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Connecticut Real Estate Market: When will Home Values Return?

Connecticut is not facing a dire predicament in their home values, home sales and foreclosures, but the state has certainly seen better days.

May home sales, for example, were quite impressive. In fact, sales of single-family homes in Connecticut were 39 percent higher than they were a year prior, thereby setting a record for the largest increase in May sales in more than two decades.

May Experiences Home Sales Surge

Many counties throughout Connecticut were leaders when it came to May homes sales, including Fairfield County and Middlesex County. Fairfield County, as usual, was a leader when it came to the May home surge. Fairfield posted a 76 percent increase in home sales in May, while Middlesex County posted an 81.1 percent increase.

However, you may be wondering when your Connecticut’s home value will rebound. According to the Fiserv Case-Shiller Indexes, home values in Connecticut are expected to return to their 2007-2008 peak levels by 2013-2014.

It’s no secret that much of April and May’s successes were due to the homebuyer tax credit; June home sales reflect this clearly. However, because Fairfield County is typically a wealthy area of Connecticut, it appears as if consumer confidence continues to rise, despite the expiration of the tax credit. Fairfield County has an $81,000 average annual income.

Keep in mind, however, that the home sales in Fairfield are often offset by the large number of foreclosures found here; home values are also suffering in Fairfield County as a result of the influx of foreclosures hitting the market.

A Struggling Economy

The state’s economy is still struggling for a variety of reasons: a high unemployment rate, a loss of personal income, and a struggling real estate market. It is important to point out, however, that the unemployment rate in Connecticut has dropped to 8.9 percent (the national unemployment rate stands at about 10 percent).

Another factor inhibiting the Connecticut economy from rebounding from the effects of the recession is a decrease in new housing permits. In fact, new housing permits in Connecticut plummeted by 40 percent in June when compared to a year before. The low number of home permits in June resulted in home permits for 2010 being behind the first six months of 2009.

A stabilizing market and low interest rates are expected to help buoy along Connecticut’s real estate market. Your home value in this area of the country is expected to return to its peak levels by 2013-2014

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