Six Factors Representative of Buyers in Today’s Connecticut Real Estate Market

The real estate market is undergoing an adjustment, yet even with interest rates higher, buyer activity is still aggressive and quality homes do not stay on market longer. More buyers are finding their way into home ownership than at any other time in history.

A recent report issued by NAR highlighted the factors facing buyers in 2023. The items that seemed to be more representative of the activity in Connecticut are offered below.

 

1. The age of first-time and repeat buyers hit all-time highs.

The age of first-time buyers jumped to 36 from 33 years after being stagnant for years. Twenty-six percent of first-time buyers reported “difficulty saving for a down payment” was a challenging task in the buying process and cited higher rental costs, car loans, credit card debt, and student debt as factors holding them back. Maybe this is a case of millennials starting to get away from the comforts of ‘home‘.

Simultaneously, for repeat buyers, the age has risen to 59 years, up from 56 years in last year’s report. Sellers have seen the values of their homes increased at an unprecedented rate and are opting to gather their equity and look for something smaller. Any mortgage they may take on would be smaller in amount and term Trades have happened later as tenure in the home has also increased.

 2. Small towns and rural areas saw a migration flow while there was a retraction of buying in urban areas and the suburbs.

Buyers choose their neighborhood based on many factors, but the top of the list was the quality of the neighborhood, schools, services, affordability, and proximity to friends and family. Small towns and rural areas proved to be the winning dynamic for many when making that choice—affordability was key, and family support systems were just down the street.

 

3. How far a buyer moved jumped to an all-time high of 50 miles from a range that had been steady between 10 to 15 miles.

Here in Central Connecticut, we have seen a large influx of buyers seeking to get away from the clustered areas of New York and New Jersey. Affordability is a large factor with accessibility to highways important.

Another factor is remote and hybrid work settings. In January 2021, many headlines touted that CEOs provided employees with permanent remote work. This allowed buyers to separate themselves from city centers or inner suburbs and migrate to farther areas. Zoom towns were the boom towns in the last year.

 

4. Buyers are diversifying where they pull together the down payment for a home. 

Given the rise in home prices, buyers are pulling together funds from multiple sources for their down payment. First-time buyers rely on savings as the primary source, but 22% (down from 28% last year) did use a gift or loan from friends/family, and 15% either sold stocks/bonds or took a loan from their 401k/retirement fund.

While half of repeat buyers used proceeds from the sale of their past home, this does not work for all. Forty-one percent used savings, and 11% even sold stock or took a retirement loan.

Pooling of funds has also been a factor as buyers get family members involved in the purchase as homes are large enough to accommodate an extended family.

 

5. First-time buyers moving directly from a family member’s home into homeownership is at an all-time high.

Twenty-seven percent of first-time buyers had this prior living arrangement, up from 21% the past year. These buyers were able to skip rental increases by moving into a home. This allowed first-time buyers to pay down debt, work on their credit scores and save for a down payment the way others may not have been able to. The share of first-time buyers who rented before buying dropped to 64% from 73%.

6. Buyers and sellers use and want the help and expertise of a real estate agent.

The value of a real estate professional was highly sought by both buyers and sellers. Eighty-eight percent of buyers used a real estate agent to purchase their home. Buyers went to agents based on honesty and knowledge and integrity and an experienced agent was an important part of the process for both buyers and sellers.

For sellers, 86% used an agent to help sell their home. Sixty-three percent of sellers used an agent that they had worked with before or that was referred to them. Sellers most wanted their agent to price the home competitively, help market the home to potential buyers, and sell within a specific time frame.

For sellers it is essential to have a sales price on your home consistent with the most recent activity. We offer free market evaluations to assist you in your sale.

If you would like information on homes for sale in Central CT please call me at 203-206-0754 or send me an email. I would be happy to assist you or to discuss homes on the market in Central CT.

Six Factors Representative of Buyers in Today’s Connecticut Real Estate Market