Real Estate Investment in Connecticut

Why Invest in Connecticut Real Estate?

Connecticut is conveniently located in New England, with New York to the east, Rhode Island to the west, Massachusetts to the north and Long Island Sound to the south. Its location, coupled with rustic landscapes - including mountains for hiking and skiing, and beaches for sailing and swimming - make the state a great place to call home for millennial, families and empty-nesters.

Connecticut’s diverse economy is driven by agriculture, insurance, technology, finance and manufacturing. And the state’s film and tourism industry generates roughly $15 billion annually. Currently, Connecticut is home to 17 Fortune 500 companies including United Technologies, Charter Communications, Xerox, Eversource Energy, United Rentals and EMCOR Group. The state’s growing job market is attracting top talent from across the nation, all whom are in need housing.

Although, the Constitution State currently ranks as one of the slowest states to bounce back from the 2008 economic downturn, it currently has the highest per capita income across the country. Unfortunately, however, the cost of living is high and housing affordability is a serious issue.

Investment Considerations for Connecticut Real Estate

Investors should consider the following factors when looking to invest in the Connecticut real estate market:

• Rising home values - The median home value in Connecticut is well above the national average. What’s more, home values have increased by 4.5% over the past year and are expected to grow by another 4.1% in 2019. Median rent prices in Connecticut are also above the national average. Steady appreciation and a strong rental market are the perfect combination for real estate investors looking for maximum ROI.
• Not tax-friendly for retirees - All retirement income is taxable in Connecticut, including withdrawals from retirement accounts and pension payments. Social Security is partially taxed. While the state exempts low-income retirees from paying taxes on their Social Security, high property taxes offset the benefits of this exemption, which makes homeownership unrealistic for low-income retirees.
• High taxes – Property taxes in Connecticut are above the national average. In fact, the ‘state’s average effective property tax rate is 2.02%, which is the 4th highest across the country. Connecticut’s income and sales taxes are also above national average, which can make housing affordability an issue.
• High mortgage delinquency rate – Connecticut presently has a 2.2% mortgage delinquency rate, which is much higher than the national average of 1.6%. Couple with the fact that the state is yet to fully recover from the 2008 economic recession, where some areas saw 20% + depreciation. Many homeowners are still underwater on their mortgages, which is feeding rental demand.

What are the Best Markets to Invest in Connecticut?

Glastonbury is one of the most coveted places in Connecticut. The city has a stable economy and steady population growth, as well as an unemployment rate that is below the national average. The average commute time is below the national average, and it currently ranks as the third best city for teleworking in the country. There’s increasing demand here for both residential and rental properties alike.

Other real estate markets in Connecticut worth exploring include West Hartford, Portland and Plantsville. All have low crime rates, high per capita incomes, and the amenities of big city living, without the high-price tag associated with living in one.