Once-optimistic sellers encountering balky buyers

By Lloyd Garrison

By most any measure, the housing market here is stalled. Buyers are few and appear to be put off by sticker shock. Even when Norfolk homeowners cut their asking price, many buyers remain skittish about committing themselves.

“It hasn’t been this slow in years,” says Tom McGowan of Elyse Harney Real Estate. He cites the recent real estate bubble that burst, setting off a meltdown in sub-prime mortgages and plunging real estate markets into turmoil, as the cause of the slowdown. “When prices go up that high, that fast,” he says, “there is bound to be a leveling.”

The leveling has put a big dent in the number of residential closings in Norfolk. So far in 2007, only seven homes have been sold in Norfolk. According to McGowan, there were 16 residential closings here by this same time in 2006.

“The sub-prime loan situation is very scary,” says Locust Lane’s owner, Anita Mathewson. “I haven’t sold anything over a million dollars this year. I hope people stop being nervous.”

Betsy Little, of Betsy Little Real Estate, LLC, says homeowners have encountered a reality check with buyers suddenly declining to pay the high prices that they were easily getting even a year ago. Her sales are half of what they were last year. “So far this year,” says Little, “many of my sellers have lowered their price once, and some more than once.”

Mathewson has met the same buyer resistance. “My experience is that you can find buyers, but only if you are not too greedy,” she says.

According to the Warren Group, a Boston-based research firm that publishes The Commercial Record, Norfolk is an anomaly compared to the rest of the state. While the number of sales across the state are down nearly five percent over the same period last year, the average sale price state-wide for a single family home edged up nearly 2 percent from $280,000 last year to $285,000 this year.

Predictably, Fairfield County did best in the state, with a 5.4 percent rise in sale prices. Litchfield County fared less well, but still posted a 2.5 percent increase in sale prices year-to-date, even as the number of homes sold dipped slightly.

Roselee Fanelli, of Raynard Pierce Inc., reports many clients are anxious about the economy, the war in Iraq and rising oil prices. Like Little, she has advised her clients to lower their expectations by trimming their asking price.

“In one or two cases, it has made a difference,” says Fanelli, which is hardly the making of a trend.

The Warren Group’s CEO, Timothy Warren Jr., believes that with Connecticut experiencing only a slight drop in home sales and modest price increases across all counties, the state’s real estate market is still healthy. “It is the definition of a soft landing,” he says, which can not be said for slumping home sales in nearby Massachusetts and Rhode Island.