July 11, 2011 | last updated June 1, 2012 10:25 am
FOCUS ON HOMES

Signs of life in high-end housing | Cash buyers are taking advantage of prices that seem near rock bottom

CONTRIBUTED PHOTOS
CONTRIBUTED PHOTOS
Toll Brothers will start marketing its Weatherstone at Avon community this week with homes like this starting at $700,000. Meanwhile, in Fairfield County, the ‘Point of View’ property (lower photo) sold in late June for $39.5 million, a record for the Greenwich shoreline.

While most residential real estate continues to stumble in Connecticut, signs of life are echoing from the luxury home market as prospective buyers flush with cash are finding discounted home prices to their liking, spurring more deal flow, industry experts say.

In Greater Hartford, for example, there have been 61 deals closed for high-end homes of at least $700,000 in Avon, Farmington, West Hartford, Hartford, and Simsbury through July 1 of this year, compared to 47 deals a year ago, said RE/MAX Premier broker Lou Mira.

And other 42 high-end homes in the region are under deposit, not including deals made among private parties.

"We are definitely seeing a resurgence in luxury home sales," Mira said.

Brokers in Fairfield County — where the definition of luxury housing starts at $4 million — say they are seeing a similar uptick.

RE/MAX Heritage broker Virginia Klein said there have been about 50 sales of high-end homes of at least $4 million in Greenwich so far this year, compared to 37 during the same time period in 2010. In good years, there would be about 65 to 70 sales of luxury homes by this time of year in Greenwich.

While home prices have declined 13 percent, activity is definitely up, she said.

"The number of transactions is rising," Klein said. "It seems like the market is beginning to feel more normal."

Industry experts said the recent uptick in activity has a lot to do with discounted home prices and a better understanding by buyers and sellers of the true value of real estate in the market.

Prices for high-end homes are down anywhere from 10 percent to 30 percent or more, which is making prospective buyers who may have been skittish about the market a year or two ago willing to close on a deal today. And sellers are also coming to grips that the value of their home is not worth what it was before the housing crisis struck in 2007-2008.

In West Hartford, for example, a nine bedroom, 13,000-square-foot mansion at 112 Stoner Dr. recently sold for $2.725 million. In 2009, that luxury estate, which sits on 3.5 acres and has six full baths, was put on the market with an asking price of $5.9 million, more than double its eventual selling price.

"You can see why a buyer would jump in and see good value in a deal like that," Mira said. "A lot of these home prices have adjusted from the height of market."

Mira, along with other luxury real estate observers, are also noticing an interesting trend among buyers. More of them are paying with cash and skipping bank financing.

Mira said the trend could be a result of people moving cash out of more high risk investments and parking it in real estate at a time when many people think housing prices have hit or are near rock bottom.

"There are a lot of cash purchases, which is not typical of the market," Mira said.

There is also an uptick in foreign investors, particularly in Fairfield County, brokers said.

Avon realtor Mindy Ogan, of Prudential Connecticut Realty, said many of the high-end buyers in Greater Hartford tend to be insurance executives or executives at United Technologies Corp. She said the luxury home segment took a big dip as a result of the economic downturn — which hit some of Hartford's major financial services companies hard — but more move-up and first-time home buyers are beginning to hit the market now.

In Avon, she said there have been 31 deals for homes over $800,000 that have been closed or are under deposit so far this year, compared to 24 in the same time period in 2010.

"Buyers and sellers are realizing this is the new normal," Ogan said.

Meanwhile, luxury home building company Toll Brothers just broke ground on a new high-end subdivision in Avon. Called Weatherstone of Avon, the community will consist of 24 single-family luxury homes, between 3,500 and 6,000 square feet sitting on one acre lots.

Gregory Kamedulski, Toll Brothers division president for Connecticut and Massachusetts, said the homes, which go on sale July 15, will have a starting price in the $700,000 range.

The Avon development will be Toll Brothers seventh high-end project in Connecticut. Earlier this year, the Pennsylvania-based development firm opened the Estates at Wallingford subdivision that will consist of 30, 2,500 to 3,000 square foot colonial homes in the $400,000 to $500,000 price range. They have seven agreements in place for that development so far, Kamedulski said.

Although Kamedulski said it's still a tough market, he said Toll Brothers has seen steady sales in Connecticut over the last few years without too many highs and lows. They've built about 1,800 luxury homes and condos in Connecticut, and each development sells between 15 to 45 units annually, Kamedulski said.

"It's a tough market, but there is a market out there," Kamedulski said. "All of our communities are making sales."

The overall housing market in Connecticut is still on uneven footing. Central Connecticut home sales volume fell again in May — down nearly 30 percent — but the Greater Hartford market is showing signs of a possible burst in pent up demand.

The Greater Hartford Association of Realtors said that closed single-family dwelling sales dropped to 624 units in May compared to 871 in the year ago period. Area house sales have fallen every month so far this year.

Also, the median sale price fell 4.35 percent, to $220,000 from $230,000 a year ago.

But some positive signs emerged. Pending sales — deals in which a buyer has made a firm offer to a seller and is awaiting the sale closing — jumped 41 percent in May to 883 units from 627, the Realtors association said.

Meanwhile, Fairfield County has been on a bit of roller coaster ride in terms of its luxury home market. According to RE/MAX, the luxury market in New England's 15 most desirable towns experienced more difficulty in the first quarter of 2011 than the overall housing market, as a direct result of luxury-level pricing, longer days on the market, and a dip in overall inventory.

Certain high-end markets like Fairfield County continued to be burdened with a decrease in sales, the report said.

But brokers say activity is on the rise.

Recent deals, including the sale of the Hascoe or "Point of View" estate for $39.5 million, indicate positive signs.

Eric Bjork, vice president and director of sales for Prudential Connecticut Realty in Greenwich, said his firm has been involved in 14 sales of high-end homes between $5 million and $10 million so far this year in Greenwich, which is the double the amount from a year ago.

Meanwhile, he said prices for homes have come down about 25 percent to 30 percent from their highs in 2007.

But the future still remains cloudy, especially with a new wave of layoffs expected at some Wall Street investment banks, which employ many residents in Fairfield County.

Klein, of RE/MAX Heritage, said she is starting to see a slowdown in terms of showings and activity, but that is typical of the summer market.

What will really provide a more direct snapshot of where things are headed is activity that occurs or doesn't occur during the fall, Klein said.

Comments
ADVERTISEMENTS
Most Popular on Facebook
Copyright 2017 New England Business Media