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CT Home Builders See A Glimmer

National report predicts state will rebound later this year

By Sean O’Leary

Hartford Business Journal Staff Writer

05/12/08

Contributed Photo

Construction on the Sea Spray development in Niantic began in 2006 and eventually will have a total of 110 units.

Home building permits in Connecticut dipped 15 percent in the first quarter, but a recent national study predicted Connecticut would be one of the first states to recover from the nationwide downturn.

The housing permit trend could turn positive here as soon as the third quarter, while most other markets have more suffering ahead, according to a study compiled for the National Association of Home Builders.

That’s no surprise to Middletown home builder Robert Fusari Sr. As a group, Connecticut builders have been cautious, said Fusari, whose company, Real Estate Service of Connecticut, has taken more than two years on the partially built 110-unit Sea Spray development in Niantic.

“We’re down, of course,” Fusari said. “The sales are down, and with any kind of housing cutback there are going to be drops in prices. But we don’t have a lot of inventory out there, and that reduces the stress on the market.”

Bill Ferrigno, president of the Home Builders Association of Connecticut and owner of Avon-based Sunlight Construction, said the state is poised to recover quicker because it avoided the traps the robust market set.

Contributed Photo

Developer Robert Fusari Sr. says builders in Connecticut have remained cautious.

Builders Adjusted

“It’s not a huge bubble that burst,” Ferrigno said. “The builders in Connecticut, in a nutshell, saw what was going on and adjusted accordingly.”

The report by HousingEconomics.com prepared for the NAHB said Connecticut would benefit from having avoided the home construction binges that contributed to the collapse of real estate markets in states like Arizona, California and Florida.

Connecticut’s low inventory of unsold homes will translate into rising housing permits in the fourth quarter of the year, if not the third quarter, the report predicted.

In the first three months of 2008, there were 1,091 housing permits issued in 128 Connecticut towns, compared to 1,286 in the same period last year, according to data from the state Department of Economic and Community Development.

There is little doubt the state’s housing market is hurting, as reflected in dwindling sales and falling prices. But there is some basis for optimism. For the 128 towns surveyed by DECD, the number of permits actually went up to 386 in March from 251 in February.

However, in 2007 housing permits dropped 16.1 percent statewide, falling to 7,746 from 9,236 in 2006. But the decline was less severe than the 24 percent national average drop or the 19.8 percent average drop in New England.

“The permits have slowed, but that’s because a number of builders have already been approved for projects,” said Eric Person, executive officer for the Home Builders Association of Hartford County.

No Freefall

The NAHB study predicted that housing starts in the Hartford metro area would fall by only about 8 percent in 2008, and it held out the possibility of an upturn in the second half.

Person noted that home construction in Connecticut never went into a freefall.

“People were watching the news and got a little nervous,” he said, referring to the early reports of the housing crisis in the south and west. “It’s really more of a regional thing because the eastern part of the country, for the most part, avoided that huge run-up on real estate. We were always a little more steady.”

But the picture doesn’t look as bright in Massachusetts, where housing permits fell more than 50 percent in February, or in New York City, were they dipped 45 percent in the first quarter.

Ferrigno sees a key indicator that the Connecticut market may be ready to turn.

“There are signs out there, especially that we have a lot of traffic at open houses,” Ferrigno said. “The buyers are out there. They’re just waiting.”