GOOD NEWS, BAD NEWS
The good news is that real estate nationally and locally the real estate market is better than it was a year ago. This is not particularly surprising since there is general consensus that we reached the bottom of the housing market in January of 2009. With interest rates at a 30 year low, bargain basement prices, and the homebuyer tax incentive buyers created a very active Spring market with lots of sales, although this did not result in much of an increase in prices, because inventory is still high.
The bad news is that sales of previously owned U.S. homes took a record drop in July to their lowest pace in 15 years, suggesting further loss of momentum in the economic recovery. As the National Association of Realtors issued the report, Chicago Federal Reserve President Charles Evans warned that the risk of a double-dip recession was higher than six months ago although he did not think output would contract, describing the recovery as ongoing but modest (Reuters, 8/24/10).
We expected a rebound effect after the tax incentive program ended on April. Credit continues to tighten and the FHA now has stricter requirements for borrowers. This means fewer qualified buyers in a market with high inventory and more foreclosures, which means it will continue to be a strong buyer's market for the foreseeable future.
The market overall is still much better than a year ago regardless of which yardstick you use to measure it. We will hope that the economic recovery continues and we expect that the progress on the Black Rock Train Station will give our area a boost in value as it nears completion in 2011. Let's take a closer look at the market, drilling down from the national to our local market.
NATIONAL
The Standard & Poor's/Case-Shiller 20-city home price index released Tuesday was up 4.2 percent from a year ago. Prices are up slightly from a year ago, but the overallmarket plunge was severe. The market went down almost 40% in less than two years before it came back up again. The current market is still significantly below the peak, in some areas of the country homes have lost up to 80% of their value (e.g. Florida, Nevada, Arizona). Nationally home prices are back to 2003 price levels. (Source: S&P/Case-Shiller Home Price Indices, 8/31/10).
The inventory of unsold homes on the market has grown. At the current sales pace, it would take more than a year to exhaust the inventory on the market nationwide, compared with a healthy level of about six months (Source: Associated Press. 9/1/10, "Home prices rise in 17 cities as forecast grows dim for rest of year")
CONNECTICUT
Single-family home sales in Connecticut surged 33% in June compared to a year earlier, while the median home price climbed for the seventh straight month, according to a new report by The Warren Group, publisher of The Commercial Record. The year-to-date median single family home price is 4% higher than a year ago.
Condominium sales also increased statewide in the first half of 2010. Year-to-date condo sales increased 36% from a year earlier. The year-to-date median condo price is up 3%.
FAIRFIELD COUNTY
Fairfield County median prices are up 8% over the previous year for single family homes, but are still 20-30% below their peak prices. Inventory levels are 10% higher than last year, which means prices are not likely to increase in the near future while we work our way though this inventory. Lower price points are still more active, but luxury home sales showed increased activity for the first time in two years.
Fairfield County median prices are up 8% over the previous year for condominium prices from Q2 2009 to Q2 2010. Fairfield County currently has 9 months of condominium inventory. (Source: Warren Group)
BRIDGEPORT
Bridgeport median prices continue to decline although they appear to be leveling off. The value of homes in Bridgeport are 40% below their peak prices. The median price for a home in Bridgeport was $150,000 for the first quarter of 2010
As you can see below inventory is decreasing, The Bridgeport single family real estate market has 11 months of inventory at present. This is still a buyer's market, as over 6 months worth of investory is considered a buyer's market. However Bridgeport's inventory is better than Fairfield County at 13 months and the same at the state at 11 months. What this means is that prices may still decline as there is more supply than demand, but will not likely decline as sharply as in the past few years, as long as all other factors remain the same.
BLACK ROCK
Black Rock is faring better than the rest of Bridgeport. The median sale price was $277,500 for the first half of 2010 which is statistically the same as the median price for the first half of 2009 at $275,000. Prices are 25% below their peak in 2005/2006 for most homes in Black Rock, although luxury homes above $600,000 are 30% below their peak.
Sales of single family homes in Black Rock increased significantly for the first half of 2010 over the first half of 2009. There were 7 single family sales in the first half of 2009 compared to 16 in the first half of 2010. There are currently 28 single family homes on the market, which is about 10 months of inventory. Over 6 months of inventory is considered to be a buyer's market.
Condo sales increased from 4 to 7 in the same period. There are too few sales to provide a median price. Unfortunately there are 25 condo units currently on the market which is 18 months of inventory. Coop sales actually decreased from 3 to 2 in the same time period. Inventory is at record levels for coops with 12 units on the market, which is 36 months of inventory.
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For more information on the the Black Rock community, visit the Black Rock Community blog at www.blackrockonline.org
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