New construction homes are rare in Greater Hartford. During 2020 the SmartMLS only reported 253 closed sales for properties that were built in 2019 or later. This translated to about 2.5% of total deals. In 2019 (without the pandemic to interfere with construction) the count was 243 closed sales for properties that were built in 2018 or later, which was about 2.8% of the deals.
The reality is that new construction is not common in Greater Hartford, and hasn’t been for quite a while, because our population has not been growing. There are rural towns on the outskirts of the metro area that could be developed, so there is space to build, but few have wanted to take the risk.
Will the very strong demand for homes in 2020 motivate developers to launch new construction projects? It’s difficult to know for sure, but here are some factors they will consider.
The first hurdle is findings and acquiring land. Infill construction is consistently popular in towns like West Hartford, though the scale is limited to the relatively few undeveloped (and underdeveloped) parcels that remain. Land is more plentiful further from the commercial centers.
Once a location is identified, the next challenge is imagining the right mix of style, features, and price point to attract modern buyers while still making the project economically viable. Construction costs were generally north of $200/sqft before the pandemic disrupted global supply chains. Nearly all new construction sold for more than $350,000 in 2020, with about a third of the sales closing over $500,000.
An important question is whether our collective “wants” for a home have changed permanently due to the pandemic. Buyers had been trending towards smaller properties close to commercial centers last decade. The lock-downs associated with the pandemic reversed that trend to allow for more private outdoor space, and for additional indoor living space for virtual work/school and recreation. If permanent, this argues for suburban construction that could accommodate larger lots.
Finally, a developer has to consider whether they can sell the town in which the new homes are located. Greater Hartford is a collection of independent municipalities that each have their own history, local governments, school districts, and services. Any significant development would need the support of both the buyer pool and the town in order for construction and sales to go smoothly.
My sense is that the demand in 2020 is unlikely to trigger a boom in new construction, but we’ll see. There is demand for new homes, so if someone can identify the right location and product then they might be able to make some money.