Stamford Lags Behind When it Comes to Data-Driven Decisionmaking

I started my professional career in business consulting as a data analyst. I was responsible for analyzing consumer product data from Fortune 500 companies and grocery stores and recommending improvements to increase sales for dozens of Time Warner magazines and Mars candy brands. Now, practically every industry is obsessed with “Big Data” and its potential to help solve business and social problems. Technology enables us to handle larger and larger data sets, so we can combine information that has never been combined before with less cost. In my real estate business, my clients seek to hedge their risks when buying homes and investment property. Adequate data collection allows them to do so.

A few years ago, I was helping an investor understand the real estate landscape of cities in lower Fairfield County. We started with the Greenwich Town Hall. It took less than 5 minutes for the clerk to provide a CD (compact disk) with a line-item list of all the property in the city of Greenwich with columns that indicated the type of property (residential, commercial or industrial) ownership, square feet, zone, etc. This list even included property developments that were proposed but not yet built.

This was fascinating only by comparison to my experience in Stamford. When I tried to get the same type of list from the Stamford Government Center, it was impossible. After weeks of trying, I received an email with the total square feet of property that was industrial, commercial or residential, with no line-item information. A line-item report with property characteristics was unavailable.

Stamford has made some progress with technology since then, but we still have a very long way to go when it comes to leveraging data. Most of the data exists in silos within each department, precluding any meaningful analysis of the state of our city and how the different areas of the city impact each other.

According to the City of Stamford website, the clerk’s office has lots of data:

“The City and Town Clerk serves as Stamford’s Keeper of the Records for all documents that pertain to the City and its residents.  This includes, but is not limited to Land Records (records relating to any kind of land transaction such as deeds) and City Maps, Birth Certificates, Marriage Licenses, Death certificates, Dog licenses, Trade Name Registrations. More About the Office of the Town & City Clerk in the City Charter.”

It is time for that data to be connected across departments and utilized for better decision-making. This will provide powerful information for the residents, investors, non-profits and business owners that work hard to improve and remain sustainable. Now, that local and state funds are becoming more and more limited information, intelligent data-driven decisions are more important than ever.

In a few weeks, Lyda Ruijter is running for Town Clerk. Whether you are an Independent, Democrat or Republican (and I have been registered as all of the above since I vote on the issues), please take a moment to read about her and what she can do to move our city forward in regard to modern data collection. For the sake of a thriving sustainable city, we should understand the importance of what she seeks to accomplish. Click here: http://www.stamfordadvocate.com/local/article/Challenger-candidate-seeks-to-modernize-Stamford-12284669.php

If you have not registered to vote on November 7th 2017, or if you need more information about voting, click here. The offices that are up for election are as follows:

  • Mayor
  • Town Clerk
  • Board of Finance
  • Board of Education
  • Constables
  • Board of Representatives

 

 

How Depreciation Saves You Money

Claiming a depreciation expense allows you to take a dollar amount that equates to about 3.6% (residential) or 2.5% (commercial) of the value of an investment property building (excluding the value of the land) as an expense for a number of years (27.5 for residential and 39 for commercial) to lower your annual taxes due to the IRS. This means when you calculate your net income each year for a residential investment property that is worth $300,000 (excluding the land value), you would deduct $10,909 from your net profit number before you calculate your tax liability. This means you are not paying taxes on that $10,909 if you record your depreciation expense.

When you are ready to sell the property, taxes do become due on the amount you deducted each year but it is still best to take the deprecation expense. Even if you don’t claim the expense each year, the IRS will calculate your capital gains taxes as if you had.

To avoid taxes on capital gains when you sell an investment property, consider a 1031 exchange. If you plan to take your profit from one investment property and use it to buy a similar investment property this option might work for you. Speak to your accountant about this option and make sure you understand the requirements. There are various rules regarding the handling of funds and deadlines that must be met in order to avoid the tax implications.

(Please note this blog should not be construed as financial advice. It reflects my opinion and experience only, which might not apply to you. Always consult your accountant before you make financial and tax decisions.)

Buyers Should Request a CO

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.

Stamford | Greenwich | Darien | Norwalk | Fairfield | Wilton

NAR Reports Home Sales and Prices Up at Close of Spring Market

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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.

Source: NAR (National Association of Realtors)

SONO Loft Rental – Norwalk, CT – $1750 – Parking Included

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Mid-Year Report 2016 v. 2017 Single Family and Condo Sales – Stamford, CT

Jan – June 2016 Jan – June 2017 Percentage Change
SF Total # Sold 320 343 +7%
SF Median Sold Price $562,500 $600,000 +6%
SF Median Sold PSF $254.02 $260.51 +2%
Highest SF PSF $1,020.41 $840.41  -17%
Lowest SF PSF $119.64 $98.11 -17%
CN Total # Sold  304  318  +4%
CN Median Sold Price $313,000 $290,000 -7%
CN Median Sold PSF $243.48 $250.29 +2%
Highest CN PSF $727.49 $546.32 -25%
Lowest CN PSF $104.17 $94.74 -9%
Highest SF Home Sold Price $3,100,000 $3,702,500 +19%

Observations:

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.

Click here for homes that reflect the median closed PSF for Mid-Year 2016 and 2017.

Click to view the homes that reflect the highest and lowest sold PSF for Mid-Year 2016 and 2017.

Click here for the SF homes with the highest sale price in the first six months of 2016 and 2017.

Please note:

  • Condo sales include coops
  • PSF is Price per Square Foot
  • Data includes CMLS recorded transactions only
  • The surrounding towns tend to follow similar market trends when compared to Stamford. For data on your specific town, please email your request to prattray@kw.com