Realtors in Fairfield County remain confident that although the residential real estate market could soften, there will be no housing bubble in the near future. This newly built home in Weston, which includes six bedrooms, six full bathrooms and two half-baths, is being offered for sale at $2.5 million.

Although the majority of economists and housing experts have scoffed at rumors of a housing bubble for years, experts lately are giving more credence to the possibility.

But Realtors in Fairfield County – part of what Kiplinger’s Personal Finance Magazine recently named one of the 13 riskiest housing markets in the United States – are hoping to burst that theory, and stress that although housing prices might soften, there is certainly no bubble that is going to pop.

“I don’t see, per se, the bubble,” said Dave Wilk, vice president of operations for Prudential Connecticut Realty.

Kiplinger’s named New York City and its suburbs – including parts of Connecticut and New Jersey – as one of the riskiest markets based on high existing-home prices and The PMI Group’s Housing Risk Study, which put the risk of a price decline in New York City at 31 percent.

Meanwhile, Federal Reserve Chairman Alan Greenspan warned last month of the possibility of small price bubbles in different parts of the country.

Realtors who work in Fairfield County, however, have a sunnier outlook. Globally, the area is still undervalued, according to Beverly Walsh, sales manager of the Westport office of William Raveis International.

“All in all, the New York marketplace and the Connecticut marketplace is underrated on a global scale,” she said.

Homes in cities like San Francisco, Hong Kong, London and Tokyo all carry relatively higher prices. Walsh acknowledged that housing has to be priced according to the local marketplace, but said the comparisons show what kind of prices the market could potentially handle.

And locally, even though homes that are priced correctly still sell quickly – and often with multiple offers – there has been a slight shift away from the sellers’ market that has been a fixture in Fairfield County for the past couple of years.

But it has not quite become a buyer’s market, and Walsh said she doesn’t see that happening. More likely, it will become a neutral market for six months or a year, she noted.

“It could be very short-lived,” Walsh said. “We’ve seen some trend toward some softening of prices.”

‘Media Hype’

Wilk agreed that the double-digit appreciation that has been occurring in the area probably will slow down.

“In Fairfield County – in particular, in lower Fairfield County – prices are still appreciating dramatically,” he said.

But the 10 percent to 15 percent increases will slow, he said, adding that he finds that most of his colleagues agree.

Walsh counts herself among those colleagues.

“I don’t think our economy can support the kind of double-digit appreciation we’ve had year after year,” she said.

But if the market does not outpace itself, homes will continue to sell quickly and at a good price, according to Wilk.

Wilk also emphasized that correctly priced homes are selling quickly, although some Realtors and home sellers are still pricing homes like they were a year ago. It is still common for a seller to get 98 percent to 100 percent of the asking price if the home is well priced, he said.

The changes in the market were not unexpected, according to Wilk, who said several groups predicted that 2005 wouldn’t see the kind of prices and sales that were common in 2003 and 2004.

Brendan Grady, senior vice president of operations for Connecticut and Westchester County for Coldwell Banker Residential Brokerage, said he has seen a slight increase in supply this year that has led to homes staying on the market longer, but other factors have kept the market healthy.

“Demand remains fairly constant,” Grady said.

Demand for the first six months of this year has been nearly identical to the demand at the same time last year, he added. And although the market in 2003 and 2004 was clearly a seller’s market with prices rising quickly, Grady, like Walsh, said he sees the market now as fairly neutral.

“We see the market today as a normal market,” he said.

Part of the reason the market is softening may be all of the attention being paid to the bubble theory, according to several Realtors.

“I think a lot of it is media hype,” Walsh said.

The demographics in the area are still good and job indicators are not bad, so media reports about the bubble likely play into the softening of the market, she said.

“You can’t pick up a newspaper without somebody having an article about a bust,” she said. “I don’t think we’re looking at boom vs. bust.”

Rather than a market-wide bubble burst, Walsh said she thinks it is more likely that there will be “tweaks” across different parts of the market, such as specific price ranges.

Wilk agreed that media attention is contributing to the different messages about the bubble that potential homebuyers are receiving.

“The consumer is confused,” he said.

For the first time in his career a Realtor, Wilk added, he is putting the blame for slow activity in pockets of the Fairfield County market on bad weather and on stories in the media.

Interest rates are also a factor in the changing market, according to Grady.

“I think the key factors are interest rates and employment,” he said.

But all three Realtors are hopeful that other factors will keep the market healthy. Many of the Fortune 500 companies located in Fairfield County have been doing well, Grady said, and he believes that will result in job growth in the future. And although interest rates likely will continue to rise over the next 12 months – the Fed raised rates again earlier this week – Grady said he hopes that, because real estate has been such a stimulus to the economy, rates will rise slowly.

Increased employment will be a big factor in the market over the next year, according to Wilk.

“Job growth is the big thing,” he said.

Lawrence Yun, an economist with the National Association of Realtors, agreed. Despite the predictions in Kiplinger’s Personal Finance Magazine, the prospect of prices declining in New York City – which would affect prices in suburban Fairfield County communities – seems minimal, he said. Job growth in the area is good and there has been a housing shortage accumulating for years, according to Yun.

“There’s probably additional room for prices to go up,” he said.

Although some baby boomers are leaving the area, the outward migration is offset by an influx of immigrants to the area, he added.

The job growth is possibly the biggest factor tied to housing prices and the housing market, according to Yun, who noted that historically in the United States, prices only drop when there is local job loss.