The Costs & Benefits Of Calling Fairfield "Home"

Like many southwest Connecticut towns, Fairfield has been roiled by the housing downturn; houses once thought to be safe bets saw their values tumble. But a more pressing story line recently has been about the cost of living, and whether it’s gotten too high because of escalating property taxes. Still, others—such as real-estate brokers, home-builders and transportation analysts—are finding much to cheer about as 2012 unfolds.



Ax The Tax

As home sales slowed over the last few years, the tax money generated from those sales dried up, depleting Fairfield’s town coffers. In response, the Board of Finance has voted to boost the town’s mill rate (how property taxes are calculated in Connecticut) by relative leaps and bounds. From 2009 to 2010, it jumped two percent (from 18.9 mills to 19.27 mills), while the next year it shot up 16 percent (from 19.27 to 22.47), which is loftier than in other communities. (In Westport the rate is 17.43, while in New Canaan it’s 13.853; though Bridgeport’s clocks in at 39.64.) However, around the same time, Fairfield reassessed the property value of its homes for the first time since 2005. And guess what? Over the course of that time, in the throes of the Great Recession, home values—perhaps unsurprisingly—fell. In fact, almost nine out of ten homes in Fairfield lost value, town officials say. The upshot: Mill rates went up, but values went down so a lot of people ended up seeing their tax bills shrink, although that was certainly not the case across the board.

Assessment Duress?

But not everybody is in the same boat. Residents in the waterfront Pine Creek neighborhood and inland, at the Ridge—a gated community near the Westport border—got stuck with higher tax bills, brokers say.
Some aggrieved homeowners met with officials from the Municipal Valuation Service, the firm that conducted the revaluation, to learn which factors upped their home values, which brokers say is a good first step. Failing any relief there, some also have taken up the issue with the Board of Assessment Appeals, a popular recourse. In fact, of the twenty-five listings Melanie Smith, a broker with Prudential Connecticut Realty, had in early January, the assessments on three were being appealed, she said, adding that one of those homes saw its assessment double. Other fights have gone even further. In an unusual move, some homeowners have sued Fairfield in Superior Court. (Others might just sit tight until  the next revaluation in 2015 and hope for a better outcome.) What has rankled many real estate experts is how to explain the whole process; homes on the same block can often have wildly different assessments. “They are all over the place,” says Julie Vanderblue, president of the Higgins Group. “Whatever formula they are using, it’s not working.” And it may be destabilizing the real estate market. Melanie says an older couple on Pine Creek Avenue packed their bags for Florida after challenging their assessment and “not getting any forgiveness,” she says. Still others are skipping town for places like Westport, she says, where the schools are comparable to Fairfield but the tax burden is lighter. “It is definitely a deterrent.”

Coastal vs. Pastoral

Two neighborhoods that buyers always seem to covet, through busts and booms, are Southport and Greenfield Hill, for their roomy mansions, accomplished residents and tight-knit vibes, even if the terrain—waterside for Southport, rural for Greenfield—is quite different from one another. But which of the two is the better investment? In 2011, sales of their high-end homes actually matched up pretty evenly, according to data from the Greater Fairfield County Consolidated Multiple Listing Service. In the million-plus category in Greenfield Hill, for instance, eight homes sold at an average of $1.42 million the data shows, including $1.25 million for 99 Governors Lane, a four-bedroom built in 1995 with nearly 3,500 square feet. Meanwhile, in the village of Southport—the compact enclave by the harbor—four homes sold at an average of $1.46 million, including $1.9 million for 1070 Pequot Avenue, a century-old three-bedroom. Even if a wider net is cast, the results are similar. In the section of Southport north of the Post Road (excluding Sasco Hill, which is treated as its own market), there were thirteen sales at an average of $1.49 million, including $2.59 million for 1241 Hulls Highway, a new-construction six-bedroom with an in-ground pool. But the data also shows that Greenfield Hill’s homes sold below their asking prices by larger margins than in Southport, which suggests that Southport’s market may be slightly stronger—by a hair. (Brokers, famously loath to play favorites, declined to comment.)

Rearing to Re-Fi

Adjustable-rate mortgages got a bad rap after the Great Recession, and for understandable reason: Many homeowners who took out these kinds of loans—which offer low interest rates for long periods of time before resetting to usually higher ones—defaulted, which fueled the housing collapse. But are those types of loans, better known as ARMs, really so bad? Michael Daversa, president of Atlantic Residential Mortgage, doesn’t think so. In fact, he’s actually recommending them to homeowners looking for a way to save some money while they sit out the market. Assuming they qualify for a re-fi, and that their home’s value hasn’t tanked too much, there are advantages: interest rates for ARMs can be 3.875 percent, which is like three-quarters of a point below the rate for a 30-year-fixed mortgage, so the savings can be major, he says. Sure, that ARM rate is good only for ten years. But, Daversa says, consider that the average homeowner in Fairfield moves every seven years. So, he or she will likely be gone before the higher rate kicks in. (Then again, the way rates have been trending, they could actually also tick lower over that time frame.)
Frustratingly, Daversa says that Fairfield residents are reflexively drawn to safer fixed-rate mortgages, though they should at least mull over the universe of products. “Homeowners here should analyze their mortgages,” he says, “like they analyze their investments.”

On Track

Those who gravitate toward hot new neighborhoods should consider planting their tent stakes south of I-95, on the border with Bridgeport. Okay, that might be a bit premature: The land there is still made up mostly of large industrial tracts, busy roads and empty lots. Yet real-estate experts predict that within a few years, this eastern corner of town could boast an array of new homes, shops and even riverfront parkland. The trigger is Fairfield’s newest train station, and its third: Fairfield Metro, which debuted late last year. The much-publicized office buildings that were supposed to go up around it never came to fruition, but the area was rezoned, so where a vast parking lot stands today could soon welcome four-story apartment buildings. This type of housing there would be good for a couple reasons, says Amanda Kennedy, an associate planner for the Regional Plan Association, which consulted on the rezoning. Because Fairfield is so affluent, rental apartments would partly satisfy the need for affordable housing, she says. And because those units would sit so close to a transportation hub, people could get around easily on foot, which would keep cars off streets; the Whole Foods that already exists there is also a big draw. “This is a place where the town can put new development without any of the negative effects that development can bring,” Amanda says. Fairfield Metro “will definitely get a lot of attention in the next five to ten years.”

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