The Connecticut Business Journal reports on the housing bubble in that state. "Whether an anomaly or a harbinger of spring, the housing market appears to be cooling, even at the high end of the spectrum. 'Throughout New Haven County as well as throughout Connecticut there is a softening, which affects the luxury home marketplace,' explains James Porto, president of the Greater New Haven Association of Realtors."

"Connecticut Association of Realtors President Mark Foreman reports January and February home sales down this year at every price level. 'The agents I've talked with over the past couple of months say there's definitely a reduction,' he says. 'What we have seen is a rise in the level of housing stock and time on the market.'"

"Guilford $1 million-plus luxury home listings skyrocketed from 11 in 2004 to 42 last year, a 281.8-percent increase. The number of sales remained the same, ten each in 2004 and 2005, but the average sale price dropped 20.4 percent, from $1,772,250 to $1,689,997."

"In Milford, the number of luxury listings rose 253.8 percent, from 11 in 2004 to 42 last year, with 11 sales in 2005 versus ten the year before. Madison luxury home listings likewise soared, from 29 in 2004 to 67 in 2005, a 131-percent increase. Twenty-three sold in 2004 and 27 last year."

"'I've been shocked at the number of multi-million-dollar houses that have come on the market in the last month, from $3.5 million in North Haven to $5 million in Madison,' says (broker) Barbara L. Pearce. However, 'I haven't seen houses in that price range closing, so I'm kind of wondering what's going on there.'"

"She has a theory. Pearce says she suspects that 'Things are coming on [the market] as though prices were going up at the same rate they were a couple of years ago. But I don't think that buyers believe it.'"

"'In 2004 and 2005, we would see houses go into multiple offers within hours,' (agent) Lory Walz recalls. 'Since last summer, we've been seeing price reductions, and more inventory is staying on the market a bit longer.'"

"Upward creeping interest rates are having an impact, on builders as well as buyers. 'While they're still low, every time they go up a little, it takes out a sector of the market,' says John Shwecky, president of the Home Builders Association of New Haven County. 'The market has been falling down for homes $1 million and up,' Shwecky adds, 'and some builders are actually having to give a little more options when they sell.'"

"Rising interest rates have transformed the mortgage lending landscape over the past 12 months. 'Volume is down in the 25-percent range,' says Christopher Danner. Danner notes that interest-only loans are popular now, as are reverse mortgages for older people with liquidity 'who can't afford' to live in their homes."