The real estate squeeze is no longer a passing phase of the market. The new normal is low inventory, higher borrowing, and high prices.
Kent’s real estate sales/values have historically been driven by the second home market. Owning a home in the country has always been an attractive balance to the stress of living in a densely populated city.
For more than a century, Kent’s “country home” market grew moderately with historic predictability. Home sales averaged 20 to 25 closings each year with 30+/- being offered at any one time. That is until Covid struck. Here are the data:
March to March sales in Kent were:
- 2020/2021 83 sales
- 2021/2022 53 sales
- 2022/2023 33 sales
- 2023/2024 36 sales
These figures are not unprecedented. Kent saw a similar market run up to the Great Recession in 2008.
March to March sales in Kent then were:
- 2004/2024 73 sales
- 2005/2006 55 sales
- 2006/2007 56 sales
- 2007/2008 42 sales
The difference is what happened after each bull market. Fear of the 2008 global economic meltdown induced people to sell their country home. Fear of the 2020 global viral attack has compelled people to hold on to their country homes.
Ever since the pandemic, when living in a less populated area felt essential, the number of properties for sale in Kent (and everywhere in the county) has been at historic lows.
Simply put, the real estate market has long-haul covid. This “ailment” is due in large part to the Covid refugees who bought and now are reluctant to sell their homes, and locals who both feel safe here and have few choices if they wanted to move out of Kent.
This reluctance is based in common sense because:
- Homes have increased in value making it a good investment;
- Mortgage rates were at 3-4 percent in 2020, cheaper than today’s 7 percent rates;
- Remote working is an accepted business practice and sometimes preferred;
- The covid scare is still top of mind and having an “escape” home is still prudent, and
- Country living is a very appealing lifestyle.
A few homes purchased between 2020 and 2022 have come back on the market, though not enough to increase the inventory to the historically normal level of 30 homes for sale in Kent at one time.
A year ago, first quarter 2023 had eight home sales with an average sales price of $520,000 (rounded). The average home took over four months to sell.
Home Sales in Kent in the First Quarter 2023 by bedrooms*
| Bedrooms | # Sold | % Sold | Avg. Original List Price (LP) | Avg. FinalList Price | Avg. Final Sales Price (SP) | SP:LP | SP:OLP | Avg. Market Days | ||
| All | 8 | 100% | $584,125 | $558,500 | $521,312 | 93% | 89% | 131 | ||
| 1 – 2 | 2 | 100% | $349,500 | $310,000 | $295,000 | 95% | 84% | 153 | ||
| 3 | 5 | 100% | $635,800 | $630,600 | $584,700 | 93% | 92% | 117 | ||
| 4 | 1 | 100% | $795,000 | $695,000 | $657,000 | 95% | 83% | 157 |
The first quarter of 2024 is much the same. There were seven sales from January through March. The average sales price was $845,000 (rounded), taking four months to sell a house during this period.
Home Sales in Kent First Quarter 2024 by bedrooms*
| Bedrooms | # Sold | % Sold | Avg. Original List Price (LP) | Avg. Final List Price | Avg. Final Sales Price (SP) | SP:LP | SP:OLP | Avg. Market Days | ||
| All | 6 | 100% | $1,028,000 | $1,011,333 | $884,167 | 87% | 86% | 124 | ||
| 1 – 2 | 2 | 100% | $374,500 | $324,500 | $297,500 | 92% | 79% | 234 | ||
| 3 | 2 | 100% | $362,000 | $362,000 | $380,000 | 105% | 105% | 22 | ||
| 4 | 2 | 100% | $2,347,500 | $2,347,500 | $1,975,000 | 84% | 84% | 117 |
Condominium Sales in Kent First Quarter 2024 by bedrooms*
| Bedrooms | # Sold | % Sold | Avg. OriginalList Price (LP) | Avg. Final List Price | Avg. FinalSales Price (SP) | SP:LP | SP:OLP | Avg. Market Days | ||
| 1 – 2 | 1 | 100% | $292,000 | $292,000 | $283,000 | 97% | 97% | 12 |
This is the foreseeable rhythm of the real estate market. Currently, there are seven homes listed on the Multiple Listing Service (MLS) and four homes in contract to close, comparable to the first quarter of 2023.
Offerings of undeveloped land are also slim with only five parcels available ranging from seven acres to 62 acres. The average price is $592,000 and two of these parcels are more than 40 acres. Sales of land in first quarter 2024 tallied only four transfers. The average size was three acres, which represents a typical Kent building lot.
So the constriction of inventory is keeping prices high, making sellers happy and buyers settle.
Given this dynamic, however, sellers must still price their house appropriately as buyers no longer feel pressure to make full-price offers.
Not all houses have bidding wars as they did a few years back. In 2023 homes were getting an average 93 percent of the asking price, while now, in 2024, sale prices average about 87 percent of asking price.
I’ll update you next quarter. Have a happy Spring!
Chris Garrity of Bain’s Real Estate will give insight into real estate activity on a quarterly basis.
