2020 started strong for the Connecticut real estate market. The number of sales was up, the median sales price was up, and the amount of time homes sat on the market was down. These are all indications of a hot real estate market.
But now that the outbreak of COVID-19 has officially launched a recession, Connecticut residents are wondering if the global economic downturn will impact the Connecticut real estate market? And, if so, how bad will it be for buyers and sellers?
Here is your update on the state of the Connecticut real estate market.
Despite COVID-19, Connecticut is Still a Hot Seller’s Market
Despite this new COVID-19 recession, the Connecticut real estate market is still thriving! While we may see sales slow, and may even see a slight decline in home values over the next year or two, Connecticut is in a strong position to ride out this new recession with minimal damage.
As I reported when interviewed by Coverage.com for their Home Buying Guide, the Connecticut housing market is seeing an influx of buyers as people reevaluate the functionality of their homes following the COVID-19 lockdown. Many buyers are now looking for larger homes with more outdoor space. The Litchfield County and Farmington Valley areas are primed to take advantage of this new wave of buyers.
Increased Buyer Demand is Good News for Connecticut Sellers
The inventory of homes available in the Greater Hartford area has been even lower than normal. New listings were down more than 56% in April of 2020 compared to April of 2019. This is likely because sellers were hesitant to list their homes while showings were limited due to the stay-at-home order.
Now that the stay-at-home order has lifted and the busy summer real estate season has started, we should see more listings hitting the market. Sellers recognize that there is a chance of home values declining slightly as a result of this new recession, so they’re ready to capitalize on the increased buyer demand while values are still high.
Low Interest Rates Provide an Additional Incentive for Buyers
Buyers are normally hesitant to enter the housing market during a recession because they want to wait until home prices “hit bottom”. First, I should point out that the bottom of the market is only visible in hindsight; you can never tell in the moment when prices have bottomed out, so trying to time the market perfectly is a fool’s errand. Secondly, we’re not seeing that type of hesitation with this new recession because people don’t expect to see much of a dip in prices. This isn’t like 2008 when the recession originated in the mortgage market and devastated the housing market. Prices might dip a bit, but not enough to pass up your dream home when it hits the market today.
And the low interest rates are just an added incentive for buyers. In November of 2019, mortgage interest rates were sitting around 4.94%. As of June 2020, they’re around 3.49%. A drop in interest rates means buyers save money on their mortgage interest, so you can afford to spend more on your home. Did you know that a decrease of just 1% can add $30,000 to your budget?
The Bottom Line on Today’s Connecticut Real Estate Market
While no one can deny the financial devastation caused by the COVID-19 pandemic, the good news is that the housing market is fairly well protected against this new recession. The Connecticut real estate market, in particular, is still strong and still holds opportunities for both buyers and sellers.
When you’re ready to make a move, contact me. Whether you’re buying, selling, or both, I’ll help you make the most of the ever-evolving market conditions.
