I recently met a couple that bought a single-family home about five years ago. They were first-time home buyers, and at the time they were represented by an agent I do not know. The home they purchased was recently renovated, including the entire kitchen. Their transaction seemed to go smoothly, and they were confident that they got a great deal on the price—until their home ownership dream quickly turned into a nightmare. In just a few months after closing, they started having extensive plumbing problems, and eventually their entire upstairs bathroom started sinking down into the kitchen directly below.
This sounds unimaginable, but this type of scenario can happen when renovations are completed without the owner taking the proper steps. The prior owner had removed a supporting wall to redesign the kitchen and failed to consult with an engineer and carpenters to ensure that a proper supporting beam was installed. In addition, the owner had renovated without applying for a permit or obtaining a certificate of occupancy (CO). The new buyers were completely unaware of the seller’s negligence. They were left with an overwhelming expense that they could not afford, and soon afterward the home went into foreclosure.
I tell this story because it is one that could have been avoided. Often, the importance of a CO is communicated to sellers, but it is even more important that CO’s be fully understood by buyer agents and homebuyers. The process for obtaining a CO starts with applying for a permit. Each town has a list of the types of renovations that require a permit and CO. Obtaining a permit requires paying a small fee (generally $10 to $13 per $1,000 worth of planned work) and presenting an outline of the work planned for the home. You might also have to visit several town departments to verify information about your home beyond your work’s scope.
Through this process you will get feedback from your local building department and other town agencies that will help you adjust and finalize your plans. Once the work is completed, an inspector will visit your home and determine if the project was completed in accordance with current building codes. If the inspection goes well, you will receive a CO for your records, which you can share with future buyers. The process is quite simple and requires just a few hours of time and interaction with experts that can turn out to be very helpful. You will gain knowledge about various town departments and how their services protect you, your home, and the property values in your community.
If you are a potential buyer and you notice renovations in a home that you plan to purchase, you should always ask for a CO. If there is none, you can request that the seller apply for a permit retroactively and obtain a CO before you close. Buyers that don’t require this tend to be experienced contractors or tradesmen. These types of professionals often have confidence that they can inspect renovations themselves and are comfortable with the risks involved with doing so. Most homebuyers should avoid that type of risk.
You can learn more and apply for permits online in most lower Fairfield County towns. Click the link for your town.
As of July 24th 2017, Connecticut REALTORS® reports that the single-family residential home median sales price is $280,000 which reflects a 1.8 percent increase from $274,950 in that same time period last year. Median indicates that half the homes sold for more and half for less. Single-family residential home sales in Connecticut increased 6.4 percent comparing June 2017 to June 2016. The total units of homes sold were 4,448 in June 2017 and 4,182 in June 2016.
In CT, townhouses and condominium median sales price in June of 2017 was $185,000 representing a 8.8 percent increase from $170,000 in that same time period in 2016. Sales in Connecticut increased 8.9 percent comparing June 2017 to June 2016. Total units sold were 1,016 in June 2017 and 933 in June 2016.
Statistics released by the National Association of REALTORS® indicate total home sales nationwide (includes single-family homes, townhomes, condominiums and co-ops) increased 0.7 percent comparing June 2017 to June 2016; and the median national home sales price is $263,800. Regionally, Northeast home sales increased 1.3 percent in that same time period; with a median sales price of $296,300.
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The good news this mid-year is that sales volume is not declining for single family homes or condos compared to last year. Demand is outpacing last year by 7% and 4% respectively, even though demand for homes is weakening nationally. In regard to prices, the median price PSF for single family homes in Stamford is up 2%, so we are still seeing a gradual, sustainable improvement. Condo buyers are still applying smaller budgets in general reflected by the median price decline of 7%, but they are also paying slightly more per square foot. This reflects a continued focus on condition, location and floor plan as factors that are just as important as size. It is still a great time to buy. Prices are affordable compared to area income and mortgage interest rates continue to be historically low. This will not be the case forever. Check out the stunning homes with the highest sold price for both mid-years linked below. I have also included homes that reflect the median, highest and lowest prices per square foot.
The data was interesting in March. Buyers decided not to pay more per square foot for newer single family homes even though the median price was up. This is because buyers are beginning to think renovated is the new normal. It is expected that even older homes are supposed to be renovated, energy efficient and have all the bells and whistles, so both an older updated home and a younger home can trade at a similar price. The median PSF for condos was higher than for Single Family Homes in March. This is rare and most likely due to the fact that condos with great floorplans are closing at a premium since they are often more convenient to town, trains and highways than many sold Single Family Homes. Convenience is something buyers are increasingly seeking. The sold price for 25 Sleepy Hollow (the reflection of the median for Single Family Homes) is similar to what a buyer would pay for new construction, but it was built in 1947. I predict flipping is a good plan for the future of Fairfield County as our inventory continues to age.
SF home sales in Stamford in February was sluggish compared to the prior year, most likely due to factors in the overall economy, business and political world more than anything else. Both demand (units sold) and PSF were down, although it is important to remember that demand can be artificially low when there is not enough desirable inventory to buy. This is often the case in Fairfield County this time of year and also as buyers get pickier and lean towards the exceptional properties only. Selective buyers are not only taking their time to buy, but they are generally more willing to wait until more inventory becomes available rather than bid the price up on a property they like that has buyer competition. This phenomena is what is keeping prices reasonable even though a large number of Fairfield County residents understand the advantage of buying versus renting. On the condo side, more units were sold at lower prices overall. Newer condos, however, experienced an increase in PSF’s even though the median purchase price was down. This means value is improving but budgets are not. Overall, the strong 15.4% increase in demand is refreshing. I predict demand will get stronger throughout the year as first-time buyers get weary of record high rents. Their only constraint will be inventory. I encourage current owners to study those terrific real estate design sites like Houzz and renovate with an eye for what younger buyers want. Failing to do so means your home will sit on the market and risk getting sale, only to trade painfully at fixer-upper pricing.