Permits to build new homes in Fairfield County surged 60 percent between April and July compared with the year previous, after a lackluster start to 2007 when builders registered half the number of new home permits they did in the first quarter of 2006.
For the year, permits were up 11 percent through July from their 2006 levels, bucking figures that showed declines nationally and in the Northeast.
Supplied by the Connecticut Department of Economic and Community Development (DECD), the Connecticut data further muddy the outlook for housing sales as builders assess fallout from the subprime mortgage crisis.
In July, the U.S. Census Bureau indicated that new housing starts dipped 6.1 percent from their levels in June and 20.9 percent from their level a year ago, reaching a 10-year low. The National Association of Realtors does not expect a recovery in housing starts until at least 2009.
“If you are a housing contractor or in a business that is housing-related, you are going to have a tough time ”“ though less so in Fairfield County,” said Peter Gioia, vice president and economist for the Connecticut Business & Industry Association.
That is in part thanks to ample commercial construction under way in Stamford, which is expected to increase office space for companies and so drive demand for nearby residences. The city has several condominium projects under way.
Connecticut is not immune to a recession in its housing market, but is not as exposed as some other areas of the country, argues Todd Martin, an economist whose clients include Bridgeport-based Peoples United Financial Inc. After a residential building boom in the late 1980s, with Connecticut permits peaking at 30,000 units in 1986, annual totals have not strayed above 12,000 permits since.
Martin forecasts annual increases through 2010. That would be a welcome change from 2006, when Fairfield County”™s permit total dropped 38 percent to 1,940 units, according to DECD, compared with a 17 percent drop in the rest of the state.
Danbury led the state in 2006 with a net addition of 320 units of housing, including the impact of demolitions; measured as a percentage of all housing in the city, however, Danbury”™s gain did not rank among the top 40 Connecticut municipalities.
Fairfield County”™s relatively active and expensive housing market is spurred by the county”™s proximity to New York City and formidable school districts, according to a new study in The Connecticut Economy written by editor Dennis Hefley and MaryJane Lenon, a Providence College economist.
Analyzing median sales price data published by the Boston-based Warren Group, the authors found that Fairfield County”™s median home sales price in 1988 was $263,000. Boosted by Greenwich”™s median sales price of $1.8 million as of this year, the median price countywide is now $718,000, nearly double the growth rate of New London County, the second-fastest rate in Connecticut over the same period. Thanks in part to casino and tourism expansions, however, New London County has nearly matched Fairfield County”™s home inflation rate since 2001.
Loosening zoning restrictions might spur development of new condominium and apartment buildings, Hefley and Lenon say, but housing prices are likely to remain high unless subsidies are introduced for either builders or for lower-income families, tactics often opposed by wealthy communities.
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