Condo revival helps lift August home sales here
After several years of lagging sales, the condominium market in New London County suddenly burst to life over the summer.
And the market for single-family homes, especially in the lower price ranges, wasn't too bad, either.
In the single-family market, sales volume for July and August was the highest in at least six years, according to figures released Monday by Stonington-based Sound Investment Consultants. Condominiums have seen a sudden surge over the past three months, with unit sales rising more than 22 percent and prices up 16 percent during the period.
"That caught me by surprise," said Les Bray, principal at Sound Investment Consultants, referring to the condo numbers. "There are indications that things have picked up."
Bray said two factors could be at work in the sudden interest in condos. First, interest rates are rising, and buyers may have decided to get into the market while loans are still historically cheap. Also, he said, slow sales for condos over the previous few years may have led to pent-up demand.
August's condo sales in the region were off a bit from last year's numbers, but prices were a different story. Last year's median of just below $130,000 zoomed up to $175,000 this August.
"It looks like condos are coming back," said John Bolduc, chief executive officer of the Realtors Association of Eastern Connecticut, which covers New London and Windham counties.
Bray said it's unclear whether this is a temporary spike or a definite trend because the number of transactions is relatively small. He pointed out that price rises in the condo market are running contrary to single-family numbers, which show that buyers are leaning toward lower-priced homes.
The median price for a single-family home in the region last month was $215,000, down from a $218,250 median seen during August of last year. And the average single-family home price of about $241,600 was the lowest August number seen in at least six years - the fourth time this year that the average price has hit a six-year low.
"You're really looking at a shift in the marketplace," Bray said. "The market has kind of slid down a rung or two."
But sales showed an up trend in recent months. August sales were up 5.4 percent and are up more than 11 percent so far this year.
Bolduc, head of the local Realtors association, said the region is currently being hurt by an overhang of properties that have yet to make it out of the foreclosure process. Connecticut requires judicial review of foreclosures, which can lead to a three-year lag between the time a home enters foreclosure and when the case is finally closed.
"That has an impact on the median price, for sure," Bolduc said. "We'll probably be suffering the effects for another year or so."
Still, Bolduc pointed out that increased real estate sales are a positive sign for the local market. August sales continue a trend of solid sales growth seen in the second quarter of the year, he added, while prices are up and down depending on market conditions in local towns.
The region's economy has been hurt by layoffs among casino and pharmaceutical workers, and jobs in the Norwich-New London area still haven't bounced back to levels anywhere near where they stood before the Great Recession. Many homeowners are stuck in place, said Bray of Sound Investment Consultants, because their homes are worth less than what they paid for them.
The trends have slowed sales of so-called "move up" homes as homeowners are either unable or unwilling to take on more debt. Most of the action is in starter homes, generally under $200,000.
"The low end is moving," Bray said. "Maybe that's the new normal."