Find Your Dream Home
Three Keys to Success Understand: the Market “State of Real Estate”, Find the Right Design “Dream House”, Learn from a Leader “The House That Raveis Built”
State of Real Estate
Young, Affluent Buyers and Other Pack Leaders of the Spring Market
Stability means everything to the home. It’s also absolutely vital to the housing market. There were no shortages of disruptions to the market in 2013, led by shakeouts from the storms, not to mention the shaking up of mortgage rules. But as the new year rolled around, the buyers suddenly came knocking.
When the buyers are out, of course, sellers who had been hunkered down suddenly want to play. “Inventory was actually a little low,” Denise Walsh of Raveis said in January, “but now it’s climbing. We added sixty-five new listings just last week.”
Denise notes that buyer confidence was actually building last summer—and then came the government shutdown. “With the media harping on it every single morning, it just sucked the wind out of the market, temporarily,” she says.
But the nonappearance of Armageddon, followed by a continued high level of the Dow and the attendant Wall Street bonuses, all combined to put a spring in everyone’s step. The spurt of new activity in January makes her “highly optimistic” for the coming spring market. The proof is in the numbers. In 2013, the average Fairfield sales price was $745,477, marking a leap of $74,000 over the 2012 average.
So who are the players in this newly rejuvenated market? Two groups have come to the fore, and each has its distinct set of preferences. The first group is now called “The Downsizers,” although most would answer to “Boomers” (the first wave of which are now in their late sixties) or “Empty Nesters.”
The Downsizers are looking for what Julie Vanderblue at Higgins Group calls “luxury for less.” Moving from 5,000 square feet to half that represents challenges. The Downsizers are not opposed to the master bedroom on the ground floor. Some of them require the so-called additional in-law apartment, whether for visiting grandparents or for actually taking care of elderly family members.
“They want to reduce taxes and overhead and put it toward vacations and seeing their grandkids,” says Denise Walsh. “They couldn’t sell their houses over the past four years. Now these houses are selling, and now there’s an emerging market of buyers who want to take advantage of low interest rates.”
When Downsizers seek to sell that house, one of the most important requirements is to make sure the place has the general scent of newness about it; that is, if you want to sell it to the biggest group of people with healthy bank accounts, the Young Buyers. If you haven’t heard, this group only wants new.
“The younger couple typically doesn’t want to do projects,” says Charles Zylstra, sales associate of Nicholas Fingelly Real Estate.
In another time, notes Julie, older houses were said to have “potential,” in which buyers could choose their own wallpaper. That notion is now gone. The Young Buyer wants to move in to a finished house.
One concept gone by the wayside for the Young Buyers is the rule of traditional interior design. The Young Buyers seem to be more inclined to get away from classic interiors. “Never before in my career have I seen people wanting eclectic, wanting a contemporary feel or an open floor plan,” says Julie. “I think it’s just the trends of youth.”
Bette Gigliotti of Raveis has noticed that first-time buyers are getting younger, and they are sure buying a lot more house than they once did. “Some first-time buyers are buying houses at $1.4 million—and that’s significant.”
And, of course, all of Fairfield County benefits when the intense Manhattan scene sends its Young Buyer out this way. “We see all these young families from New York,” says Pam Foarde of Al Filippone Associates. “They’re often just over thirty, have a child nearing school age and they don’t want to spend $35,000 a year on kindergarten. Then there’s the taxes and the cost of living in New York. It’s no wonder they come out here.”
All of this has helped create what Julie Vanderblue terms the new urban shift. Young strivers are migrating not just to cities but to “town-cities,” like the new Fairfield County.
Just don’t expect the Young Buyers to want to skin their knuckles taking up old linoleum. “If they have the ability to buy a $3 million house,” explains Melanie Smith of Berkshire Hathaway, “they probably work in the financial market; they work long hours and they’re busy. I had a buyer the other day say to me, ‘I love the antique houses but I know I’d be painting it all the time.’ ”
The Young Buyers prefer to be closer to Fairfield’s train station or suddenly hot downtown, and this has meant a slowdown for the grand old compounds up on Greenfield Hill.
But one house assured of a fast sale, Melanie notes, is the new house built over a teardown. “Even if the lot is small and the price is $3 million, boom, it sells. People just want new,” she says.
Still, Melanie’s biggest sale, at $5.7 million, was a grand one on Southport’s Harbor Road. That precious water view still has the power—especially if it’s safe from the tides.
All of Southport is actually pretty hot now. Pam Foarde reports that humble Capes in the area just north of the thruway were getting snapped up, torn down and replaced by that all-powerful new.
Then there are the shifting fortunes found at the beach. “We were worried about the beach area after Sandy,” Pam says, “as people were scared away. But, guess what, the beach had a great year.”
In the year after Superstorm Sandy swept through in October 2012, a riot of construction work has continued apace. “Everyone always comes back to the water,” says Pam. “I’m just sad about some of the homeowners who couldn’t afford the new insurance or the repairs caused by the new FEMA standards, requiring them to raise their house.” If more than 50 percent of the house had to be rebuilt, the main floor had to be positioned 13.7 feet above the waterline. She adds, “They were telling us, the builders were down there, knocking on their doors. And some of the owners said, ‘It’s time to move on.’ ”
So where are all the Downsizers looking? Denise Walsh notes that shoppers used to roam about six miles from their old house, but now it’s extending to more of a twelve-mile radius. Easton has gotten hot. Trumbull and Stratford have come into play.
“The university area is hot,” says Julie. “I feel Lake Hills is the area to watch. It offers five beaches and a very affordable lifestyle.”
If one thing worries the Fairfield real-estate market, it’s the property taxes, which, while markedly lower than, say, Westchester, have risen in the last two years.
Then there are the new, tougher mortgage restrictions brought about by the Dodd-Frank Act. Suddenly we’re hearing the initials “QM,” as in Qualified Mortgage. Borrowers are in for a new, heavier scrutiny. A borrower who has changed businesses or simply reorganized one will be asked to provide rafts of documents. “They’re basing loans now on income, not assets,” says Bette Gigliotti. “In the past, they said, ‘Oh, you have a huge Charles Schwab fund.’ But I don’t think they take that into consideration anymore.”
The banks are flush with cash, says Michael Daversa of Atlantic Residential Mortgage, and very willing to make loans. Some loans, though, Daversa observes, are trickier. A freshly divorced person dependent on alimony, for instance, will have to collect a year’s worth of alimony payments before getting a mortgage.
“Self-employed people will have a tougher time. And I can’t name a bank today that’s doing a no-income loan,” he says.
The jumbo rates of 4.25 percent are up a half-point in the last eight months. “People are furious,” he laughs. “But are you kidding? That’s still a tremendous rate.”
While the stiff new QM regulations have put the kibosh on the “creative” loans of the previous decade, Daversa still sees some ingenious innovations.
One is the “blended mortgage,” which some people are using in lieu of a jumbo loan. “You get a $600,000 mortgage plus a $200,000 second mortgage as a home-equity credit line. The second mortgage is usually an interest-only loan, so it’s cheaper. Are you paying off principal? No. So you have to be financially stable and knowledgeable to handle them. But once you figure out how to do a blended mortgage, you get a better rate.”
No one can accurately predict the coming rates, or what the new Fed Chair Janet Yellen will do. There are a lot of market soothsayers out there predicting a rise in the interest rate this year. The immediate effect is to rouse people into the broker’s office right now. It might not be full boom time again, but it’s good.
Your favorite architect just completed the perfect house…for someone else. Perk up, compare it to a market listing.
Peter Cadoux: On His Project
“Blurring the line between the exterior and the interior environment has always been appealing for many homeowners and is now possible with new building techonologies…This one room serves many functions: a pool house within a home, a family room with a fireplace and a television visible while swimming, a veranda to provide protection from the sun, a screen porch, a fully functioning sunroom during the winter. It is, simply put, the best of all rooms.”
Neil Hauck, AIA: On His Project
“One of my favorite recent projects isn’t a new house…but a renovation to an existing Colonial. The program called for us to enlarge the kitchen and to add a breakfast nook, family room, butler’s pantry and mudroom on the first floor. The homeowners’ goal was to transform the house into a fun place to spend time with family and friends…I am very pleased with the palette of materials we used to finish the interior spaces.”
McKee Patterson, AIA, Austin Patterson Disston Architects: On His Project
“Privacy was key to designing a comfortable residence for this young family: a home that provided private yard space while retaining lovely water views. By designing a series of outbuildings—a pool house with guest quarters, a garage and shed—that parallel the road, the pool and backyard entertaining spaces are nicely secluded. Separating the spaces transforms this 5,900-square-foot residence into an intimate and informal home.”