Distress in the 2011 Hartford County Market

Distress in 2011 Hartford County Real Estate Market

Our local MLS added two fields to denote distressed sales back in 2008. As with most new things, the fields were not immediately and uniformly adopted by the thousands of individual agents in the area. Now that they are widely used, we can begin to look at the level of distress in our local markets using the CTMLS database.

At the big picture level, it appears that distressed single-family homes and condominiums sales represented about the same percentage of total deals in 2011 – approximately 1 in 7. Multi-family sales were much more likely to be distressed – nearly 1 in 2.

The percentage of distressed sales was highest across all property types in the more urban towns of Hartford, New Britain, East Hartford and Bristol. Their total percentage of distressed sales was inflated because those are the towns with the most multi-family properties, but in general those towns had the highest levels of single-family and condominium distress too. Bloomfield had the second highest percentage of single-family distress, but a below average percentage of condominium distress and very few multi-family sales during the year.

Although this chart incorporates a lot of information, it only scratches the surface. We’re excited to have all this data available and will continue to look for other interesting questions that it may be able to address.

West Hartford Taxes

It’s budget season in Greater Hartford, which is always a contentious time for property owners since it is often the first sign of rising taxes. West Hartford has a double dose of uncertainty as the Town works to figure out both the size of the budget and the implementation of the recently completed revaluation.

West Hartford Town Hall

I attended the first of two public budget hearings on Tuesday afternoon in the Town’s Legislative Chambers. Since it seemed like the Town Council was looking for input on the budget side of things, I decided not to share thoughts on the revaluation side of the equation.

Nearly all of the Town Council members were able to attend the 2:00pm session in person, which was quite impressive. The Town also put together a four page summary of the proposed budget that includes prose descriptions in addition to the financials. There is a lot of information available on the Town’s Proposed Budget web page, though I don’t see that specific summary document.

The hearing had an audience of about 20, and the only item on the agenda was listening to public comment. Seven of the attendees took a turn at the podium to share their views on a range of budget-related issues. Of the speakers, I would characterize five as expressing various levels of opposition, one as neutral with concerns, and one as supportive with concerns.

The level of Town employee benefits was cited as a specific concern by nearly all the speakers, even the one supporting the proposed budget. Most presented the issue as a long-term challenge that threatens the Town over the coming decades. Top Gun fan George Kennedy, President of the West Hartford Taxpayers Association put it this way, “The Town is writing checks that our bodies can’t cash.” One person cited specific benefits that they felt were out of line with the “real world” of the private sector. And another person worried about a future financial situation in which it wouldn’t be possible to raise taxes enough to fund Town operations, the school system and the retirement benefits liability – that West Hartford would eventually face bankruptcy like other towns and cities around the country.

The second theme of the public remarks was that the distribution of the tax burden and the assessment process were not working properly. One speaker, a local real estate agent, noted that the town has square footage wrong on many properties and too few people challenge their assessments. Another argued that the Town Assessor had kept the Market Value of that homeowners’ property unfairly high while other nearby homeowners saw more meaningful reductions in their Market Values since 2006. Another speaker criticized the decision to implement the new values all at once since his taxes are projected to increase by 24%. Finally, the assertion was made that the citizenry supporting the budget don’t pay the majority of the taxes (Note that this statement was not supported, and I would love to see the data that does back it up).

It was interesting that of the seven speakers at the public hearing, four of the homeowners are projected to have higher taxes while the other three are projected to have a lower tax bill. The lone individual speaking in favor of the proposed budget did so despite facing a 16% tax increase.

It is also apparent that the overall level of the budget is more of a concern than the tax allocation system. We reviewed the Town Assessor’s 2011 Market Values for each of the seven homeowners and did not see any obvious errors. There are questionable 2011 Market Values out there, but that’s what the assessment appeals process is for, and the values for these homeowners seemed reasonable.

Taking this a step further, the proposed budget calls for taxes of just over 2.5% of Market Value. A home worth $300,000 should pay property taxes of:

($300,000 market value) x (70% assessment ratio) x (35.92 mill rate) = $7,543.20

which is basically $2,500 per $100,000 of property value.

 

Those who would like to share their views on the proposed budget will have an opportunity in a couple weeks. There will be a second Public Hearing on Monday, April 9th, 2012 at 6:00pm in Room 314 of Town Hall. Please see the Town’s Proposed Budget web page for more information and the tax calculator.

 

Related Posts:
West Hartford: Proposed Town Budget
West Hartford Revaluation 2011 – Mill Rate Estimate
West Hartford Revaluation 2011 – Informal Hearings
West Hartford Revaluation
West Hartford Revaluation, Part II
Property Taxes and Revaluations

2011 Average Prices and Sales Mix

Warning: What follows is quite dorktacular. You have been warned.

Last week we looked at the really big picture transactions data for Hartford County in 2011. The main concern we had with how the numbers turned out was that the average single-family home price appeared to rise slightly from 2010 to 2011, which was not what we saw in the market on a house by house basis.

There is no easy way to track the price trends in a region because every house is unique. Repeat sales is the best method I know of, but it’s too hard for us to use. Anyway, we were talking averages in the post. Our hypothesis as to why the average might be misleading in this case is that averages can be influenced by a change in the mix of homes that sold between the two years. They are especially susceptible to sales of expensive homes since one million dollar property contributes as much to the total sales volume as five $200,000 homes.

The first step we took to test our hypothesis was to look at how the mix of sales changed between the two years.

Hartford County Single-Family Sales by Price Band

The chart shows that the number of sales increased in the sub-$100,000 price band and also in all three price bands above $500,000. It also shows that the $100,000s remained almost exactly the same. Finally, the number of deals in the $200,000s fell by about 20%, while both the $300,000s and $400,000s fell by about 12%. The chart confirms our anecdotal observation that there is was more interest in high end properties in 2011, but doesn’t address our hypothesis in a convincing manner.

What if we plotted the total sales volume for each price band instead of the number of deals? That would put each of the price points on equal footing in terms of their contribution to the average.

Amount Spent on Hartford County Single-Family Homes

This chart shows that the homes that sold for less than $100,000 matter very little in the average. But otherwise the chart is not conclusive about whether the average remained the same due to prices holding steady between the two years or some other reason.

Maybe we should just throw in the towel on the average as a proxy for home prices and move over to the median. Between 2010 and 2011 the median single-family home price in Hartford County fell 3.3% from $230,000 to $222,500.

Or we can just trust our observations of the market … home prices fell in 2011.

2011 Closed Stats From 50,000 Feet

Last year we gathered up all the Hartford County residential transactions since the beginning of the CTMLS in 2000 and showed how the very high level trends had changed over 10 years. Today we update those charts with the data from 2011. As always, the CTMLS is deemed reliable but not guaranteed.

2011 Closed Single-Family Hartford County Transactions

2011 Average Single-Family Home Prices in Hartford County

Observations

The total number of single-family home transactions fell again in 2011, decreasing about 8% from the 2010 total. With the latest data point, activity for this type of property is about 41% off the 2005 peak in Hartford County. Last year we wondered whether we had seen a bottom in the number of deals – clearly 2010 was not the bottom.

As sales volume fell, showing a decrease in overall demand, the average sales price was apparently not changed. We don’t put a lot of faith in average prices because they are strongly influenced by the mix of homes that sold in a particular year, so we think something else is going on.

Our anecdotal experience is that home prices are still falling in all the towns and markets in which we do business. We also see more interest in higher priced homes, which will tend to inflate the average, and believe that’s why the average sale price edged up slightly. We’ll work on building the case to either prove or refute this hypothesis and share that result too.

Big picture analysis like this is never especially satisfying since we usually end up with more questions than answers. What are you guys seeing out there as you follow the markets? Michael called 2011 almost perfectly in the comments from last year’s post, so we clearly have knowledgeable readers!

Also, we have this data broken down by every single town in Hartford County. If you’re interested in a specific town, email us and we’ll send you the charts.

December Contracts: Making Up For November

December single-family contracts came in at 357 for Hartford County, which was slightly higher that the number of deals that came together in November.

2012-01-08 Dec 2011 Hartford County Contracts

December is traditionally the slowest month of the year, so having it outpace any other month is a bit of a surprise. We think that the usually large snow storm, which was felt through the beginning of November, worked to push some business into the year’s final month.

This December also showed an uptick in activity compared to December of 2010. The number of homes that went under contract this past month is nearly 10% higher than the total from the previous year. It’s difficult to know how much of this observation can also be attributed to the snow storm. Our feeling is that it is not a result that we should read too much meaning into.

Results were well distributed at the town level, though not over as extreme a range as we have seen in previous months. More interesting is that the number of homes actively for sale has come down to about 6.6 months worth of inventory. It was at 7.3 months in the November report, and peaked at 8.8 months in the June report.

Inventory levels should be lower at the beginning of the year. Many sellers take their properties off the market over the holidays so they don’t have to worry about keeping their home in “show condition” and accommodating visits from potential buyers. New listings will begin to come on the market at a steady pace, and the pace will increase as we get through the winter and closer to the traditional spring real estate season.

We’re working on our 2012 real estate predictions, and will hope to have some more analysis of 2011 available in the coming weeks.

Dec 2011 Hartford County Contracts by Town