Four factors drove the Fairfield County luxury real estate market in Q3: lowered interest rates, increased buyer interest, strategic seller opportunities, and ongoing inventory challenges.
Here’s an overview of how this played out.
Q3 Market Overview:
The Federal Reserve’s decision to lower interest rates played a pivotal role in Q3, boosting buyer activity through accessible financing and pitting it against an already tight inventory market. Limited Inventory challenged buyers, with new listings down significantly compared to last year.
In desirable areas, this led to more competitive bidding which added pressure on buyers and created opportunities for well-prepared sellers. This dynamic benefited sellers across all markets with an increase in both median home prices and sales to list ratio.
Days on Market (DOM) dropped, reflecting faster transactions for homes priced properly. The decline in DOM, combined with sales-to-list ratios above 100%, indicates that motivated buyers were ready to act when they found the right property.
Q3 Snapshot by the Numbers:
- Unit Sales: Overall sales volume remained constrained by the limited availability of new listings. For the quarter, new unit sales declined by 9.3%.
- Median Prices: While two markets experienced a Q3 dip in median sales prices (Southport, Ridgefield), the overall price trend remained positive across the luxury market at +8.9%, supported by demand for high-end homes.
- Inventory Levels: New listings fell by 20.5% across the quarter compared to last year, keeping competition high and options limited for buyers.
- Sales-to-List Ratios: Most transactions continued to close near or above asking prices at approximately +1.0%, reflecting a competitive market where buyers were willing to pay for properties that met their criteria.
- Days on Market (DOM): The average DOM dropped by 15% as serious buyers acted quickly in response to limited inventory and competitive pricing.
Our conclusion: The third quarter of 2024 has been marked by strong buyer activity, limited inventory, and the influence of lower interest rates. As we move into Q4, opportunities exist for buyers to secure favorable terms and for sellers to take advantage of strong demand.
Looking Ahead: Q4 Predictions:
As we enter the final quarter of 2024, a few trends could shape the market:
- Continued Buyer Demand: Lower interest rates will continue to attract buyers, especially in the luxury segment where small rate reductions translate into significant savings. This could sustain demand through the typically slower winter months.
- Gradual Inventory Improvement: Some sellers who were waiting on the sidelines may decide to list in Q4, drawn by the strong buyer activity. While this won’t offset buyer demand, it will lend balance, offering more options for buyers. We expect competition for desirable homes to persist.
- Price Stability with Local Variability: We predict that median prices will hold steady based on supply / demand. Buyers may see opportunities for negotiation in markets where properties have lingered. The disparity between high-demand and slower-moving areas will become more pronounced.
Our advice to buyers and sellers:
For Buyers:
Challenge: Limited inventory makes finding the right property difficult, and competition remains strong.
- Action Steps:
-
- Be Ready to Act: Get pre-approved for financing before starting your search. This ensures that when you see the right property, you can respond quickly. This minimizes the risk of losing the home to better prepared buyers.
-
- Embrace Flexibility: Identify properties that might not meet 100% of your criteria but have potential for customization or improvement. This can open doors in a market with fewer options.
-
- Leverage an Advisor’s Expertise: Work closely with an advisor to identify homes that are likely to become available soon. Off-market opportunities can be a way to avoid bidding wars.
For Sellers:
Challenge: While inventory constraints offer sellers a competitive edge, buyers will not fall for mis-priced homes.
- Action Steps:
-
- Price Strategically from the Start: Work with your advisor to set a price that attracts attention without undercutting your property’s value. Sales-to-list ratios remain strong, but buyers are quick to pass on a home if it is overpriced.
-
- Market-Ready Presentation: Invest in pre-list improvements and professional staging to make the home stand out. This ensures the property commands top dollar, even if buyers are cautious.
-
- Highlight Long-Term Value: Today’s buyers are thinking long-term, especially in the luxury segment. Work with your advisor to emphasize features that align with this mindset, such as energy efficiency, location benefits, and potential for appreciation.
At Cindy Raney & Team, we focus on our client’s end goals, starting with the greatest challenges they face. This allows us to advise and develop strategies that address client needs directly. This approach allows us to offer guidance that aligns with what clients want to achieve.
