Hurricane Sandy and a backlog of foreclosures helped hold 15 percent of homes underwater financially in Fairfield County, bucking a national trend of improving real estate values.
CoreLogic, the California real estate data company, reported the number of homeowners who owed more on their mortgages than their homes were worth in the Bridgeport-Stamford market, which includes all of Fairfield County, increased to 15.3 percent in the fourth quarter from 14.0 percent in the third. Across the county, 31,681 mortgages had negative equity. The region had a higher percent of underwater homes than the state's 14.8 percent.
Nationally, the number of homeowners underwater retreated, but remained higher than the county's and the state's rate. In America, 21.5 percent of all mortgages are underwater, down from 22.0 percent.
Tim McLaughlin, senior vice president of secondary marketing for Weichert Financial Services, said the Fairfield County home values were feeling the same pressures in the fourth quarter that affected New York and New Jersey.
"One, Hurricane Sandy had a little bit of an impact on the quarter," he said. "And some of the super jumbo homes, north of $1 million are coming down in price."
Sandy, which struck the Northeast at the end of October, did billions of dollars in damage to real estate across the Northeast.
In the meantime, homeowners who escaped the storm got hit with a dose of reality in this market and have dropped their asking prices, McLaughlin said.
For example, McLaughlin said homes listed at $2.5 million weren't budging, but in the fourth quarter, bids around the $2 million mark started coming in and some sellers started giving in. That in turn affects housing values.
"We are, in fact, selling more houses," he said. But prices came down in 2012, as sellers became more amenable to discounts.
However, Deak said everyone he's been surveying is expecting the market here to see price increases as inventories shrink, especially as the supply of foreclosed homes gets worked off.
Connecticut ranked in the top 10 for the number of homes in foreclosure during 2012, according to the Mortgage Bankers Association. The high number of foreclosures was blamed largely on the state's judicial process, which can take years to work through. That leaves distressed homes on the market longer, which can depress prices.
Other states have had more homes foreclosed, but because the process is faster, they have been able to work through that inventory more quickly.
The impact on people with homes underwater varies. Getting a mortgage refinanced can be difficult and in some cases, people who might have wanted to sell and move to another home are trapped in place, unable to get a high enough price that will allow them a profit that can be used to buy the next home.
But Deak said in many cases, people are going to keep paying their mortgages because they like their communities and want to live there.
In the worst cases, where values are 15 percent or lower than the outstanding mortgage, he said there will be some people who will default, and that's bad mostly for the banks that hold the loan.
Overall, Deak said the market looks good. He pointed out new housing starts are up nationally and there is increasing activity in Connecticut.
The Commerce Department said Tuesday housing permits for new homes increased 33.8 percent nationally in February, but were off just 1.2 percent in the Northeast.
However, the Census Bureau noted new home permits in Connecticut were up 68.3 percent in December.
"We're behind," Deak said, explaining the Connecticut market is just a little out of step with the national landscape.
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