Property Rounds: Neighbors beat Connecticut’s residential market
Updated 1:58 pm, Wednesday, October 18, 2017
As the labor market goes, so goes the residential real estate market.
That’s helps explain why Connecticut, while slowly and steadily growing its home sales each year, is lagging behind the pace of Massachusetts and Rhode Island.
“Traction in the housing market can’t be had without traction in the local labor markets,” Donald Klepper-Smith, chief economist and director of research at DataCore Partners, said. “They go hand-in-hand.”
As Connecticut’s closest New England neighbors, Massachusetts and Rhode Island have seen stronger growth in jobs and home sales — as well as home prices — over the last several years. Massachusetts is particularly hot, having recovered 312 percent of the jobs lost during the recession. Connecticut has regained only 78 percent, according to data provided by Klepper-Smith.
“When you look at Massachusetts up 300 percent and Connecticut up only a quarter of that … that says it all,” he said.
There were 60,797 single-family homes sold in Massachusetts in 2016 and 45,621 through September in 2017, according to The Warren Group, a real estate data company and publisher of The Commercial Record.
Connecticut, with roughly half the population of Massachusetts, saw 32,551 homes sold in 2016 and 25,926 through September of this year. Rhode Island, with less than one-third the population of Connecticut, had 7,642 homes sold in 2016 and 10,917 throughout September 2017.
The disparity is greater in the condominium market with Massachusetts having 23,971 sales in 2016, compared to 8,336 in Connecticut. Year-to-date 2017 numbers mirror those of last year.
“The Connecticut market is heterogeneous; there are pockets of places doing well and other places not doing so well,” Klepper-Smith said.
Pockets of strength
Fairfield County continues to be a strong point for the state, both in number of homes sold and median price, he said.
Cynthia Hughes, a Realtor with Coldwell Banker in Danbury and president-elect of the Northern Fairfield County Association of Realtors, agreed that Connecticut has seen slower growth due to the job market. Her territory has held its own, however.
“The market in northern Fairfield County is steady and busy with buyers and sellers, while still battling low inventory,” she said. “That makes for a somewhat tricky market on both the buyer and seller sides.”
Median prices of homes sold show a more dramatic difference as Massachusetts has increased since 2013 to $345,000 in 2016, an increase of about 7 percent. Prices in Rhode Island have jumped more than 8 percent in that same span, to $233,000.
Connecticut, meanwhile, saw prices drop 5.4 percent from $260,000 in 2013 to $246,000 in 2016. Through September, median prices have dropped again to $250,000 in Connecticut.
Cassidy Murphy, an editor with The Warren Group, said the prices are stagnant in Connecticut because of a surplus of supply throughout the state.
“In Massachusetts, there’s not a lot of supply and there’s a lot of demand for what is out there,” she said. “In Connecticut, it’s the opposite. There’s a surplus and that’s keeping prices down.”
It’s all about Boston
Murphy said the strength of the Massachusetts market may be summed up in one word: Boston.
“The great economic engine is Boston and greater Boston. The rest of the state is doing well, but not as well as Boston,” she said. “Boston is really what’s driving the train now.”
The Boston effect is also giving the housing markets in Rhode Island and New Hampshire a bump as the city’s popularity is driving down inventory and escalating prices, forcing people farther away from the city.
“There are a lot of factors that go into this, but Boston is super-hot right now,” Murphy said.
Boston’s new hip vibe, coupled with its educational facilities, history and entertainment offerings, has made the city a magnet for millennials. In fact, a study by The Boston Foundation showed that Boston has the highest concentration of millennials in the country. The study showed that 34 percent of Boston’s population is between age 20 and 34.
“Connecticut doesn’t have that attraction,” Murphy said, pointing to cities such as Portland, Maine, and Providence, R.I., as growing cities with a lot to offer. “Also, Connecticut is known as a state that is not terribly business-friendly — whether that’s true or perception. Connecticut is also losing population, which is a challenge when it comes to selling homes. What Connecticut needs to do to change its fortunes has not yet been determined, but it does exist. It goes in waves. It’s a pendulum and it’s not always going to be that way.”
Boston is also having success luring businesses to the city, most notably enticing General Electric to relocate its headquarters from Fairfield.
Klepper-Smith said the Springfield area is also a booming market and has recovered 190 percent of the jobs lost during the recession. Connecticut, he said, is not likely to break even in the foreseeable future, especially with another national recession already overdue.
“Labor markets in Connecticut are in disarray,” he said. “That’s why the housing market is moving slowly.”
The writer may be reached at firstname.lastname@example.org; 203-731-3338. Alexander Soule, Macaela J. Bennett and Paul Schott contributed to this article. Contact the writer at email@example.com; 203-731-3338