Home Prices Across Connecticut Have Failed To Recover Since Peak In 2007
Hartford Courant, May 17, 2018
By Kenneth Gosselin and Matthew Kauffman
Home prices across Connecticut — hit hard in a housing downturn that gripped the state a decade ago — have yet to stage a broad-based recovery and remain 15 percent below the peak in 2007.
An analysis by The Courant of single-family house sale price data from 2007-2017 reveals no brighter picture when broken down by county. None of Connecticut’s eight counties has seen median sale prices recover anywhere near 2007 levels.
And among Connecticut’s 169 municipalities, just 12, including West Hartford and Southington, have either reached or surpassed the annual median sale price in 2007, according to the data provided by The Warren Group, which tracks real estate trends and publishes The Commercial Record.
The numbers are dismal, even for real estate agent Joanne Breen. Breen has lived through three or four recessions during her nearly 40-year career, and she said she has never seen a housing downturn like the past decade.
“This was worst, by far,” Breen, part owner of ERA Sargis-Breen in Newington, said. “This was the deepest, longest and I have never seen Connecticut fail to recover along with the rest of the country for as long as we’ve been on sidelines. I’ve never seen us to be so far behind the rest of the country.”
The Courant’s analysis also found:
Fairfield County has fared the worst, still down 24 percent, with only one town, Darien, reaching recovery in median sale price by the end of 2017.
Hartford County is showing the most strength, but it is still down 11.5 percent overall from a decade ago, and there is little consistency among its 29 towns and cities. While three communities — Hartland, Southington and West Hartford — have surpassed 2007 price levels, a third of the county’s municipalities have had weaker recovery than the state as a whole.
After an 18-percent plunge between 2007 and 2009, prices statewide have barely budged, regaining only 3.3 percent. Hartford and Middlesex counties did not “bottom out’ until 2015.
Changes in median sale price — where half of sales are above and half are below — does not necessarily mean that all sale prices, or home values for that matter, are rising or falling. But the median price is a well-watched indicator of broader trends in the market.
As the state enters the thick of the spring home buying market — traditionally the strongest of the year — experts say the sluggish home price recovery is tied to broader economic trends reshaping Connecticut. Slow job growth, population declines and uncertainty about how troubled state finances will affect local property taxes are all playing a role, they say.
Sellers are often disappointed that their listing prices are lower than what they, or even their real estate agents, think their homes might be worth in a healthier market. This reality — especially frustrating because property taxes keep rising — has sent some would-be sellers to the sideline, leading to a tightening supply for homes for sale.
“Sadly, sometimes you look at the bricks and the mortar and it is worth X, but in this market, I can only get Y and Y is lower,” Paula Fahy Ostop, a real estate agent and partner at Marshall + Ostop Associates/William Raveis in West Hartford, said. “That’s just the market conditions that we are in.”
Pricing Woes back to top
This spring, real estate agents in greater Hartford are reporting heavy traffic at open houses and homes are going under deposit. But buyers are choosy and across all price ranges, sellers are giving more and settling for less.
Buyers want homes with updated kitchens and bathrooms, in attractive locations and with few downsides. Or they want a house in need of work but priced so the cost of updates are factored in and then some, agents say.
Sara Salomons and her ex-husband learned the complexities of the current home sale market when they listed their 1920s home near West Hartford Center two weeks ago.
The couple purchased their center-hall Colonial in 2009 for $330,000 in a market past its peak in price and still losing ground. Divorce wasn’t in the picture, so the couple sank about $80,000 into major renovations. The projects included a new kitchen, creation of a master bedroom suite on the second floor and the conversion of the attic into a bedroom.
But when it came time to put the home on the market, recovering their $410,000 investment was out of the question.
“It’s disappointing to be selling it for less than what we put into it,” Salomons said. “The renovations that we did were far more than some fixes here, some fixes there. But I’m also realistic and I knew how I was pricing it. I knew this is what the market could handle right now.”
Despite the renovations, Salomons and her former husband listed the house at $365,000 — $45,000 less than their investment. Showings and an open house drew dozens, but just one offer emerged and it was for less than the asking price — a shared-driveway and vintage windows seen as downsides. (An agreement was later reached with the prospective buyer for a sale at the asking price.)
The market is sending some confusing, mixed signals. Bidding wars are not uncommon for the most attractive properties, giving the mistaken impression of a “hot” market.
A year and a half ago, when Marianne Monoc and her husband bought their Simsbury home, it had been on the market at least nine months. So when they put the contemporary-style home up for sale two weeks ago, they didn’t expect to have to pack up very fast for a relocation to Colorado.
But as soon as the home was listed, offers started rolling in, even before a scheduled open house. At one point, there was a four-way bidding war. The couple accepted an offer five days after the house went on the market, and it was above the listing price of $314,900.
“We were expecting a long, drawn-out sale,” Monoc said. “We were excited and a little nervous and had to get things going a lot faster that we thought.”
The sale price was well above the $286,000 Monoc and her husband paid in late 2016 plus the $15,000 in repairs they’d made since moving in — a sign, agents said, of recovery. But the house also had a new kitchen, bathrooms and the sought-after “open concept” layout.
Despite multiple bids, buyers remain cautious about how much they are willing to invest when it is uncertain when prices will fully recover.
If you have a house and you’re trying to leave...you’re, at some point, going to grit your teeth and say, well, instead of $240,000, I’m going to get $210,000. — John Glascock, director of the Center for Real Estate and Urban Economics, UConn
Previously, “when someone was coming into the market, it would be more ‘what are the great neighborhoods people are gravitating toward?’” Ostop said. “Now, the first thing is: ‘what should I buy so I can resell?’ They’re worried about the exit strategy.”
Big homes, lower incomes, fewer children back to top
The real estate market is inextricably linked to the broader economy, and some experts say the types of jobs being created in Connecticut has a strong bearing not only on the kinds of houses that are selling but the prices being paid.
John Glascock, director of the Center for Real Estate and Urban Economics at UConn, said the last recession cost the state jobs paying $100,000 and more; and since then, those jobs have been replaced with ones paying between $40,000 and $60,000.
“So that changes the demand for the housing that we have in the marketplace,” Glascock said, noting that Connecticut’s stock of homes is weighted to the larger, higher-end houses.
Glascock also said the decline in the number of children graduating high school indicates that families are having fewer children and are seeking a smaller houses, also different from what is in the market.
“So, those two big effects will likely continue to dampen the demand for housing in terms of price,” Glascock said.
There also is pressure on price from the side of sellers.
When you don’t have robust job growth, you don’t have the demand for housing that we used to have. — Joseph McGee, vice president of public policy, Business Council of Fairfield County
“If you have a house and you’re trying to leave — retire or whatever it is that you are trying to do — you’re, at some point, going to grit your teeth and say, well, instead of $240,000, I’m going to get $210,000,” Glascock said. “And you go on with your life.”
At first, Fairfield County — long known as the state’s “Gold Coast” — seems a surprise as the worst price performer among all the state counties, especially with those Wall Street bonuses.
Sure, millennials are putting off home purchases longer, preferring to live in apartments, spurring a rental construction boom in the county and elsewhere in the state.
But Joseph McGee, vice president of public policy and programs at the Business Council of Fairfield County, said car and rail congestion is probably the largest issue holding back price recovery in the county.
McGee said every company the council tries to woo to come to Fairfield County talks about the congestion. Corporations are open to Stamford because it is within a hour train ride to Manhattan, but going to Bridgeport or New Haven or even farther east, McGee said.
Even within Stamford, corporations are only interested in establishing headquarters with, say, 80 employees but not bringing in 1,000 workers, McGee said.
“We’re just convinced that the lack of investment in transportation infrastructure has really hurt the economy here and, as result, has hurt residential property values,” McGee said.
McGee pointed to brutal commutes into Stamford from the surrounding suburbs, such as Fairfield, where an 18-mile drive once took a half hour and now it can be up to an hour and 20 minutes each way.
Like other areas of Connecticut, there is a “mismatch” between houses for sale and those sought by buyers in Fairfield County, McGee said.
Higher-end houses priced at $5 million and more are sitting, with the most attention on those ranging from $550,000 to $700,000, which are in short supply, McGee said.
While Connecticut has lagged behind much of the nation in recovering from the recession, some real estate agents say the housing price gains — as modest as they are — are evidence that the market is slowing improving.
Still, most towns and cities still face a significant climb out of the last housing recession, and the pace of growth isn’t expected to change dramatically in the next few years, experts say.
“We are moving in the right direction,” Carl Lantz III, an agent at RE/MAX Premier Realtors in West Hartford, said. “It’s just very slow. People just need to be realistic in what’s going to happen.”