Real estate doldrums are hitting corner

An already sluggish Northwest Corner real estate market has been further slowed by economic uncertainty, disruption on Wall Street, a credit crisis and a possible recession. But area brokers say they are confident sales will pick up by the fall or even this summer.

In the first quarter of 2008, sales volume and median sale prices of residential homes have remained flat or declined in just about every town over the same period last year. In Sharon, for example, there were five sales during the first quarter (from January to the end of March) in 2007.

During that same period which ended about six weeks ago, there were four sales this year, according to the Commercial Record, a Boston-based real estate trade publication. The median sale price also fell from $359,000 to $333,000, a decrease of 7.8 percent.

It was much the same in Salisbury, where sales fell from five to three and median prices dropped from $596,000 to $562,500, or almost 6 percent.

The trend in the Northwest Corner is consistent with what’s happening nationwide. The number of existing home sales nationwide, including single-family homes, condominiums and co-ops, was down 19.3 percent in March compared to the same month in 2007.

And in the first quarter of this year, the median existing single-family home price was $196,300, down 7.7 percent from the first quarter of 2007, when the median price was $212,600, according to the National Association of Realtors.

Closer to home in Connecticut, the median price of single-family homes fell 7 percent, from $288,500 in March 2007 to $268,250 in March 2008. That’s the biggest monthly price drop since April 1995, when prices declined 7.9 percent, the Commercial Record reported.

Impact on weekenders

“There are definitely fewer active buyers,� said John Harney Jr., founder and principal of John Harney Associates in Salisbury. “Some customers have pulled back to see how things shake out.�

Harney cited several factors that have conspired to slow the real estate market in the Northwest Corner, including the loss of jobs at Wall Street investment banking firms such as Bear-Stearns and Merrill Lynch.

In addition, many upscale buyers have experienced a loss of wealth in the sluggish stock market and executives are anticipating smaller bonuses at this year’s holiday season. Combined with skyrocketing fuel prices and general inflation, the reality is that there is less disposable income for the wealthy weekenders who make up the bulk of the buyers in Northwest Corner towns.

“That having been said, there are still buyers who are willing to come forward because they see an opportunity,� said Harney, whose firm sells mostly to clients looking for part-time homes.

Harney does not foresee anything like what happened in 1987, when a stock market crash caused the national real estate market to fall into the doldrums for almost 10 years.

David Bain, owner of Bain Real Estate, which is based in Kent, said last month things were bit slow but he was optimistic the action would pick up soon.

“I’m not sure if it’s the bottom right now but it’s close to it,� said Bain, who sells about 90 percent of his properties to weekenders. “Buyers don’t like uncertainty.�

Bain had about 20 sales pending, whereas in a typical year he has 30 or so. But the income of Bain’s firm is holding steady because a greater percentage of the sales are on the high end.

Largest sale in the county

Bain started off the year with a whopper. In January, a 47-acre estate on a private lake in Kent sold for $11.1 million, the highest residential sales price ever in Litchfield County.

“I know it sounds like a cliché but now is the best time to buy,� Bain added. “Come this fall the prices will be higher.�

Lakeville broker Robinson Leech agreed that the market is slower than last year, with fewer closings and less overall traffic. He compared the current market conditions to the adjustment that occurred around 1990, when home values dropped as much as 30 percent and land values fell by as much as half.

“What I do see happening is from any final bottom, there may well be a very slow recovery in value structures that could take two years or longer, post-[presidential] election time, to achieve,â€� Leech said in an e-mail.  “This is, of course, conditional on a national recovery taking place as well, at many business levels.â€�

Salisbury Realtor Elyse Harney echoed the sentiments of the other brokers and added that during downturns in the market, the Northwest Corner “has always come back higher and stronger.� She acknowledged that her sales are slower than normal.

“But, of course, there’s nothing normal about real estate,� she quipped.