After years of stops and starts, the Stamford real estate market finally appears poised to take off in 2015. Located just miles from the New York state border, Stamford is a popular destination for buyers looking to simulate the big city experience. However, like many other areas of the country, even Stamford was not immune to the foreclosure bug when the market declined. After years of slow recovery, Stamford has finally turned the corner and is ready to return as a market leader. The local economy is once again robust, consumer confidence is at a 20 year high, and buyers and sellers alike were both active at the beginning of the year. All signs suggest that these trends will continue for the rest of the year, and beyond.
The current median home price for Stamford is well above the national average. At close to $375,000; this number is nearly twice as high as the rest of the country. When the market collapsed, Stamford was one of the hardest hit markets. Foreclosures lingered much longer than in other markets, mainly because of these increased sales prices. Home values have taken a slow march towards appreciation, but things seemed to have turned a corner last year. The Stamford market was down 0.7 percent in the fourth quarter of last year, but is up to start this year. Gains over the last three years have helped pull the market out of its post-recession funk. In spite of a rough winter, the first quarter of 2015 experienced its highest level of sales in many years.
The biggest reason for optimism in the Stamford real estate market is the improving economy. Unemployment numbers for Stamford are just above the national average, but are improving. Unemployment is down a modest 0.7 percent from this time last year, but there are improving signs of job growth. The state of Connecticut is outpacing national averages in terms of economic activity. With business expansion and small business growth on the rise, it has contributed to a more healthy economy. With a strong economy, local real estate is in greater demand. New single-family housing permits are above the long-term average. Construction is also on the rise from a year ago. The demand for housing is rising, which will have a trickle-down effect on the rest of the local market. With an increase in new properties will come an increase in business, which will greatly improve the economy. The fact that the first quarter numbers were up – in spite of a rough winter – only validates the strength of the Stamford housing market.
The following highlights how much equity has been gained in the Stamford real estate market relative to the year of the home’s purchase:
- Homes purchased in the Stamford housing market one year ago have dropped in price about $16,685. The national average increased $15,753 over the same period.
- Homes purchased in the Stamford housing market three years ago have appreciated, on average, by $25,642. The national average was $53,565 over the same period.
- Homes purchased in the Stamford housing market five years ago have depreciated, on average, by $1,071. The national average increased $47,444 over the same period.
- Homes purchased in the Stamford housing market seven years ago have depreciated, on average, by $53,905. The national average increased $17,200 over the same period.
- Homes purchased in the Stamford housing market nine years ago have depreciated, on average, by $69,525. The national average also dropped $100 over the same period.
Although the median home price in Stamford is high, the level of affordability is still strong. The national average for mortgage payment in relation to income is 14.3 percent. The average for Stamford is just under 9 percent. The Stamford real estate market has long proven to be historically strong in this area, and particularly strong over the past 12 months. The more confident buyers are that they can comfortably afford their payment, the more likely they will look to buy. This demand will slowly begin to push home prices upward and create equity in a much shorter amount of time. Home equity typically flows back into the local community through renovations, updates and improvements. This money goes directly into the hands of local contractors and handyman who spend at local restaurants and businesses. Affordability is one of the real indicators of market growth, and the Stamford housing market is exceptionally strong in this area.
The national foreclosure problem is certainly headed on the right track, but we are not quite out of the woods yet. The Stamford real estate market is one of those trending in the right direction. Foreclosures are down over 11 percent from this same time last year. The number of pre-foreclosures is also down, close to 80 percent from last year. Even the number of foreclosures that end up at auction are down a whopping 200 percent over the same period. Projecting those numbers out 12, 24 and 36 months, it is not unrealistic to think that future foreclosure numbers could be even lower, possibly back to pre-2008 levels.
Stamford real estate investing will benefit from the discount these properties provide. The median sales price of a non-distressed home was $414,750. The median sales price of a foreclosure home was $302,750, or 27 percent lower than non-distressed home sales. That is a savings of more than $100,000.
One of the keys to market growth for any city is in the strength of its most popular areas. If this is the case, Stamford is well on its way. The downtown Stamford housing market has seen a revitalization, as evidenced by its average sales price, which is up almost 6 percent from last quarter. The most popular and populated areas of Stamford are up 5 percent from just last month alone. These areas will eventually lead the way for surrounding areas to be in demand, furthering the city’s growth.
Having closed sales and data to look at is one positive sign, but there are other important factors as well. Local real estate agents are reporting increased buying demand at open houses and showings. Just one year ago, sales numbers were relatively weak compared to the beginning of 2014. A stronger economic forecast, coupled with a loosening of credit standards and still low interest rates, is bringing buyers out to Stamford in full force. Pending sales are up almost 78 percent from this time last year. Higher comparable sales lead directly to more homes on the market. Increased supply will give buyers more options, and even further the growth of the Stamford housing market.
There are many promising factors for the Stamford real estate market. Compared to the same time last year, the average number of days on the market is down 16 percent. Home prices are up a modest 1 percent, but closed sales are up almost 28 percent. To say that things are trending upwards would be an understatement. With the local and national economy strengthening every day and downtown Stamford doing the same, it is only a matter of time before Stamford regains its place as a formidable area to buy real estate. Fortunately for Stamford real estate investing, we are just seeing the tip of the iceberg. There is still tremendous opportunity to be had at the ground level.
Stamford Real Estate Market Summary
- Current Median Home Price: $342,700
- 1-Year Appreciation Rate: -6.1%
- Unemployment Rate: 6.3%
- 1-Year Job Growth Rate: 1.3%
- Population: 126,456
- Median Household Income: $76,797