The Connecticut Real Estate Market Report

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					The Connecticut Real Estate Market
Report: New Construction & Land




            Prepared for The Connecticut Real Estate
                           Conference
             By Barry Rosa, Vice President & Director
                  New Homes & Land Division
                  Prudential Connecticut Realty
                          April 7, 2004



        brosa@prudentialct.com
        203 882 5525
                      The Connecticut Real Estate Market Report
                            Prudential Connecticut Realty
                            New Homes & Land Division


   How mortgage interest rates are fueling the current real estate market. The following
    simple affordability calculation uses a $200,000 30 year fixed rate mortgage:

   Interest Rate     Monthly Pmt.          Income to Qualify*

    5.50%             $1,136                $48,800
    5.75%             $1,168                $50,200
    6.25%             $1,231                $52,900
    6.75%             $1,297                $55,800
    7.75%             $1,433                $61,600
    8.75%             $1,573                $67,600
    9.75%             $1,718                $73,900
    10.75%            $1,867                $80,300

                                                       *using a 28% monthly housing expense debt to income
                                                        ratio
                                               The Connecticut Real Estate Market Report
                                                     Prudential Connecticut Realty
                                                     New Homes & Land Division



                                   New Residential Housing Permits by County, 2003 vs. 2002

3000


                                        2443
                            2195
2500
       1893




                                                                                                      1844
                     1786




                                                                                         1707
2000

                                                                                                                                                                    2002
1500




                                                                                                                           1109
                                                                                                                                                                    2003




                                                                                                             902
                                                                      838
                                                                                   828
                                                   790




                                                                                                                                  759
1000
                                                                735




                                                                                                                                             743



                                                                                                                                                   523
                                                                                                                                                              497
500


  0
                                   Hartford




                                                                                                                                        Tolland
                                                         Litchfield




                                                                            Middlesex
              Fairfield




                                                                                                                   New London




                                                                                                                                                         Windham
                                                                                                New Haven
                              The Connecticut Real Estate Market Report
                                    Prudential Connecticut Realty
                                    New Homes & Land Division



                         Percentage Change, New Residential Housing Permits by County,
                                                2003 vs. 2002


                                           3.9%                                               State of CT

             -5.0%                                                                            Windham

                     -2.1%                                                                    Tolland

                                                                                         22.9% New London

                                                    8.0%                                      New Haven

                          -1.2%                                                               Middlesex

     -7.0%                                                                                    Litchfield

                                                              11.3%                           Hartford

         -5.7%                                                                                Fairfield

-10.0%           -5.0%            0.0%     5.0%       10.0%           15.0%   20.0%        25.0%
                        The Connecticut Real Estate Market Report
                              Prudential Connecticut Realty
                              New Homes & Land Division



                    New Residential Housing Permits, State of Connecticut
                                1996-2003, 2004 Projections

2004 Proj.                                                              10200

     2003                                                              9985

     2002                                                         9607

     2001                                                       9254

     2000                                                       9311

     1999                                                                     10794

     1998                                                                             11541

     1997                                                      9054

     1996                                             7671

             0   2000         4000       6000         8000        10000               12000   14000
                 The Connecticut Real Estate Market Report
                       Prudential Connecticut Realty
                       New Homes & Land Division



 Trends in permitting and land



 Land is getting harder to permit and more expensive to
  purchase! Permitting expenses themselves are becoming more
  costly (engineering, survey, design layouts, legal representation)
  and the longer times add costs.
                The Connecticut Real Estate Market Report
                      Prudential Connecticut Realty
                      New Homes & Land Division



 A number of Connecticut communities have imposed a
  moratorium on new subdivisions in the past 12-18 months: A
  partial list of those that have:

               Ansonia
               Clinton
               Cromwell
               East Haddam
               East Hampton
                The Connecticut Real Estate Market Report
                      Prudential Connecticut Realty
                      New Homes & Land Division



Communities with recent or current subdivision moratoria:

                Middletown

                Oxford

                Sprague
                The Connecticut Real Estate Market Report
                      Prudential Connecticut Realty
                      New Homes & Land Division



 Communities that are now actively considering subdivision
  moratoria:

            – Shelton

            – Seymour
                 The Connecticut Real Estate Market Report
                       Prudential Connecticut Realty
                       New Homes & Land Division



 The State of Connecticut has posted about 60,000 residential
  sales in a good market year.

 New residential permits are about 16% of residential sales.
                            The Connecticut Real Estate Market Report
                                  Prudential Connecticut Realty
                                  New Homes & Land Division



                    2002, New Residential Permits as a Percentage of Residential Sales
                                  (1-4 family & Condo) by County, 2002

40.0%
                                                                                    34.5%
35.0%
                                                29.9%
30.0%
                                                                                               27.0%

25.0%                              23.9%                                 23.0%

20.0%
                        15.1%
15.0%
         11.4%                                               11.7%
10.0%

5.0%

0.0%
        Fairfield      Hartford   Litchfield   Middlesex   New Haven   New London   Tolland   Windham
                     The Connecticut Real Estate Market Report
                           Prudential Connecticut Realty
                           New Homes & Land Division



Newtown Lot Sales, 3 Acres or Less 2000 to 2003

Year                          2003       2002      2001          2000

No. of Sales                  29         80        42            38

Median Sales Price            $209       $170      $150          $135
($000)

YOY Price Change              22.9%      13.3%     11.1%

Total Price Change            54.8%
                   The Connecticut Real Estate Market Report
                         Prudential Connecticut Realty
                         New Homes & Land Division



Newtown Median Single-Family Sales Price 2000 to 2003

Year                        2003       2002      2001          2000

Med. Sales Price            $378       $368      $315          $313
($000)

YOY Price Change            2.7%       16.8%     0.6%

Total Price Change:         20.1%
                    The Connecticut Real Estate Market Report
                          Prudential Connecticut Realty
                          New Homes & Land Division


 Trends in New Construction:

 Size of homes: Buyers now are willing to trade sheer size for quality and
  detail in interior finishes.

 Details matter: Customers are paying attention to small interior detail
  features, these are very important in establishing the perceived quality of the
  product.

 In model homes: A “best foot forward” philosophy, include up-grades and
  premium features in a model is paying off.

 Maintenance free finishes are fully accepted (and often preferred) in place of
  traditional materials.
                    The Connecticut Real Estate Market Report
                          Prudential Connecticut Realty
                          New Homes & Land Division



 Bathrooms and kitchens are generally increasing in size as are investments in
  appliances and finishes.

 Family or great rooms are getting larger. Living rooms are decreasing in
  size, they may well become obsolete in the coming several years.

 Dining rooms (a readily identifiable separate area) are important. Informal
  dining areas that are combined with kitchen facilities as the primary dining
  area are the least preferred.

 Buyers are investing heavily in up-grades: At Prudential Connecticut Realty
  we see an average of a 13% increase to the base price of a home.
                    The Connecticut Real Estate Market Report
                          Prudential Connecticut Realty
                          New Homes & Land Division



 Cluster or common interest detached formats are now readily accepted by the
  marketplace. Smaller lots are ok based on the fact that there are many
  families now where both individuals are working. Time available for
  exterior maintenance and yard tasks has been reduced.

 Since this is New England, exterior appearance must still be traditional but
  interior floor plans and features should be contemporary.

 Buyers ask many more questions about builder reputation and capabilities.
                  The Connecticut Real Estate Market Report
                        Prudential Connecticut Realty
                        New Homes & Land Division



 Age-restricted and designed products.

 Developers and builders must be careful to permit and build such
  products where the market warrants it, not as a result of town or
  zoning requirements.

 A feasibility analysis is warranted in many cases, prior to permitting

 Universal design features are slowly appearing in new construction
  and are beginning to get attention in the market place.
                    The Connecticut Real Estate Market Report
                          Prudential Connecticut Realty
                          New Homes & Land Division



 Age-restricted and designed products



 There are many common wisdom “myths” concerning age-restricted housing
  (significant downsizing on the part of customers is one of these myths,
  except in the case of a second home).

 Housing needs do vary by age class (active adult vs. retired vs. senior)

 These are discretionary purchases. Age-designed housing has to “hit the
  mark”, not just in features and size but in price as well.
                       The Connecticut Real Estate Market Report
                             Prudential Connecticut Realty
                             New Homes & Land Division



                  2002 Population Distribution by County & State, Ages 50-64
                           (as a percentage of overall population)


    St of Ct                                        16%

  Windham                          15%

    Tolland                                         16%

New London                                          16%

 New Haven                                          16%

 Middlesex                                                            17%

  Litchfield                                                                          18%

   Hartford                                         16%

   Fairfield                                        16%

           14%   14%     15%     15%      16%     16%      17%     17%         18%   18%    19%
                             The Connecticut Real Estate Market Report
                                   Prudential Connecticut Realty
                                   New Homes & Land Division



                    2002 Population Distribution by County & State, Age 65 & over
                               (as a percentage of overall population)

    St of Ct                                                                              14%

  Windham                                                                   12%

    Tolland                                                       10%

New London                                                                          13%

 New Haven                                                                                      15%

 Middlesex                                                                                14%

  Litchfield                                                                              14%

   Hartford                                                                                     15%

   Fairfield                                                                        13%

               0%       2%         4%       6%        8%        10%       12%         14%         16%
                     The Connecticut Real Estate Market Report
                           Prudential Connecticut Realty
                           New Homes & Land Division



                    2002 Population Distribution by County & State, Age 50 & Over
                               (as a percentage of overall population)


    St of Ct                                                                                30%

  Windham                                                                            27%

   Tolland                                                                          26%

New London                                                                                 29%

 New Haven                                                                                       31%

 Middlesex                                                                                       31%

  Litchfield                                                                                       32%

   Hartford                                                                                      31%

   Fairfield                                                                               29%

               0%   5%           10%           15%           20%           25%             30%           35%

				
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