Despite the fact that home sales are down in Connecticut and elsewhere, prices remain on the rise. Million-dollar homes are becoming commonplace in New Haven County, where this house at 135 Coram Lane in Orange sold earlier this year for $932,000.
The first half of this year was much like real estate experts expected. Median home prices are still rising, but at a considerably slower pace than they have been for the past few years. The number of home sales is down, substantially in some places.
It is a far cry from the numbers in 2004 and 2005, when double-digit increases in median prices were seen almost across the board. This year, one county has shown a double-digit price increase. Median home prices in New Haven County were 11 percent higher at the end of the first half of 2006 than they were at the end of the first half of last year.
Several factors could be playing into those numbers, according to Barbara Pearce, president and chief executive officer of H. Pearce Real Estate Co. in North Haven.
“I think [New Haven County’s] price increase has, in general, lagged behind Fairfield County and Litchfield County,” she said.
The county also has more second homes than many others in Connecticut, and the market for second homes is still strong. The numbers also could be due to some extraordinary increases at the top end of the price spectrum, Pearce said.
It wasn’t long ago that there were no million-dollar homes in New Haven County, she said. Now, multimillion-dollar homes are not uncommon. Also, much-publicized improvements to the city of New Haven have people more inclined to want to live near there, although Pearce says it has always been a good place to live.
“I think there’s a general perception that New Haven is improving,” she said.
The year-to-date median price for a single-family home in New Haven County at the end of June was $250,000, an increase of $25,000 over the midway point of last year. Home sales fell during that same period, however, by 17 percent – several points over the decline of the entire state, which was about 13 percent.
Fairfield County saw the biggest drop in sales over last year of all the counties. In the first half of 2005, 5,529 homes were sold. In the first half of this year, 4,479 were sold, a decrease of 19 percent. The county’s median price increase, however, was higher than in many of the others: It rose from $506,000 to $547,500, an increase of almost 8 percent.
Overall, the median price for the state climbed from $264,900 last year to $275,000 this year, an increase of almost 4 percent.
“We’re definitely seeing more inventory on the market,” said Mark Foreman, president of the Connecticut Association of Realtors and founder of Cornerstone Capital Mortgage and Real Estate Services in Fairfield. In some towns, there are between 15 percent and 30 percent more active listings at a time than there were last year.
“That’s obviously affecting the market,” Foreman said.
Buyers are taking more time to make decisions, and multiple offers are no longer common. But the changes reflect a return to a normal market, Foreman said, something experts have been saying for more than a year.
“I think we’re getting closer to [a normal market],” he said.
‘True to Form’
Barry Rosa, director of new homes and land at Prudential Connecticut Realty, was not surprised to hear about the changing statistics.
“That’s tracking true to form,” he said.
Rosa predicted that sales will be down between 10 percent and 15 percent by the end of the year.
“It’s cooled down from last year,” he said.
The cool-down started in July 2005, but, as Foreman said, it marks more of a return to a normal market.
“Eighty-five to 90 percent of the market is still there,” he said.
Interest rates that have risen steadily – although they are not yet at levels most consider to be very high – and rising energy prices have yielded slower home sales, Rosa said. It takes time for people to adjust to changes in the market, so many sellers are pricing their homes too high and having to reduce the prices.
It is up to agents in many cases to get prices in line, and to price correctly within the home’s range of worth, Rosa said. Most homes on the market now have to be priced in the middle of the range instead of at the top.
“It’s incumbent upon [agents] to make sure the range gets narrowed,” he said.
Such trends have been going on for several months, and some agents have had trouble.
“Some of it, yes, can be a painful change,” Rosa said. But the market is not dead, he added.
Hartford County saw the smallest decrease in home sales in the first half, with 4,700 sales in the first half of last year and 4,544 sales in the first half of this year, a decrease of 6 percent. Tolland County saw a decrease of about 9 percent, from 746 sales last year to 717 this year. Other counties saw decreases between 10 percent and 15 percent.
Litchfield County experienced the smallest increase in median prices, going from $247,000 last year to $253,000 this year, an increase of a little more than 2 percent. Other counties saw increases between 4 percent and 8 percent.
