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With mortgage rates on the decline, an already competitive residential real estate market is set to grown even fiercer in Connecticut.
Agents in Connecticut note that the state is dealing with a lack of inventory, similar to its New England neighbor to the North, Massachusetts. This has led to homes that are priced appropriately receiving multiple offers and buyers sometimes waiving contingencies to make their offer stand out.
According to economists at the residential brokerage Redfin, the daily average 30-year fixed mortgage rate has been 6.57 percent so far in August, down from 6.86 percent in 2024 and representing a 10-month low.
“Redfin recently reported that there are 500,000 more sellers than buyers in this unbalanced housing market, so buyers have been holding most of the power for some time,” Redfin’s head of economics research Chen Zhao said. “However, lower rates have opened even a stronger window of opportunity for buyers to re-enter the market and negotiate on lower prices and concessions. I recommend that buyers in Connecticut jump on this opportunity if they’re serious about homebuying before rates creep back up.”
Similar to Zhao, Cathy Lynch, a Coldwell Banker real estate agent based in Madison noted that even a slight downturn in rates can get buyers off of the sidelines.
“I think people have gotten used to the rates from where they were and decided, ‘well, we’ll refinance at some point,’” she said. “So if someone needed housing, I don’t think it affected them buying. But having said that, I would say that even when there is a little downturn, it does spark that energy and people get out looking again because I think they get more excited about it.”
More Affordable Mortgages Have Downsides
If more individuals are out in the market due to a reduction in rates, it will also impact affordability. Lower rates mean that homebuyers could be approved for higher loan amounts and increased competition will drive home prices even higher.
“As the rates continue to drop, it’s going to impact affordability for people,” RE/MAX broker and owner Marissa Pistritto said. “We’re actually going to see more and more people still fighting over the same houses, and with the lack of inventory, I think it’s going to make the market even more competitive, because now we can potentially have twice as many people still going after the same amount of homes, and now they can just afford more.”
According to the latest data from The Warren Group, the publisher of The Commercial Record, the year-to-date median sales price for a single-family home in the Nutmeg State is $425,000, up from $400,000 at this time in 2024.
Agents noted that buyers are more aggressive in the current market which has led to more offers above asking. But while prices are on the rise, buyers have more information available to inform then when a home is overpriced.
“I think that they’re very savvy,” Lynch said. “They know when something’s overpriced and it will reflect and then you get days on market and you end up having to do price reductions versus coming out, being aggressive with the pricing, hitting it just right, or even a little under.”
With the current lack of inventory, she also noted that buyers look to complete a deal much faster than in the past.
“With a lack of inventory, if something comes on the market, they ask to see it right away,” Lynch said. “Then they’re prepared. They’ve got their preapproval. If they need a mortgage, they’re actually often going through the whole prequalification process.”
Many Still Stuck with Low-Rate Loans
While lower rates could mean a boost to buyer activity, agents believe that sellers would need more of a continued downturn to add inventory to the market. Especially current homeowners who received low-interest rate mortgages during the pandemic.
“I personally don’t think that the rates dropping a point will have that much effect on those clientele selling yet,” said Anthony Revoir, the broker/owner at Uncasville’s RE/MAX One. “Yes, they’d be making good money, but again, they’re buying high as well.”
High prices could be keeping sellers with low-interest rates on the sidelines, Lynch said. The current lack of inventory adds even more difficulty when looking to purchase a home when looking to sell a household’s current property.
The properties that are ending up on the market are typically on the higher-end of the market, according to Lynch. This has led to more deals utilizing cash transactions which are not affected by interest rates compared to deals involving financing.
“In our global luxury market, those people have put their homes on the market, and we’re seeing a lot of cash buying,” she said. “In our area, 51 percent are all cash transactions when they’re on on the higher end. So I don’t know how much the interest rates will affect that, other than to help push the domino effect along to make someone sell their home, and then they, in turn, buy something.”
Beyond the luxury market, Lynch stated that many buyers are attempting to make cash offers to make their offer stand out among fierce competition.
“They’re trying to pull out all the stops, whether it be help from a parent,” she said. “They’re just trying to make their offers as clean as possible, maybe no inspections, or inspections for informational purposes only. So it just seems like the buyers are so much more prepared, and oftentimes they’ve lost out on three, four and five houses because of these multiple offer situations.”
But regardless of the direction of rates, homebuyers who will need to purchase a home will still be active in the market.
“I think too many people, too many agents, let the media and let influencers determine their future of real estate,” Revoir said. “Higher interest rates, yes, aren’t beneficial to everybody, but at the same point, it keeps real buyers out there. I think they face more real buyers, but then the only issue they face is more real buyers buying houses. So honestly, agents just need to keep their heads down.”
