John Engel's New Canaan Market Report for July 2018, part 1

The number of sales is down 23.8% this year in New Canaan, 96 versus 126 last year.

If we go back 3 years we see sales of 100 and 119. In that context 96 is not nearly so alarming. 

Zillow calls it a "buyer's market" saying home values have declined 1.3% in the last year. 

Zillow predicts that they will rise 1.4% in the next year. For the last several years Zillow has been predicting a flat market, neither appreciating or depreciating. And they are mostly right.

The number of high-end (over $3 million) sales has not changed.  10 sales each year.

The number of very high end sales (over $4 million) has not changed. 7 last year and 6 this year.

So, what is changing?

We have 3 sales under $500,000.  There were none in 2016 or 2017.  We had one sale in 2015. 

This is good news. There will always be a demand by families who just cannot afford New Canaan. Having a few options below the $500,000 mark is a good thing. It is also good news for builders who are struggling to buy land and build homes below the $1.5 million mark.

The number of pending sales is down 33.3% this year at 86 versus 129 a year ago. We saw 107 pending sales in 2017 and 133 pending sales in 2015. This is significantly lower than the previous three years and this is troubling. Pending sales is our best forward indicator, deals that are in the pipeline but not yet closed. Slowing pendings combined with slow sales means momentum is slowing as we head into the Fall market.

The number of listings has not changed, peaking around 349 which is up 9% from last year but unchanged from two years ago. Zillow says there are currently 423 homes for sale, prompting people to say "What's wrong with New Canaan?" Too much focus has been made on the number of listings and days on market. More and more often people are putting their homes on the market with the expectation that it may take 2 years to sell. They put it on the market while they still have children in the high school saying if it sells too soon they will just rent. New Canaan is at a significantly higher price point than some of the neighboring towns and we accept the fact that it takes longer to sell a house in a town where the average price has always been over $1.5 million. (Currently Zillow says the median asking price is $1.5 million, down from the 10 year high of $2.19 million in January 2015

I can think of 5 clients in New Canaan at the top of the market, $4 million or more, who all accept that it may take a couple years to sell their homes. Therefore, they put their houses on sooner than they would have a few years ago. They are building in a cushion of time. That is why we see Absorption Rates and Days on Market levels much higher than the historical averages. Sellers all remind me that they do not have to sell, that they would simply prefer to downsize (in the New Canaan market where they have roots) and spend a portion of the year somewhere else. The psychology "do not have to sell" is very different from previous recessions where sellers were over-leveraged and had to sell, or where there were no sales such as in January 2009.

How is the market?

First of all, there is more than one "market" in New Canaan and we can't paint them all with one brush. In fact, I would say that in some categories the market is quite brisk with a ton of demand. I'll outline 5 categories and how they are doing right now and why: 

1.  Antiques. The market for vintage houses and antiques that have been restored to modern standards can be quite strong. Of course, it can depend on factors like location and quality of the lot. But, several excellent examples have experienced bidding wars and have sold close or even above their asking prices.

2.  Mid-Century moderns. The market for moderns is also strong, relatively speaking. The sales of a few notable examples such as the Frank Lloyd Wright house, the Breuer House and the Willis Mills House demonstrate continued demand for these unique, high-style houses. God and the Harvard Five aren't making any more mid-century moderns and so scarcity continues to drive this market. There are some stunning examples that have not sold and so it is not to say they all sell immediately. But, in my analysis of the last two dozen sales of mid-century moderns I find that they are selling at a higher multiple of their assessments than the broader market.

3.  New Construction. There are currently 27 new houses on the market in New Canaan ranging from $6.45 million to as little as $1.35 million.  One was first listed in October 2014.  Over 1300 days on the market! That is a patient seller.  But, he is not the most patient. There is one (out-of-town) builder who has been trying to sell his house for 10 years. There is no record of it ever renting and it has been on the market almost continuously since 2008. It is being offered today at the same price it was offered in 2008. 

4.  In Town. There are currently 24 houses offered for sale within half a mile of the train station. They range from $689,000 to $3.2 million and date from 1810 to new construction. The smallest lot is less than a tenth of an acre while the largest is nearly an acre downtown. This category is doing well and will continue to do well because access to the village and a favorable commute are a big draw for an increasing number of buyers. 

5. Condominiums. At this time of the year there is always a lot of hand-wringing about the condo market and a perception that condos are not selling. The sellers are beginning to get anxious that they missed the Spring market and they are ready to make deals. There is no Spring market for condos because condos sell equally well in October, February and July. I think that the condo market is somewhat dependent on the sale of houses but not entirely. People buy condos for many many reasons and they do it all year long. This year we have sold 26 condos versus 29 last year. There are 28 pending versus 29 last year. There are 98 active listings versus 102 last year. The absorption rate is 12.4 months versus 12.2 last year. And the average and median price is within $10,000 of where it was a year ago. All in all a remarkably consistent market on track to sell 48-49 condos again this year just as we did the last two years.

Of the 321 single family homes on the market today:

56 were built between 1731 and 1945 

48 were built between 1946 and 1960

74 were built between 1961 and 1980

66 were built between 1981 and 2000

76 were built between 2000 and 2018

67 have one acre or less of property

252 have more than one acre of property

244 of the active listings are "colonial"

14 are cape cod

12 are ranches

12 are modern

11 are colonial split

7 are antique

VIDEO: "What Was Old is New Again" - a look at the updated Simon House of 1860 on 113 Locust Avenue in New Canaan with John Engel and Susan Engel

This immaculate 3-story antique with private deck and yard downtown invites comfort and exudes modern elegance. With 3 bedrooms & 2 baths, generous living space and an open plan you'll enjoy a perfect setting for relaxing and entertaining. Downstairs oak hardwood floors and plenty of natural night flow throughout the home's open, airy layout. Special highlights include two (wood) fireplaces, rich exposed brick, chic moldings, central air (and ceiling fans), new LG washer & dryer, marble baths, tons of storage space and glass sliding doors that lead out to the rear deck. Upstairs you'll love the original wide-board pine floors and walk-up attic playroom. You'll love the convenience of your 4 off-street parking spots, a great neighborhood steps from restaurant row and an easy commute.Windows for both bedrooms upstairs and the picture window facing the deck are new.

https://www.halstead.com/sale/ct/new-canaan/113-locust-avenue/house/170060863

VIDEO: "And All Probably 200 Yards from the Center of Town" - the new video of 88 South Avenue "Southgate" in New Canaan featuring Susan Engel and John Engel

This elegant private Georgian style brick townhouse has been in the same family since new! An end-unit, it is adjacent to garages, with large stone terrace & awning, and convenient guest parking. The large Living room has a wood burning fireplace and 2 sets of recent sliders providing bright views. There is a sunny Library or Dining room opposite the kitchen, and a Powder room on the 1st Floor. Upstairs there are 3 Bedrooms and 2 baths. On the lower level you find over 800SF of unfinished space for Laundry, hobbies or storage.

https://www.halstead.com/sale/ct/new-canaan/88-south-avenue/coop/170066423

VIDEO: "If James Bond Lived In New Canaan, He Would Live Here" - the new video of 269 Dan's Highway in New Canaan by John Engel and Susan Engel

Just 5 minutes from charming New Canaan this hilltop estate nestled on 4 secluded acres offers an oasis of serenity from the pressures of business or travel. Designed by a Greek architect to fit its natural setting, the home offers 4 levels of private, terraced private gardens and a beautifully intimate swimming pool. Watch deer as you enjoy morning coffee from the Italian tiled exterior balconies. 7500 square feet in 4 stories of open and expansive living area finished with hardwoods, marble, granite and stone will make your stay a delight to the eyes. Exterior doors from almost every room at every level access terraced, private gardens. Enjoy 4 bedrooms with a separate studio apartment and a cork paneled movie room with a 20 foot screen.

https://www.halstead.com/sale/ct/new-canaan/269-dans-highway/house/170049823

Chairman's View: "Somewhere along the line that's too much" - my column for the New Canaan Advertiser April 2, 2018

“Somewhere along the line that’s too much, way too much” BOE Chairman Henry Coleman said on March 28, 1974 about the school budget of $8 million, now $90 million in 2019. That is a 5.65% compound annual growth rate. Inflation over the same period was 3.65%. The main reason for this is the compounding effect of the CBA-negotiated annual COLA increases when combined with the step increases in teacher pay.  Wage rates in Connecticut are much higher than comparable states. When you add in step increases you’re up to 4.5% and 5%.

This is budget week: Tuesday’s public hearing and Thursday’s final Town Council vote. What happened and didn’t happen this year?  The Board of Finance held the overall budget to a 1.89% increase. The town operating expense rose 1.33% and after contingency and pension that increase is 1.69%. On the Board of Education side we see they cut the requested $3 million increase by $900,000, resulting in a 2.07% operating increase and a 2.45% overall increase. I never got the answer to my question, “Show us what 2% looks like”. The BOE wants to pick that number together. Ok, we will.

Why didn’t we cut the Education budget $400,000 further to bring the budget within the 2% guidance? The Board of Finance said too much, too soon and the Town Council agreed. Second, the schools healthcare costs spiked up $568,000 this year. Taking this out of the equation means the Education budget is being held to 2.07%.  Finally,  we heard the Superintendent say “redeployment of staff through attrition” which means a commitment to reducing headcount gradually. That’s the key. It’s what we needed to hear. It took 10 years to add 64 new staff positions. It may take a few years to reduce by that many. 

The Town Council is drafting an ordinance requiring the town of New Canaan to annually prepare a Long Term Financial Plan (LTFP) in which we set our financial assumptions and goals for the next 5 years. (Hint: That corridor should be set at 2.0%-2.5% annual growth.) Instead of a BOF guidance letter in October there will be a collaboration between boards starting this month: the Boards of Education, Finance, Selectmen and Town Council deciding what we can afford now.

Town departments requested $8.6 million in Capital, down from $11.1 million. The Selectmen cut it to $7.9 million. Finance cut it to $7.7 million. The Town Council is eyeing another $300,000 in cuts at the expense of new sidewalks, a paddle court and projects at Irwin Park. Waveny’s $1 million “placeholder” should survive but comes with a great deal of scrutiny and public input. 

Finally, it is interesting to note that Board of Ed member Hazel Hobbs is quoted in that 1974 article saying “I guess it’s just a question of priorities.” Indeed. Forty-four years later Hazel Hobbs is still fighting for school excellence. Thank you for your service, Hazel. This budget has worn me out. I can’t do this 43 more times.

Chairman's View: "Please, Tell Us What a 2% Budget Looks Like" - my column for the New Canaan Advertiser March 5, 2018

Darien schools are requesting a budget increase of 2.34% (including the new tuba). Wilton’s school board is asking for 2.24%. Note, in the last 3 years Wilton has averaged less than a 1% per year. The Stamford public schools requested an increase of 1.48% after coming in last year at 2.2%. Stamford’s low increase was largely the result of a new employment agreement with teachers that moved them from a private insurance plan to the state’s, saving money for taxpayers and teachers. Two months into the budget season New Canaan’s Board of Education continues to request 3.48% saying this is the price of excellence. Think about that: two months into the budget season and there have been no attempts on behalf of the BOE to debate and cut their own budget, no attempt to bring it in line with BOF and BOS guidance of 2%, saying instead that “priorities are purposefully in tension with the Town Council and BOF” 

Half of the Town Council was in attendance at the last Board of Finance meeting and one veteran member said, “I was waiting for someone to simply ask to see the 2% budget as Bryan must have that ready by now…the BOE has been preparing for a couple for months for this.” 

BOE lawyers might say its legal, but without public meetings of a Curriculum Committee or at the Board of Education level we do not know where cuts to the budget will be felt. Advertiser stories on pages 1, 3, 4 and 6 all point at the problem most citizens have in not knowing where cuts will be felt until after we’ve made them. 

A few years ago the Administration needed curriculum development in response to state mandates for social and emotional learning (SEL). New Canaan took the lead statewide and developed a new curriculum, probably the best in the State.  Curriculum development money is still in in the budget, compounding every year. We spent $15,000 on Happiness training for teachers and $31,500 on a Climate workshop. This year we are adopting the Yale RULER curriculum for $42,000. We are already number 1. Can we please take one year off from curriculum development?

Please don’t threaten to cut favorite programs. Reduce the budget in non-teacher headcount. In the last 3 years enrollment went from 4174 to 4184. We added 10 new students but we added 19.5 net new staff, a $676,147 increase. If you add insurance, pension and benefits that increase exceeds $1 million. In the last 10 years the Board of Ed has added 64 new full time equivalent staff and teachers during a period of relatively flat enrollment. 

Teacher stipends have increased 56% from $622,939 to $970,116 since 2016, offset in part by parent donations and ticket revenues. But that money still comes from parents one way or another. 

Connecticut requires 1.0 credit of health and gym. Darien and Wilton meet the 1.0 credit minimum. New Canaan requires 2.25 credits including substance abuse counseling. Could reducing gym and health to state minimums be part of an opportunity to shorten the school day and provide later sleep times?

2018 is not business as usual after State cuts. As Tom Butterworth correctly points out, we run the risk cutting to 2% without knowing where its coming from. Please, tell us what a 2% budget looks like.

Chairman's View: "Its Getting Harder to Find Woods and Meadows Where a Dog Can Roam Off-Leash" - New Canaan Advertiser January 22, 2018

Its getting harder and harder to find woods and meadows where a dog can roam off-leash. Under Article 6, Section 8 of the Town Charter, dogs aren’t allowed off-leash anywherein New Canaan public parks except in Spencer’s Run at Waveny. 

That includes the Bristow Bird Sanctuary, whose deed requires it “forever [be] maintained as a Bird Sanctuary and Wildwood Preserve and used for no other purpose whatsoever.” That language prompted a recommendation by Parks & Rec in 2014 to ban dogs from Bristow. Dog lovers responded and the Town Council took up the debate in 2015. We ruled with the dogs when Animal Control Officer Kleinshmitt testified that deer, not leashed dogs, have the greatest impact on ground-nesting birds. Vice Chairman Steve Karl recognized the importance of green corridors to our community saying, “Hopefully between the Conservation Commission and Park & Recreation Commission, we can make some improvements over there to make it nice for everybody—people, birds and dogs.”

Now what? The Land Trust off-leash policy is under review. When off-leash dogs are not controlled they present a problem for neighbors and walkers. Recently, there was a complaint over large dogs jumping on an 18 month child in the 40 acre Watson-Symington Woodlands. Another dog ignored his owner’s pleas and followed a jogger down Wellesley Road. 

All other Land Trusts in Fairfield County require that the dogs be controlled on leashes (with one exception). Some board members believe the intensity of use on more popular parcels warrants rethinking land trust policy there. 

New Canaan is proud of the fact that we can offer off-leash walks, a rare privilege indeed. The response to traffic is increase our holdings and open up more parcels to public visitation, saying we have enough land to accommodate everybody. Chris Schipper called the incident the rare exception saying, “We’ve had 2 complaints in 5 years. Neither were members of the Land Trust. Don’t create blanket rulings to deal with exceptions. There are many other parcels to visit.” Discussion continues. 

Sunday April 22 is Earth Day. The Land Trust will open a new Green Link trail between Irwin Park and the Nature Center, completing a 3-mile walkable loop. As New Canaan “nature sanctuaries” become more popular should they be managed like Parks? Write your vote on the back of a $100 bill and send it to the Land Trust at Box 425, New Canaan, CT 06840