In this Connecticut housing market forecast for 2022, we will take a look at how the real estate market performed in 2021 and the trends that we think will continue in 2022. Included is also our list of top cities to invest in the Connecticut real estate market in 2022 for rental properties.

Without further ado, let’s get into the 2022 forecast for the Connecticut housing market!

Connecticut Housing Market Review of 2021

Connecticut Housing Market Review of 2021

In 2020, the real estate market across the US witnessed a sudden and massive increase in home purchases. Those who were lucky enough to buy a property during that time, or before it, were the biggest winners.

That is because this increase in home sales during the first year of the COVID-19 pandemic was accompanied by two main factors that have shaped the market in 2021:

  • Inventory shortages
  • Home value increase

These two factors resulted in home prices going through the roof in most markets, affecting both urban and suburban areas.

Read: COVID-19 Real Estate Trends

The massive increase that we saw in housing prices between late 2020 and mid-2021 is starting to slow down a little, but it is not stopping. This means that home prices will probably continue to go up in most US markets in 2022 as well, even if at a slower pace.

The Connecticut housing market in 2021 was especially popular among people moving in from New York City and other metropolitan areas who were seeking to own bigger homes in rural areas and suburbs to spend their time there during the lockdown and remote-work period.

While these trends applied to most markets in 2021, it became apparent that Connecticut was becoming popular among homebuyers who wanted to own a secondary residence in the suburbs. According to research by Zalman & Associates, the Connecticut market had the most significant change in the US in mortgaged second home purchases, which was 74% up from last year.

Additionally, the supply shortage of new homes couldn’t recover from the increased demand as newly built homes were very scarce due to the supply chain challenges that continue to affect newly built housing units.

Homebuilders struggled in 2021 to keep up with the demand as materials such as wood, steel, and cement were in short supply, among several other challenges.

Finally, another trend that took place in the Connecticut housing market in 2021 and that’s expected to continue in 2022 is the increased demand for luxury homes in certain areas like the Shoreline and interior Connecticut. Luxury home sales were up by 13.8% compared to 2020, and a mind-boggling 194.4% compared to 2019.

Now that we’ve looked at how the market performed in 2021, let’s jump into the Connecticut housing market forecast 2022.

Connecticut Housing Market in 2022

There are two main factors that you should keep an eye on when doing a Connecticut housing market forecast for 2022:

These two factors are expected to shape the market in 2022. So, let’s talk more about them!

Housing Inventory

As mentioned earlier, the inventory shortage in 2021 was one of the main reasons that drove home prices up.

Since construction wasn’t happening, the homes that are available for sale on the market could barely keep up with the demand.

For this reason, the inventory continues to be an important part of any Connecticut housing market forecast in 2022.

Additionally, most foreclosures were put on pause in the past two years due to regulations related to COVID-19, which further added to the inventory problems.

But this year, it is expected that foreclosures will take place, which will release a large number of foreclosed properties that will become available for sale on the market.

However, near the end of 2021 going into 2022, the challenges that stood in the way of new home constructions are starting to get solved, and it’s expected that home construction will soon resume.

That would result in a healthier supply of homes for sale, which will directly affect home prices and slow down their appreciation.

Read: 2022 Real Estate Market Forecast: 10 Predictions

Mortgage Interest Rates

Another factor that has shaped the market in the past two years is that mortgage interest rates were decreased, resulting in more people qualifying for a mortgage to buy a new home, driving the sales up. This was part of the COVID-19 mortgage relief program for real estate investors.

However, it is expected that in 2022 mortgage interest rates will increase again, which will disqualify a large number of people and remove them from the market as potential buyers.

And while this might decrease the demand that the market is currently seeing, our prediction in this Connecticut housing market forecast for 2022 is that the current demand is too high to be drastically affected by the increase in mortgage interest rates.

Best Markets to Invest in Long-Term Rentals

The cities on this list are great options when it comes to finding investment property in the Connecticut housing market to be used as a traditional long-term rental property.

The cities are ranked based on their traditional/long-term cash on cash return based on Mashvisor data, which takes into consideration home prices while also factoring in mortgage payments that you’re expected to pay.

Based on these criteria, these are the top 10 cities for investing in a property in Texas:

#1 North Canaan, Litchfield County

Median Price: $373,000

Square Footage: 202.66 Sq. Ft.

Occupancy Rate: 78.71%

Traditional Rental Income: $2,465

Traditional Cash on Cash Return: 5.27%

#2 Sherman, Fairfield County

Median Price: $694,983

Square Footage: 287.93 Sq. Ft.

Occupancy Rate: 55.83%

Traditional Rental Income: $4,538

Traditional Cash on Cash Return: 5.2%

#3 South Windsor, Hartford County

Median Price: $253,647

Square Footage: 165.11 Sq. Ft.

Occupancy Rate: 87%

Traditional Rental Income: $2,046

Traditional Cash on Cash Return: 4.94%

#4 Mansfield, Tolland County

Median Price: $294,940

Square Footage: 180.8 Sq. Ft.

Occupancy Rate: 66.89%

Traditional Rental Income: $2,117

Traditional Cash on Cash Return: 4.73%

#5 Weston, Fairfield County

Median Price: $1,287,000

Square Footage: 304.49 Sq. Ft.

Occupancy Rate: 48.27%

Traditional Rental Income: $8,644

Traditional Cash on Cash Return: 4.38%

#6 Coventry, Tolland County

Median Price: $267,023

Square Footage: 191.67 Sq. Ft.

Occupancy Rate: 79%

Traditional Rental Income: $1,744

Traditional Cash on Cash Return: 4.32%

#7 Woodbury, Litchfield County

Median Price: $730,192

Square Footage: 284.17 Sq. Ft.

Occupancy Rate: 51.09%

Traditional Rental Income: $4092

Traditional Cash on Cash Return: 4.3%

#8 Clinton, Middlesex County

Median Price: $779,717

Square Footage: 239.4 Sq. Ft.

Occupancy Rate: 58.17%

Traditional Rental Income: $2,938

Traditional Cash on Cash Return: 4.01%

#9 Simsbury, Hartford County

Median Price: $274,438

Square Footage: 150.68 Sq. Ft.

Occupancy Rate: 69.14%

Traditional Rental Income: $1,897

Traditional Cash on Cash Return: 3.95%

#10 Morris, Litchfield County

Median Price: $1,139,200

Square Footage: 1,312 Sq. Ft.

Occupancy Rate: 50.81%

Traditional Rental Income: $5,629

Traditional Cash on Cash Return: 3.95%

Best Markets to Invest in Short-Term Rentals

The cities on this list are great options when it comes to finding investment property in Connecticut to be used as a short-term Airbnb rental.

The cities are ranked based on their short-term/Airbnb cash on cash return based on Mashvisor data, which takes into consideration home prices while also factoring in mortgage payments that you’re expected to pay.

Also, make sure to check your state’s laws and regulations regarding short-term rentals, and consult your legal advisor or real estate agent, to ensure that this is a viable investment option for you.

Based on these criteria, these are the top 5 cities for investing in a property in Texas:

#1 Wethersfield, Hartford County

Median Price: $392,213

Square Footage: 144.79 Sq. Ft.

Occupancy Rate: 81.33%

Airbnb Rental Income: $2,879

Airbnb Daily Rate: $120

Airbnb Cash on Cash Return: 8.19%

#2 Coventry, Tolland County

Median Price: $267,023

Square Footage: 191.67 Sq. Ft.

Occupancy Rate: 79%

Airbnb Rental Income: $3,346

Airbnb Daily Rate: $168

Airbnb Cash on Cash Return: 7.84%

#3 Easton, Fairfield County

Median Price: $877,557

Square Footage: 231.4 Sq. Ft.

Occupancy Rate: 48.82%

Airbnb Rental Income: $14,375

Airbnb Daily Rate: $168

Airbnb Cash on Cash Return: 7.42%

#4 Bloomfield, Hartford County

Median Price: $290,563

Square Footage: 137.46 Sq. Ft.

Occupancy Rate: 72.38%

Airbnb Rental Income: $3,548

Airbnb Daily Rate: $238

Airbnb Cash on Cash Return: 7.4%

#5 West Hartford, Hartford County

Median Price: $479,342

Square Footage: 201.37 Sq. Ft.

Occupancy Rate: 73.8%

Airbnb Rental Income: $5,006

Airbnb Daily Rate: $159

Airbnb Cash on Cash Return: 7.38%

#6 Ledyard, New London County

Median Price: $335,213

Square Footage: 189.99 Sq. Ft.

Occupancy Rate: 58.37%

Airbnb Rental Income: $3,969

Airbnb Daily Rate: $416

Airbnb Cash on Cash Return: 7.33%

#7 East Haven, New Haven County

Median Price: $299,236

Square Footage: 193.39 Sq. Ft.

Occupancy Rate: 53.42%

Airbnb Rental Income: $3,573

Airbnb Daily Rate: $341

Airbnb Cash on Cash Return: 7.12%

#8 Groton, New London County

Median Price: $669,456

Square Footage: 311.76 Sq. Ft.

Occupancy Rate: 58.37%

Airbnb Rental Income: $5,574

Airbnb Daily Rate: $300

Airbnb Cash on Cash Return: 6.76%

#9 Wolcott, New Haven County

Median Price: $353,449

Square Footage: 195.22 Sq. Ft.

Occupancy Rate: 60.4%

Airbnb Rental Income: $3,455

Airbnb Daily Rate: $99

Airbnb Cash on Cash Return: 6.44%

#10 Torrington, Litchfield County

Median Price: $300,952

Square Footage: 157.32 Sq. Ft.

Occupancy Rate: 49.18%

Airbnb Rental Income: $3,016

Airbnb Daily Rate: $232

Airbnb Cash on Cash Return: 6.32%

How to Find an Investment Property in Connecticut

If you’re looking to find an investment property in any of these cities in Connecticut, then Mashvisor is the tool for you!

In order to find an investment property that matches your search criteria and that makes sense as an investment opportunity, you will normally need to access a large number of listings through a real estate agent or other sources that are available.

Using the listings that you have access to; you will then need to identify the strongest markets with the best opportunities before comparing properties in the market of your choice to determine the best properties for investing.

Mashvisor, however, does all of this for you!

If you like our Connecticut housing market forecast 2022, check out our top 10 predictions for the US housing market in 2022.

Our platform includes a wide range of tools that can help you find investment property in Connecticut or anywhere else in the U.S.

Using our Investment Property Finder, you can browse the different markets using a map interface to see where all the properties for sale are located, how they performed in the past, and how they’re projected to perform in the future.

While the Property Marketplace tool gives you a virtual shop where you can look at properties listed for sale on and off-market, along with their prices, rental rates, and more.

Both of these tools can be customized using a selection of filters to help you narrow down your search based on the property’s price, cash on cash return, occupancy rate, or the rental strategy that you want to use.

Additionally, and once you’ve identified one or more properties that you’re interested in, you can then analyze each property for its investment potential using the investment property calculator tool, which lets you calculate each property’s expenses and income streams to give you an idea of what your future investment will look like and how long it will take for it to pay off its price.

All of these tools and more can be accessed with our subscription plans with virtually no restrictions – all to help you make the leap from being a beginner real estate investor to becoming a professional and successful investor.

Bottom Line

In this Connecticut housing market forecast for 2022, we saw that the trend of increasing home prices that started in 2020 and continued in 2021 is not expected to stop anytime soon.

Fueled by increased demand and a shortage of inventory, and further increased by facilitated mortgages and halted constructions, the Connecticut housing market is growing at a rapid pace.

However, it is expected that this growth will slow down a little for most property types in Connecticut in 2022 due to increasing mortgage interest rates and a recovering inventory. Luxury homes, on the other hand, won’t be affected by these factors and are expected to continue to outperform other types of properties in the market.




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