In New England, a Different Kind of Market

Kim Bronson’s home in West Windsor, Vt., has everything.

Five bedrooms, a federal-era main house, several fenced horse paddocks and four guest cottages. A prime location just 12 miles south of Woodstock, a northern Vermont vacation spot known for quaint New England charm. It’s only missing one thing, actually - a buyer.

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. Still nothing.

“I’m really surprised it hasn’t sold. I don’t think Vermont and New England is going with the same real estate flow as the rest of the universe,” she said.

As has been well documented, rising Florida home loan rates and inventory buildup have caused the market to cool considerably in this part of the U.S., and areas such as California, Las Vegas and Arizona are experiencing the same trends. But in New England, there even more of a chill, with a number of additional factors contributing to the slowdown.

A persistent exodus of residents and a stagnant economy across the region are quickly depressing home sales. The real estate landscape in New England is as diverse as its actual landscape, of course. Different factors impact growth in picturesque Camden, Me., Boston’s South End, and up-and-coming Hartford, Conn. Income levels vary wildly, too, with often only a mile or two separating affluent suburbs from rough neighborhoods.

• Even so, sales across New England fell sharply in the first five months of 2006.
• In Massachusetts, single-family home sales fell 9.3 percent through May. Sales in the Cape Cod and Worcester areas saw steep declines of 17.8 percent and 12.5 percent, respectively.
• In Connecticut, sales fell by 11 percent in the first five months of the year, with pricey Fairfield County leading the way with a 17 percent drop.

Many parts of the U.S. housing market have slowed. The National Association of Realtors predicts existing-home sales across the country will be down this year by 6.7 percent from 2005, even more than the 4.4 percent drop the group forecast in January. Nowhere has the cool down been more broad than in the California and Florida housing market, where five straight booming years have given way to precipitous declines.

Yet factors behind New England’s slowdown are more complicated. Its economy appears to be stalling at a time when most the country - Florida included - maintains a relatively strong economic outlook. The manufacturing, leisure and hospitality industries, three important economic engines in the region, are looking at a decline through 2010, resulting in rising unemployment.

Meanwhile, the pool of potential first-time buyers in the region is falling fast. U.S. Census Bureau data showed almost 200,000 residents ages 25-44 left the region from 2000-2004. All six New England states show declines in that category, with four of them outpacing the national average. No wonder the housing karket in New England, where real estate prices have climbed at least twice as fast as household income this decade, is icy.

“The population flight weighs on the region’s economy and housing market,” said Mark Zandi, an economist with Moody’s Economy.com.

The collapse in housing affordability, he adds, has driven out first-time home buyers en masse. New Englanders have been slow to cut prices in spite of the slowing market, and median prices have yet to fall, holding steady at $310,000 through May. The reluctance is especially true at the high end, brokers say, where sellers are often in a position to wait.

Even sellers with star power are striking out. Boston Red Sox outfielder Manny Ramirez has been trying to unload his 4,500-square-foot condo in downtown Boston since June 2005, according to Jason S. Weissman of Boston Realty Advisors. While the 37th-floor penthouse has been on the market for over a year and the city’s real estate climate has shifted drastically, Ramirez hasn’t reduced the $5.7 million list price.

“He’s prepared to wait in order to get his price. The market will ultimately judge if he does,” Weissman said.

But as Floridians and residents of many other states well know, New Englanders are not the only ones seeing a slowing market. Here’s a look at other areas in decline.

1. Las Vegas, Nev.
May 2006: Condo and townhouse sales volume fell 19 percent compared with the same 2005 period. Single-family home sales declined 17 percent.
Notes: 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.

2. Los Angeles County, Calif.
May 2006: Home sales volume down 11.6 percent compared with the 2005 period.
Notes: 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, the second-biggest gain in the Golden State.

3. Miami-Dade & Broward County, Fla.
May 2006: Home sales down 26 percent compared with the 2005 period.
Notes: Median prices for single-family homes were up 1 percent from both the previous month and the year before, to $379,700.

4. New York, N.Y.
May 2006: Condominiums and apartment sales rose 35 percent compared with the same 2005 period.
Notes: Virtually all of the increase was attributed to closings at recently completed condominiums.

5. San Francisco, Calif.
May 2006: Citywide home sales down 18 percent compared with the same period a year earlier.
Notes: May marked the third consecutive month that the price increases were in the single-digit range in comparison to a year ago.