It can be very difficult to tell what the market for your own property or potential property might be, if you are reading national news about real estate and the economy. When you turn to the local news, it can be jarring, to say the least. Even within a market area, one part or one town can be outperforming or underperforming the others. What can I tell you? It confuses us also.
For the past 25 years, the Connecticut market has not matched the national market more often than not. However, there are two Connecticut markets--all of Connecticut, which includes Fairfield County, which is heavily influenced by metro NYC; and the "real" Connecticut, which is the rest of the state. Of the top 100 metro markets in the country, only 4 have declined in prices in the past 12 months, and two are here: Hartford and New Haven. You may read statistics that don't mirror what you are seeing only in your area, because Fairfield prices did not decline, and this year's Wall Street performance meant that serious money was available to throw at real estate in that region. The state as a whole was 50th out of 50 states and the District of Columbia in price appreciation (we beat Mississippi) for the prior year, but the entire state was positive for price growth, albeit slightly.
Although mortgage rates, which have a big influence on prices, are largely national, energy prices vary, because of tax rates, and tax rates vary a lot. In addition, we have tax policies here (especially our estate tax and our highly inclusive income tax) which put us at a disadvantage to other states, when people are choosing. Property taxes directly affect real estate prices, and we are more dependent upon them than are some other states.
Another factor is our legal system, requiring court involvement in foreclosures. Connecticut is not alone in being like this, but the states that have lengthy legal foreclosure processes are lagging behind in price appreciation, because those properties have not yet all turned over, and that is holding prices down. There can be real differences between average prices counting foreclosed properties and short sales, and those which only measure MLS sales, for instance.
Is there an upside, you might ask? In addition to the recent news that Greater New Haven will be the first part of the state to regain all the jobs lost in the recessions (another factor in the state's lagging performance), there is the obvious: Since we haven't seen the rise in prices yet, or the end of short sales and foreclosures, the big bump up that is likely to come is still ahead of us. That means that, if you are buying now, you will be buying somewhere else at likely a higher price point than you will be buying in Connecticut. Unless you believe that there will be permanent stagnation in prices here, and we know that all markets in the past have been cyclical, the next part of our cycle is statistically likely to outperform the areas that have already recovered fully.
You are not alone if all of this seems confusing, or complicated. The advice for sellers is to be cautious, and not be greedy about asking price. And, at the end of the day, if you live here, and you like it here, lifestyle would suggest that you should buy. And soon, before rates rise.