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Whatever Happened to Good News?

In May, Connecticut?s Labor Force Grew. The new casino: The MGM Grand at Foxwoods began hiring for June?s grand opening and the bottom did not fall out of the home sales market as it has in other parts of the country. Robert DeNiro was in Connecticut filming movies twice this year, Indiana Jones spent a week at Yale, Wes Craven stalked the Litchfield Hills last month and the majority of Greenwich?s hedge funds have not gone under as pundits predicted. Still, check out almost any newspaper, blog, podcast or nightly news program and it?s 1974 or 1989 all over again.

Fuel prices have risen nationwide. In Connecticut, a city ruled by cars and lacking in quality mass transport high fuel prices are a true burden and the state is affected by fallout from the sub prime mortgage debacle. Even Senator Chris Dodd(D) who is stumping for a $300 billion mortgage bailout bill is under fire for securing loans from Countrywide, one of the biggest dogs in the dog eat dog world of sub prime mortgage financing.

But in Connecticut, home sales are still healthy, difficult but healthy. In fact, according to the Clerk of the Court for Hartford County, the number of foreclosures reported by all judicial districts in Connecticut between March 2007 and March 2008 were actually fewer than the than the number reported for 2006-2007.

While the number of home sales has dropped state wide, the pricing has only come down 10% from this period last year. We are experiencing a correction, not a disintegrating market. Homes now stay on the market from two weeks to two months instead of two days and bidding wars are fewer and farther between but expanding families and Connecticut?s quality of life are still moving property sales.

Signs point to New Haven County pulling out of the housing slump after seven months. This past May home price were only down 5% from May of last year. While the number of sale transactions is lower at 14%, we do not have 28 months of inventory on the market as portions of the country like Florida, Arizona and Nevada do.

In the late eighties and early nineties, Connecticut led the way in the recession. We went into the recession earlier and came out later. We spent the early part of the decade as leaders in poor lending practices, houses being built on speculation and in some cases with poor materials, pressure treated lumber that was used before being properly cured and more. After the speculative building boom and an explosion in the condominium market, demand outstripped demand, our economy crashed.

The biggest residential real estate developer in the state was exposed for corruption and bad practices, local banks that over lent with little or no collateral went out of business, manufacturing jobs were sent out of state. Nerves were on edge and fear was palpable.

Those who stuck it out and modified their businesses, manufactured small niche high end items, turned their printing companies into graphic design firms, traded their corner offices in for cubicles and bull pens, came out the other side more resilient than ever. They saw an economy that completely shifted from a manufacturing base to an information and technology base and banks pulled back on lending. The evolution continues.

Anyone who lived through those times could look at cities around the country that were adding population and homes exponentially over the last five years and know that the party has to end sometime whether you live in New Haven or Las Vegas.

But a stalled housing market in Las Vegas or Orlando does not mean that Connecticut or the rest of the country is going to fall. The good news is that adaptation and perseverance will translate into success. Rising fuel prices are a breeding ground for new technologies, as is an economy that nationally is shifting from a manufacturing base to a knowledge and service base just like Connecticut did. Early adapters will thrive. Let?s hope more than a few people look to the past for a healthy economic future.

July 2, 2008

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