A robust inventory of homes for sale and dropping prices should combine to make it one of the best years to purchase a home in recent memory, local experts say. They’re hoping nervous window shoppers, including fiscally-cautious millennials, will decide it’s their time to put down roots.
For sellers, on the other hand, that means taking a hard look at the competition in their price range, being realistic about what a property will go for and making thoughtful improvements when needed to help their homes stand out from the crowd.
MASTERING THE MILLENIALS
What drives the incoming generation of home buyers is DIFFERENT THAN THE GENERATION BEFORE
People used to come to the market with an attitude of thinking they’ve got the world by the tail, said Jeff Kelly, office manager at Houlihan Lawrence in Darien. “They wanted everyone to know it and have a house that was reflective of that. Somehow that’s not cool anymore.”
Lynley Middleberg, brokerage sales manager for William Pitt Sotheby’s International Realty in Darien, put it a different way: “Buyers who want a lot of land and are looking for a sprawling estate are practically unicorns now.”
The newest generation of buyers are primarily interested in being close to a downtown, and are leery of a property’s carrying costs, along with other expenses associated with home ownership. And while they often have connections to Fairfield County already, they are also more prone to stay in their-post collegiate city world until young children pull them toward suburban living, realtors say.
Millennial buyers are also a little less secure about their financial future and wary about being burned by a repeat of the 2008 housing bubble and ensuing recession.
“In many cases it’s not that they can’t buy, it’s that they don’t want to feel like they are overpaying,” Kelly said.
That wariness has driven more would-be buyers to rent first, realtors say. However, with the market’s turn, Howell suspects many of those renters are now ready to make a jump.
New Canaan-based developer Arnold Karp is counting on millennials testing the local waters to help fill Merritt Village, a 109-unit mixed condo and apartment development he’s putting up in town, tentatively set to open in mid-2020. He pointed to a 12-unit apartment building he developed in New Canaan called The Crossing; six of the 12 original tenants have already gone on to buy their own homes, he said–five in town and one in Darien.
Getting younger couples to take the first step into a community is key, Karp said.
More housing variety aimed at younger couples as well as empty nesters is also headed to market in Darien, where David Genovese’s Baywater Properties plans this year to begin redeveloping more than seven acres in the heart of town into a mixed-use space that includes 116 apartments. Across town in Noroton Heights, two redevelopments of existing shopping plazas would bring a combination of more than 170 apartments to that neighborhood.
FIX IT OR FORGET IT
Key renovations will go a long way toward helping a home stand out
Today’s buyers can search online for homes more quickly than ever, or dismiss a house right off the bat for outdated décor. Presenting a house in its best light from the start is key, realtors say, even if it means investing some money to make it lighter and brighter for today’s savvy clients.
Declutter and de-personalize, consider fresh paint. Make sure floors are in good condition. Take down touches like heavy drapes or store your grandmother’s armoire to help give a sense of space.
Some of those things are not major expenses “but they’ll quite often be the difference in whether a house moves quickly,” said John Dunn, a sales agent at Houlihan Lawrence in New Canaan.
Kitchens and bathrooms—especially master baths—are prime decision drivers for buyers. If possible, they should be updated, realtors say. Because white or light cabinetry is on most buyers’ wish lists, sellers should consider painting out darker wood, realtors say, depending on the condition of the rest of the kitchen.
“Buyers want to see how they could live in your house, not how you are living there,” noted Jeanne Howell, manager at Berkshire Hathaway Home Services – New England Properties in New Canaan.
“People who want a certain price for their house – those people are starting to drop out of the market, this isn’t the market for them,” said Kelly. “People who really do need to sell are starting to come to grips with needing to stage it, spend some money, do something” to distinguish it from the pack.
Howell recalled one home in New Canaan that had been on and off the market for at least six years. “Everyone called it the ugly green wallpaper house. It was all pink and all green–even pink carpeting. We repainted everything, staged it a bit and for under $20,000 (in improvements) that house sold on the first day (back) on the market.”
online by design
Tools like virtual staging give buyers a real view of what a home can look like
Financial circumstances vary, and not every home is able to be re-imagined in real life. Realtors have other tools they can turn to, like virtual staging that shows a room’s potential, to help buyers visualize easy changes either when window shopping or even when touring a property room by room.
Middleberg called such online tools “a great way to make a minimal investment and give the house a fresh look, without having the full commitment for a six month (in-person) staging contract.”
Because realtors now take the approach that “all of our first showings are done online,” she said, the strategy of adding videos to home listings, especially drone video “is getting bigger and bigger.”
“You feel like you’re walking through [the property], it gives you a really good sense of how the house flows,” she said. “It gets someone in the house more quickly and more invested in the house when they get there [in person] because they have interacted with it via video” already.
At the same time, Dunn cautioned that younger web-savvy buyers should remember online browsing is a “great first step but nothing really replaces going through the town, going through the neighborhood.”
A realtor can help shed light on which home is on a busy corner or why one has more value than another, he noted.
“Sometimes you have to see it to believe it,” he said. “That’s the fun part of the job – it’s our job to know not just the inventory but the area, to know what the needs are of any particular client, and to find a property that checks as many of those boxes as possible.”
by the numbers
Late winter storms and economic forces made for a slower than expected 2018
Heading into the 2018 spring market, realtors were optimistic. Sales prices were up overall from the year before certain price points showed particular indications of strength, and listings were on the uptick.
Then came a series of late-winter storms that held back early shoppers, and economic forces that ultimately buffeted the buying season far more than expected. Rather than embracing the wide array of choices, many shoppers got cold feet, realtors say.
At year’s end, the sales volume in Darien was down 14.6 percent from 2017, with 258 properties sold compared to 302 the year before. New Canaan sales were off 16.1 percent, with 209 sales versus 249 in 2017. In the smaller market of Rowayton, sales were down 20.7 percent, from 87 to 69.
“I think every firm here was a little surprised by that downturn,” Howell noted.
Certain market slices took a particularly big hit. For example, 43 homes in Darien sold for between $2 million and $2.499 million in 2017; a year later that figure was cut in half, to just 21.
“Those are the houses that used to sell — a nice five-bedroom Colonial for $2.6 million, that thing used to sell like hotcakes,” said Kelly. “The numbers bear out a problem.”
In Darien a handful of big-ticket closings, some on the in-demand waterfront, helped the median sales price in Darien end off just 2.8 percent, finishing the year at a $1.4 million, down from $1.44 million a year earlier. New Canaan fared a little worse, with its median sales price dropping 9.6 percent to $1.387 million from $1.535 in 2017. Rowayton–where 69 properties sold in 2018 compared to 87 the year before—saw the median price drop from $1.325 million to just $975,000.
RENO VS DEMO
Builders look to buy smaller homes to rebuild and suit the needs of a modern buyer
Howell said in New Canaan, some of the lowest-priced properties are drawing in developers who can now get run-down homes cheaply enough to tear them down and make their margins with a spec build. She said she was amazed to see one local builder snap up two houses on the same street for demolition last year.
“I haven’t seen that in a long time,” she said. “It’s wild.”
In Darien, Kelly estimated about half the homes that sold under $700,000 in 2018 were headed for demolition by contractors who saw opportunity to make their margins with a lower entry price.
No matter what the price point, realtors say, almost no buyer asks for a Magnolia Home-inspired fixer-upper.
But “when we find a person who’s willing to do a little work, we hold on to them very tightly because there is a lot that can be seen in that (renovation) market and there’s a lot of really good deals to be had,” Middleberg said. “If you are willing to put in a little bit of work, there’s a lot more comfort in the equity that can come back out.”
new buying potential
Generation Z could soon be in the market for something big
Real estate, much like everything else, is all about change. According to Gillian De Palo, vice president, sales for William Raveis Real Estate in New Canaan, sellers can look forward to the next generation of buyers: Generation Z.
De Palo said that this generation is being compared to to the Depression/WWII “Greatest Generation.”
“Gen Z grew up with financial insecurity while coping with terror threats and war,” she explains. “Early reports call them pragmatic, hard-working and driven by financial security. They are less interested in entrepreneurialism and more interested in staying put in companies and hopefully in homes.”
She says they are a frugal bunch, seeking value, and may take interest in those homes farther from the center of town as offering an opportunity to pursue their American Dream.
“Most importantly, after an abundance of screen time, they crave social connections and will be drawn to the finest asset New Canaan offers to any generation,” she said.
This, De Palo said, is a pretty big shift from the millenial buyer, who look for the ease of buying a smaller, ready-to-move-in home.
IF THE PRICE IS RIGHT
CONSERVATIVE BUYERS look for deals more than ever
Pricing a house is always key – but never more than in this time of wary buyers and ample competition.
“New Canaan, like the rest of the tri-state regional market, we feel we’re in a re-set right now” regarding home prices, says Janis Hennessy, president of the New Canaan Board of Realtors and an agent at William Pitt Sotheby’s International Realty in town.
That means realtors are having some tough conversations with would-be sellers about what the market realistically will bear.
Kelly said home prices compared to previous years are “all coming down” —and the higher the price, the bigger the downward trend.
“As you get down toward entry level, those prices are holding fast a little better,” he said. “If you get up into high twos and threes you get some pretty big moves southward in terms of pricing.”
Middleberg said buyers are using that trend to their advantage, driving prices down further.
“Even if something is priced very tightly in the beginning, which is what we all strive to do, buyers are typically not coming in with an offer unless they see movement from the sellers first,” she said. “It’s almost like a game of chicken.”
Dunn said to come up with the most market-savvy price, his entire office tours and reviews a property, with each agent giving their own take. Then they have what may be a tough conversation with a would-be seller.
“If you have the information and you’ve done your homework and you have the analysis, while it’s never easy to have those conversations at least it’s understood you’re coming at it from an analytical perspective,” Dunn said.
In many cases, a fresh coat of paint can mean making the sale, or not
Owners who tired of their homes lingering for sale in 2018 responded by pulling their properties from the market well before year-end, Kelly said. Inventory dropped from 246 single-family homes listed at the end of September to just 172 on Dec. 31.
Whether those sellers will try again in 2019 remains to be seen.
Howell suggests some owners who really need or want to move their properties in 2019 will have to “re-launch” them by not just adjusting the asking price but throwing in an improvement, such as freshly painted walls, to lure in new views.
Agents have to take each property on a case by case basis and do some detective work to figure out why one sat while another sold, she said.
Middleberg said sellers may want to even consider doing “pre-listing inspections.” She said this does not necessarily mean a full property inspection to determine issues that would require disclosure, but rather to give a better sense of what might come up with a buyer.
This gives owners the option of addressing those issues prior to going on the market or of factoring any needed fixes into the home’s pricing strategy, she said.
New Canaan and Darien are STILL DESIREABLE TO POTENTIAL BUYERS
Mortgage rates, national and state leadership, the local economy and the nuts-and-bolts impact of the new federal tax laws—which will become more concretely apparent to individual families in April—all remain X factors in the spring housing market.
But no matter what, the tightly-knit communities of Darien and New Canaan, their well-regarded school systems and the other factors that make for a good quality of life locally should continue to prove attractive to many buyers and help properties here hold their relative worth, experts say.
“Things change, tastes change,” said Dunn. “At the end of the day what doesn’t change is the town itself and the area you are buying into.”