- CT Local Housing Market Shows Surprising Strength

August 2008

Connecticut's housing market has lately shown small but perhaps significant signs of resiliency - even as the national housing market continues its long decline. Although new-home starts in the state continue to decline, they are doing at a slower pace than the national average, according to the July Connecticut Economic Digest, which reached that conclusions mostly based on housing permit statistics, median home sale prices and delinquency rates.

According to the state's Department of Economic & Community Development (DECD), the number of housing permits issued by municipalities across the state rose ten percent in June from the same month in 2007. June's total of 740 housing permits also represents nearly a 50-percent increase from the 493 permits that were issued in May.

June's housing-permit total was also the highest since May 2007, when 745 were issued.

However, year-to-date Connecticut building activity remains far behind the first half of 2007. Between January 1 and June 30 of this year, 2,687 housing permits were issued - almost 22 percent less than the 3,444 figure for the equivalent period in 2007.

For the month of June Manchester led all Connecticut municipalities with 141 permits issued. Milford was the second highest, with 106.

- Home Prices down 7.6%

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Foreclosures are driving down prices in the last 12 months, with cities in the Sun Belt leading the decline. Real estate prices continued to post steep year-over-year declines during the three months ended June 30, according to a new report from the National Association of Realtors (NAR). Nationwide, the median single family, existing home price plunged 7.6% to $206,500 from $223,500 in the second quarter. The median

price is one in which half of all homes sold for more and half sold for less. A record numbers of foreclosures is helping to drive down prices, according to NAR. In fact, foreclosures and short sales accounted for about one third of all existing homes sales.

"In many areas with large concentrations of foreclosure sales, homes are being purchased below replacement cost values," said NAR president, Richard Gaylord. "Many buyers with long-term expectations are getting exceptional value in the current market."

Sun Belt metro areas led the decline. These areas ran up fabulous gains during the mid-2000s boom, but are experiencing even more severe declines during the bust.

In Sacramento, Calif. prices plunged 35.6% year-over-year to $$229,500. Cape Coral, Fla. recorded a loss of 33.1%, prices in Riverside, Calif. dropped 32.7%, and Los Angeles prices are down 29.6%. Las Vegas prices fell 23.6% and Phoenix was down 22.5% for the quarter.

More bargain hunting buyers are coming into the market, according to the Realtors. "The biggest home-sales gains over the previous quarter have been in some of the markets with the steepest and fastest price drops," said Lawrence Yun, NAR's chief economist. "Buyers in these areas are responding to deeply discounted home prices."

Existing-home sales increased 25.8 percent in California, 25.0 percent in Nevada, 20.5 percent in Arizona and 10.1 percent in Florida during the quarter.

The biggest regional home price declines have occurred in the West, where homes lost 17.4% of value to a median of $290,500. Prices in the South, at $177,000, were almost flat, down just 0.9%. The Northeast median home sold for $269,000, down 9.6%, and the Midwest came in at $161,500, down 4.1%.

Among metro areas, Yakima, Wash. posted the largest percentage increase. Prices there rose 8.9% year-over-year to $162,300. Binghamton, N.Y. was second with a price jump of 8.7% to $120,900.

Condo prices fell much less than single family homes, down just 3% year-over-year to $220,000 from $226,900. A couple of cities recorded double-digit condo price gains, led by Syracuse, N.Y., up 17.8% to $144,900, and New Orleans, up 15.9% to $192,100. Houston condos rose 9.9% to $141,100.