When It's Hot, It's Hot
“If you didn’t make money in 2020, then maybe real estate is not the right business for you,” says Graham Klemm of Klemm Real Estate who specializes in selling country properties and luxurious estates in northwestern Connecticut and nearby New York State.
Klemm Real Estate has five area offices covering the region.
Klemm said 2020 was the best of the best for the always strong Litchfield County real estate market. “It’s not just COVID,” that is driving the urban buyer, he said. “Interest rates are at 3 percent—if they were at 10 percent we could not be having these sales—and technology now makes it possible for people to work from home. Those factors account for half the sales.”
COVID may have added some pressure for people seeking a country haven but Klemm said the allure of the region is the continuing attraction. “Litchfield County is a fantasy land,” he said. “It’s a very special place. They are after the dream of living as a country gentleman or gentlewoman. That is what they are striving for.”
He cites the “charming villages” that dot the region with their antiques shops and fine dining, the possibility of finding properties with views and privacy, congestion-free roads and year-round activities as among the attractions. “That’s always been the case with the Litchfield County real estate market,” he asserted.
The urbanites have a list of things they are looking for in their dream homes. “The things that roll off their wish lists are water, views, amenities—those are the hot ticket items for their lives. A split-level ranch house is not on the list. People always want that which is unachievable.”
Privacy is almost always important to the high-end buyer. Klemm said many would like to find an historic building but they do not want them to be on a busy highway. “People’s bubbles are burst on Colonials because they are often built on a noisy highway. They were built by Colonial farmers who had a lot of land but built roads right up next to them. The trend is toward larger houses and this is never been an area of large houses. The Colonial farmers built efficient small houses so getting a house larger than four bedrooms hard.”
Thus there is a trend toward buying new buildings set deep in properties but not necessarily one for custom building. “Buying a tract of land and building a house is a two-year project,” he said. “Most want to buy with expectation that can buy and use in 60 days so they want something that is turnkey. They are not inclined to do work on a property and you can’t get a contractor to save your life.”
Similarly, the new buyer is not interested, at least initially, in whether the property is “green.” “It’s the esthetic that matters, not energy efficiency—that’s an ownership issue, not a purchase consideration,” he said. “Solar panels are ugly and unless you have a 20-plus year ownership plan, the numbers don’t make sense for geothermal. They might expect thermal pane windows but they are not looking for absolute ‘green.’”
He acknowledged that there are “sub-sets” in the real estate business. “There are lots of markets within markets. Village houses have an audience. Sold more houses in villages than many other Realtors. People like the character of the houses and the fact that they have elbow room and still can walk to town for the mail or to get some coffee.”
So, who are these urban buyers looking for a dream home in the region? According to Klemm, the demographic is changing. “Buyers used to be more mature,” he said. “It used to be a 65-year-old. Now most are under 50 and I have lots of clients younger than that. They may bring their kids up to go to prep school and realize they will be visiting the area for the next four years so they buy a house rather than staying in a hotel. Along the way, the house becomes the family homestead. Most people stick to a 10-year timeline.”
The people drawn to the area tend to be low-key. “They may want to live in a lovely house with all amenities but we don’t get the Wolf of Wall Street types who want to wear gold watches and show off their wealth,” he said. “We get the people on the fringes of Wall Street—the strategy players. Maybe a money manager but not a trader. They want to come here and wear t-shirts and jeans and be anonymous.”
The current market is a dream come true for Realtors, except for one thing—inventory. Klemm said there is always a shortage of properties with all the right qualifications, which results in price escalation.
“Death, divorce and distress are the three ‘Ds’ of the real estate business,” he said. “There is always low inventory. The only thing that can make people sell is money. So, prices going up is the only possible outcome. In 2020, everyone was scrambling looking for inventory.”
He warned that would-be buyers need to be prepared to act quickly. “They no longer have the luxury of time,” he said. “It used to be that they would come up and look at a property and then come back two or three weeks later for a second look then come back a couple of weeks later with the mother-in-law. They can’t do that anymore. I’ve had a couple of transactions where the property was on the market for only a few hours.”
At the moment, an average time on the market is six to eight months.
Spring and fall are traditionally the Realtor’s strongest months. “A lot of sellers will tell their kids at Thanksgiving that this is last Thanksgiving in the Connecticut house so we do get some new inventory at that time.” Mid-winter is hard because it is hard to envision a property’s grounds under snow. But this year “is bucking all the trends,” he said.
Sellers must be prepared for a lot of activity in their homes once they go on the market. “If you have COVID concerns, you will have to prepare for a lot of people in your house,” he cautioned. And there has never been a time when ‘less is more’ is true. Many people live in their houses too fully. Buyers try to look beyond your clutter but, if the market eases up a bit, there may be a need for stagers. Right now, if someone wants to sell there has never been a better time.
Klemm could not estimate how much property has appreciated in the past year. “It’s difficult to extract the increase because these are not cookie-cutter properties. This is not a market you can analyze for a property-specific area.”