks upward in the spring, that will demonstrate that equilibrium is returning to the marketplace.
Certainly, that’s the goal for 2024. “I think it’s the first full year where we’ll see a normal market again,’’ Zampa says. “It’s all going to depend what the Feds do. And we’re already seeing signs of more inventory.”
That would certainly be welcome news, because the past few years have been extraordinarily complex. “It’s been a real challenge,’’ Hickey says. “Buyers and sellers need to work with agents who are on the top of the game and on their toes. That’s still the best way to get things done.”
One Couple’s Quest for the Perfect Home
In January of 2023, Vikktoria Cooper met a couple anxious to enter the Stamford real estate market with a list of wants. The Coldwell Banker Associate Broker warned them straight away some concessions might be necessary.
“The market had raced past their pre-approval level at ludicrous speed,’’ says Cooper, recalling the movie “Spaceballs” with Mel Brooks. “It was the craziest market I’ve ever seen in my nearly 20 years of experience.”
Rising interest rates, limited inventory and strong demand frustrated many potential buyers. People who hesitated or tried to find the “perfect” match frequently found themselves shut out altogether.
“Toward the end of June, my first-time homebuyers learned to forgo the updated kitchen and two baths for one in need of updates and with one bath,’’ Cooper says. “However, their epiphany came too late. The increase in rates eroded their buying power well below their pre-approval levels.”
The couple switched focus to a condominium, but that market also dried up. “By the time they pulled in to see a condo, all that was left were the tire marks of the many buyers who had come before them,’’ she says.
When a property came on the market, Cooper and her clients dropped everything to see it. Still, they could not find the one.
The lessons learned should resonate with every homebuyer: Know how much you can afford, what you’re willing to accept, and be able to move quickly.
“This is not your parents’ market. Their experiences from 10-plus years ago does not make them real estate savants. The speed at which the markets have shifted is unmatched,” Cooper says.
Buyers should listen to professional advice. “Internet services do not have the answers, and crystal balls aren’t going to predict the many flavors of real estate.”
As of press time the couple is still renting but at the ready for when the right home comes available.
Local Lending Lessons
Penn Johnson has been around the real estate block. As a 36-year industry veteran, the president of Stamford Mortgage knows how to help first-time buyers navigate a complex market.
Johnson advocates finding the right lending partner before starting your home search. “It’s a mistake to start looking at properties before you have your budget set,’’ Johnson says. “You might be looking too high—or too low.”
While interest rates have climbed dramatically, Johnson believes it’s a mistake for potential home buyers to focus on rates. The most important number, he says, is monthly payment.
“Figure out how much you can put down and what size payment you are comfortable with and go from there,’’ he says. “It’s all about finding the right house that fits your budget. Don’t try to time the market, because you never know what interest rates are going to do. You can’t predict mortgage rates.”
Mortgage rates jumped dramatically in 2023 as the Federal Reserve Board hiked them multiple times in an attempt to cool surging inflation. While fixed rates approached 8 percent, adjustable rates might be a better option for some buyers.
“Now that rates have gone up, about a third of our buyers are taking adjustable rate mortgages,’’ Johnson says. “It can be fixed for five to seven years before you’re subject to a rate adjustment. During that time you might be able to refinance.”
While the real estate landscape might have changed—homes in Stamford are on the market for less than two months, on average—the buying process has not. People still need to get their finances in order, get pre-qualified and be ready to move.
“Most sellers are going to ask for a letter from a lender that you’re qualified before they even negotiate,’’ Johnson says.
He says well-prepared buyers will eventually find the right home. “I tell my clients to be prepared and be patient. Stay at it, know your numbers, and move quickly when you see a home that fits the bill.”
