The Ripple Effect of the Government Shutdown on Real Estate by Barbara Pearce

Plenty has been written about the downsides of the current shutdown of the Federal government, but sometimes people get confused about where there are delays or closures, and where business is still being done.  However, I’d like to begin with the big picture:  Uncertainty is bad for business.  If costs go down or stay the same, that’s great for us.  If costs, or interest rates, rise, we can also budget for that.  What people really don’t seem to like to do is guess about the future.  Therefore, politics impinges on real estate sales whenever buyers and sellers are unsure what will happen in the near to medium term.  Interest rate increases are a good example.  When they start to go up, it often spurs sales, because buyers can see that costs are rising, and they act in order to limit those increases. 

Lost wages probably have the greatest direct effect.  Between the worry and the reality, people have enough to think about, and real estate can, and sometimes must, go on the back burner.  In the case of some nonessential and contract workers, the loss of wages may be permanent, in that they will never be paid for the weeks of the shutdown.  Even those who will eventually be paid may clearly have cash flow issues.

Now, let’s turn to ongoing transactions.  Fannie Mae and Freddie Mac are private entities, so they are still doing business, as is the VA, but USDA loans are out for the present. FHA loans are expected to take longer.  But, if you need information or documents from Social Security or the IRS, regardless of loan type, get in line and prepare to wait.  Flood insurance is apparently being processed normally.

For rental properties, Section 8 is a real dilemma.  Each office supposedly will run out of money for vouchers at different times, but all will run out eventually.  Landlords can, I guess, evict tenants, but their replacements won’t have vouchers either, and landlords will still have to plow and heat the premises, among other things.  Cash flow may become a big problem.  Regular tenants may not be able to pay, and that’s even trickier, since they won’t be getting retroactive vouchers when the shutdown is over, so landlords may have to make tough decisions. 

This is not a complete list, or a certain one, but food for thought.

 

Connecticut Rental Rates Take A Breather After A Year of Increases

Article is from Article is from CT Real Estate and Construction, click here to read the article on their website.

 

CONNCECTICUT: Rents in cities across Connecticut saw a monthly dip in rent, running counter to a year long trend. New Haven county rents have posted the steepest annual increases, with New Haven and Meriden seeing annual increases of 5% and 7% respectively. Connecticut’s overall annual rent increase for 2016 is only 1.3%.

October showed a different direction with rents making modest declines in Hartford, New Haven and Stamford as well as other cities across the state Only Danbury registered an increase in rents for October [1.35%].

Currently, median rents in New Haven stand at $1,080 for a one-bedroom apartment and $1,320 for a two-bedroom. Hartford is more affordable with only $820 and $1030 respectively.

Stamford remains the most expensive to rent among Connecticut cities with $1500 for a single bedroom and $1890 for a two bedroom.

New Haven and several of the cities have seen several months of modest declines but most of Connecticut have seen increases for the year. Danbury and Norwalk have both seen modest declines however.

According to Apartmentlist.com cities nationwide have seen rents grow more modestly, or in some cases, even decline. But most Connecticut cities are still more affordable than most large cities across the country.

Several Connecticut cities have rents above the national average of $1,160. Nationwide, rents have grown by 2.7% over the past year compared to the 5.3% increase in New Haven, 2.7% in Waterbury, .7% in Hartford and a 1% decline in rents for the year in Stamford.

In spite of Connecticut’s increases, renters will find more reasonable prices in the state’s cities than most large cities across the country. For example, San Francisco has a median 2BR rent of $3,070, which is more than twice the price in New Haven.

Data from Apartment list is skewed toward luxury apartments and information that is available from data on private listing sites, including but not exclusively apartmentlist.com. Apartment List says they are “committed to making our rent estimates the best and most accurate available. We start with reliable median rent statistics from the Census Bureau, then extrapolate them forward to the current month using a growth rate calculated from our listing data. In doing so, we use a same-unit analysis similar to Case-Shiller’s approach, comparing only units that are available across both time periods to provide an accurate picture of rent growth in cities across the country.”

Article is from CT Real Estate and Construction

Southwestern CT housing prices strain owners and renters (from CT Mirror)

The following article is from the CT Mirror and was written by Schae Beaudoin, please click here to visit CT Mirror online

Almost half of Americans pay too much for their rent, and in southwestern Connecticut those numbers are even higher, says a national study.

Harvard University’s annual State of the Nation’s Housing report says 18 million renters across the nation are burdened by their housing prices. Homeowners and renters are considered “burdened” if they spend more than 30 percent of their income on rent.

In Fairfield and New Haven counties, about 55 percent of renters are considered burdened. Both counties are in the top ten in the nation for percentage of burdened renters. The national average is about 48 percent.

Additionally, over 11 million renters in the U.S. were considered “severely burdened” in 2015 because they paid at least half of their income for housing. The number of homeowners considered severely burdened was at its lowest since 2004, but there still were more than 7.5 million Americans in that category.

In their proportion of burdened homeowners, Fairfield County is behind only the New York City and Los Angeles metro areas. The Hartford metro area, which includes Hartford, Middlesex and Tolland counties; the New Haven metro area; and the Worcester, Mass., metro area, which includes Windham county, also are above the national average for burdened homeowners, which is 24 percent. About one out of every three homeowners in Fairfield and New Haven counties are burdened, according to the report.

Burdened renters and homeowners

Percentage of burdened renters and homeowners in CT, surrounding metro areas and the national average

Area	Percent of burdened renters	Percent of burdened homeowners
Fairfield County metro	55%	35%
New Haven metro	55%	31%
Hartford metro	47%	27%
Worcester metro	46%	27%
New York metro	53%	36%
Boston metro	49%	28%
National average	48%	24%

HARVARD JOINT CENTER FOR HOUSING STUDIES, STATE OF THE NATION’S HOUSING 2017

Rents in Fairfield County are among the highest in the nation, with median rents higher than those in the New York and Boston metro areas.

Pete Gioia, economist at the Connecticut Business and Industry Association, said Fairfield County’s high prices aren’t new, and Connecticut is relatively affordable compared to the larger surrounding cities. In Boston and New York City, housing prices are growing faster than they are in Connecticut. Affordability problems arise when houses in buyers’ desired price range aren’t available.

“Is the housing stock that’s available comparable to what purchasers are looking for? That’s where you get into some affordability issues,” Gioia said. “This is not just true of Connecticut. This is true of other areas. There’s a lot of buyers out there for reasonably priced housing. There’s fewer buyers out there for very high-end, expensive and large properties.”

While median income for renters in New York, Boston and Fairfield County are similar, the median rent in Fairfield County is about $100 higher per month than in Boston and New York, suggesting higher rents, not lower incomes, are behind the burdens on renters in Connecticut.

Fairfield and New Haven counties have some of the lowest percentages of 18- to 24-year-olds heading households. About 10 percent of 18- 24-year-olds are independent heads of households in those counties. The national average is closer to 20 percent.

Gioia said affordability probably keeps some younger millennials from moving out on their own in Connecticut, and many who do leave for other places. Gioia said students who leave the state for college are more likely to stay out of state. Larger metro areas also appeal more to younger people, he said.

“If you’re an unmarried 23-year-old, you want to be where the action is, and there’s a heck of a lot more action in New York City or downtown Boston than there is in Connecticut,” Gioia said, adding many young people come back to Connecticut later in life when they begin families.

However, Gioia said there is economic opportunity here. “If you’ve got the skills, you can make a pretty darn good income in Connecticut, even if you’re fairly young,” Gioia said.

The report found that nationally, higher rents may become a norm. The number of rental units costing less than $800 per month has decreased between 2005 and 2015. In the same decade, units with monthly rents over $2,000 increased by 1.5 million.

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