Connecticut House Sales In 2011: Lowest In A Generation
By KENNETH R. GOSSELIN
February 01, 2012
Connecticut's house sales in 2011 sank to their lowest level since at least the mid-1980s, dropping below even the levels of the devastating housing recession that gripped New England in the early 1990s.
The 13 percent plunge in the number of single-family house sales in 2011 marked the seventh straight year of year-over-year declines — and there are few prospects for much of a rebound this year, even as the market approaches the spring buying season, traditionally the busiest time of the year.
Prices also fell in 2011 compared with 2010. But the slight decline of 2.8 percent in the median price of houses that sold, reported by The Warren Group, does not necessarily mean that the value of most houses is still falling.
A plan announced by the White House on Wednesday to help homeowners with underwater mortgages refinance could boost the housing market, keeping more borrowers in their homes and out of foreclosure — easing the number of foreclosed properties competing with other properties.
In Connecticut, some sellers say their frustration with the slow pace of the market is building — forcing them to the sidelines because they are unwilling to drop their asking prices any lower.
In Wethersfield, Paul Signorello has been helping his father, Pietro, sell his home ever since 2009, a year after his mother died. Back then, the 3,100-square-foot split-level was listed for $489,000, but the house came off the market after several months when there were no offers.
Signorello's father, who has since moved to a smaller home, listed the house for $432,900 last September.
"Now, we're down to $399,000, and we're giving the house away, and we can't even get any showings," Paul Signorello said. "Now, he's at the point, he just wants to sell, but he may have no choice but to rent it. He understands he will have to take a hit, but how much of a hit do you have to take?"
Signorello and his father have plenty of company: Sales of single-family houses in Connecticut dropped to 21,141 in 2011, down from 24,270 in 2010, according to the report Wednesday from The Warren Group, which tracks housing trends in Connecticut and elsewhere in New England. Last year's figure fell below the previous low point of 23,739 sales in 1991.
Record-low mortgage rates have done little to boost the housing market, as high unemployment and tighter lending requirements have held back sales. Potential home buyers worried about the stability of their jobs aren't willing to make big purchases. Borrowers who are comfortable purchasing a house are finding it difficult to get a loan, lenders requiring strong credit scores and sizable down payments.
"People are still waiting for the deal of a lifetime," said John Zubretsky Jr., president of Weichert, Realtors—The Zubretsky Group in Wethersfield. "There's uncertainty: 'Is it going to be worth less on the day I buy it?' It's like driving a car out of the lot. People are saying, 'I don't know, I just don't know.'"
House sales in Connecticut on a year-over-year basis fell in 10 months in 2011, rising only in January and August. The decline in sales was particularly sharp in some months because a federal home buyer tax credit in the first half of 2010 lifted sales — but the hoped-for lasting momentum did not materialize.
Despite the sales decline in 2011, the median sale price in Connecticut dipped just 2.8 percent, to $243,000 from $250,000 in 2010. Zubretsky said that prices might still erode further this year, pulled down by foreclosure sales and short sales, in which the lender agrees to accept less that what is owed on the mortgage.
This housing recession in Connecticut differs from the early 1990s because of the number of residential foreclosures, touched off by loose lending to risky borrowers who couldn't ultimately afford their mortgages and deepened by a recession that cost tens of thousands their jobs, Zubretsky said.
"It has turned the market upside down," Zubretsky said. "It's going to take 3 to 5 to recover, and that's not months."
Although Wednesday's report paints a dismal picture of the state's residential housing market, sales are still occurring, and multiple offers aren't unknown, if a house is priced right for its location, real estate agents say.
But there are other troubling signs for the state's housing market. New home construction in 2011 dipped to its lowest level in decades, as housing permits for single-family houses, condominiums and apartments fell below 3,000 in the 128 towns and cities tracked by the state. By contrast, a healthy market would have between 8,000 and 10,000 permits issued annually.
Donald L. Klepper-Smith, an economist at DataCore Partners in New Haven, said there must be marked improvement in the jobs market before housing will get any sort of significant lift.
"Our labor markets are healing very slowly," Klepper-Smith said. "We're not looking at things coming back in a large way anytime soon."
Klepper-Smith said he would need to see annual, year-over-year sales increases in the double digits to sense that a recovery in the housing market was taking root.
The number of house sales declined across all eight Connecticut counties in 2001, from a 6.5 percent decline in Tolland County to a 23 percent plunge in New London County.
In Hartford County, sales fell 11.2 percent to 5,195 from 5,850 a year earlier, according to The Warren Group. The median sale price dipped 4 percent, to $215,000 from $224,000 in 2010.
A separate report Wednesday by RE/MAX of New England noted that sales in Connecticut's luxury home market fell in the last three months of 2011, compared with the same period a year earlier. But prices per square foot rose in the four Connecticut markets surveyed: Darien, Greenwich, New Canaan and Westport.
On Wednesday, President Barack Obama outlined a plan to help homeowners refinance, even if they owe more than their property is worth — a condition known as being underwater. The opportunity to refinance could save borrowers an average of $3,000 a year, the White House said. Obama pointed out that the program was not intended to be a quick fix.
"Now, the truth is, it's going to take more time than any of us would like for the housing market to fully recover from this crisis," Obama said in a speech announcing the plan. "This was a big bubble, and when it burst it had a big effect."
Obama said that previous programs rolled out by his administration haven't been as successful as expected. Some of those did not gain the full support of banks and other lenders who needed to implement them.
"If you're ineligible for refinancing just because you're underwater on your mortgage, through no fault of your own, this plan changes that," Obama said. "You'll be able to refinance at a lower rate. You'll be able to save hundreds of dollars a month that you can put back in your pocket."
Reprinted with permission of the Hartford Courant.
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