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Despite many national news stories talking about the collapse of the real estate market, the state of Connecticut turned in a good performance. Was the market weaker than in years past? Yes. Was the market in a free fall? Absolutely not!
Here’s a brief overview of the most important patterns for 2006 (see data by county and individual towns inside).
This is a market place that has reached a much more balanced level.
Unit Sales
The number of single-family and condominium sales in 2006 was less than 2005. We projected that there would be about 15% fewer single-family sales and about 8% fewer condominium sales (in units). The actual figures came in at 14% and 7%, respectively.
A better way to say (and think about) this: The number of single-family sales was 86% of last year’s level. The number of condominium sales was 93% of last year’s level.
In both situations, the rate of sales activity is much more realistic and sustainable than the very strong sales rates of prior years. This is a market place that has reached a much more balanced level.
How about median sales prices?
After enjoying (and getting somewhat spoiled by) years of double-digit price appreciation, sales prices moderated in 2006. Overall, single-family median sales prices went up 1.3% last year. The condominium median sales price went up 6.6%.
A normal year will show price increases in the 4-7% range. We had been seeing price increases in excess of 10% in recent years.
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We had become so used to an exceptionally strong market that in contrast 2006 appeared to be a weak market, when, in fact, it was not.
In both cases, sales prices are in line with income levels and mortgage rates. Looking back, the larger price increases of years prior to 2006 were fundamentally fueled by decreasing mortgage interest rates.
2006 showed many characteristics of a transitional market in Connecticut. We have become so used to an exceptionally strong market that in contrast, 2006 appeared to be a weak market, when in fact, it was not.
As we look ahead into 2007, we see a stable real estate market. Will there be weak spots? Yes. Will these weak spots get disproportionate attention from the media? Probably so.
Expect a rate of sales that will likely be similar to 2006. Anticipate overall modest price increases with the largest increases in sales prices for condominiums.
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