State of the Real Estate Market in Eastern CT

After 2 record setting years in a row, 2006 returned to normal. Fortunately, it was a soft landing as most towns in the area actually saw a slight increase in average sales price. Overall homes stayed on the market longer and the number of home sales dropped by  6%.  The average price of a single family home in New London County increased from  $313,545 in 2005, to $334,675 in 2006.  Much of the price increase in 2006 came in the towns of Old Lyme and Colchester and some of the smaller towns including Lyme, Lisbon, Lebanon, Bozrah and Preston.  The towns of Groton, East Lyme, Montville and Stonington saw less than a 2% increase, while Ledyard and Griswold actually had a 1% decrease in sales price.  

Throughout 2006, inventory remained at record high levels reaching over 5400 active listings in September, 2006.  The year ended with 4,583 active listings. To put this number in perspective, there were less than 3000 active listings on the market throughout 2004.  As a result of the high inventory, the market shifted in favor of buyers in 2006.  Pending home sales, a leading indicator to gauge market activity, began to slow.   The “bidding wars” of 2004 and 2005 were no longer evident as the market settled into a much slower pace.  Buyers did not feel pressure to move quickly and took more time to make home buying decisions.  Although interest rates remained favorable throughout the year, buyers simply had enough of increasing home prices. Unfortunately, in 2006 sellers seemed unwilling to make price adjustments despite the trends. But even with the slowdown, 2006 was still a historically strong year in Eastern, CT. 

What’s in the future?  The state of the market in New London County was given an enormous boost when the Groton Submarine Base survived the federal government’s 2005 Base Realignment and Closure (BRAC) initiative.  Multi-million dollar expansion projects proposed at Foxwoods and the Mohegan Sun casinos should bring new jobs and increased demand for housing to the region.   Despite this positive news, home inventory remains high. Sellers must be willing to make price corrections to get their homes sold.

Ken Fears, Manager of Regional Economics for the National Association of Realtors® addresses sellers in recent remarks: “Taking a small concession now will save sellers the consternation of longer days on the market and a potentially larger concession down the road...... a small pin prick now is better than worse later.”

For sellers in 2007, offering a home in outstanding condition will be critical. Buyers won’t settle for less.  Favorable condition and flexibility about pricing will be the key to getting homes sold in 2007.

*Statistics from sales reported by the members of the Eastern Connecticut REALTORS® Information Service, Inc. do not represent all sales.  Information deemed reliable but not guaranteed.