Is Money Less Green in Hartford?

I’m perplexed. It appears that money available to be earned in Hartford is less valuable than money that can be earned in West Hartford. Even though that goes against the basic idea that a dollar is a dollar.

We have a 2-unit building for sale in Hartford that is quite close to the West Hartford town line. For those interested in the specifics, it’s at 307 New Park Avenue, which is across the street from the movie theater and just south of I84.

307-309 New Park Ave, Hartford

That location is not closely linked to any Hartford neighborhood. In fact, the closest residential enclave to the homes on this triangle of land is in West Hartford.

What confuses me is that investor buyers aggressively pursue properties in West Hartford, but they don’t seem interested in a building a block away that is similar in layout and vintage, and has better economics.

Only four 2-unit buildings sold south of the highway in West Hartford over the past year. The table below compares those buildings to our listing.

2019-01-29 Comparing Two-Unit Deals

Rental income is not available for all the properties on the list. However, the actual rent our listing generates is in line with two properties that sold in the $260,000s. We’re only asking $209,900 … and our property taxes are much lower. Our listing has the most favorable ratio of income to expenses, by a long shot.

Why the big difference in value?

It could be that the buildings have different attractiveness to owner-occupants, but most West Hartford buildings are purchased as investments. So the buyer is unlikely to live in any of these properties.

The tenants pay their own utilities in our listing, so that’s not a hidden expense to the investor owner that is holding back our price.

The condition of the property is fine, so it’s not like we’re marketing a place in poor shape. Tenants generally ensure that the rent they pay reflects the condition anyway, and we know the rents.

Investments in the Hartford multi-family market have even shown better appreciation over the past few years. Median prices increased 32% compared to 4%.

2019-01-29 Two-Unit Deals in West Hartford versus Hartford

It is interesting to note that our $209,900 asking is a lower price than any West Hartford 2-unit building sold for since 2016.

I must be missing something in this analysis…
A.) The building is barely outside of West Hartford.
B.) Actual tenants pay strong monthly rents and utilities.
C.) Market appreciation has been strong in Hartford.

There is money to be made by operating 307 New Park Avenue as an investment property. More money than buying a similar vintage 2-unit building a block away in West Hartford.

Is money less green in Hartford?

Note: All data is from the CTMLS, and deemed reliable but not guaranteed. It represents multi-unit properties marketed as 2-unit buildings. One West Hartford property that was a commercial use simultaneously marketed as a 2-unit was removed from the data set.

2018 Condo Sales: Steady Market

2019-01-21 Hartford County Condo Sales

Hartford County condominiums maintained their pace of sales in 2018. The deal count increased by 2 properties from 2017 to finish with a total of 2,204 sales.

2019-01-21 Hartford County Condo Prices

The median condo sales price increased by 2% from the previous year, reaching $153,000. The positive direction was the first meaningful step upwards for the median price in a decade.

One of the reasons for the long-term downward trend in the median price is that developers have sold fewer “New Construction” condos in the current decade. The chart below shows that there was a wave of new properties built in the previous decade. Those new units, which represented more than 15% of the total number of deals in 2006, played an important role in pushing up the median price.

2019-01-21 Hartford County New Construction Condo Sales

The uptick in median price, and the level deal count, resulted in a reasonably steady distribution of sales by price band.

2019-01-21 Hartford County Condo Sales by Price Band

Finally, here is the breakdown of the number of deals and median prices by town. Condominiums are distributed throughout the County, so a number of towns have active condo markets.

2019-01-21 Hartford County Condominium Sales in 2018 by Town

Don’t hesitate to ask us your condominium questions. We’re experienced agents who are active the local condo market. How can we help you?

Strong 2018 Hartford County Single-Family Sales

Hartford County finished 2018 with a closed deal count in the mid-8,000s for single-family homes for the third year in a row.

2019-01-04 Hartford County Single Family Sales

Median single-family homes prices increased by 4.5% from $220,000 to $230,000. Average single-family home prices also increased, though by a smaller percentage.

2019-01-04 Hartford County Single Family Prices

Breaking the number of sales down by price band, we can see that number of deals at prices below $200,000 decreased, while the number of deals in the middle price bands increased.

2019-01-04 Hartford County Single Family Sales by Price Band

All of these observations are positive for the real estate market. Deal count is holding steady near the high points established in the early 2000s. Prices are rising as measured by both common valuation metrics. The decreasing number of deals at the lower price points are a result of the rising prices – properties moved up into the next price band.

Most interesting is that the market is behaving similarly to the first few years of the 2000s. The data shows stable deal count with upward pressure on prices. Price increases were driven by strength at the low end of the market, which represents the majority of Greater Hartford’s housing stock.

This year’s market checkup shows a healthy real estate market without any significant warning signs.

2017 Hartford County Single-Family Sales Data

Hartford County finished 2017 with a slight increase in the number of single-family home sales compared to 2016. The total in the Connecticut MLS database as of 1/4/2018 was 8,649, or 1.6% higher than the previous year. Although there wasn’t significant growth in market activity, the deal total for the year remained close to the 2005 peak, signifying strong overall demand.

2018-01-07 Hartford County Single Family Sales

Looking at the trend in pricing, the chart below shows that both the average and median sales price fell in 2017 compared to 2016. There has been little progress in pricing for years, with both metrics just below the 2009 result, and well off the 2007 peak.

2018-01-07 Hartford County Single Family Prices

Pricing results are not uniformly bad, despite the middling numbers, but it is difficult to see the bright spots when reducing the entire market to a single data point. Additionally, the decrease in the average and median prices is a bit misleading, as will be discussed below.

Lower price bands showed a strong increase in activity over the past few years. Most of the housing stock in the region is worth between $100,000 and $300,000. In 2017 those deals represented nearly 65% of all sales. Those are the price bands that experienced consistent buyer interest and rising prices. The upper end of the market continues to struggle with low demand and downward pressure on prices.

2018-01-07 Hartford County Single Family Sales by Price Band

Distressed sales are a meaningful part of the Greater Hartford market. The percentage of single-family homes sales that were either foreclosures (bank owned) or short-sales (seller owed more than mortgage) remained steady at just over 13%. Most of the deals that closed for less than $100k were distressed (456 out of 652, or 70%), though more than half of the distressed deals closed for more than $100k.

Differences in buyer demand at the various price points have been evident for years. 2017 continued the trend of strength at the low end and weakness at the high end.

It appears that average and median prices decreased because of how those numbers are calculated rather than because of buyers bidding less. In 2017 the number of buyers for low end homes increased versus 2016, while the number of buyers for high end homes decreased. The mix of sold homes changed. Therefore, when the average and median prices were calculated, the mix of sales ($200,000 deals vs $500,000 deals) forced the overall average and median prices down.

Prices fell for technical reasons, not because individual homes are necessarily worth less than they were last year (though some are worth less). The big picture takeaway is that headline numbers like median sales price can’t always be trusted. It is important to get into the numbers to understand the details.

We’re looking forward to seeing what 2018 brings. As always, we are happy to answer questions for folks who would like more information.

2016 Single-Family Sales by Town

The other day I posted the County level stats for sales activity and pricing. The big picture view gives a good sense of high level trends, but doesn’t provide much insight into the markets of individual towns. The reality of Greater Hartford real estate is that each town is its own market, and there can be very different dynamics at play.

Here is a summary chart showing the activity and price changes in each of Hartford County’s towns. This continues to be for single-family homes, which represent the majority of the housing stock in most towns.

2017-01-06 Hartford County Single Family Sales in 2016 by Town

How did your town do last year? If you’re interested, send me a quick note at KyleB@KyleB-RE.com and I can send you our town report to get deeper into the data.