They’ve been saying it for two years, but it’s still true. Low interest rates and rising home prices continue to fuel the hot real estate market, and according to statistics recently released by the Connecticut Association of Realtors, it continues to heat up.
During the first quarter of this year, Connecticut saw almost 1,000 more sales than it did in the first quarter of 2004, according to CAR’s numbers, which were prepared by the National Association of Realtors. The second quarter also started out strong, with existing-home sales across the country hitting a record high in April, according to NAR. April resales were 5.7 percent, about the pace of resales in April 2004, according to NAR.
Home prices are rising quickly and people want to make sure they buy homes before they are priced out of the market and before interest rates rise.
“People are afraid they won’t be able to buy a home [if they wait],” said Norm Krayem, a member of CAR’s Executive Committee and the broker-owner of Realty Estates in Groton.
As housing prices continue to rise, finding affordable housing in Connecticut – and the rest of New England – is becoming more difficult. Many homebuyers are therefore purchasing houses now, before they get priced out of the market, Krayem said. In fact, many are turning to condominiums as prices get higher. It is difficult to find a single-family home that is ready to move into for less than $250,000 these days, Krayem said, so condos are becoming a better option for many people.
Real estate investment was also a reason the housing market heated up in the first quarter, Krayem said. Many investors in the stock market are getting poor returns, but real estate continues to go up in value.
“[Investors] see that housing is the place to go,” he said.
Krayem added that as long as interest rates stay below 6.5 percent, he expects homes sales will not slow much.
Somewhat Slow
Although national numbers showed strong sales in the beginning of the second quarter of this year, some local Realtors noticed sales slightly lagging. In Groton and Mystic, the possible closing of Groton’s Naval Submarine Base New London – which has been recommended by the Defense Base Closure and Realignment Commission – has affected real estate sales. Krayem said he knows some fellow Realtors who have lost sales because of that possibility. But most Realtors are not overly nervous about the situation because they understand that the closure would happen over six years.
“We’re waiting [to see what happens], like anyone else,” Krayem said.
The general public, however, is still unsure about what will happen, and many do not want to buy homes in the area until they know.
Sales have been somewhat slow in southern Connecticut during the second quarter of this year because of the possibility of the base closing, and because of the weather, Krayem said.
“The phones weren’t ringing [in mid-May and June] as often as we thought they should,” he noted.
Krayem said he expects sales to pick up in August and early September. Fall is traditionally a busy time.
Indeed, the third quarter of 2004 saw the most homes sales in the past year, with 77,100 sales, seasonally adjusted, according to CAR’s statistics. That was nearly matched in the first quarter of this year, when there were 75,300 sales. That is nearly 10,000 more than the 65,500 sold in the first quarter of 2004.
A large part of the reason for that difference was the increase in sales in Hartford County, which also rose by a large amount from the first quarter of last year to the first quarter of this year. In the first quarter of 2004, 16,900 homes were sold in the county. In the first quarter of 2005, 17,600 were sold.
In actual numbers – not numbers that have been seasonally adjusted – the state saw 13,570 sales in the first quarter of this year and 11,800 in the first quarter of last year.
Among single-family homes, there was little change statewide in homebuyers’ preferences over the past year. Around 50 percent continue to buy three-bedroom homes. The median price for all single-family homes, however, has risen. In the first quarter of 2004, it was $254,200. In the first quarter of this year, it was $297,500.
The median price has risen in every county but one since last year. Only in Windham County did the median price decline slightly during the first quarter of 2004 compared with the first quarter of this year. The price last year was $182,800, compared to $181,100 in 2005. However, the decline may be a fluke. In the last quarter of 2004, the median price was $197,100.
