Should I Sell in 2025? Or Buy?

The year is still young, but there are early signs of how this year may go.  It is not  encouraging.  The Connecticut real estate market is still being dragged down by larger economic factors that add up to pent up demand, if not frustration. 

Mortgage Rates - Pundits keep pointing to the current mortgage rates being in the 7% range.  This discourages selling for two reasons:  1) It is a rate that puts home ownership just out of reach for a number of potential buyers.  If they could get a mortgage closer to 6% that would increase originations and 2) There are still many homeowners with mortgages below 4% and a lot of equity in their homes.  They see no advantage in trading up for a higher mortgage.

Low inventory – This continues to plague the Connecticut market as well as other parts of the country.  Against the lows of 2023, there has been some recovery, but nowhere near the levels that would be considered historically normal.  Early signs are that rates will rise into the middle of the year.   This will further discourage buying.  There is still uncertainty about whether the Federal Reserve will lower interest rates some more.  Presumably, if they do, mortgage rates will come down.  That was expected last year, but that is not how it worked out.  Despite dropping the rates, there was a period where the 30-year fixed went higher. 

Price Appreciation  - Connecticut, and the New England region continue to see price increases while pricing in  other parts of the country are  softening.  Houses are appreciating faster in Connecticut than in other parts of the country.  The projection for 4-6% increases in Connecticut for 2025.  However, there have been ups  and downs.  During 2024, the median house price nearly reached $500k, but has since come down to around $450k.  The take home message is that experts can make their predictions, but everything is not as it appears.  Instead, one has to understand the cycles and know when to take advantage of an opportunity.

What Do I Do? -  The proper answer remains “it depends  on your situation”.  If the question is based on looking to cash in the equity on your home and downsize, that is still a possibility.  If you are buying, you need to work with an agent in order to jump on opportunities as soon as they appear.