Most of the time the subject comes up as I’m touring around with a buyer and trying to cover various home buying subjects as we drive from one property to the next. My client will casually ask about taxes, expecting an answer along the lines of “They’re low/high compared to other towns.” In most towns I can give an answer like that, and then also talk about where that town is in the revaluation process.

When we’re touring Hartford, my answer is usually, “They’re complicated; would you like the short version or the long version?” To their credit, most buyers seem to ask for the long version. They want to know how it works, and what possibilities exist in the future. After all, they’re going to be on the hook for making the tax payments if they buy a house in the City. And as their agent, I feel it’s my responsibility to make sure my buyers have all the information they need to make an informed decision.

I’ve spent a considerable amount of time trying to understand exactly how the taxes work in Hartford.

I’ve talked to the City Assessor and various staff members to work through the details of the current system at different points of time. I’ve talked to our elected officials at both the City and State level to hear the arguments for why they have advocated for different implementations. I’ve sat in on presentations and negotiations between different constituency groups as they hash out a forward looking plan.

Despite all this effort, I still cannot neatly summarize property taxes in the City of Hartford for someone with basic municipal property tax knowledge. It’s just too complicated. I can’t even build a spreadsheet/model that will predict the coming year’s taxes based on an expected City budget. There are too many moving parts.

The best I can do is create a resource, so that those interested in learning about how property taxes work in the City of Hartford have a central place to go for information. I’ve made an effort to summarize as best I can, and I’ve also collected and sorted links to over 50 articles, presentations, and videos on the subject dating back to 2006.

The City of Hartford: Property Taxes page is a work in progress, and I definitely appreciate feedback and comments on how to make it more helpful, more accurate, and generally better.

The data shows a 13% decrease in the total number of contracts from the second quarter of 2010. However, looking more closely at the individual months, we can see that 2011 showed very steady performance – about 150 deals came together in each of the three months. The comparison to 2010 is tricky because of the federal home buyer tax credit. Last year there was a huge surge of activity in April 2010 followed by two much quieter months to round out the quarter.

More concerning is the lack of a meaningful bump in overall activity during the spring 2011 months. The 2009 market showed more traditional seasonality, which gives a sense that 2011 spent the second quarter of the year headed in the wrong direction.

Looking at the numbers for the individual towns, sorted by total Q2 2011 contracts, we can see that performance is all over the map. Some of the towns near the top of the list (towns with more condos in their housing stock) performed pretty well – Farmington and Enfield were more active than last year, while South Windsor was basically flat. Other towns with lots of condo communities struggled to match last year’s totals, showing declines of up to 40% in the number of contracts.

Inventory levels continue to increase, which is another important indicator of the direction of the market. As of this past weekend, it would take more than 10 months to work through the inventory currently on the market.

All of the data clearly points to an opportunity for buyers. The elevated inventory means that there are lots of properties to tour, and to choose from. The lack of a real increase in contract activity through the spring months shows that, for whatever reason, condos just aren’t as popular these days. Mortgage rates continue to be quite attractive, and loans are available for those with good credit and reasonable debt loads.

Renting? It may make sense to run the numbers to see if this is the right opportunity to become a homeowner.

Curious about investment properties? Being a landlord for a condo is a little bit easier than managing a multi-family or other type of property. It’s still a big commitment, but there are fewer things you’re directly responsible for as the landlord of a condo.

We would be happy to talk about any situation, and have personal experience going through both of these scenarios ourselves, in addition to helping others understand and work through them.

Phasing In Market Values
We tried to keep things simple last time, focusing on the basic revaluation process and timeline. This required leaving out an important detail about how the 2006 revaluation was implemented. When the updated Market Values were released in the fall of 2006, residents learned that property values had increased dramatically since the previous revaluation in 1999. Rising property values are usually a good thing for owners, since it increases the equity in their home. However, this time there was a catch.

The revaluation found that residential property increased in value more than commercial property, which meant that homeowners would pay higher taxes as they collectively took over some of the tax burden from commercial property owners. In addition, residential property appreciation varied by house, which meant that homeowners with the largest gains in home value would see an even larger increase in property taxes.

West Hartford decided to use a Phase-In to more gradually transition to the new Market Values. Phase-Ins are relatively common, and increase the taxable market value of a property in stages so that owners with the biggest gains in property value aren’t hit with large tax increases all at once.

The Town allowed taxable values to increase by a maximum of 25% in the first year. Since nearly all homes had appreciated by more than 25%, the remaining change in Market Value was distributed equally to years 2 – 5 of the phase-in. By Grand List 2011, everyone would be taxed based on their 2006 Market Value.

Freezing the Phase-In
Public concern about the revaluation grew over the first two years, and focused on two main points. First, that the October 2006 revaluation date may have been the peak of the market. Some argued that the values were unfair because homes couldn’t be sold at those prices less than two years after they were set. The second concern was that homeowners were being taxed on unrealized gains. Owners didn’t have any extra money in their pockets from their home’s appreciation, so how could they afford to pay their increased taxes without selling their home? The argument typically used long-time residents who were on a fixed income as examples. The Town Council voted to freeze the phase-in after the second year, locking in the Grand List 2007 values.

Many of the effects of freezing the phase-in were correctly identified in real time at public meetings. Residential property had increased in value more than commercial property, so freezing the phase-in shifted more tax burden to businesses, which were struggling with a weakened economy. It also shifted more of the burden to motor vehicle owners. Finally, homes with less than average appreciation ended up paying more taxes than they otherwise would have, while homes with more than average appreciation paid less than they otherwise would have.

In the two years since the freeze was implemented, we’ve learned even more about the effects. One of the most interesting is that the revaluation was not done at the peak of the market. Average prices continued to rise through 2007 even though the number of transactions was already falling. Although we didn’t publish the chart, the trend was similar in West Hartford. Additionally, the decline in prices over the subsequent down years has not been nearly as steep in West Hartford as it has in other areas of the region or the country. The value of many homes continues to be fairly close to the numbers identified in the 2006 revaluation.

As a specific example, consider a very typical 3 bedroom, 1.5 bath home in West Hartford Center. The 1999 revaluation set the Market Value at $148,600. Revaluation 2006 determined that it had appreciated to $280,286. The property had sold a couple years before for about that price, so in this case the Assessor did pretty well.

Revaluation 2011 will likely show that its Market Value has not changed dramatically. This particular home was recently listed for sale again, at right around $300,000, and went under contract very quickly, as most do in this price range. However, because the phase-in was frozen, the home is on the tax roles as being worth $209,384.

Analysis of Grand List data from the Assessor’s office shows that had the Phase-In been completed as planned, the mill rate for the coming year would be about 32.65 rather than 39.44. We calculated this number by removing the Phase-In Exemptions from the assessed values and then allowing the mill rate to decrease until the property tax revenue equaled what the Town expects to raise in the coming year. Our estimated mill rate may not be exactly right, but it’s close.

Planning for the Fall
Owners are in a similar position as 2006 when looking towards the 2011 revaluation. Within the residential side of the Grand List there are large variations in how home prices differ from the frozen phase-in values. Changes to the commercial side of the Grand List, which makes up 16.4% of property values in town, are also uncertain. It is difficult to project how the tax burden may shift. It seems prudent to wait until the fall to understand exactly where we stand before getting too concerned about different possibilities.

In the meantime, residents need to understand a few key points. The revaluation will begin to go public in the fall, and individual home owners will have an opportunity to challenge their Market Values. There will hopefully be a public discussion about how to transition to the new Market Values. Finally, if the Phase-In had been completed (rather than being frozen), the order-of-magnitude tax impact on owners would have been in the +5% to +10% range, though it would have varied considerably based on the assessment of individual homes.

The first floor features a combination living room and dining room that opens to the kitchen. Hardwood floors, crown molding, fireplace, and French doors add to the character of the space. The oversized, eat-in kitchen has more than enough room for cooking and storage, with a breakfast area at the far end. A traditional foyer and updated powder room complete the level.

Upstairs, the spacious master suite includes a bay window, fireplace, walk-in closet, and full bath with dual vanity, shower stall, and whirlpool tub. The two additional bedrooms both have good closet space. The second level also includes a hall bathroom and laundry area.

The fully finished lower level of the townhouse contains a large media room with built-in surround sound and a second smaller room perfect for play space or a popcorn popper.

The unit has an attached 2 car garage, and the complex is built around a large center green that is lightly treed and makes for a nice public space.

17 Harwich Lane is offered at $324,900. If you’d like to see this home, please have your agent arrange a showing, or call me at 860-655-2922 to schedule a visit. More details and a photo tour are available.

Despite the relatively high inventory levels, the supply is not always distributed in the same manner as the demand. Some complexes have a lot of units for sale with very little apparent interest, while other communities that are perennial favorites with buyers have maybe one or two available.

The most curious data point in the whole table is the number of contracts in South Windsor. There are a lot of condo communities in town, and South Windsor is usually one of the leaders in terms of total annual deals. Last year there were 106, while in the year before there were 110. This year has been a completely different story. There were only 4 in January, and just 2 in February.

Their inventory number is actually quite reasonable, at 6.2 months – a much more balanced market than some of the towns that are strongly favoring buyers. Scanning through the active listings, most of the big South Windsor communities do have a couple of units available, but not as many as in the past year. As a specific example, one complex had 14 closings since 1/1/2010 and currently has 2 active listings and 1 under contract. Is the huge drop in activity a supply problem, a demand problem, or a mismatch of the two?

It’s not yet clear what is going to happen in the condo markets this year. As the chart below shows, the number of transactions has been considerably lower in the past few years. The first two months of this year point to an even slower 2011 than 2010. Are the buyers simply waiting until the weather improves before they get serious about their search? More listings will appear as April approaches, but will owners look to sell their units at the same pace as they have in previous years?

Events & Activities

Knox Parks Foundation is throwing a Tropical Party in their Laurel Street greenhouse this Friday, March 11th, from 6:00pm to 10:00pm. Word on the street is that they’re bringing in some parrots from the Beardsley Zoo. Go check out the birds, music, and general good times in this benefit event – tickets are $20.

The annual Hartford St. Patrick’s Day Parade will be held Downtown this Saturday, March 12th. The event kicks off at 11:00am from the Capital Avenue side of the State Capitol building. From there it loops past the Old State House before finishing near the Memorial Arch. Free parking is available at the Morgan Street garage for the day, and they’re also throwing in a $20 20% off dining voucher to encourage folks to come back for a meal on the 17th.

Finally, college basketball conference tournaments continue throughout the week, leading up to the NCAA Tournament Selection show/event/spectacle on Sunday evening. It’s the height of the bubble season! Are you on the bubble? ESPN considers the UConn men to be “locks” for the Big Dance, and one of a staggering 10 Big East teams they believe have tournament invitations wrapped up. Sadly, my Demon Deacons are not even on the bubble this year after turning in a 1-15 conference record in the weak ACC (only 2 ranked teams?!?).

Open Houses

10 Walbridge Road, West Hartford, $559,000, Sun 1:00 to 3:00
Located on one of West Hartford’s most desirable streets, this grand home has all the wonderful architectural details of the early 20th century. The living room (photo above) is amazingly comfortable with a brick fireplace, a built-in bookcase, and french doors out to the 3 season room with southern exposure. I took a quick break there during yesterday’s open house for agents and almost didn’t leave. It’s just a really great space. Interesting without being too ornate or fussy. Spacious, yet still intimate. And that’s just the living room! There are plenty of other great rooms in the home to discover. It has 6 bedrooms and 3.5 baths over 3,171 sqft. More details and a photo tour are available.

791 Prospect Ave #B3, West Hartford, $305,000, Sun 1:00 to 3:00
For a maintenance-free living experience, this large condo is packed with amenities. The main living space is large and bright, and takes advantage of its position on the corner of the building. The master suite has a huge bedroom, separate office/study, multiple walk-in closets, and of course a full bath. There are great details like a marble floored entry, hardwood floors through the kitchen and main living area, laundry in the unit, elevator access, and parking in the heated garage under the building. Like to swim, or maybe just read in the sun? Check out the pool or your private balcony. And if that’s not enough, step through the private gate into world-renowned Elizabeth Park. The unit has 2 bedrooms and 2 baths over 1,826 sqft. More details and a photo tour are available.

What Else?

Send Kyle (KyleB@KyleB-RE.com) a quick note if you know of other events we should include … thanks!

Events & Activities

Flower Show, CT Convention Center, Thu 2/24 through Sun 2/27
Think spring with the 30th annual Connecticut Flower Show at the Convention Center this weekend. In addition to the usual displays and exhibits, there are also lots of seminars available at the show. We also see that the UCONN Co-op is offering free soil testing at their booth, if you can manager to get a half cup of dirt out of the ground…

Concora & Hartford Symphony Perform Bach, Sun 2/27 at 4:00
One of our clients will be participating in a week-long choral event that culminates with Concora’s collaboration with the Hartford Symphony. The concert will be held at the Immanuel Congregational Church in Hartford, check out the Concora website for more information. Have fun, Marion!

Academy Awards, Sun 2/27 at 8:30
Awards season for the beautiful people wraps up on Sunday evening with the Oscars. As usual, they’ll have a little something for everyone. The red carpet with all the dramatic fashions and even more dramatic fashion critics. The biggest stars and their entourages filling the Kodak Theatre. And bringing it all together on stage will be co-hosts James Franco and Anne Hathaway.

Open Houses

38 Goodwin Circle, Hartford, $489,900, Sun 2/27 from 1:00 to 3:00
Start your Sunday afternoon by touring a fantastic condo in the Elizabeth Park area. This large townhouse-style home was built in 2005 and still has that new construction feel. The main level has a large open living area that encompasses the living room, dining room, eat-in kitchen, and even extends out to a deck overlooking woodlands. A large family room awaits downstairs in the fully-finished walk-out lower level. Upstairs, the master suite features a bedroom with sitting area, walk-in closet, private loft, and oversized ensuite bath with whirlpool tub. 3 bedrooms, 3.5 baths, 3,164 sqft, central air, attached 2 car garage. More details and a photo tour are available.

What Else?

Send Kyle (KyleB@KyleB-RE.com) a quick note if you know of other events we should include … thanks!

Buyers and sellers successfully negotiated contracts on 103 Hartford County condominiums in January. The table shows the results by town, and sorts it based on the number of deals. There are some surprising results in the data, both in terms of the number of sales and the change from last year.

Some towns have more condos than others – it’s just the way the housing stock was built in those areas. What’s interesting about the January result is that some of the towns with the most condos had relatively few deals. South Windsor has numerous condo complexes and is routinely at the top of the list in terms of the number of deals. This month they only had 4, which was well off last year’s count of 12. Rocky Hill is another town with an active condo market that got off to a slow start.

The other important stat is inventory. We ran the calculation using the current number of listings and the total number of contracts over the past 12 months. This is how we always do it so that we can minimize the impact of seasonality. Since we believe that the number of deals last year is artificially high (because of the tax credit), then that’s going to make the inventory look lower than it really is. Inventory is also often at a seasonal low in January. The spring market hasn’t quite kicked in, and sellers have not yet listed their properties.

With those two points in mind, the current inventory is concerning. The County is going into the spring with more than 8 months of inventory, which is already well into “Buyer’s Market” territory (more than 6 months). We’ll keep a close eye on this in the coming months and expect a large jump in the calculation in May once the tax credit deals are more than 12 months in the past.

2010 got off to a quick start, with buyers out shopping early. The number of contracts written trended ahead of 2009 for the first four months, spiking in April as the Federal Home Buyer Tax Credit expired. After that, the activity level was rather low and did not exhibit the traditional market seasonality. The number of total contracts was down about 10% for the year.

Looking at stats for the individual towns, we can see that it was a mixed bag.

Nearly all towns in the County have at least some condos, though certain towns have a much larger supply than others. This chart doesn’t show it, but the price points often vary between towns. Buyers looking at higher price points will have different towns available to them than buyers looking a lower price points, and vice versa. There are also still some new construction projects available, if that is a priority.

Although most of the towns showed a decrease in the number of contracts written for the year, the change in contract number varied widely. Five towns actually saw an increase during 2010. West Hartford jumped all the way from the eighth largest condo market in 2009 to number one in 2010 as all of the towns ahead of it experienced a slowdown in their markets.

Over the past two years it has consistently taken about 90 days to sell a condominium in Hartford County. Sellers need to be aware that the sales process could take a few months so that an extended time on market can be factored into their planning. Keep in mind that the days on market stat counts the time from when a property is listed until it goes under contract, so the seller will still own the home for another 45 to 60 days as the buyer goes through their inspections and secures their mortgage.

Condominiums are an important part of the Greater Hartford real estate market. There are not nearly as many available as single family homes, and they are distributed differently throughout the County. We’ll do regular posts tracking the condo market and see how it evolves during 2011.

Events & Activities

CMTA Hartford Boat Show, CT Convention Center, Fri 1/28 to Sun 1/30
I’m sensing a bit of a theme in the January events at the Connecticut Convention Center … big toys! Last week they had the RVs, and this week it’s boats. If only it was followed by cars and electronics in the coming weeks (it’s not). Being a land-lover, the boat show isn’t high on my priority list, but I know lots of people who love both sailing and fishing. Might be worth checking out. Get $2 off the $12 adult admission (kids 12 and under are free) using the coupon on the event website.

Canton Barn Saturday Auction, Sat 1/29 at 7:30, Free
This week is as good as any to mention the Canton Barn’s weekly Saturday night auction. We would highly recommend checking this place out if you are in the process of furnishing or decorating a house. We’ve attended on a number of occasions, bought a bunch of stuff, and have been impressed with how reasonable prices can be for larger items. For example, we still regret buying our dining room set new when we could have found a table and chairs with more character for a fraction of the price at the Canton Barn. Doors open at 5:00 so you can inspect the items up for bid, and the actual auction starts at 7:30. They cook burgers and ‘dogs on the grill out back and have an impressive assortment of pies. Arrive a little early, put a cushion on your chair, check out the merchandise, grab some pie, and enjoy the event. The Canton Barn is smoke-free, alcohol-free, and cellphone-free. Once the auction begins it is also adult-only. There is no buyer’s premium or reserve bid, they accept cash and checks only – no credit cards – so plan accordingly.

Open Houses

For those who are looking for a new home but aren’t all that keen on this January’s shovel-palooza, we have the perfect solution … condos! This week we have two fantastic condos open for your inspection, both very centrally located in Greater Hartford and in the vicinity of Elizabeth Park.

791 Prospect Ave #B3, West Hartford, $305,000, 1/30/2011 from 1:00 to 3:00
The Grosvenor House complex in West Hartford is adjacent to the Elizabeth Park Rose Garden. Unit B3 is a modern, bright, and spacious ranch style condo with all the amenities. A spacious entry opens to the large combined living and dining rooms that serve as the heart of the home. The updated eat-in kitchen is fully applianced, and has plenty of storage. A secluded master bedroom suite features a large bedroom, private office, multiple walk-in closets and a full bath. A second bedroom and second full bath complete the home. The condo also has garage parking, elevator access, a private balcony, in-unit laundry, central air, storage unit, and totals 1,826 square feet. More details and a photo tour are available.

38 Goodwin Circle, Hartford, $489,900, 1/30/2011 from 1:00 to 3:00
The Goodwin Estate is a relatively new complex in Hartford’s West End. Built in the mid 2000s, the complex has the new construction look and amenities. Unit 38 is an end unit that backs to the woods. It is a townhouse style, with large open living room and dining room and fully appointed kitchen with maple cabinetry, granite counters, and stainless appliances. The walkout lower level is fully finished as a large family room with full bath. Upstairs is a master suite featuring private loft, walk-in closet, and large bath with Jacuzzi tub. Two additional baths and a full bath complete the upper level. The condo also has an attached 2 car garage, private deck, in-unit laundry, central air, and totals 3,164 square feet. More details and a photo tour are available.

What Else?

Send Kyle (KyleB@KyleB-RE.com) a quick note if you know of other events we should include … thanks!