Connecticut’s residential real estate market is finally showing signs of life, nearly six years after the housing bubble burst, sending home sales and new construction into a tailspin.
But the rebound isn’t just being spurred by traditional single-family home sales.
Indeed, the hottest sector in residential real estate has been the condo market, as low interest rates and a short supply of inventory has spurred more sales activity among condo buyers and sellers, realty experts say.
Greater Hartford condo sales shot up nearly 35 percent in July compared to a year earlier. A total of 247 condo units traded hands in July, up from 183 sales in the year ago period, according to the Greater Harford Association of Realtors (GHAR).
Meanwhile, July condo sales were up 10 percent compared to June 2013 sales, which reported 224 closings.
”It appears that the condo market is outperforming single family homes, which could be the result of better affordability rates for first time homebuyers,” said Jeff Arakelian, president and CEO of the Greater Hartford Association of Realtors. “Another consecutive rise in closed sales is evidence that our market recovery is well underway.”
Despite the positive numbers, however, the outlook is cloudy. Rising interest rates (which creeped above 4.5 percent) could sap momentum in the residential real estate market, experts say, and put single family home and condo sales in a backward slide.
Regardless, Arakelian said he is still optimistic.
One reason the condo market has improved is because sellers are finally coming to grips with more realistic pricing of their real estate, he said. In the years following the 2008 financial crisis, many potential condo sellers had overinflated values of their properties, which made it difficult for deals to get done.
But that appears to be changing.
Despite increased sales activity, for example, the median sales price for condos in Connecticut actually decreased 5.84 percent in July from a month earlier to $145,000 from $154,000.
Affordability is also a driving factor for condominium sales, according to Marilyn Dzen, owner and realtor of Dzen Realty in South Windsor.
“Homes are generally more expensive to purchase than condos,” she said. “The price factor is very appealing to many buyers right now. I think young people, retiring folks and everyone in between are drawn to condo living because it is cheaper, easier to maintain and the units are typically new.”
Dzen said she believes condo sales will continue to flourish in 2013 and well into 2014, but she would like to see more interest from local cities and towns for new condo developments.
She said she isn’t aware of any right now.
“And that’s a shame, because there is a big demand for condominiums in Connecticut,” said Dzen.
Future condo sales will also be significantly impacted by interest rates, said Lawrence Yun, chief economist for the National Association of Realtors.
Yun said changes in affordability are impacting the market and with mortgage interest rates at the highest level in two years, it has pushed some hesitant buyers off the sidelines.
The average number of days a condo spent on the market in July declined 12.75 percent from a year earlier to 89 days from 102 days, GHAR data shows.
“The initial rise in interest rates provided strong incentive for closing deals,” Yun said. “However, further rate increases will diminish the pool of eligible buyers.”
