Connecticut Home Prices See Steepest Drop In 16 Years

Real estate activity normally warms up with the weather, but not this spring.

Connecticut housing sales and prices continued to fall in May, particularly in the eastern half of the state.

The number of single-family home sales statewide was 24.5 percent lower in May than in the same month a year ago. For the first five months of the year, sales were off by 26.5 percent.

Even more troubling were the median prices, which for homes sold in May were down 10.8 percent from May 2007. It was the first time prices fell by double-digit percentage points since July 1992, according to The Warren Group CEO Timothy Warren Jr.

The difference then, Warren said, was the state was already pulling out of its housing slump and sales had actually increased by more than 7 percent.

No Silver Lining

“There was no sign of such a silver lining in May,” he added.

The precipitous drops in sales and prices were significant but not unexpected, according to Connecticut Association of Realtors President Ken DelVecchio.

“It has been sliding more and more for months now, and we’re seeing the steepest slide yet,” he said. “The problems had been confined to the urban areas, but we’re now seeing the suburban areas being affected as well. The national trends have caught up to Connecticut.”

“I believe there were a lot of potential buyers out there that remained on the fence and stayed on the sidelines,” DelVecchio said, adding they could be lured back into the market if they expect interest rates to go higher.

Although summer tends to be a slow time for home sales, Realtors have seen some activity lately. DelVecchio said he sold two homes himself in the past two weeks.

“Inventory is up and activity, lately, has been up as well,” DelVecchio said. “It’s unusual. The market is set for a rebound, and houses can be sold if sellers are willing and serious about selling.”

Lowering Expectations

Essentially, DelVecchio said, sellers have to accept the fact their houses are not worth what they thought, and they’re nowhere near what they were worth two to three years ago.

It is also evident that the western part of the state has been far more affected by the market decline than the eastern part.

In May, sales were down 44.5 percent in Fairfield County and 22. 4 percent in Litchfield County, while sales were actually up by 14 percent in Windham County.

When it comes to price, Middlesex County had no change in its median price for May, while Hartford County fell just 4.1 percent. That was in stark contrast to Fairfield County, where prices dropped 13.2 percent, and Litchfield County, where prices were off by 17.2 percent.

John Bolduc, executive vice president of the Eastern Connecticut Association of Realtors, said the perception of a deteriorating housing market has become reality.

“Eastern Connecticut’s economy is stronger than a lot of the nation because we have tourism, the casinos and jobs being created,” he said. “But frankly, the national media has contributed to our problems and certainly oil and energy prices have had an impact. There are a lot of factors in play.”

Sales volume for the first quarter of 2008 in Windham and New London counties was down nearly $50 million, from $220 million to $170 million, as 153 fewer homes were sold according to Multiple Listing Service data.

The average sale price fell $6,000 to $302,744, while the median price was $245,000, off $7,000 from last year. Figures for the second quarter are due within weeks, and Bolduc predicted they would continue to slide significantly.