Industries involved with financial services are struggling in the United States. Goldman Sachs, Bank of America, JPMorgan Chase and Citigroup all reported their worst quarterly earnings since 2008 for the three months ending in June.
New York State lost 3900 financial service jobs last year alone and bonuses on Wall Street fell 13% in 2011.
The ripple effect of these losses is reflected in the housing market and nowhere more sharply than in Connecticut. Federal housing data show the state leads the nation when it comes to declining home prices.
According to the National Association of Realtors, Fairfield County has been hardest hit, with home prices in Greenwich and New Canaan falling 12.9% annually. This represents the biggest drop of all the 147 areas the group monitors.
Despite its proximity to New York and Boston, Connecticut’s poor housing performance is directly related to the flagging fortunes of the financial services industry. Home transactions using conventional mortgages increased 8.4%; however, those using jumbo loans for more expensive properties fell 9.7%.
Furthermore, Moody’s downgraded Connecticut’s municipal debt because the state is collecting less revenue, thanks to the decline in capital gains tax receipts.
Bloomberg predicts the current situation will worsen. A heavy backlog of foreclosures could further depress housing prices. International home buyers and those who work in sectors other than financial services have buoyed New York City but Connecticut is a less attractive destination for those people.