July Contracts: Mixed Signals

2018-08-02 Hartford County Single Family Contracts in July 2018

Hartford County finished July with 868 single-family home contracts, a decline of more than 15% from the July 2017 total. On a year-to-date basis the County is a little less than 4% behind where it was at this point last year.

The comparison month, July 2017, was an outlier in last year’s data. The chart above shows that the deal total unexpectedly jumped last July, unlike the total from July 2016. Because of the odd behavior in the 2017 data, we’re inclined to not worry about last month’s result appearing to be such a big miss. 2018 continues to be a solid year, if not quite as active as 2017.

Scanning through the year-to-date performance by town in the table below, it looks like most of the towns in the Farmington Valley are having a better year than last year. On the other hand, some of the urban towns that we repeatedly highlighted last year as strong performers are showing signs that this year is a step backwards.

Inventory levels vary widely from town to town, but remain on the lower end of the spectrum. It’s possible that low inventory levels are acting as a drag on the market.

Consider East Hartford, which is more than 22% behind last year’s pace for deals. They are currently at 2.3 months of inventory, which is a seller’s market. Buyers need a reasonable selection of homes to choose from as they consider their options. And perhaps there just isn’t a good enough selection in some of the towns with low inventory. Greater Hartford is unfortunately not the type of market where people will buy any property at any price.

All of the towns that have more than 10% gains in the deal count have inventory levels of at least 4.8 months, putting them in the neutral market category. It’s a trend that we’ll monitor as we think about how to put the decrease in deals in proper context.

2018-08-02 Hartford County Single Family Contracts in July 2018 by Town

June Contracts: On Trend

2018-07-10 Hartford County Single Family Contracts in June 2018

Halfway through the year, the real estate market is in good shape. Activity levels are in line with the previous two years, which were both strong years for the market.

Hartford County finished the month of June with 969 single-family contracts, which was about 3% fewer than the total from last June. On a year-to-date basis the first half of 2018 was about 1.6% behind the first half of 2017.

One of the important trends of the first half of the year was an increase in mortgage rates. We started 2018 with buyers getting mortgages with interest rates at about 4.0%. Rates jumped to just below 4.5% in the first quarter, and crept up a little more in the second quarter. We’re seeing rates in the mid-to-upper 4% range right now.

The increase in mortgage rates is relatively modest in the overall scheme of things, and rates are still at very low levels historically, but these types of changes do have an impact on buyers. Monthly interest payments tick upwards, reducing the monthly budget available for actually buying the house or covering the other costs that go along with home ownership. At the margin the change in rates will have a cooling effect on prices.

Despite the increasing rates, we fully expect the real estate market to continue to be active for the remainder of the year.

2018-07-10 Hartford County Single Family Contracts in June 2018 by Town

53 Beacon St, Hartford

53 Beacon St, Hartford

This outstanding 2-family is turnkey and perfect for an owner occupant or investor.

Unit 1 has original oak detailing, leaded glass windows, and pocket doors. The living room has a decorative fireplace and opens to a formal dining room with built-in hutch. The renovated kitchen has eat-in space, a dishwasher and pantry for storage. There are three large bedrooms and an updated bathroom.

Unit 2 also has original oak detailing, leaded glass windows, and pocket doors. It encompasses the second and third floors of the home. The living room has a wood burning fireplace and connects to a den and the formal dining room, both with built-ins. The kitchen has been extensively remodeled, as has the full bathroom. There are two large bedrooms and two enclosed porches that complete the second floor space. The third floor offers an additional oversized bedroom, full bathroom and kitchenette with sitting space, and plenty of storage space, perfect for an in-law or au pair.

The home has two newer high efficiency gas boilers and gas hot water heaters, laundry in the basement for each unit, a 2-car garage, a lovely front porch, and a fenced backyard with a deck. Don’t miss this fantastic opportunity!

53 Beacon Street is 6 bedrooms, 3 bathrooms, 3,701 sqft, and is available for $310,000. For more information, or to schedule a private tour, please contact Kyle Bergquist at 860-655-2922 or KyleB@KyleB-RE.com. More details and a photo tour are available.

May Contracts: Heart of the Spring Market

2018-06-04 Hartford County Single Family Contracts in May 2018

2018’s monthly deal count increased in May. The 1,089 total was slightly less than the May 2017 total, but a solid increase over the April 2018 count. On a year-to-date basis there have been 1.3% fewer Hartford County single-family home contracts in 2018 than there were through the end of May 2017.

May is traditionally the single busiest month of the year. It is also far enough into the year that the town-by-town results have enough data to be interesting. Most of the towns in the County are within 10% of their 2017 performance on a year-to-date basis. Rocky Hill, Avon, Granby, and Burlington all outperformed last year by more than 20%, while only East Granby, Marlborough, and Manchester lagged last year by more than 20%.

Taking a more detailed look at Manchester, it appears that their 21% underperformance can be directly attributed to a lack of inventory. The Manchester market is busiest in the $100,000s, where 148 homes went under contract through the end of May 2018. That’s about 30% fewer than the 213 that had gone under contract by the end of May 2017. There is currently only a 2 month supply of listings in that price band, making it a strong seller’s market.

Inventory levels continue to be low throughout the County. There were only 3.2 months of homes available as of the end of May, which is barely above the level that is considered a seller’s market. June should continue to be active before the pace of deals begins to slow down in the second half of the year.

2018-06-04 Hartford County Single Family Contracts in May 2018 by Town

A Rising Tide: Greater Hartford’s Advantage as Sea Level Increases

2013 Dragon Boat Races

The old saying that a rising tide lifts all boats takes on new meaning now that we know that sea level is actually rising in addition to the tide.

Regional differences in the impact of sea level change will prevent everyone from sharing the same outcome as the water advances. Many areas will struggle with higher tides, while others will benefit. Hartford, as an inland metropolitan region, has an advantage over our coastal neighbors.

Articles about rising sea level appear regularly in the news, as the consequences of global climate change become more obvious at the water line. Most of the coverage can be divided into two categories; reviews of the scientific consensus and the latest published research, or profiles of regions threatened by the rising seas. This is a quick look at rising sea level and the opportunity it creates for Greater Hartford.

Rising Sea Level

The most recent consensus report on climate change (AR5) was issued in 2014 by the Intergovernmental Panel on Climate Change. The report concluded that humans have influenced climate change, and that recent climate changes have had an impact on humans. Since so many major cities are on the coast, serving as home to such a high percentage of the world’s population, an increase in sea level is of concern.

Sea level is rising for two primary reasons, both of which are related to warmer air temperatures as greenhouse gases trap more and more of the sun’s heat in the atmosphere. Warmer air melts land ice, and much of the resulting water eventually makes its way into the oceans. Warmer air also warms ocean water, which in turn causes the water to expand.

Scientists have measured a 3.4 inch increase in sea level since satellites began to collect data in 1993. Before the satellites came online, scientists tracked sea level using tidal gauge records, which showed that sea level has been rising since at least the beginning of the 1870s, and is about 9.8 inches higher than it was when observations began (data source: NASA).

The consensus projections when AR5 was published in 2014 were that sea level is likely to rise between 15 and 24 inches by the year 2100, depending on our ability to limit the future release of greenhouse gases. The highest potential sea level rise by 2100 that AR5 reported was nearly 36 inches if no progress in limiting greenhouse gases is achieved. (source: AR5, see Figure SPM.6(b) on page 11 of the Summary for Policymakers)

Since AR5 projections were released, new scientific studies have reported that land ice is melting faster than expected, and that existing estimates of sea level rise may be too conservative. The additional melting has been observed on portions of Greenland and Antarctica that most actively interact with the ocean.

As a point of reference, scientists estimate that there is enough ice on Greenland to raise sea level by about 20 feet. Antarctica contains enough ice to raise sea level by about 200 feet. Fortunately, neither the Greenland nor the Antarctic ice sheets are expected to completely melt during the next century, even if we do everything wrong in managing the environment. But it does show that increases of sea level of more than the 36 inches contemplated in AR5 are definitely possible. And if the new peer reviewed studies are taken at face value, higher increases are now considered likely.

Sea Level in the United States

The baseline assumption about sea level rising two feet poses challenges to numerous US regions, before even considering that the two additional feet of water may arrive sooner than expected. The pace of profile articles has increased in recent years, as more regions see the impact of the current water line.

Florida faces a considerable amount of risk because of its low average elevation and because most of the population is on the coast. Miami gets profiled frequently because they already experience regular tidal flooding in some neighborhoods. Storm surge from periodic hurricanes make the situation worse. There was an article at the end of 2017 describing “climate gentrification” in which money was flowing into a historically low income neighborhood, and pushing out long-time residents, because its average elevation of 11 feet above sea level made it less prone to flooding and an attractive investment opportunity. An article from May 2017 covered the same themes from a different perspective.

The Louisiana Gulf Coast was recently profiled in the New York Times. The series cited a USGS report that found the state lost 2,000 square miles of coastal wetlands to rising seas since 1932, which is about the size of the entire state of Delaware. New Orleans, much of which is below current sea level, is protected by a flood control system that failed during hurricane Katrina in 2005, and was reported to be in poor repair last fall as hurricane Harvey threatened.

New York City is surrounded by water, and likely has the most valuable collection of real estate in the entire country. Flooding has become more common in the City, which is highly dependent on the subterranean public transportation system.

Boston is on the water too, and a significant amount of its land was created by filling in the harbor. Its important infrastructure includes a partially underground subway, the highways of the Big Dig, and an airport on reclaimed land. The brand new Fan Pier neighborhood flooded twice so far this year during nor’easters, prompting Governor Baker to announce plans to file legislation to address climate change.

Risks associated with rising sea levels are not new to any of these coastal regions. The Miami-Dade County Sea Level Rise Task Force issued a report in 2014 with specific recommendations. The Task Force felt that the region needed to “reinvent our urban infrastructure.”

The New York State Sea Level Rise Task Force issued a report to the State Legislature at the end of 2010. It contemplated sea level rising by as much as 55 inches by 2100, and warned of infrastructure damage as areas flood more frequently during storms. New York City has their own report and plan, which is being updated at the time this article was published. A previous version of plaNYC included an interactive flood mapping tool to show the expected extent of high tides and flood plains in the 2020s, 2050s, 2080s, and 2100. They appeared to be expecting 36 inches of sea level rise by the end of the century, versus the 55 inches in the State’s Task Force report.

The State of Massachusetts is actively working on a State Hazard Mitigation and Climate Adaptation Plan that builds on a 2013 Plan. They have an updated draft risk assessment out, and are working on strategies and action items. Their analysis for sea level rise is that the median (most likely) increase in Boston will be 2.3 to 3.0 feet by 2100, with the increase unlikely to exceed 8.2 to 9.7 feet.

Although sea level rise is the only threat we’re discussing today, there are other environmental effects that will be caused by climate change. A partial list includes changes to temperature and precipitation patterns, increases in severe storms, and new flora and fauna.

Hartford’s Climate Advantage

Hartford has an advantage over many other regions, particularly with respect to sea level change. We are not on the coast, so rising sea level and tidal flooding will have a modest direct impact on us. However, the state does have a meaningful amount of shoreline, and Connecticut’s leaders need to think carefully about how we plan for the coming environmental changes.

The normal water level of the Connecticut River in Hartford already varies based on the tides in Long Island Sound. When writing this portion of the story, the gauge Downtown showed water levels of about 4 feet above sea level during low tide and a little over 5 feet above sea level during high tides.

As a point of reference, the basic flood categories for the river in Greater Hartford are Action Stage at 12 feet, Flood Stage at 16 feet, Moderate Flood Stage at 24 feet, and Major Flood Stage at 28 feet. It’s common for the river to crest at levels in the upper teens. Main Street in Downtown Hartford is at about 50 feet of elevation.

Taking a step back, it is clear that rising sea level will impact the region and the State. Adding 5+ feet of water in Long Island Sound will create new challenges in Hartford, particularly when the river crests, but the challenges will be very different than those faced by coastal cities.

We encourage readers to ask what your organizations are doing to prepare for rising sea levels. We want the region to be thoroughly prepared, within the various levels of government, within the private sector, and within the non-profits.

Despite the challenges Greater Hartford will face, our region does have a strategic advantage. Greater Hartford has a capacity to add population in locations that are safe from the threat of rising sea level. Said another way, Greater Hartford offers an investment opportunity for residents and businesses. Those investments might be expansions or relocations, as people reconsider their investments in areas that will be impacted by rising sea level.

Even the indirect impacts can be scary. For example, what is the State of Massachusetts going to do as Greater Boston and the Cape are directly threatened by rising sea level? Will they invest in sea water defenses and try to preserve all of their coastal infrastructure? Or will they abandon the coast (e.g. Logan) and rebuild further inland? Both options sound very expensive for the State’s taxpayers, who will be on the hook for some big ticket items.

Greater Hartford needs to address rising sea level in our long term planning. If we can limit the risks (State expenses) on our own shoreline, and prepare our regional infrastructure, then we will have a compelling story to tell about our future as the sea level rises.