Banking industry woes are translating into major price declines for high end residential real estate in Connecticut. For those who believe that real estate prices has bottomed out, please consider Connecticut Homes Biggest Losers As Wall Street Cuts.
Prices in the Fairfield County area, home of the banker bedroom communities of Greenwich and New Canaan, tumbled 12.9 percent in the second quarter from a year earlier, the biggest decline of the 147 U.S. metropolitan areas measured by the National Association of Realtors. While the number of home purchases within the state financed with conventional mortgages rose 8.4 percent in the first half, deals using jumbo loans for pricier properties slid 9.4 percent, according to Warren Group, a real estate tracker.
“We’re in a tough slog here relative to everybody else, which is surprising given where we’re located, near New York and Boston,” said Terence Beatty, director of the new homes and land division of Prudential Connecticut Realty in Wallingford.
The state, which hosts the world’s two largest bank trading floors within UBS AG (UBSN) and Royal Bank of Scotland Group Plc (RBS)’s Stamford offices, is falling behind a U.S. housing recovery after losing 3,900 financial-services jobs since July 2011, the most of any industry. Connecticut also is struggling with rising foreclosures, posting the nation’s second-biggest jump in notices of default and repossession last month.
The state has only regained a third of the about 117,500 jobs that it lost during the recession, figures from the Connecticut Department of Labor show, and the unemployment rate has risen for three straight months to 8.5 percent.
The average Wall Street bonus fell 13 percent last year to $121,150, the lowest since 2008, and almost 40 percent less than the $191,360 reached in 2006, according to projections by New York State Comptroller Thomas DiNapoli.
The combination of a weak economy, lower incomes and a high unemployment rate have resulted in a 139% increase in foreclosure filings in Connecticut over the past year. Making matters worse, Connecticut income and property taxes are among the highest in the nation which discourages home ownership and forces many retired people to migrate to lower tax states. Earlier this year, Connecticut imposed the largest tax increase in history and the State has long been viewed as being openly hostile to businesses.
As the banking industry struggles to cope with slow loan demand and the increased cost of complying with new regulatory burdens, the fabulous paychecks passed out to employees prior to the financial crisis are now a thing of the past. Expect high priced Connecticut homes to continue to decline in value.