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There is an urban movement when it comes to the Connecticut house hunt.

Supply might be limited, but the places where home prices significantly soared in the last year concentrated at the most expensive as well as the most affordable segments of the market. Demand soared in 2021 and into this year for homes in cities and more affordable areas like Bridgeport, Hartford and New Haven.

But homes, even with a shallower pool of supply, were also getting snapped up in some of the state’s most expensive areas like Greenwich and Westport. That sent prices even higher.

Some of the higher-end activity boils down to people wanting more space during the pandemic, but the higher interest in urban parts of the state comes from simple laws of supply and demand. There aren’t enough homes in suburban areas, so potential buyers are looking within city limits to find a deal.

“It’s such a competitive market right now that buyers are naturally looking for choices,” said Tammy Felenstein, president of the CT Realtors trade group. “The larger cities offer more choices at more affordable prices.”

Bridgeport, Hartford, New Haven See Boost

The 208 home sales in Bridgeport during the first quarter was 7 percent higher than the sales volume seen during the same time in 2021, according to data from The Warren Group, publisher of The Commercial Record. That exceeded the state average and accompanied a 16 percent increase in median home prices, which now sit at $290,000.

While there were fewer home sales in New Haven and Hartford, home prices in these cities were up 27 percent and 11 percent, respectively. The median sales price in New Haven was $265,000 in the first quarter and $195,000 in Hartford.

“People are having such a tough time finding houses in just the outskirts of those cities, so they’re having to look more into the cities because there is a little bit more inventory there,” said Bill Arzt, president of the Greater Hartford Association of Realtors.

The surge toward cities and former industrial areas was even more pronounced last year, when the 418 home sales in Naugatuck represented a 21 percent increase over 2019 levels. The 36 percent increase in the former mill town’s median home price left it at $250,000 at the end of last year – but that’s still way below the $320,912 median The Warren Group reports as the typical home price statewide year-to-date.

“Numerous factors are in place that affect buyers,” said Ken D’Arinzo, president of the Mid-Fairfield County Association of Realtors. “The competition to having the winning accepted offer has resulted and continues to have buyers being priced out of homes in one area to explore communities that are slightly more affordable.”

Will Buyer Interest Survive Rate Hikes?

Pricier parts of the state are still seeing buyer interest, as the pandemic-related demand for more space at home hasn’t ebbed. It’s just that there isn’t enough supply, so sales volume might be down while prices surge.

Greenwich saw seven fewer home sales in the first quarter than the same time in 2021, but the median price rose 7 percent to $1.98 million. On an annual basis, the 2021 median price in Greenwich was $2.2 million – 37 percent above 2019 levels. They were 35 percent higher in Westport, where the median price last year was $1.5 million.

Those interviewed for this story said they haven’t seen general interest dwindle so far amid rising interest rates. Demand outpacing an extraordinarily limited supply of housing is the top factor in Connecticut real estate now.

“The demand is still extremely high, and we are all sort of just honestly flabbergasted at how extremely low the inventory still is really,” said Joanne Breen, a Newington-based broker at ERA HART Sargis-Breen Real Estate.

But prominent Realtors do anticipate rising interest rates to spark further interest in historically less expensive parts of the state, especially for more price-sensitive and first-time buyers. Rising interest rates means it is more expensive now to pay a mortgage.

A presentation at this week’s National Association of Realtors conference in Washington, D.C., showed how a mortgage payment for the same home jumped 55 percent in a year amid rising home prices and interest rates. A 3 percent mortgage last year for a $400,000 loan meant a $1,686 monthly payment. Today, a 5.1 percent mortgage on the home, now valued at $480,000, costs $2,606 per month.

“The increase in interest rates means buyers will need to adjust their preferences and areas they can afford,” D’Arinzo said. “The increase in interest rates will affect the ability of first-time home buyers to move from renting to owning. What was affordable a year or two ago, may not be affordable to have manageable monthly payments.”