Hartford Business Journal

HARTFORDBUSINESS.COM | AUGUST 7, 2023 15 + Ostop Team at William Raveis Real Estate, said there are multiple reasons for the low inventory. "There was such incredible activity in 2020 and 2021 that a lot of people got out of the market early," she said. Current interest rates are another factor. Many people who might have been looking to sell, either to down- size or upsize, are in homes now with low interest rates, around 3%, Ostop said. In contrast, the national average for a new fixed 30-year mortgage loan was hovering at about 7.25% as of late July. Homeowners may be reluc- tant to sell their homes if they have low interest mortgages locked in on their current properties, Ostop said. Another factor is the volatility of the stock market in the past year, prompting people to be hesitant to take money out toward a purchase, as they want their portfolios to recover. "Those are the two biggest things we see holding people back," Ostop said. The atmosphere is having a "pretty significant impact" on the real estate industry, she noted. "The agents and brokers — you are making money when transactions close," Ostop said. "So, when we have fewer transactions, obviously that means the income overall is lower." 'Debt, death or divorce' Supporting businesses such as real estate photographers and home inspectors are also seeing a signifi- cant downturn, she said. Paul Orentas, owner of CT Property Inspections LLC in West Hartford, said business is down 75% for his company over the past nine months. "Besides the problem of the lack of inventory, people are waiving inspections to win the contract," Orentas said. "There is no such thing as a perfect home, and there are always unknowns that home inspections reveal." To make up for the loss of busi- ness, Orentas said he has been pursuing a license to do building inspections for municipalities. Key to any turnaround, Ostop said, will be a decrease in interest rates and recovery of the stock market. Earlier this year, she predicted much of the inventory would come via "debt, death or divorce," which create scenarios where people have to sell. Meanwhile, interest rates have not impacted most potential buyers, who know they can refinance later when rates drop, Ostop said. Houses that are for sale are often fetching multiple offers, from three to 20, with some homes selling within five days. Ostop said she has clients who have been actively searching for a home for 12 months. "On very few occasions have we seen buyers drop out of the market," she said. "When they are dropping out, it is because they are so frus- trated with the number of offers they have made, and they still haven't secured a home. They say, 'I'm just going to take a break until the inventory increases.'" are busy. Windsor Federal, with $755 million in assets, has focused more of its attention on commercial lending, according to recently-ap- pointed CEO Luke Kettles. At GSB, formerly Guilford Savings Bank, residential mortgage lending represents a large part of its busi- ness, according to Lyle Fulton, executive vice president and chief lending officer. "Like everything in banking, you wait a few months, and it will change," said Fulton. During the pandemic, low interest rates spurred significant first mort- gage and refinance loans, while home equity volume lagged, Fulton said. Now, many people have locked in at lower rates, causing refinance business to dry up, while demand for home equity loans is up, he said. "Our home equity volume has exploded because people don't want to refinance their low fixed rates," Fulton said. "They would rather take their home equity out through a home equity loan and keep their first mortgage at three percent, or sub-three percent." For homebuyer mortgages, the drop in volume is "strictly an inven- tory issue," Fulton said. "People are willing to pay six to seven percent if they can find a home," he said. "The problem is, now they can't find a home, and we are a Connecticut-based lender." Jason McConnell, vice presi- dent, residential lending manager with GSB, said the $1.1 billion-asset bank made a conscious effort early on to address leaner times ahead. The bank launched a direct lending channel, the GSB Lending Center, that aims to make it easier for customers to get mortgage, home equity and other lending products primarily via phone or email, while also lowering the bank's expenses. Staff will still meet in person with customers if they prefer, McConnell said. The residential real estate market isn't impacting GSB's staffing needs, which will actually grow in the months ahead. The bank aims to hire this fall to grow its Lending Center. "There is a huge demand for home equity loans and lines, so we have been really focused on capturing that business from existing and prospec- tive clients," McConnell said. New construction-to-permanent loans are also a focus for GSB, he said, as housing starts are at all-time highs. GSB's residential first mortgage portfolio was at about $387 million as of May 31, up $20 million from the end of last year, according to Fulton. Hartford County growth Michael Sheahan, executive vice president, chief lending officer at Chelsea Groton Bank, said his lender's residential lending business is still doing "very well." "While refinance volume is down, our purchase mortgage, construction, land, and home equity volumes continue to grow in New London, Hartford and other counties throughout Connecticut and Rhode Island," Sheahan said. The $1.6-billion asset bank's partnership with Federal Home Loan Banks and the Connecticut Housing Finance Authority to offer down-pay- ment assistance grants and loans has helped boost purchase volume, he said. While some mortgage lenders have laid off employees, Chelsea Groton Bank hasn't, Sheahan said. "In fact, we've added another experienced residential lender to our team to focus on the Glaston- bury area market as our market share continues to grow in Hartford County," Sheahan said. "We've maintained all of our team members that support our residential lending program throughout Connecticut and Rhode Island." GREATER HARTFORD SINGLE-FAMILY RESIDENTIAL ACTIVITY (JAN. - JUNE) 2022 2023 % Change New listings 3,902 2,743 -29.7% Pending sales 3,155 2,333 -26.1% Closed sales 2,876 2,133 -25.8% Median sale price $322,500 $342,000 6.1% Average days on market 24 26 8.3% Source: Greater Hartford Association of Realtors Residential market Continued from page 14 Mortgage lending Continued from page 14 3,000 2,500 2,000 1,500 1,000 500 2018 2019 2020 2021 2022 2023 0 No. of housing permits issued Source: U.S. Census Bureau/Department of Economic and Community Development Connecticut monthly housing permits (Jan. - June)

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