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High Tide for Waterfront Property
Tax assessments spike value of shoreline real estate
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Business New Haven
9/15/2003
By: Richard Rangoon
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The town’s recent 12-year revaluation has revealed that the market for waterfront property is populated mainly by millionaires - lots start at about $1 million each.
However, higher market value means higher resale values, a consideration especially for those who own older, smaller homes and who wish to cash in, says Branford Assessor Barbara Neal.
On the other hand, many longtime owners of smaller homes can no longer afford waterfront taxes - which now range from $15,000 to $30,000 per year - and find themselves with no choice but to sell.
However, the town has a plan that allows qualifying owners to defer paying up to 75 percent of their taxes until they sell their property, Neal says. Branford charges four percent of the amount deferred when the home is sold.
Homeowners also can choose to take out a "reverse mortgage," in which they raise money - while retaining ownership of their home — through selling home equity to a bank. The amount of equity is limited by a federally set cap.
Some owners of smaller homes are moving up to waterfront homes, and people from outside of the area — more often than not New York City -are moving into lots and altering them to their taste, Neal says.
Demand for beach access, together with the benefit of the town’s social services, have driven up real estate prices throughout Branford. Smaller homes away from the waterfront average about $250,000, helping to boost condominium prices to more than $100,000.
One trend is for a family to buy farm property in northern Branford and then renovate the parcel into a second home, Neal adds.
Two towns to the east, although homebuyers typically must put up at least $1 million to buy waterfront property in Madison, the town’s roughly 200 to 250 waterfront lots are less expensive than those in some other shoreline towns, maintains Madison Assessor Patricia Hedwall.
Nonetheless, during this year’s revaluation, waterfront properties registered at three to four times their previous market values — and taxes on them skyrocketed proportionally. On the other hand, property in relatively unpeopled northern Madison saw barely any increase at all.
While the average home price in Madison is about $450,000, waterfront property can cost as much as $3 million, Hedwall explains.
Assessment of the town’s 8,200 parcels resulted in a 70-percent increase in Madison’s grand list, probably due in large part to the increased market value of the lots due to their proximity to the beach, Hedwall says.
Many buyers of waterfront property are coming from Greenwich and elsewhere in metro New York, but New England and the rest of the East Coast also are represented.
One reason for Madison’s popularity with New Yorkers might be a general hesitancy to make trips by aircraft since the September 2001 terror attacks, says Hedwall. Thus more New Yorkers want to be within driving distance of their vacation home. Madison’s proximity to Boston is another attraction to urban-dwellers.
Another trend is for homes to be used year-round. A vacation home’s owner now is more likely to make "academic" or "university" rentals in the off-season, and more families are choosing to live in Madison throughout the year.
More visitors to Madison are paying the taxes to support a year-round community because they are raising their families in the town. This is in contrast to an area such as the Thimble Islands, off of Branford and Guilford, which become deserted when summer ends, Hedwall says.
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