The CT real estate market has been very favorable to sellers for the last few years. Since 2020, home prices in CT rose from an average of $260,000 to $361,000 today – this amounts to a nearly 38% increase. In addition to being able to get more money for their houses, CT homeowners were able to structure favorable terms of sale such as fast closings, having buyers cover closing costs or requiring that buyers waive inspection contingencies.
Low interest rate policy that the US Federal Reserve (the Fed) implemented to support the economy in the wake of COVID related shutdowns was a big factor spurring the supply / demand imbalance in CT real estate and across the country. With buyers able to borrow at <3%, they suddenly had significantly more purchasing power and bid up home prices.
However today the macro backdrop is very different. Inflation in the US sits above 8% and the Fed has taken a more hawkish stance on interest rate policy, raising rates to the highest levels in several decades. This has impacted lending across the economy, and mortgage rates have risen dramatically. Currently the average rate on the 30Y fixed rate mortgage is nearly 7%, while in December the average rate was 3.1%. For a 20% down payment on a $500,000 home, the monthly mortgage payment at 3% would be $1686 while at 7% it is $2727 – a 61% increase! This dynamic is starting to lead many CT home buyers to exit the market or start looking in cheaper markets as they can no longer afford to buy a CT home with the current interest rates.
As a CT homeowner looking to sell, you may be wondering what other options exist for me if the housing market starts to soften?
- Seller financing: Seller Financing is a real estate agreement in which the seller handles the mortgage process instead of a financial institution. Simply put, you become the bank. This means you can walk away with some immediate cash (from the buyer’s downpayment) and receive interest over time on the portion of the purchase you finance. These deals can be very creatively structured too. For example, you might be able to entice a buyer by offering a lower interest rate than a traditional bank, but have a shorter term on the loan with a balloon payment in a few years. This can be a win-win. You get paid a fixed income consisting of principal and interest while the loan is outstanding, and then get paid back in full within a few years. The buyer is able to get in at a lower rate, build some equity and then either refinance or sell the house in a few years to pay you back.
- Cash buyers: CT cash buyers, like BlueCrest Property Group, are less affected by higher rates as our purchasing power is unchanged. For this reason, we are still in the market to buy even when a lot of other traditional home buyers have exited. Working with a cash buyer can save you a lot of headache as you don’t have to worry about the deal falling apart because a lender isn’t willing to fund it.
Blue Crest Property Group
While not all buyers are able to provide cash offers or consider seller financing, BlueCrest Property Group is open to structuring these types of deals with CT homeowners. When it comes to selling your CT house for fast cash, consider BlueCrest Property Group one of the top home buyers in CT. If you wish to learn more, please visit https://www.bluecrestpropertygroup.com/