10,000 People Change Their Addresses to Connecticut

It's so nice to be popular!  Poor Connecticut, which has been lagging in most economic measures over the past decade, has now come out on top in two recent metrics:  It's the most improved state for COVID in a recent statistical analysis; and its population is on the way up, with 10,000 New Yorkers joining the ranks of the Nutmeg State.  

Our little state packs a big wallop, when it comes to outdoor space, forested land, beaches, and low density in most places.  We also enjoy, of course, easy access to the greater NYC metro area.  Those factors have combined to make this at least a temporary home to many displaced New Yorkers.  They are looking at, renting, and buying property in most counties.  All of us in real estate can feel the activity, and we are also noticing all the New York license plates on the roads.  Inventory of listed properties is very low, and multiple offers are evident at many price points.

Not only is this a great place to live, but we also seem to have done an excellent job in bringing down the rate of infection for the coronavirus.  This adds to the feeling of safety and serenity that is making people snap up our property.  After a long, quarantined spring, it's nice to think that all the hibernating paid off.  

And brought us an economic boost as well.  Every real estate transaction has a multiplier effect on the economy, and will help to make up for the slow second quarter.  In fact, although we are expecting a slow summer for tourism, maybe that's because the tourists have decided to move here,  instead of just visiting.  That bodes well for the value of our homes, our commercial property, and our tax base. So, whether you are thinking about becoming a Nutmegger, or just renting a place for the season, welcome!

Big Change in NYC Rental Law

New York City has always operated differently in the real estate world than almost anywhere else.  Long after the rest of us began to publish lists of every property on the market, they held on to the old system of each broker representing only his or her own listings.  When we started putting our Multiple Listing Service online, they kept to the scattered knowledge of listings that they'd always had.

Last week, a ruling came down from the New York State licensing agency, saying that renters no longer had to pay a broker's fee when renting an apartment, unless they represented a renter.  Issued as a "legal guidance", it changes the current practice, where brokers control access to most listings, and charge the renter up to 15% of the yearly rent, at the time that the lease is signed.  Brokers and real estate associations are fighting the ruling, although it isn't clear what will happen to any challenges.  Going forward, real estate brokers must either get paid by the landlords, or must have a representation agreement with the tenants.

Essentially, that's what happens in Connecticut.  We are required by law to offer representation to buyers and tenants, and they must sign an agreement for that to be in effect.  Landlords and owners most often do pay us, but we have a fiduciary relationship with buyers and tenants whom we represent.  We need another set of signatures in order to represent both the seller/landlord and the buyer/tenant, and that creates what is called dual agency.  Our duties are not related to how the commission gets paid; it's about what gets signed.

It's interesting that NYC is so late to the party, because the rights of tenants and buyers have been at the forefront of change around the country for a long time.  Because we have so many people coming to Connecticut from NYC, it often comes as a surprise to learn about our laws and requirements.  Now that they are going to have the same types of agreements, signing for representation may come to seem more routine.

Every Segment of the Market is Different

Not only is it hard to judge the quality of the Greater New Haven market by looking at national trends, you have to know town (and neighborhood), plus price range, in order to make a prediction about how quickly a property will sell.  Multiple offers are common on well-priced homes in towns without enough supply, and they are much more likely in price ranges frequented by first-time homebuyers.  And those price ranges are different where?  You guessed it-town to town, and neighborhood to neighborhood.

Even those parameters may not explain everything.  We've seen waterfront property fly off the market lately, mostly in the $1 to $2 million dollar category.  Some of that is by neighborhood, but I think it has more to do with the length of time since the last hurricane on our immediate coastline, plus the consequent lower prices we have been experiencing, which eventually have reached compelling levels.  If that's not squishy enough, there's also the stock market to consider-volatile markets, especially when they are high, tend to lead people to divest stocks and buy real estate.  That's both because they suddenly have more disposable cash, and because they are looking for a tangible place to put it.

All of this is by way of saying that you cannot simply look at Boston or NYC, and conclude that we must be a blend of those two markets.  One is hot, although cooling on the multi-offer scale (Boston), and the other is suffering from oversupply at the top end and a new mansion tax.  What to do?  Read local, shop local, and use a local Realtor!

Reaping the Rewards?

Now that the stock market has started to rally so strongly, maybe it’s time for people to take what they’ve made, and buy real estate instead.  In our region, prices are still very low, compared to even twenty years ago.  We used to have average home prices well above the national average, so that job recruits moving here were worried about finding affordable housing comparable to their previous homes.  Now, we are very close to the national average, and we haven’t gone up, in some areas, enough to cover the declines of the last decade.  Commercial prices have been bumping along, also not moving up over time.  Some industrial buildings are at prices equal to those of years ago.  While some towns have a shortage of smaller commercial spaces, others have empty big box stores, many of which could be repurposed.  We are very short on affordable housing in our region, and the gap keeps growing, as rents continue to rise.  Even as housing prices for homes have declined, rents have doubled, and many tenants are paying a percentage of their incomes for rental units that is considered to be onerous.

 

What does all this mean for buyers?  Real estate is, and always has been, cyclical to some extent.  Through the boom  years, we would say that what goes up, must come down.  Now it seems that the opposite should also be true:  What went down, will come back up.  There is still an opportunity in our area, which isn’t true in much of the country—especially the coasts—to get normal appreciation on purchases, given the current state of prices.  We know that investors have been increasingly drawn to our state, because of the high prices in Boston and NY.  Why would locals not invest as well?  While we’ve been reading about the woes of Connecticut, others have been coming from out of state and out of the country, and buying and buying.  With our deeper knowledge of the local market, we should be able to do better than they could.  So let’s make a resolution in 2019:  Buy local!

Ten Great Reasons to Live in Greater New Haven and Connecticut

10.  75 Miles from NYC and 125 Miles from Boston

9.  332 Miles of Coastline

8.  60% of State is Forested

7.  Top 10% of Metro Areas in Support for the Arts

6.  4th Oldest Symphony Orchestra in the Nation

5.  5th Among States in Quality of Life

4.  4th Most Intelligent State

3.  Yale University Ranked #3 in U.S.

2.  Median Home Price of $229K is Below U.S. Median of $256K

and

1.  World's Best Pizza

Report from NYC

Once again, I've met with colleagues from around the country, this time in New York City.  That market is much softer than in the past few years, especially at the upper end (although their upper end is so high that we can't even imagine sales at those prices!).  In fact, the upper end everywhere, whatever that means in a particular market, has slowed down considerably.  Supply exceeds demand, and is often over a year or more in quantity; here, that supply is much higher.  In Middlesex and New Haven counties, 5 homes over $2 million had sold by July, and there were 87 active listings in that price range on the market.  Just do the math.

On the lower end of price ranges, almost every company reported that sales were being affected by lack of inventory.  In some places, that meant that the supply of homes could be measured in days.  Again, we have more supply in our market, but even we feel that there are not enough homes in very good condition and under $300,000 in some places.

When you go to a meeting that has national representation, you can really see how far behind Connecticut lags, in almost every category--job growth, population, birth rate, home prices, and home sales.  We need to get our act together, and sooner rather than later.  Having said that, NYC is not the boom town of the past few years, and agents there complained that sellers wanted last year's prices, while buyers wanted next year's prices.  That's food for thought for sellers here, as well.