Connecticut Housing Market Normalizes as Rates Ease, Affordability Challenges Linger

Connecticut's residential real estate market is showing signs of normalization after years of pandemic-era volatility, with gradual interest rate reductions and stabilized inventory levels creating what market participants characterize as a healthier transactional environment. Rob Marucci, broker-owner of Better Living Realty LLC, reports that the market has moved away from the multiple-offer scenarios and rapid price appreciation that defined recent years, settling into patterns more familiar to agents who entered the business before the disruptions. "The market actually feels a little bit more normal," Marucci explains, noting that prices aren't "going through the roof anymore" and multiple offers are less common unless properties are priced aggressively low. This shift reflects the combined effects of increased inventory and measured federal interest rate adjustments, with buyers now securing mortgages under 6%—a threshold that had proven difficult to reach during the recent rate peak.

Despite this rate relief, broader affordability challenges continue affecting buyer capacity as consumer prices across categories have roughly doubled over five years, compressing household budgets even as mortgage rates decline. Marucci warns that this dynamic raises foreclosure concerns as households face sustained pressure from elevated costs across housing, food, energy, and other essential expenses, anticipating potential acceleration in foreclosure activity if affordability constraints intensify. Recent mortgage product innovations including 50-year terms signal lender efforts to expand buyer qualification pools, though Marucci views extended terms with skepticism regarding long-term borrower outcomes, noting that "the first half of the mortgage, you're paying a lot of interest, very little principal." Waterbury's urban core demonstrates inventory patterns diverging from suburban periphery markets, with single-family listings in the city reaching 122 units—a level unseen in recent years—while suburban Middlebury maintains 22 listings consistent with recent ranges.

This pattern may reflect pandemic-era migration from New York reversing as employers adjust remote work policies, with Marucci watching closely because "maybe some of the New York buyers are moving back to New York" and wondering if "values went up too high too quickly, and now people are trying to sell." Regarding winter listing strategy, Marucci recommends sellers avoid seasonal delays in current market conditions given economic uncertainty, advising that "tomorrow, something drastic might happen" like stock market crashes that could change people's confidence in home buying. Looking ahead to 2026, Marucci anticipates price stabilization absent significant external market disruptions, feeling that "values are going to completely level off" and predicting "more of a level flat market until something changes." Better Living Realty provides residential real estate services across Connecticut markets including estate clearance and investment property management.