WHEN IT COMES TO THE LOCAL REAL ESTATE MARKET, BIGGER WAS ONCE BEST, BUT THAT’S NOT THE CASE IN 2018. Today’s buyers are often looking for modest homes, less of a yard and an X factor that is more June Cleaver than Kim Kardashian. “That sense of neighborhood and community is back,” says Jake Fay, sales manager at William Raveis in Darien. Perhaps that’s why median sales prices were up in the past year in Darien, New Canaan and Rowayton. But choosy buyers largely remain in the driver’s seat, which means sellers need to focus on presentation and pricing. Here are more real estate trends top brokers report as the spring house-hunting season begins.
ON HOME DESIGN
NEIL HAUCK, a Darien-based architect, has been designing custom homes for over three decades. We asked him what’s hot in current design, how his clients’ tastes are changing and what choices he thinks will hold up best in today’s market.
WHAT TRENDS ARE YOU SEEING IN HOME DESIGN? One of them certainly is toward what I would call more modern architecture, particularly inside the house. I find that the old traditional moldings and bead board is going by the wayside. People are looking for more fresh and modern designs. Rather than putting in wood burning fireplaces, people are maybe having one wood burning fireplace and then stark modern fire boxes, which are gas flames that are very modern-looking. Raised-panel cabinet doors are giving way to either very modern flush panels or sometimes recessed Shaker-style panels. I’m also finding people are tending to downsize a bit. So they will often forgo a formal living room or dining room—or sometimes both—in favor of one sort of large continuous space that has a sitting area, dining space and kitchen in it.
WHAT ABOUT ON THE EXTERIOR? That’s one thing that doesn’t change a lot in this region. The New England styles are all very aesthetically pleasing, so people who move to this area do want often to follow one of those styles, though I am finding that more people want modern interpretations of traditional styles like Shingle style and colonial architecture. For instance, people are moving away from shutters and moving toward metal roofs rather than wood. There’s also more flat trim, less embellishment, larger windows. Large door openings are in demand too, either through sliding doors or pocket doors. They offer the ability to open up a wall by 10 or 12 or more feet so the room becomes wide open to the outside. Twenty years ago, people would have nice terraces which you’d access through French doors. Nowadays people are doing outdoor rooms. I did one recently in Darien. The whole (outdoor) structure was freestanding. It was almost like a mini house with no walls. It had a roof structure that was supported by posts, a nice seating group and a table.
WHAT HOME STYLES WILL HOLD THEIR VALUE MOST OVER TIME? In New England I do think the more traditional styles, as long as they are done well and done in such a way that the interiors are up to date—that is, state of the art with things like the appliances, televisions and audio visual systems. I think those styles tend to hold value more because they appeal to a broader market. Modern architecture, even at its best, really appeals to people who like modern architecture, and if you’re a traditionalist you’re not going to buy a modern house. But if you like modern architecture and see a good traditional design with some modern features inside, I think you might be attracted to that.
1 By the Numbers
Overall sales were up year-over-year in both Darien and New Canaan in 2017, with New Canaan showing a particularly impressive jump after a tough 2016. There were 250 homes sold there, a nearly 36 percent increase from the year before, with the biggest gain in the $1.5 million to $2 million price point. But the median sale price was up just 1.3 percent year-over-year, to $1,517,500. “You’re not getting more for your house this year just because houses are selling,” cautioned Ashley Howell Petraska, director of business development and sales for Berkshire Hathaway Home Services in New Canaan.
Darien saw a 15 percent increase in the number of properties sold—the highest mark in at least a decade—and a 4.3 percent increase in the median sales price, to $1,440,000. In both towns, however, the median sales price remains below levels achieved in 2014 and 2015.
In Rowayton the same number of properties sold in 2017 and 2016 but the median sales price was up 10.4 percent, to $1,330,275. Lynley Middleberg, the brokerage manager at William Pitt Sotheby’s International Realty in Darien, said what’s also notable in Rowayton is that properties that hit the market there have been moving relatively quickly.
2 High-End Headaches
The good news for owners of properties on the high end in New Canaan is that 2017 was the year those homes started to sell again. In that town, five houses sold in the $5 million and up range, compared to just two the year before. The bad news? According to Candace Blackwood at Berkshire Hathaway in New Canaan, more than one big home sold for $1 million or more below a previous sale price or initial asking price. “It’s very obvious that people are taking huge haircuts. They’re not getting what they paid [initially] or what they put into them,” she says.
Jeff Kelly, office manager at Houlihan Lawrence in Darien, says properties that remain strong in the luxury price point are on the waterfront, due to its limited availability. “A house that’s big for the sake of being big is not attractive to people,” he says. “Off the water, an extremely large home on a big piece of real estate is suffering here.” What will make a big property move is a low enough price that buyers believe they are getting a deal, realtors say. Middleberg says Darien’s notable sales included a seventeen-room estate on Long Neck Point that went for $18 million in the spring after being on and off the market for about four years, and another in the same neighborhood that sold for its full asking price of $6.8 million.
3 The Millennial Puzzle
As you would imagine, millennials are driving many of today’s home-buying trends. What they’re after, say realtors, is a simpler lifestyle. “They’re looking for suburban [homes] now, and people didn’t think that would be the case. They’re coming in and looking for new [construction], they’re not looking for huge, and they’re not looking for a lot of land,” says Dave Wilk at Coldwell Banker in Rowayton. Casey Lange, an agent at Halstead in Darien, says location is another top request, with in-town homes selling well. “Convenience is a priority,” she says.
In the past, Fay says, many buyers “didn’t care if they had a neighbor within an acre or two. Now people are more drawn to the cul-de-sacs and the streets that have cool Halloween things going on, stuff that really speaks to the community part of it. Many buyers will say, ‘I don’t want to live on a street with a double yellow line.’”
Realtors unanimously agree the other truism across the current market is that few buyers want to take on a fixer-upper, despite the popularity of that genre on TV. Homes that sell well are, at minimum, “move-in ready,” with some buyers asking to see only new construction. “When I first got into the market twelve years ago, everybody wanted a project, they wanted to buy a house and fix it up and make money on it,” Petraska says. “Now, people are so busy they don’t even want to pick a paint color.” New buyers are also extremely choosy, Fay says. “It’s not show them ten houses and they’ll pick one, it’s show them thirty or forty houses and maybe they’ll pick one.” This generation of buyers is also more concerned than earlier generations about a property’s short-term resale value, in part because they live in a world where people no longer stay at the same job for decades.
4 How to Get It Sold
In the current market, realtors say, preparation is everything, and sellers may want to seriously consider spending some money on improvements. Decluttering has always been a mantra, but it’s basically mandatory now. Lange often advises people to take out 50 to 80 percent of their furniture while adding neutral accent pieces to make the space seem more open and modern. In addition, consider repainting interior spaces—opt for neutrals like grays and white. Remove heavy drapes to let in more light and make sure hardwood floors are in top condition. Improving a kitchen and a master bath may also be worth the money. Paint darker wood cabinets the more currently fashionable white, or change out linoleum countertops. Even smaller things can have a big impact, Blackwood notes, like switching out a faucet or a dated light fixture. Outside, keep the property looking clean and manicured.
Petraska says the goal should be to make the house look livable, not sterile. “Organizing the pantry, organizing a closet, making it look simply lived in is usually the best,” she says.
Gillian DePalo, sales vice president at William Raveis in New Canaan, warns homeowners shouldn’t “test” the house’s sales appeal before making improvements. “Once it’s been exposed to the market, it’s hard to change opinions about its condition,” she says. Yet Wilk cautions sellers not to put more money into the house than they are going to get back. “If it’s a total gut job, price it accordingly,” he says.
5 The Digital Future
For those who don’t have the time or money to hire a professional stager, redo a kitchen or furnish a vacant house, technology has an answer. Augmented reality and virtual staging are arriving on the scene, and with more buyers getting their first and best impressions of a property online, realtors are excited about its possibilities. Computer programs allow realtors to create images of what a room would look like with a more modern dining set, custom couches, or a whole different type of cabinetry. “Then you can really shine online a bit, instead of having empty rooms or not-so-pretty furniture,” Fay says.
They also help people visualize how they could decorate a currently vacant space. Fay’s agency, for example, is using the technique for a $7.55 million waterfront home on Salem Straights in Darien. The property is new construction, but virtual staging has allowed the listing to include pictures of a tastefully furnished living room with white, modern couches, a round wood coffee table and glowing fireplace; seating in the kitchen; a comfortable dining space; a cozy family room; an inviting private office; and a master bedroom with crisp linens on a bed facing shelves with artfully arranged books. Online, the house looks to be straight out of a shelter magazine, but if a prospective buyer were to walk through the door of the actual house, those rooms would be empty.
Middleberg says her agency plans to begin using an augmented reality app that can show people on a screen how things would look if they were changed out in an existing house, as they are touring it. “I think that’s going to be a big trend,” she says. “It’s insane what the technology is coming out with. You don’t have to have virtual reality goggles on your face. It’s literally holding your tablet up to a wall.”
6 Special Touches
What makes a home stand out in a market where inventory has not been a particular issue, especially at higher price points? “If you have an expensive house, you’d better have a generator,” says Blackwood, along with high-end appliances and the detail and molding work clients have come to expect for that cost. An existing pool won’t make or break a deal, she says, but for more expensive homes, “the ability to put in a pool is key.”
Open floor plans and outdoor “rooms” with amenities like fireplaces and kitchens are increasingly popular with today’s buyers, realtors say. “Especially with the new buyers, who really prioritize the quality of life, outdoor entertaining spaces—and entertaining spaces that translate from indoor to outdoor—are a huge benefit for a home,” says Lange.
Energy efficient heating systems and other eco-friendly updates are also high on the wish list for younger buyers who are more concerned than their parents’ generation with their carbon footprint, says DePalo. New and/or recent construction has the highest appeal but it has to also be good quality, realtors caution.
“If you have a house that’s 1990s construction, but you can feel every step in it, that definitely turns buyers away,” Petraska says. “If you walk into a house that was built then but is a good, solid construction, that one will sell before the other one that’s shaky.”
7 The Right Number
While homes are moving, pricing is critical, especially in slower segments—one of which is the $2 to $3 million market for homes that are not new in Darien. “It’s been very difficult for us as realtors,” Kelly says. “In many cases the owners of these assets acquired them in a much headier time, sometimes in bidding wars. A lot of sellers are finding they’re having to part with these homes at a price they really didn’t want to sell at. You can sit there and say your house is worth $3 million until your neighbor sells for 2.5, and then you have a problem.”
Wilk says pricing a house lower may seem counterintuitive to sellers, but it can work. “It’s hard in this business because people are typically used to saying we can start here and come down,” he says. “But if a seller picks the right number to start, it may trigger a bidding war that ends up with the house selling over the asking price.”
Lange says because of relatively low interest rates, some buyers are looking at a wider range of price points than in the past. Consider a buyer who’s considering homes between $2 and $3 million. “What’s really hard about that is some are looking in that range because they think a $3 million house may sell for $2.3 million, while others are looking because they really can buy up to $3 million.” That’s where an experienced realtor who knows the market comes into play, she says, because that person will know “a home priced at $3 million used to be 3.8 and it’s not going to sell for less.” Likewise, she says, a realtor with a deep knowledge of comparable listings can help a seller pick the right price to stand out against other competitors. “Those agents have been in those homes,” she says. “They know what the house looks like, the quality of the bedrooms, and how it will show.’”
8 The New Empty Nest
These days, many downsizers are moving out of the local market in search of more tax-friendly retirement locales, but Rowayton remains appealing to older buyers who are drawn in by its smaller beachy homes and vibrant social life. New Canaan, with the largest stock of condominiums, also serves a niche for this population. Here, the price of condominiums was up 15.9 percent in 2017, Lange says, with a similar number of condos sold. In Darien and Rowayton, smaller numbers of units trade each year. Darien saw eighteen condos sell in 2017, up from twelve in 2016; Rowayton saw six versus nine. Prices were down 12.7 percent in Darien and 33.3 percent in Rowayton.
Fay says a lot of downsizers would like to stay in the area, but there aren’t enough options. “Obviously Rowayton’s an easy place to move to, but prices there have gotten close to Darien prices, so what are you downsizing to? You’re not downsizing your budget.” Realtors would love to see more of a condo market in Darien to meet demand. “I think everyone’s sort of hoping Baywater Properties comes through with this downtown project,” he says. “A good condo product can move here, but where are you going to build it?”
9 Economic Forces
The Baywater project has been among those buffeted by outside economic forces, with developer David Genovese announcing in late fall that he had reduced the 11-acre proposal’s scope due in part to concerns about the current state of the retail market. Realtors say the state’s economy and changes in federal tax law have also thrown some potential kinks into the residential sales market in this part of Fairfield County, though they are not sure whether those concerns will translate into actions on the part of buyers and sellers. “A lot of [federal tax] deductions have been eliminated, but people still buy houses based on their needs and not tax law,” DePalo says. “Housing is both a financial and emotional decision. People are going to make it based on their finances, the feel of the town, the education system and proximity to their job.”
Lange says a lot of buyers at a recent open house were asking about the tax changes. But she notes some may feel very little impact at all depending on their tax filing status. Plus, the state’s relatively low property taxes compared to its neighbors continue to remain appealing.
Says Fay: “I think we have a [state] leadership issue that hopefully gets changed. But there are still really good schools. We’re on the coastline, and it’s less than an hour to the city. With all the negative headlines, it’s still a pretty good place to live. And that’s not changing.”
10 TAX FACTS
There are some big changes in federal tax law coming into effect in 2018. We asked Robert F. Carroll, a Darien-based attorney and certified public accountant (darientaxguy.com), for a primer on what’s new.
MORTGAGE INTEREST If you are buying a new home or a second home, you’ll find yourself subject to a lower limit on the tax deduction allowed for mortgage interest. Before, interest paid on the first $1 million of that debt was deductible; for any new mortgages that closed after December 15 that limit has dropped to $750,000. Existing homeowners are grandfathered in at the earlier level. But if they want to use a home equity line of credit to make improvements, they’ll be hit by another change: The interest on those payments is no longer tax-deductible.
PROPERTY TAXES There is a new $10,000 limit on the deduction for the combination of state and local income taxes, sales taxes, real estate property taxes, and personal property taxes, and a new, higher standard deduction–$24,000 for a married couple filing jointly. Carroll expects most families in this area will continue to benefit from itemizing their deductions. “Anybody with a mortgage of $750,000 is still going to be itemizing,” he says. “Because they’re still at $20,000 of mortgage interest expense.”
SELLING A HOME The $500,000 capital gains tax exclusion for married couples ($250,000 for individuals) on the profits from a home sale has not changed, as long as the property was used as the seller’s primary residence for 24 of the last 60 months prior to the sale. Deductions can still be taken off that profit calculation for closing costs on a property. Of course, if you sell your house for less than you paid, none of this applies.