National news is reporting that housing is making a strong comeback with median prices up 3% for the second quarter of 2012 with pending sales for this period the highest since 2007 (if you take out the spike caused by the tax credit of 2010). Beware, Connecticut Homeowners, this is NATIONAL news with areas like Arizona tipping the scales with a rise of near 13% followed by Idaho at 8.7% and Florida at 7.4%. Looking at NATIONAL number is important because it reflects trends. Connecticut was “late to the Dance” as far as the plunge in prices and therefore will be one of the last to recover. Although it doesn’t seem so to many, we were among the least impacted by the housing recession, prices falling generally 30% from the peak in 2006.
The Real Story:
Connecticut , and specifically Fairfield County, recorded the biggest declines in the nation according to the Federal Housing Financing Authority and the Connecticut Association of Realtors. Connecticut prices for single family homes fell an average of 4.7% since the same period last year, with Fairfield County taking the largest hit with 8%. Brookfield, specifically, mirrored the county statistics almost exactly. Although the number of sales are up in Brookfield, they are down in several neighboring towns.
The Negative influencers:
1- Fairfield County is one of the top 10 areas in the country for median sales prices making it predicable that our percentages in change would be higher both up and down.
2- Our ties to Wall Street, the stock market, and corporate bonuses have all had a negative impact on the buying power of our clients.
3- RealtyTrac.com has reported a 201% increase in new foreclosures starts in Connecticut in July. This “distressed property” inventory make up about 25% of current inventory.
4- Even with the low interest rates, banks have increased documentation requirements for our borrowers making it more difficult to qualify for a loan.
The Positive Indicators:
1- Interest rates below 4% make the affordability index extremely attractive.
2- Sellers are becoming more realistic about values and realizing that it is time to move on.
3- Inventory levels are falling.
4- Although unemployment is still 8.5%, 5100 new jobs in July for a total of 23,500 for the year which according to Brian Durand, spokes person for Malloy’s chief budget and policy agency is the 9th fastest growing economy in the country!!
5- Housing permits are up 39% in the state.
6- Banks, with the help of government programs, are more flexible with loan modification programs keeping more distressed sales off of the market and more people in their homes.
7- 25% of homes currently on the market are selling within 30 days, reflecting buyer demand and realistic pricing.
Nationally the housing market is gaining momentum. Connecticut is still lagging but shouldn’t be too far behind. When the local recover begins it will be in SMALL increments, not the large swings we have seen in some of the “problem markets”. For buyers, it is an ideal time to buy. For Sellers, your homes are worth more today than they will be for a minimum of the next 3 years so it might be time to “bite the bullet” and not to delay your lifestyle goals any longer.
McCaffrey Professionals of Coldwell Banker
300 Federal Road
Brookfield, CT 06804