The number of houses sold in Connecticut so far in 2007 is down dramatically, but it may not be an indicator of an oncoming housing slump.
With the median prices for houses improving for the state and in all but two counties, the belief is that the housing market is still healthy.
“The trend in Connecticut is in direct contrast to other New England states where we are seeing slumping sales and slumping prices,” said Terence Egan, editor in chief of The Commercial Record, published by the Warren Group. “It’s the old supply and demand principle, but prices are not falling in Connecticut.”
Year-to-date housing sales for Connecticut are down 5.8 percent compared to last year and sales in June were down a staggering 9.5 percent in contrast to June 2006.
But median sale prices have been going in the opposite direction. The state median price jumped 4.15 percent in June and has steadily increased by 1.82 percent for the first six months of the year.
“I believe there are a lot of factors at work here but it seems to indicate that housing prices in Connecticut did not become as inflated as in other areas,” said Egan. “If you look at Fairfield County, the prices have been very consistent in going up by 4 percent.”
MLS Concurs
Multiple Listing Service statistics from the Greater Hartford Association of Realtors (GHAR) revealed similar trends, with a 12.28 percent drop in sales for the first half of 2007 and a 1.58 percent increase in median price.
Bob Fiorito, a member of the Connecticut Association of Realtors, said that the national news and trends on the housing market have spilled over into Connecticut in the form of cautiousness.
“When you look at buyers now, they’re taking longer to make their decisions,” said Fiorito. “I think that plays a role in sales because with the price staying up, the value is still there, it’s just a matter of buyers making that decision.”
Of the 5,045 closed sales tracked by the GHAR from January to June, the average time on the market was up 8.5 percent, to 64 days.
Because of the talk surrounding the national housing market and the possibility for a slump, Fiorito said that buyers are skeptical and have no urgency.
“There’s not panic in the market and I don’t think there’s any crisis, it’s just buyers looking for the best value,” said Fiorito. “There’s still a lot of negative news out there that is probably making people think twice.”
Another concern for potential buyers is the uncertainty in the mortgage markets and the tightening of credit for lower-income (often first-time) buyers.
Inventory Levels
“It’s not an issue of inventory because the inventory is still there,” he said. “There may be fewer people in the market and maybe there’s a few less that shouldn’t have been there anyway.”
The downturn in sales does not appear to be related to a thinning of the number of houses on the market, though steep increases seem to be fading. GHAR reported 10,827 listings for the first six months of 2007, an increase of 2.9 percent, as well as 1,929 listings in June, for a very modest increase of 0.10 percent.
The Commercial Record’s Egan agreed that a segment of homebuyers have been excluded, or potentially excluded, due to the turmoil in the mortgage market.
“When there is news of turmoil, it generally means consumer are going to be more cautious and that’s understandable,” said Egan. “The big picture is that the state of Connecticut is doing far better than, say, Massachusetts.”
Massachusetts went through a phase in early 2005 when sales were slowing yet prices remained level, but it snowballed to a point, said Egan, where both sales and price have taken serious hits in the last year.
