Why more people are buying condos in Connecticut
Demand has risen for condominiums, particularly new developments, in Connecticut at a time when the rate of multi-family home construction has dropped, industry professionals said.
Much of that demand has come from homeowners who downsized to cash in on the hot housing market, real estate agents said.
As of November, housing with five or more units represented just over 37 percent of new starts. In 2020, it was more than 55 percent, and in 2019, it was 59 percent, according to permit data compiled by the state Department of Economic Community Development.
“I think that can be attributed to a whole host of different things,” said Jim Perras, chief executive officer of the Home Builders and Remodelers Association of Connecticut. “Certainly, just because of sheer volume, the supply chain issues are felt more acutely by our multi-family builders and certainly, the increasing cost of land and the availability of land for multi-family development is both getting more expensive.”
The state is facing a housing shortage. After the 2008 recession, builders constructed fewer homes than they had in years past, and Connecticut recovered from the economic downfall more slowly than other states, Perras said.
The state is short about 87,000 units of housing that’s affordable for extremely low-income renters, according to the National Low Income Housing Coalition.
Prices for condos in Connecticut have generally trended upward since January 2020 when the median price was $165,000. In September, the median sat at $201,750, according to SmartMLS data.
It’s a story that mirrors, and is in many ways tied to, the single-family housing market that has driven up prices for houses that stayed on the market for just days earlier in the year. Demand for housing across the board has been high in Connecticut for months, said Tammy Felenstein, president-elect of the Connecticut Association of Realtors.
Many Connecticut residents opted to take advantage of inflated house prices and downsize earlier than they’d planned. They’re often interested in the flexibility a condominium lifestyle provides, real estate agents said.
“They saw an opportunity to sell because of the pandemic buyers,” said Rita Kirby, a real estate agent with William Pitt Julia B Sotheby’s International Realty. “They didn’t want to miss that wave.”
And some former Connecticut residents who moved out of state have decided to return by purchasing a condo for a second home, agents said. Not needing to maintain the grounds has been a draw for those who travel frequently between two places, said Bonnie Sztam, another agent at Sotheby’s.
Kirby and Sztam are working to sell a set of townhomes at 42 Forest St. in New Canaan in the $2 million range. The townhouses have been popular, and much of that draw has been because they’re newly built, the agents said.
Most of the people who’ve come to see the townhomes have been seeking second residences or downsizing, Sztam said.
Millennials who want to own their homes at a lower price point and people seeking a second home are also driving up interest in condominiums, said Joel Grossman, the new business development director at Calcagni Real Estate.
Grossman’s company is working on a set of 13 townhouses in New Haven that’s scheduled to be completed in January. And they’re in the final stages of two more in the region — a 60-unit in Orange and a 149-unit in North Haven. The North Haven units aren’t scheduled for completion until 2024, but the Orange units will likely be finished at the end of next year.
All the New Haven units are sold, as are all but one of the Orange units, Grossman said. The Calcagni complexes are going for lower price points than the luxury spaces in New Canaan — approximately in the $200,000 to $350,000 range.
The units have been popular, and millennials have flocked to the Pierpont Hill development in North Haven because it’s not age-restricted. Some condominium complexes are only available to people aged 55 and up, he said.
“A lot of your millennial buyers that will come in, they’re not interested in all the maintenance,” Grossman added. “They still want to be able to travel, they want to just pick up and go, they don’t have to worry about all the exterior and the yard maintenance.”
It’s often more difficult to build multi-family housing in Connecticut because of restrictive zoning ordinances, Grossman said.
The issue was a focus during the most recent legislative session, and while lawmakers did pass some measures such as eliminating minimum parking requirements, not enough time has passed for Connecticut to see the effects of those laws, Perras said.
Cities across the state are also working on developing affordable housing plans.
Increasing multi-family housing development, including condominiums, would likely create a “trickle effect” to create more opportunity to improve housing affordability in Connecticut, Perras added.
And Grossman said condominium developments with more units are more affordable for the builder and consumer because the cost of construction can be spread out among the houses.
“You just get that higher density out of it,” he said. “You might be able to spread the cost of utilities and everything among units.”
Perras said he expects to see more multi-unit development as supply chain issues are sorted out and the cost of construction materials drops.
“I still think that there’s a strong market for multi-family and a need for multi-family in the state of Connecticut,” he said.
