Connecticut Can’t Shake Housing Slump
Single-family house sales slipped again in March, offering more evidence that the Connecticut housing market slowdown, while relatively mild, could remain for some time longer.
According to the Hartford Courant, sales of both previously owned and newly built houses fell by 8.6 percent in March, compared with the same month a year earlier.
It was the second month in a row that sales fell after a strong January had given some hope that they might regain some momentum.
The median sales price of a single-family house in March also fell, falling 2.8 percent, to $270,000, from $277,750 a year earlier, according to the monthly report Wednesday from The Warren Group.
Economists say Connecticut mortgage activity remains healthy, although the housing market has clearly cooled from the robust sales and price increases of the past few years.
It could also take some time - perhaps into next year - for the market to regain some of its lost steam.
Donald L. Klepper-Smith, an economist at DataCore Partners in New Haven, said there is nothing to suggest that a housing slowdown will be anything but an “orderly step-down,” with a modest decline in sales and prices.
That, he said, is to be expected after such a period of strength in sales and price gains, and it follows the classic “housing cycle.”
Economists don’t expect a plunge in sales and prices in Connecticut such as the one in the early 1990s, when mortgage loan costs spurred a drought of more serious proportions.
This time, they say, home builders haven’t flooded the market with new homes, meaning that while there’s no imminent recovery in sight, there’s also no dangerous housing bubble waiting to pop.
There also has not been the degree of investor speculation in Connecticut that drove residential construction in Florida, spurred California mortgage demand and caused other markets to surge - markets now hit with deep declines.
Even so, Klepper-Smith said there should not be an expectation that there will be a quick pickup in the Connecticut market.
“It’s folly to think it’s going to come back on a dime,” Klepper-Smith said.
Timothy Warren Jr., chief executive of The Warren Group, said he expects that there will be continued “ups and downs” in both housing sales and Connecticut home prices before the market stabilizes.
“The market is still recovering from a year of sales declines,” Warren said.
Sales of single-family houses in March fell in all counties except Windham and Litchfield. Fairfield County took the biggest hit, as sales plunged 17 percent, but the median sales price still managed to eke out a 1.3 percent gain, to $532,500.
In Hartford County, sales fell by 10.2 percent, compared to a year ago. The median sales price rose by 4.4 percent, with mortgage rates still low, increasing to $235,000 from $225,000 in March 2006.
Condo sales in March also fell statewide, tumbling by 11 percent, compared with the same month a year earlier. Despite slowing sales, the median sales price rose 5.8 percent, to $199,950, from $189,000 a year earlier.
SOURCE: Hartford Courant