Census: State ranks in top half of U.S. in home ownership
For a fifth consecutive year, Connecticut entered January with a higher percentage of residents owning their homes, according to U.S. Census Bureau estimates released Tuesday. At the end of 2023, Connecticut’s estimated 68.9 percent home ownership rate ranked 25th nationally.
The gains came despite the highest mortgage rates the newest generation of home buyers have ever seen, which combined with limited numbers of new listings convinced some would-be home owners to wait another year for their first purchase, despite the higher rents they are having to pay. On Wednesday, the Federal Reserve signaled a willingness to reduce interest rates this year, which could help more renters consider a home purchase, something economists see as a pillar to building equity from income.
It was the first time since 2015 that Connecticut closed out the year ranked in the top half of states for home ownership. Dating back to 2006, the Census Bureau recorded the highest home ownership rate in the first three months of 2010, when an estimated 72.3 percent of residents held the deeds to their homes.
“Home ownership is a huge goal, in terms of trying to make sure the first-time home buyers have access to the availability of down-payment assistance, but also an affordable first mortgage,” said Nandini Natarajan, CEO of the Connecticut Housing Finance Authority, speaking Monday in Hartford as part of an affordable housing roundtable series by the Connecticut General Assembly carried by CT-N.
Over the last 18 months, the Connecticut Housing Finance Authority has closed just over 3,000 loans under a new “Time To Own” down payment assistance program, with the state kicking another $35 million to the program in December.
Time To Own was created by the state in 2022 to help borrowers having difficulties getting mortgages in the open market due to limited income or other factors. The average Time To Own award is nearly $30,700, according to the latest data CHFA provided CT Insider. Time To Own loans are forgiven on a schedule of 10 percent of the principal every year for 10 years. The median borrower’s annual income is just above $68,500.
Of more than 40,000 mortgages that lenders extended in 2022 to Connecticut borrowers for the purchase of homes as primary residences, including duplexes and tripledeckers, the median loan amount was $285,000, according to Federal Financial Institutions Examination Council data reviewed by CT Insider. That does not include thousands more in which a portion of a residential building is also a commercial establishment.
The median interest rate on that
group of residential loans was 4.99 percent, but more than 13,300 Connecticut borrowers took on mortgages at interest rates of 5.5 percent or above in 2022. That is the threshold that some experts say tends to make borrowers think twice about signing on the dotted line, even with the ability to refinance as rates come down over time.
Factoring in a $30,000 down payment, a Bankrate mortgage calculator crunches a nearly $29,000 difference over the span of a 30-year mortgage for loans locked into a 5.5 percent rate, versus those at 4.99 percent.
In the final week of January, Freddie Mac calculated a 6.69 percent average mortgage rate nationally, and said stabilizing rates have prompted some potential homebuyers to jump “off the fence back into the market” in its words.
“We still look for a first rate cut this year in May or June,” said Chris Rupkey, chief economist for FWDBonds in New York City in a Wednesday afternoon reaction to the Fed meeting. “With inflation slowing markedly over the second half of last year, the risks are growing that real interest rates are becoming more restrictive than policymakers intended when they made that final rate hike back in July 2023.”
Speaking Monday at the affordable housing roundtable in his role as House Majority Leader, state Rep. Jason Rojas, D-East Hartford, said legislative subcommittees are finalizing proposals to enable more affordable housing for the session that kicks off next week.
“There’s probably lots of good ideas out there, but some of them may cost money,” Rojas said. “It’s not that we can’t consider them — but we know there are likely to be limitations in terms of what we can spend new dollars on in a short session.”