When it comes to selling homes in Darien, New Canaan and Rowayton, Realtors agree that few are more motivated to buy in town than those who already live here. That was as true in 2005 as it has been any other year, maybe more so: Not only do local homeowners understand how values are rising, they also have the wherewithal to buy up.
When Paul and Stephanie Fairleigh first moved to Darien in 1999, there were two attractions: a reasonable commute into New York City, where they both worked, and some running-and-playing room for their expected child, Lily, now age five. Their Holmes Avenue house, known in the market as a “starter house” because it caters to the first-time, young-family buyer, was small in nearly every way but price: $436,000. When relatives from Houston dropped in, Lily slept on a mattress at the foot of her parents’ bed. The family shared one bath.
“It didn’t look that small coming from the city, but it filled up pretty quick,” remembers Paul. “I was shocked at how expensive it was, and then in 2000 it went up by 25 to 30 percent.”
It kept going up every year thereafter. The average sale price for a Darien single-family home in 2005 was $1.6 mil- lion, according to Margaret Wright of Wheeler Real Estate in Darien, up from $1.52 million in 2004. If that seems but a slight shift, it should be pointed out that the 2004 figure represented a nearly 25 percent rise from 2003, and that 2005 arrived with growing worries about interest rate hikes and the market’s sustainability.
The market in Darien didn’t just sustain, it prospered, and the Fairleighs reaped the result when they sold their home in August for $841,000, buying another house, on Hoyt Street, for $1.3 million.
“I was torn about moving, because I like everyone on the street, but they were all moving, too,” Stephanie notes. The new house came with a significant increase in size — from 1,450 square feet up to 3,200 square feet. There’s a basement with ample space for a pool table and bar, a family room with ceilings high enough to accommodate a nearly ten-foot-high antique mahogany armoire (a treasured family heirloom), an ample screened porch for enjoying mosquito-free summer nights, three extra bedrooms for guests and a pool to make the dislocation of the move easier on Lily.
“We painted her bedroom the same color as her old one,” Stephanie recalls. “It took a little while, but she adjusted.”
Staying in Darien was never in question. Proximity to Manhattan, the schools, the town’s social life, which the Fairleighs enjoy, all made staying a no-brainer. Neither Paul nor Stephanie saw the move as a form of investment upgrade, though they agree it hardly hurts to keep it local.
“It may be stupid to say the market’s insulated in Darien, because nothing’s Teflon,” Paul says. “But anything with a reasonable commute to Manhattan seems like a safe bet.”
Actually the only bets safer than Darien these days may be New Canaan and Rowayton. The average sale price in New Canaan cleared the $2 million barrier for the first time, to $2.02 million from $1.74 million, in 2004, according to Skip Sisson of Sisson Realty in New Canaan. A similarly proportionate appreciation occurred in Rowayton, which already had a banner year in 2004, nudging just past the $1 million mark in average sale price. Then in 2005 that figure climbed to $1.31 million according to David Epprecht of RealtyQuest in Darien, which is active in all three markets.
New Canaan’s median single-family-home sale price in 2005 (half the house prices were above this figure and half below) was $1.605 million (up from $1.41 million in 2004) according to Sisson, reflecting just how much the high end pushes the market upward.
Margaret Wright’s figures for the medians in Darien ($1.32 million, up from $1.12 million in 2004) and Rowayton ($1.23 million, up from $962,500) reveal less disparity, though she notes that the median poking its way over $1 million in Rowayton is interesting in itself.
Gino Kelly of Kelly Associates in Darien calls Rowayton “the hottest of the three markets in the last three or four years, in terms of price appreciation.” That’s a debatable point considering New Canaan over the same time kept a proportionate pace with even fatter sale prices, but some New Canaan Realtors acknowledge their market has felt some cooling breezes — ironically, a byproduct of that same bullishness.
“Because the market shifted upward, it’s just not open to as many people,” Sisson notes. The average number of days on the market for a New Canaan house rose from 136 days to 148 days. The differential between asking price and selling price rose slightly. Most significantly, the number of house sales dropped, from 418 in 2004 to 338 in 2005.
“The town was off in general,” admits Hugh Halsell of Brotherhood & Higley in New Canaan. “We were certainly less active in the upper price ranges than we were in 2004. It became more difficult to sell those houses.”
“For New Canaan in particular, sales of houses under $2 million and over $4 million were fairly brisk,” adds Toni-Ann Vittoria of Coldwell Banker of New Canaan. “That middle area, between $2.2 million and $3.6 million, was not quite as brisk, I don’t know why. People were not buying as readily. Those are people who were waiting for prices to come down because the media were pushing the bubble issue.”
But nothing popped, leading to what Carolyn Clark of Carolyn Clark & Associates in New Canaan said had become her town’s version of Waiting for Godot — fence-sitters anticipat-ing downward price adjustments that never came.
“We didn’t have the supply of buyers we traditionally have,” notes Marsha Charles of Preferred Properties in New Canaan. “I had listings, I had buyers, but I couldn’t put them together. Buyers’ expectations were greater than what was being offered. Sellers figured their houses were worth more, based on past performance.”
“It’s been so heated that it’s logical to expect some adjustment, but there are no bubbles bursting,” Clark insists. “There may be some slow leaks.”
Whatever air may be escaping in the markets of New Canaan, Darien and Rowayton isn’t coming from homeowner exodus. Yes, people are moving out, just as they are moving in, but like the Fairleighs, many of those boxing up their possessions and putting up “for sale” signs are moving a matter of blocks rather than miles.
“That’s the biggest bulk of buyers we have,” says Kelly, speaking of Rowayton and Darien. “It’s been prevalent in the last ten years — they are a very significant part of the business. New people are coming in all the time, with the largest number buying starter houses. But you have more move-ups to the higher level of the housing bracket than people coming in.”
Kelly has been in the business since 1972, long enough to remember a time when corporate transferees made up a large proportion of area house-hunters. “Now many if not most of them are working for financial companies, and they don’t do anywhere near as much transferring,” he says. “Look, Wall Street is Wall Street. There is no other.”
Reflecting this trend of buying up was 2005’s optimal price-point demographic. “The increase in sales was strongest right below the top tier,” says Margaret Wright of Rowayton and Darien. “That’s always a hot range — your next move after your move into Fairfield County. You have a young family in a two-bedroom Cape and you begin looking for something larger. It’s a natural progression to that $1.5 million to $2.5 million zone.”
In New Canaan, too, “a large part of our market is trade-up,” says Gillian DePalo of William Raveis New Canaan. “A lot of people come here for the schools. They buy $400,000 two-bedroom [condominium] units, get ensconced in the community and then trade up when they can.”
Condominiums were a big part of the positive real estate picture for New Canaan in 2005, largely because there are many of them. DePalo estimates that there are around 500 units in New Canaan within walking distance of downtown. “We tend to be a high-end condo market,” she says. “Empty nesters are downsizing into condos, while new arrivals are buying into lower-end units.”
Her figures back this up. The average sale price for New Canaan condos rose from $663,000 in 2004 to $771,000 in 2005, reflecting an average price increase of 16 percent, in line with that seen for single-family homes. And while the number of single-family home sales in New Canaan dropped appreciably in 2005, the number of condo sales remained constant at sixty-nine.
“The condo market has been fabulous for the last few years,” notes Carolyn Clark, who is a big believer in “staging” such units for resale through selective, nonindividualized interior decoration. She notes that many sales are made to current New Canaanites who wish to stay in town but simplify their lives with a smaller home, usually after the children are gone. “It’s now baby boomer sell-your-house time,” she says.
But there’s a modest caveat even in this booming submarket. “Part of the buy-down challenge is there are not enough available condos,” she says. “There’s increased demand for a not-increased product.”
Darien and Rowayton have fewer condos and thus the market for them is less robust. But one common hot trend in all three towns is the appeal of teardowns and new construction. Both the highest ($5.5 million) and lowest ($480,000) closing-price homes in Rowayton in 2005 were torn down in favor of newer, larger homes. This continues the movement of recent years as the builder demographic becomes a bigger piece of the real estate pie. Sisson estimates that around fifty houses were torn down in New Canaan last year.
“The houses attracting the most interest in 2005 were those that were ripe for redoing, renovating or tearing down,” says Tom Vozzella of Prudential Connecticut Realty in Darien, which also handles Rowayton. “The most popular were small houses on big lots — fixer-uppers.”
The Fairleighs still marvel at the price they got for their old house, nearly twice what they paid six years earlier. “We did some cosmetic improvements with that house, replacing the carpet, painting, remodeling the dining room with a vaulted ceiling,” Stephanie recalls. “Nothing much.” But the buyer, a builder, saw an opportunity to create something new, and the house was demolished.
“It’s very active,” Kelly says of the teardown market in Darien and Rowayton. “In the ultra-high-end category on the waterfront, we’re seeing new records set on the highest-priced residential house sold. Believe it or not, some are being torn down or renovated. If a person has unlimited funds, he wants to put a personal touch on where he lives. Take a boat ride along Long Island Sound — it’s amazing how many new houses you see.”
Halsell says some of the new houses in New Canaan sat on the market in 2005, as builders, like everyone else, waited for a better price. “Builders are the main consumers of land these days,” he notes. “If they don’t sell their inventory, the market will soften. The market was unusually soft in 2005 because builders were sitting on what they had.”
Ample interior space remains a critical factor behind sales, even in the closely spaced coastal environs of Rowayton, where traditionally, smaller homes predominated. That is changing quickly, though Gail Van Slyck of Van Slyck Associates in Rowayton notes that not all older homes face the wrecking ball. There is still a vibrant market for vintage homes that have been maintained well.
“In this area, specifically Rowayton, a Colonial in any form is highly desirable,” she adds. “Four- or five-bedroom Colonials are popular items, and expanded Capes that have three or four bedrooms do well too.”
What makes Rowayton, which used to be a sleepy New England village, such a big deal these days? Gail Van Slyck has a theory — the Bard is drawing them in.
“I’d say it started ten years ago, with the advent of the first Shakespeare on the Sound,” she says. “That focused a lot of attention on Rowayton. New people visited and saw the village atmosphere. Before then, unless you had family or friends, you wouldn’t be here.”
Realtors in Darien and New Canaan see a timeless charm in their markets. Margaret Wright notes that Darien was the last community to see sale prices soften after the Wall Street crash of 1987 and the first to see them rise thereafter. “I don’t see anything changing,” she adds. “It’s still on the water, it’s still less than an hour from New York City.”
Regarding New Canaan, Toni-Ann Vittoria notes, “We lose very few people to other towns once they are in New Canaan. There’s upward movement, but they don’t want to move out.”
In his thirty-five years in the market, Halsell has never seen a bad year for New Canaan homeowners, and only two for Realtors: In 1981 the prime rate was over 20 percent; in 1991 banks were defaulting everywhere.
What does 2006 have in store? In Rowayton, Epprecht notes that there were fifty-two homes on the market in January, which is “on the high side.”
“I’m not concerned about it, it’s just a fact,” he says. “On the plus side, it gives us more for buyers to choose from. When you have a market of just twenty-five to thirty houses, it’s not as good. There are lots of spikes and dips in pricing when you have fewer houses on the market.”
Inventory also was up in Darien at the beginning of 2006, albeit slightly. Realtors there hope a new attitude will see sales rise in volume as well as in price.
“Priced to sell, that’s the phrase for 2006,” Vozzella says. “The key is to educate sellers to what’s going on, and not be an order taker.” He adds that the days of bidding wars and people signing binders on car hoods have been largely over for a while.
In New Canaan Sisson notes that the steep drop in houses sold over the past two years is no small thing, even if the rise in average sale price means the money is still there. There was just less to go around. “A hundred fewer sales means 200 fewer signings that Realtors didn’t experience,” he says. “My impression is that they are complaining.”
The situation somewhat complicates the buy-up market. Carolyn Clark notes a Catch-22 situation where a typical family in New Canaan looking to upgrade is stymied by the fact that they have to get the money from the sale of the old house before they can buy a new one. “It’s hard to be a buyer and make that sale, because you’re never in a position to buy. It’s challenging. You are either an intrepid, adventurous seller or you have to be willing to take a gamble even if there is not a house in front of you at the moment. Getting the two ends to meet is difficult.”
Optimism for another good year in 2006 is widespread, with early signs being generally positive. “Prices seem to be comparable to 2005,” says Joan Gallagher of Preferred Properties in Darien. “It only will be a waiting game to see where they sell!”
“I think 2006 could be a buyers’ market,” says Marsha Charles. “I thought 2005 was going to be, but buyers didn’t step up to the plate.”
Halsell notes that 2005 was a record year for year-end bonuses on Wall Street: “I’m hoping we will see some of the pent-up demand from last year.
Interest rates are not going up, so there’s no reason not to buy if the money for down payments is there.”
“It will be interesting to see how Royal Bank of Scotland coming into Stamford is going to impact our market,” Gillian DePalo says. “Their executives will start to filter into the community. That’s what UBS did.”
Another good sign in early 2006, according to Realtors, has been well-attended open houses, although not everyone showing up is in the market. Some, like Stephanie Fairleigh, remain curious.
“I still go to open houses,” she says. “I want to see what I can do with our basement.”
“Growing up in Texas, it used to be that after church, you’d go to Grandma’s,” adds Paul. “Here, after church you go to open houses.”
“We live in a great area, no two ways about it,” concludes Kelly. “It’s not surprising people want to live here, so it will continue. People ask me how I can be so optimistic. How can you not? I’ve never been unhappy about where I live.”