Study shows Connecticut’s housing market stabilizing

A study released Wednesday finds signs of stabilizing housing prices after more than a year of declines.

Over the past year, prices have stabilized or increased throught most of the state market, and areas with declines also showed improvement with smaller drops, according to a study by the Center for Real Estate and Urban Economic Studies at the University of Connecticut.

Strongest in the second quarter of 2012 were in the Enfield and Norwich-New London areas, where single-family house prices gained about 7 percent in the first quarter of 2012 and 15 percent in the second quarter.

The UConn analysis also found that prices in the Danbury area remained unchanged, while the Bridgeport-Stamford market had a relatively modest 2.8 percent decline compared with 2011 figures. In Greater Hartford, however, prices continued to decline by 5 percent, the research found.

“The housing market is benefiting from low mortgage rates and prices that are better aligned with the buyer’s expectations,” said the university’s School of Business Professor John Clapp, director of UConn’s Center for Real Estate and Urban Economic Studies.

“At the same time, it is restrained by high unemployment and limited ability to qualify for mortgages,” Clapp said. “The net result is a market that bumps along a shallow bottom.”

The center also combined the sales of condominiums in their analysis and found that the sales price continues to slide. One year ago, a typical Connecticut condominium was declining in value at a pace of about 5 percent to 7 percent annually. This year, the same unit was down 10 percent.

However, researchers warned some of the increase reflects a mild winter and an “echo effect” of the homebuyer tax credits that were in force during spring 2010.

The tax credits boosted sales in early 2010 and depressed them in early 2011, making the year-over-year change in the second quarter of 2012 look particularly high.

After adjusting for the weather and the tax credit effects, UConn estimates the volume of transactions has stabilized at levels established in 2008 and 2009.