Lower Mortgage Rates and Higher Prices Create Sense of Urgency for Connecticut Home Buyers

By Richard Barrington
Local Lender Columnist
Nov 30, 2007
If you are in the market for a home in Connecticut and waiting to see what kind of bargains the national real estate slump has created, don't hold your breath. Connecticut real estate prices have defied national trends by continuing a healthy rate of increase.

In a rising price environment, time isn't on your side. Coupled with a decline in mortgage interest rates, conditions argue for acting promptly.

Despite Mortgage Crisis, Connecticut Home Prices Rise

The median single-family home price in Connecticut rose by 4.9% for the year ending August 31, 2007. This ran counter to the general impression of a weak real estate market brought on by the subprime mortgage crisis.

This is yet another example of how local forces tend to dominate real estate. If you've been following the national trend and holding out for price declines in Connecticut, you run the risk of standing still while prices run away from you.

Lower Mortgage Interest Rates Reduce Borrowing Costs but Support Prices

The one statistic which suggested some softness in Connecticut's real estate market was a decline in sales volume. This can indicate falling demand, which would help drive prices lower. However, there is an offsetting factor in the form of lower mortgage interest rates. Lower interest rates make new home loans more affordable, and thus provide support for prices.

The affordability of new home loans also argues for a sense of urgency on the part of buyers. Mortgage interest rates are relatively low at present. This means more of your new home loan payments can go into the price of the house, and less toward interest payments. With interest rates subject to constant fluctuations, this is not a condition that is guaranteed to last.

Source
Yahoo! Finance

About the Author
Richard Barrington is a freelance writer and novelist who previously spent over twenty years as an investment industry executive.