December 5, 2004
By ROBIN STANSBURY, Courant Staff Writer
Despite the housing boom of recent years, prices in most Hartford-area
towns still have not reached the level they hit before the real
estate crash of more than a decade ago.
Only three towns - Avon, Ellington and Tolland - can boast median
housing prices that, when adjusted for inflation, are higher
today than in 1988, when the market peaked.
For many of the other 26 communities in the region, inflation-adjusted
housing prices are still tens of thousands of dollars below 1988
levels. In fact, in much of the region, real prices haven't grown
much beyond where they were in 1993, near the bottom of the housing
"The hot market of the late '80s pushed prices so far up
that, in inflation-adjusted dollars, we still have not recovered
today," said Ron Van Winkle, a West Hartford economist.
The statistics, which come in a new report from the Capitol
Region Council of Governments and examine housing sales from
July 2003 through June 2004, surprised some real estate experts
who have watched prices of homes in local communities soar in
And to be sure, in dollar-to-dollar comparisons, homes in all
29 towns covered in the report have surpassed the median price
of 1988. The region as a whole is strong, too, with a median
sales price 27 percent higher than in 1988, from $149,500 to
But when the housing prices are adjusted for inflation, the
region's current median sales price does not match the 1980s
housing boom. The 1988 inflation-adjusted median sales price
of $246,839 means a typical home today is still worth 28 percent
less than it was more than a decade ago.
Experts say the statistics indicate that the local real estate
market is not in danger of crashing - or bursting like a bubble
- despite recent large increases in housing prices.
"It tells us that the idea that this market is in a bubble
is not real yet," said Steven P. Lanza, executive editor
of the University of Connecticut's economic publication, The
Connecticut Economy. "It tells the story of a market that
isn't out of control, despite price gains of 10 percent or more
The housing market was speeding out of control in the late 1980s.
Prices were growing in the Hartford region by as much as 25 percent
each year. Permits for new housing construction were soaring;
many of the homes were built on speculation without a buyer lined
Today, median sales prices in the region are growing by about
10 percent each year, and experts are predicting that trend will
slow in the next few years. At the same time, building permits
for new home construction are about half what they were in 1988.
"This is actually good news because there is no doubt there
was a housing bubble in 1988 and housing prices were really inflated," said
Susan Coleman, a finance professor at the University of Hartford. "The
fact that housing prices are not at that level at this point,
in relative terms, means we are not in that bubble situation
again. Although prices are high and they seem high to a lot of
us, it is not a bubble."
Even Avon, Ellington and Tolland, the communities that have
recovered their real housing prices, are not in danger, the experts
said, because the boost in median sales prices is due almost
exclusively to high-priced new home construction.
Avon continues to be the most expensive housing community in
the region, with a median sales price for single-family houses
of $361,665. This can be compared with an inflation-adjusted
1988 median of $354,987.
Ellington's median is $220,001, compared with a real median
of $207,213 in 1988; and Tolland has a median sales price of
$257,900, compared with a real 1988 median of $255,755.
Economists said the Hartford region is still struggling to recover
from the 1990s recession because the local economy was hit harder
and longer than other parts of the nation. At the same time,
the region has been slower to come out of the recession, most
notably with the creation of new jobs.
"The slow population growth and the slow job growth in
the Hartford region continues to hurt," said Edward J. Deak,
an economics professor at Fairfield University. "Job turnover,
particularly in the insurance-related industries, and too few
individuals moving in from outside the area is taking away from
housing demand, which is keeping prices down."
Reprinted with permission of the Hartford Courant.
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