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Sea Change
Skyrocketing residential real-estate prices mean all but the wealthiest find themselves washed away from waterfront property
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Business New Haven
9/15/2003
By: Richard Rangoon
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A man dons his bathing suit in his waterfront house in Guilford, takes a walk across his private beach, and wades into Long Island Sound. He’s a millionaire. He pretty much has to be — because these days you’re not likely find a waterfront home in Guilford for less than $1 million.
According to some Realtors, the realistic minimum price for waterfront property — Connecticut property on Long Island Sound — is even higher. About $1.5 million would be a more accurate figure, says Ron Mazzacane of Coldwell Banker Coast & Country’s Madison office — at least in Guilford and Madison, which are in greatest demand for real estate.
Luxury property sales are tied to the stock market, so the demand for $1.5 million homes has been relatively weak in the current economy. Sales prices have stagnated in the past year and more such properties are remaining unsold. However, homes away from the waterfront — those within reach of more middle-class buyers — are selling briskly. The average price of a home in Branford, Guilford or Madison is $450,000.
People are attracted by the social services and "small-town feel" of these locations, Mazzacane says.
Most buyers come from New Jersey, Pennsylvania and New York City, and buyers are using the homes as weekend getaways all year round, rather than using them exclusively in the summer.
The recent revaluation of property in Branford and Madison has had a profound effect on waterfront sales. With a tax bill of as much as $1,000 per week in some places, property owners are deciding to sell. This is making area waterfront property more available than it has been in some time, Mazzacane says.
By comparison, East Haven and West Haven waterfront property is inexpensive and is comprised in large part of cottages rather than larger homes.
In New Haven, waterfront property — particularly in the City Point area — is more expensive than it is in neighboring East Haven and West Haven. Condominiums at the end of Howard Avenue command a fair amount of money, too, Mazzacane says.
Realtor Mia Distasi of the Beazley Co.’s Milford office says many of her buyers are people from the Fairfield County area who buy older waterfront homes and fix them up.
Many of these buyers are staying in Milford year-round, making in-season beach house rentals and off-season "academic" rentals less common.
She attributes attraction to the area partly to a recent New York magazine article citing Milford for its high quality of living. Milford also has a very long beachfront, which is attractive to many buyers, and an Audubon Society station at Milford Point.
Sales have been strong this summer, Distasi says, with the average home selling for $325,000. Waterfront property can range from $700,000 for a very modest parcel to about $2.5 million. The average waterfront lot is 0.2 acres.
A sample home — which has been on the market for some time — has 11 rooms, dates from 1890, and is on a 17-acre lot. The owners are asking $1.1 million for the property.
Cecila Jones, of H. Pearce Co., Realtors’ Guilford office, says waterfront property prices are up, but overall sales have slowed. However, business has been picking up in the late summer weeks.
She attributes the sluggish sales in part to the poor weather this spring — the time many prospective buyers visit and plan their purchases.
Guilford, Madison and Branford remain the most popular shoreline communities in greater New Haven, but some buyers are moving up the coast to Clinton, Westbrook and beyond to get more for their money.
Many buyers are from New York, and many are from states outside of New England, Jones says. Often these new buyers demolish waterfront homes built in the 1920s and 1930s and replace them with more substantial and/or updated dwellings, Jones says.
Frequently, long-time owners of older houses sell to avoid paying skyrocketing property taxes.
Local people have been known to refer to some new homes built on these lots as "McMansions," for their perceived gaudy excess.
An exception to the drop-off in sales for waterfront property is the Thimble Islands, which are off Branford and Guilford and serve as summer homes to such luminaries as Jane Pauley and her husband, Doonesbury cartoonist Gary Trudeau. Recently, one of the islands was purchased for $23 million, Jones says. The islands are used almost exclusively as summer residences, she says.
Some buyers are taking advantage of low interest rates to purchase homes in Branford, Guilford and Madison. Stocks fluctuate in value and on the whole have not been doing well, but real estate is a tangible asset and its purchase can be written off on a tax return.
The number of rental properties is decreasing and as a result summer rentals are becoming more expensive. For example, a summer cottage in Madison rents for about $8,000 and up per month. In the off-season, the same cottage rents for about $1,600 or more, Jones says.
The average waterfront parcel she sells is about 0.30 acres, with 75 to 100 feet of waterfront.
Barbara Pearce, president of H. Pearce Co. Realtors, says lot size and privacy drive the prices of waterfront property.
A small lot in Guilford or Madison could sell for about $1 million, while a larger lot might go for about $5 million.
Lots in Guilford tend to be bigger — and therefore more expensive — because local zoning rules mandate that one resident’s property not compromise the view from a neighbor’s.
Most waterfront areas have private beach associations and make their own rules affecting privacy and other issues. Guilford’s Old Quarry and Sachem’s Head waterfront areas are examples.
Pearce says prices for waterfront property have leveled off in the past six months after a period of strong demand.
One waterfront property owner is asking $10 million, but there have been no takers yet, she says.
Besides selling waterfront property, Mark Tarantino of West Shore Realty Inc. in Milford rents 40 to 60 waterfront homes a year, he reports.
Milford rentals cost from $1,200 to $2,500 a week in the summertime and attract people mostly from Connecticut, New York and New Jersey.
Although he says he has had no problem renting cottages this summer, the waterfront rental business on the whole has slowed down.
With interest rates so low, many people are choosing to buy property rather than to rent it, he notes.
Many of his renters are Connecticut natives who don’t want to travel far for their summer vacation. The price they pay depends on lot size and quality - sandy, rocky, or no beach.
Waterfront rental prices have increased by about 20 to 30 percent during the past five years, but have remained flat during the current economic downturn, Tarantino says.
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