In New England, a different kind of fall
Friday, July 14, 2006
By Troy McMullen, The Wall Street Journal
Kim Bronson's West Windsor, Vt., home has everything a buyer might expect in a pastoral North Country property: a five-bedroom, Federal-era main house, several fenced horse paddocks and four guest cottages. It's located just 12 miles south of Woodstock, a vacation spot known for its quaint New England charm. It even has a celebrity pedigree. Ms. Bronson shared the home with her late husband, actor Charles Bronson.
The only thing the property doesn't have is a buyer. Ms. Bronson put her home on the market more than a year ago at $4.9 million, then shaved the price by $1 million in April. "I'm really surprised it hasn't sold," she says. "I don't think Vermont and New England is going with the same real-estate flow as the rest of the universe."
In fact, the market is slowing in many parts of the country, where higher interest rates and inventory buildup have helped cool the once hot real-estate market. But in New England, there is a distinct chill -- with additional factors contributing to the slowdown, economists and real-estate professionals say. A persistent exodus of residents and a stagnant economy across the region are depressing home sales.
The real-estate landscape in New England is diverse, of course. Sluggish sales of Colonials in Camden, Maine, say, are at times unrelated to the market for row houses in Boston's South End or Victorians in Hartford, Conn. The region's income levels vary wildly, too, with often only a mile or two separating affluent enclaves from hardscrabble tracts. Even so, sales volume across New England fell sharply in the first five months of the year, with the region's biggest states posting broad declines.
In Massachusetts, single-family-home sales fell 9.3 percent through May compared with the same period a year earlier, according to figures from Warren Group, a Boston real-estate news publisher that compiles housing statistics. Sales in the Cape Cod and Worcester areas saw steep drop-offs, 17.8 percent and 12.5 percent respectively. In Connecticut, sales volume fell 11 percent in the first five months of the year, compared with the same period a year earlier, Warren Group reports. Fairfield County -- home to pricey towns such as Greenwich, New Canaan and Westport -- saw a 17 percent sales drop, compared with the same 2005 period.
Andrew Heiblien has been trying to sell his four-bedroom home in Mystic, Conn., since January. As in many of the small towns that dot the Connecticut shore, the number of for-sale signs in tiny Mystic (pop. 4,001) has doubled since then, area brokers say. Mr. Heiblien, a 46-year-old private ferry operator, says he anticipated a slowing market when he listed the property for $515,000. But, he says, he "never dreamed" he'd need to cut the home's asking price four times before finding a buyer. The property went under contract last week for $405,000. "I really thought the market was stronger when I put the home up for sale," says Mr. Heiblien. "I had to adjust."
The real-estate market has slowed in many parts of the U.S., of course. The National Association of Realtors predicts existing-home sales across the country will be down this year by 6.7 percent from 2005, a downgrade from the 4.4 percent drop the group forecast in January. Nowhere has the drop-off been more striking than in California and Florida, states that led the boom years and are now experiencing precipitous sales declines after years of building and, in many cases, speculation.
The factors behind New England's slowdown, however, are more complicated. For starters, its economy appears to be stalling, researchers say, at a time when the country as a whole maintains a relatively strong economic outlook. A recent report issued by the New England Economic Partnership cites continued weakening in the manufacturing, leisure and hospitality industries, three of the region's important economic engines, through 2010, resulting in slightly higher unemployment numbers. Growth in total employment is expected to average 0.9 percent per year, compared to the national average of 1.3 percent over the forecast period.
Meanwhile, the pool of potential home-buyers in the region is "falling like a stone," says New Hampshire-based demographer Peter Francese. He cites U.S. Census Bureau data showing almost 200,000 residents between 25 and 44 years of age left the region between 2000 and 2004. All six New England states show declines in that category, with Maine, Vermont, and Connecticut far outpacing the national average.
No wonder the real-estate scene in New England -- where home prices climbed at least twice as fast as household income during the run-up -- is frosty. The population flight "weighs on the region's economy and housing market," says Mark Zandi, an economist with Moody's Economy.com. The collapse in housing affordability, he says, has driven out first-time home-buyers.
New Englanders have been slow to budge, with many sellers reluctant to cut prices; in spite of the slowing market, median sales prices have yet to fall, holding steady at $310,000 through May. Such reluctance is especially true at the high end, brokers say, where sellers are often in a position to wait.
Melanie Eleftherio's renovated five-bedroom home in Newport, R.I., has been on the market for almost a year at $1.3 million. Though the 1860s Victorian includes new bathrooms and a renovated kitchen, the property -- sandwiched between the ocean and the Bellevue Avenue mansions -- has failed to fetch a single serious offer. But the 46-year-old former advertising executive isn't ready to cut the asking price. "The home is priced right for the market," Ms. Eleftherio says. "Serious buyers will recognize that."
Brokers across the region who handle expensive properties say sellers like Ms. Eleftherio are often waiting far longer than the national average of six to eight weeks to find buyers. Indeed, sales data from Warren Group show steep declines in luxury-home sales. Through May, 327 homes priced at $1.5 million sold in Massachusetts, down from 363 during the same period a year earlier. Eleven homes in that category sold in Rhode Island, down from 17 a year ago.
Even sellers with star power are striking out. Boston Red Sox slugger Manny Ramirez has been trying to unload his 4,500-square-foot condominium apartment in Boston since June 2005, according to Jason S. Weissman, of Boston Realty Advisors, who has the listing. Though the four-bedroom, 37th-floor penthouse has been on the market for more than a year, Mr. Ramirez hasn't reduced its $5.7 million price tag. "He's prepared to wait in order to get his price," says Mr. Weissman. "The market will ultimately judge if he does."
Tough All Over
New Englanders are not the only ones seeing slowing home sales. Below, a look at other markets in the midst of a downturn.
LOCATION: Las Vegas
MAY 2006: Condominium and town-house sales volume fell 19 percent compared with the same 2005 period. Single-family home sales declined 17 percent.
COMMENTS: The number of overall home listings reached 20,000 in June, an all-time high, up 32 percent from the same month a year ago.
LOCATION: Los Angeles County
MAY 2006: Home-sales volume down 11.6 percent compared with the 2005 period.
COMMENTS: Though sales volume is slipping, the median price of a home in the county rose 13.5 percent from the previous month to $568,550, second-biggest gain in state.
LOCATION: Miami
MAY 2006: Home sales down 26 percent compared with the 2005 period.
COMMENTS: Median prices for single-family homes were up 1 percent from both the previous month and the year before, to $379,700.
LOCATION: New York
MAY 2006: Condominiums and co-operative apartment sales rose 35 percent compared with the same 2005 period.
COMMENTS: Virtually all of the increase was attributed to closings at recently completed condominiums.
LOCATION: San Francisco
MAY 2006: Home sales down 18 percent compared with the same period a year earlier.
COMMENTS: May marked the third consecutive month that the year-over-year price increases were in the single-digit range.
post-gazette.com |
