New Haven Register (Sunday) (New Haven, CT)
Mortgage rates could be key for 2023
Easing burden on buyers may boost Conn. real estate market hold in new year
With rent increases nationally finally showing signs of flattening along with mortgage rates and home prices, people looking to move into Connecticut or within the Nutmeg State may get their best opportunity since the start of the COVID-19 pandemic in the coming months.
On the heels of Zillow reporting the sharpest monthly decline in rents in seven years in November, the Mortgage Bankers Association reported a slight increase in new mortgage applications last week.
The average rate for a 30-year mortgage dropped to its lowest level since September, at 6.34 percent compared to 6.42 percent a week earlier. The Mortgage Bankers Association survey
ropes in three of every four mortgage applications filed in the United States.
Redfin reported earlier
this month that buyers nationally are responding to the easing mortgage rates by doing another set of rounds of available listings, after being shut out of the 2022 market; or getting out ahead with plans to make a move in 2023.
“We are all aware of the need for more affordable homes [and] rentals,” said Seila Mosquera-Bruno, commissioner of the Connecticut Department of Housing, during a November conference on affordable housing sponsored by the Partnership for Strong Communities. “These issues are not new to us.”
Between April and June in Connecticut this year, home sellers got 4 percent more on average than the final listed price, according to Berkshire Hathaway HomeServices New England Properties, though a percentage of those properties had prices reduced from original listings. That eased slightly over the following three months, but sellers continue to seek top dollar by historic measures.
But prior the the COVID-19 pandemic, Connecticut houses were routinely selling by the same margin below asking prices — making for a buyers market, but with smaller numbers of people looking to buy, whether due to the desire to rent in the city or having yet to sock away enough money to support a mortgage.
That buyers market washed away in the pandemic spike in prices as droves of families moved out of New York City, many of them wielding cash that sellers were happy to grab rather than wait on mortgage paperwork from other bidders. For buyers needing those mortgages who are still hunting for a starter home, it has been a frustrating process.
In a Thursday study, Redfin reported that cash buyers continue to be active, whether purchasing primary or secondary homes for themselves, or as investment opportunities based on rent and resale value over time. Nearly 32 percent of properties nationally were purchased exclusively with cash in October, up about 7 percentage points from a year earlier. In the lone New England market broken out in the Redfin study — Providence, R.I. — one of every four properties was purchased with cash.
Compounding that has been rapidly dwindling numbers of residential real estate listings. Entering October, there were slightly more than 5,000 singlefamily homes for sale in Connecticut as counted by Berkshire Hathaway, down from nearly 8,000 a year
earlier and roughly 10,500 in October 2020.
Of Connecticut properties listed
for sale since Thanksgiving, about 1,300 remain on the market heading into the Christmas weekend. They range from a threebedroom house in Windham listed for $100,000 ("bring your tools” a listing blurb suggests)
and several more condos and modular homes below that threshold; to a miniature stone castle in Westport complete with turrets and ramparts, where the owners want $12.5 million.
If the past several years are any
indication, house hunters will get an inkling in early January of how many choices they will have in the 2023 spring market — and how much competition they may have for the best buys in whatever corner of Connecticut they are
looking. On Thursday and Friday, 75 more Connecticut sellers decided to get a jump on the January market in listing their houses for sale.