Connecticut's wealthy hedge-fund haven, home to Shonda Rhimes and the billionaire owner of the Mets, is losing federal 'high-cost' housing status after its home price gains lagged the US (2024)

• Fairfield County, Connecticut, is a ritzy NYC suburb known for hedge funds and shoreline mansions.
• The government cut it from a list of "high-cost areas" that helps homebuyers get larger mortgages.
• Housing expert Jonathan Miller, who lives there, was "taken aback" by the designation change.

US home prices have soared over the past year with the notable exception of one of the nation's most exclusive addresses — at least, according to one government calculation.

Fairfield County, Connecticut, New York City's ritziest suburban enclave, barely saw any home-price gains in the year through September, according to the Federal Housing Finance Agency. The county's housing lagged behind the rest of the nation so much that it's going to lose the government's "high-cost area" designation that helps give local buyers access to the larger mortgages needed to buy an expensive, but typical home.

The shift is especially surprising given the county is home to towns like Darien, Westport, and Greenwich, the hedge-fund capital of the world. Steven Cohen, a hedge-fund billionaire and the owner of the New York Mets, lives there, as do celebrities such as Shonda Rhimes, the Emmy award-winning producer of "Grey's Anatomy," "Bridgerton," and "Inventing Anna." The county's median household income of $101,194 tops the overall median income in the US — $70,784 — by a large margin.

"I'm actually taken aback," Jonathan Miller, a housing expert and the author of the "Elliman Report," which covers Fairfield County along with two dozen other popular real-estate markets across seven states, told Insider as he learned the county was losing the high-cost designation.

FHFA: This is a result of rapid price growth nationally this year

The change came about in the FHFA's annual examination, which oversees a law governing the size of mortgages eligible for purchase by Fannie Mae and Freddie Mac, the government-sponsored enterprises that exist to boost homeownership and affordable rental housing.

In regions deemed "high-cost," the government gives these enterprises the right to buy loans larger than they normally would for most of the nation because homes in these regions are more expensive. "Conforming" loans eligible for purchase by Fannie Mae or Freddie Mac typically have better terms than other loans, in part because the lender has a prearranged buyer for the debt.

According to the FHFA, the high-cost areas are where 115% of the median home price exceeds the base conforming-loan limit for most of the country.

Like most places this year through September, Fairfield County — which is situated along the Long Island Sound about 50 miles north of New York City and sometimes known as the Gold Coast — saw rising home prices. The median sales price climbed to $615,000, up from $605,000, according to the FHFA.

But the 1.65% increase was so small that 115% of the median is $707,250, below the 2023 base conforming-loan limit of $726,200, per the FHFA. Nationally, home prices increased by 12.2% in the same period.

To be sure, other data suggests greater local-home price appreciation. Data from Douglas Elliman shows Fairfield County's median sale price rose by 8.2% year-over-year through September, for example.

It could be harder for homebuyers to score a big mortgage here next year as a result

To analysts at the FHFA, an expensive region losing its high-cost status is not uncommon. But Fairfield was the only county in the US affected in that way this time, and the change may put locals at a disadvantage when it comes to getting mortgages for higher-priced properties.

According to the FHFA, prices rose so much in other coastal areas like California and the Washington, DC, region that the conforming-loan limit in those high-cost areas could climb to $1.06 million in 2023 — breaking the $1 million mark for the first time — from $970,800 in 2022.

With Fairfield County no longer a high-cost area, borrowers there will be limited in 2023 to the base conforming-loan size if they don't want to take out a larger "jumbo," or other type of loan, from a bank. In 2022, with high-cost status, the county's limit has been significantly higher, at $970,000.

On the surface, the change is perplexing, according to Miller, who said his data shows the county's average sale price last quarter was its third-highest in history.

"Fairfield County has been one of the more robust-performing regions of the New York City metro area," Miller said.