Million-dollar home sales languish
 
If some looked askance as McMansions encroached in their towns, others were quietly reveling as the comparative value of their own properties rose by benefit of neighboring such million-dollar houses.
Problem is, many of those homes are not yet selling despite a small burst of activity in the lower end of the real estate market ”“ and for those that are, some have lost their seven-digit status.
Area real estate agents acknowledge a general positive effect from the $8,000 tax credit for first-time homebuyers enacted this year as part of the economic stimulus, which is valid only for 2009. Last month, the Federal Housing Administration indicated lenders could accept the tax credit from qualified homebuyers as a down payment, which the National Association of Realtors (NAR) said should encourage additional people to consider buying a home.
Most shopping in the $1 million range, however, are selling their first, second or third homes, making them ineligible for the credit. For those homes, the action remains relatively stalled, with open houses drawing visitors, but would-be buyers low-balling offers in hopes of swinging a steal of a deal.
During the first quarter in Wilton and Weston, the average price of homes dipped below the $1 million mark, according to the Westport-based Mid-Fairfield County Association of Realtors.
At a conference in Washington in mid-May, NAR”™s chief economist Lawrence Yun said he expects mortgage interest rates to creep up in the second half of 2009, with an unknown impact on the housing market now and later this year.
“The jumbo mortgage rate remains very high, and that is stalling home sales at the very high end,” Yun said.
The question becomes when will buyers and sellers agree that the market has hit bottom? That appears to have already occurred in markets such as California, according to NAR, where home sales in some areas are nearly double their levels of a year ago.
Not so in Fairfield County, where fewer than 750 single-family homes were sold in the first quarter of 2009, off 35 percent from a year ago according to The Warren Group, a Boston-based company that publishes the real-estate trade publication The Commercial Record.
Fairfield County”™s median home price dropped to $370,000 in the first three months of 2009, a 27 percent decrease from the $508,000 during the same period in 2008.
In 2008, some 5,600 single-family homes were sold in Fairfield County, down nearly a third from nearly 8,200 sold the year before. That was the sharpest drop of the eight counties in Connecticut, and Fairfield County”™s 42 percent drop in dollar volume (to $4.6 billion) also was the worst performance in the state.
 “Connecticut”™s housing market really struggled in the first three months of the year,” said Timothy Warren Jr., CEO of the Warren Group. “There is some hope that incentives like the first-time homebuyer tax credit and low mortgage interest rates can help boost sales, but even those types of perks won”™t bring a dramatic turnaround in sales if people are struggling with job loss and salary cuts.”
Statewide, sales of single-family homes in the first quarter were off 28 percent to 3,570 from 4,930 a year earlier, the slowest sales pace for a first quarter since the Warren Group began tracking Connecticut home sales 22 years ago. The price of the median home sold in Connecticut also fell by the largest margin during that period, off 18 percent. For six consecutive months now, median home prices have fallen by double-digit percentages on a year-over-year basis.
Yun expects home sales nationally to rise between 10 percent and 20 percent in the second half compared with the latter half of 2008.
“We are overshooting downward,” Yun said. “Anytime we overshoot downward, there is the possibility for a robust correction upward ”¦ Any further price decline from this point onward would probably be minimal.”