The CT home sales market is changing. Here is what buyers and sellers need to know.

Steven A. Madej has seen both sides of the state’s home sale market.

Over the last three years, Madej and his wife looked at a good 40 houses, made six offers but only recently came out on the winning side of a bidding war for a house in Rocky Hill that offers one-level living and a short drive to an aging relative.

Now, the couple is looking to sell their Cape in New Britain where they have lived for 26 years. Madej, retired from a military career, says he is looking for one thing: a quick sale.

He’s likely to get it.

Connecticut’s house purchase market is still favoring sellers, five years after frenzied home buying in the pandemic depleted the inventory of houses for sale. The market still has not made significant gains in replenishing the supply of single-family houses.

But soaring sales prices since 2000 combined with higher interest rates has tempered the once unbridled buyer enthusiasm.

Marla J. Byrnes, a real estate agent at Coldwell Banker in West Hartford, said there is a diminished pool of buyers, and offers now more often are requiring inspections and agreements that would-be buyers would not be penalized if their mortgage were not approved.

“That being said, homes are still very much in demand,”  Byrnes said. “And the homes that look great, are presented well and priced strategically are seeing excellent results and multiple offers.”

But those multiple offers may now be 2 or 3, rather than higher volumes of even earlier this year, Byrnes said.

The fall homebuying season has traditionally been lighter than spring, but some experts say they see a coming overall moderation in the market.

“The shift isn’t going to be dramatic,”  John M. Zubretsky Jr., a broker associate at Century 21 AllPoints in Wethersfield, said. “It’s going to be very slow and trending towards a more normal market, which we may not see for another year, or 18 months. It’s going to be gradual, and it’s nothing to be alarmed about.”

A so-called “more normal market” would place buyers and sellers on a more equal footing, with prices rising more moderately, maybe 3% a year. This year, in Hartford County and across Connecticut, sale prices are on a pace to register gains of at least 6%, according to statistics from SmartMLS, the statewide multiple listing service.

Zubretsky, a veteran of four-plus decades in the real estate industry, said the change could be good for the market.

“The buyers are going to find there’s still competition, but not as fierce,” Zubretsky said. “And from the sellers’ standpoint, I don’t think it will be a downward spiral, just more of a leveling.”

Little backlog of houses

A new report from SmartMLS shows the homebuying landscape in Connecticut and Hartford County marked by declining sales because of a lack of houses on the market but rising sale prices, driven higher by competitive bidding.

In the quarter ended Sept. 30, the median sale price of a single-family house in Hartford County — where half the sales are above, half below — rose nearly 6% to $415,000, compared with $391,000 for the same quarter a year earlier.

That compares with a 6% increase for the state as a whole for the same period, which came in at $440,000, compared with $413,600 a year earlier.

Closing prices in Hartford County — not including seller concessions — averaged 5% over the list price in the third quarter, the highest of all of Connecticut’s eight counties. That compares with 2.6% for all of Connecticut, according to SmartMLS.

At the end of the third quarter, Hartford County’s backlog — or inventory — of single-family houses was little more than a month, the report said.

The most popular price range in Hartford County was $300,000 to $395,000, followed by up to $299,000, based on sales recorded in the quarter.

Despite the run-up in prices, experts say they don’t see a “bubble” shaping up in the state’s residential market, primarily because there isn’t a glut of single-family houses up for sale.

In a bubble, too many properties on the market chasing too few buyers can touch off drastic price reductions, sending the overall market tumbling. In the early 1990s, home values plummeted following an overheated market in the mid-to-late 1980s.

For two decades, there wasn’t any substantial gain in home values across much of Connecticut — when adjusted for inflation — until the onset of the pandemic buying frenzy, experts said.

Jeffrey P. Cohen, a professor of finance and Kinnard Real Estate Scholar at the University of Connecticut in Storrs, said the low supply of houses combined with mortgage rates, which have drifted lower in recent months, has helped keep the Connecticut market stable.

Last week, rates on a 30-year, fixed mortgages averaged 6.17%, the fourth consecutive weekly decline, according to mortgage giant Freddie Mac. Average mortgage rates topped 7% earlier this year.

In 2021, the rates bottomed out at just below 3%, according to bankrate.com, but started rising as The Federal Reserve sought to curb inflation. The Fed’s move to raise short-term interest rates — what banks charge each other to borrow money overnight — is not directly related to the mortgage market but eventually ripples into it.

The state’s housing market has historically been tied closely with its employment trends. Connecticut has seen only slow job growth and has yet to recover fully from the pandemic, especially in the manufacturing sector.

But Cohen said living close to the office isn’t necessarily a concern with the shift to a more remote workplace, positioning the state well between Boston and New York.

“You’re not necessarily going in five days a week,” Cohen said. “And so, that’s a fundamental change in the way people live and work and think about where they want to live and work. That makes a huge difference right now for Connecticut.”

‘Simple math’

A major reason behind sellers not wanting to list their homes — even if they would like to downsize or move to larger house — is tied to the worry of not being able to find houses in times of such low inventory. They also may be unwilling to give up a low mortgage rate, experts said.

But their thinking may change as mortgage rates ease and get accustomed to the idea that while, say, a 5% or 6%, isn’t 3%, it is still low by historical standards, Michael E. Menatian, president of Sanborn Mortgage Corp. in West Hartford, said.

“It’s simple math,” Menatian said. “They’re not going to trade in a 3% or a 4% rate for a 10, eight or even a seven. But they might for a a six or a five. That would start to get to the market, loosening things up.”

Experts say the rising appreciation of single-family houses in Connecticut — particularly in Hartford County — does have its downside.

An increasing number of buyers — particularly potential first-time homeowners — are being effectively locked out of a purchase. Owning a home is seen as a major component in building generational wealth.

The Connecticut Housing Finance Authority’s “Time to Own” program seeks to remove some of the barriers to homeownership. In August, the State Bond Commission authorized an additional $25 million for the program.

The program provides forgivable loans for down payments and closing costs to qualified applicants to smooth the path to homeownership. Borrowers must meet certain requirements, including income limits.

‘This kind of attention’

In New Britain, the Madejs listed their 3-bedroom, 2-bath Cape on a little less than a half-acre for $374,500 on Wednesday of last week, after two days of a “Coming Soon” teaser.

On Wednesday, there were eight showings for the Barbour Road house scheduled for that day and Thursday. By Thursday, there was an offer and a few more showings later in the week.

Zubretsky, the agent on the listing, said he expected at least another offer and it was likely that property would go under contract by Sunday night, possibly at or above $390,000. Such an offer would come in right at the 5% above list price, Zubretsky said.

“Properties that are in good condition and that are priced right are going to get this kind of attention,” Zubretsky said. “And that is definitely the case here.”

Tips for buyers and seller recommended by the experts:

Sellers

— Have a game plan in mind. “It’s all about proper planning,” Kurt Potter, a real estate broker at RE/MAX Right Choice Real Estate in Glastonbury, said. “You don’t just jump in one day, and throw your house on the market.” It is essential to figure out the next move. That may mean finding another house first or a rental in case the right house is not available right away. “Are you going to a different part of the country where the housing market is softer?,” Potter said, pointing to areas of the Carolinas, Arizona or Florida. “It is a great time to sell in Connecticut, where the market is one of the strongest in the country.”

— Don’t worry about timing the market. Old rules of thumb about timing to catch the spring market or to a lesser extent, the fall market, no longer apply as much with low levels of inventory. “Make sure your house is in great shape,” Potter said. “Make sure it looks as good as possible. You’ll get your money back when you do those minor repairs and freshen-ups.”

— Pay careful attention to list pricing. Don’t get caught up in the excitement of rising sale prices or what your neighbor’s property sold for six months ago. Condition can vary significantly from property to property, depending on upgrades and improvements. Century 21’s Zubretsky recommends pricing lower than what the property is expected to fetch, rather than higher, because bidding will more than likely take the price where the seller wants it to go. Price too high and there are risks of price reductions, low-ball bids or the property just sitting on the market. “And then after two or three weeks, people start asking, ‘What’s wrong with it?,’ ” Zubretsky said. “Maybe nothing. It was just a flawed strategy.”

— Consider getting a pre-listing appraisal. UConn’s Cohen said a pre-listing appraisal will give sellers a professional opinion on what a property is worth. “It gives you a document that you can actually show and say to a buyer, ‘Hey, this is what this place is worth,’ ” Cohen said. “If you spend $500 for an appraisal, and you’re able to get $10,000 more for the property because of the fact you’ve done this careful analysis, then it’s worth it, right?” Cohen said a real estate agent also can help with such an analysis.

Buyers

—Evaluate the full cost of owning a home. Experts say it is crucial to look beyond mortgage principal and interest payments. Homeowner insurance rates have been rising rapidly in recent years. According to Insurify, the online insurance marketplace, homeowner premiums are expected to rise 5% by the end of 2025 to $2,724, up from $2,600 in 2024. That comes on top of an average 9% increase in 2024.

It also is essential to understand when the next property revaluation is scheduled for the town or city where a home is being purchased. This year, nearly three dozen towns and cities are in the midst of a revaluation — a state-mandated rebalancing of how local government and schools are funded through property taxes. Century 21’s Zubretsky said he recently heard of first-time buyers in Wethersfield who could afford the mortgage principal and interest, but the deal breaker was a four-year phase-in of the town’s 2024 revaluation.

—Get fully-underwritten mortgage pre-approval. In a fast-paced home sale market, buyers prepared with a pre-approval — or proof that they have liquid funds to make a cash offer — is essential in making what sellers would deem a credible offer, experts said.

—Be definitive, confident about offers. Buyers should do all their homework about the town or city where they plan to make purchase well in advance of making an offer. “Despite the fact that they have less competition than they would have earlier in the years, it’s still a sellers market,” Coldwell Banker’s Byrnes said. “Buyers should still make their absolute best offer that they can make and to expect they will be in a multi-offer situation.” That’s particularly true on houses that were just listed, Byrnes said.

—Consider hiring a real estate agent.  “For the average person, it’s a complicated process, especially if you’ve never bought a home before,” UConn’s Cohen said. “They cost a bit of money, but if you have the right one, the right fit for you, you will get what you pay for.” Cohen said it is worth it, in terms of access to listings and help with negotiating, “which is a big piece of the puzzle, if you’re trying to bid against four or five other people.” Agent commissions are negotiable.

Kenneth R. Gosselin can be reached at [email protected].