Why Should You Invest in Real Estate in Connecticut?
Connecticut is the center of New England. It sits right in the middle of a beautiful selection of cities; New York to its east, Rhode Island to the west, Massachusetts on its north side, and Long Island Sound to the south. You’d be hard-pressed to find towns with better locations than this.
It also has scenic landscapes of rolling mountains with excellent hiking or skiing. Peaceful beaches also contribute to the appeal of the state. The state’s natural beauty is one of many reasons that realtors in Fairfield, CT tout its ideal location for families and millennials.
Connecticut also has a very diverse economy with various sectors like agriculture, tech, manufacturing, and finance. The 17 Fortune 500 companies in the state, like United Technologies, Xerox, and United Rentals, are just a few of the factors contributing to the economy of the thriving state. Not to mention that the state has a very rich tourism industry that earns over $15 billion yearly.
A thriving economy means a thriving job market. People all over the country who are in search of comfortable housing and profitable jobs have begun making their way to Connecticut to take advantage of its many opportunities.
Connecticut is still the state with the highest per capita income in the U.S. But with this high average income comes a high cost of living. Real estate agents in Connecticut point to house affordability as another thing that has caused a bit of an issue in the state’s real estate market.
What Should Investors Consider Before Investing in Connecticut?
Even though Connecticut had a thriving economy, investors still need to be careful before diving nose-deep into the real estate market. There are a few factors that should be considered:
Rising Home Values
Connecticut’s median home value is way above the national average. Additionally, the value of homes in Connecticut has surged in the past year. There are speculations that this value will continue to increase in the coming years. The median rent prices in the state are also relatively expensive. But despite the high buy-in price, the Connecticut real estate market will give a good ROI. The home values have been appreciating steadily. Combined with the solid rental market, the right set of conditions is in place for real estate investors to make a profit from their investment.
It is essential for an investor to look into the market trend of home values before investing in real estate. It would be devastating to invest in an area only for the value of homes to begin declining within a short time. Not all places have the ability to continue appreciating value. When investing, you must be sure that you are acquiring an asset, not a liability. Though the state has a positive trend overall, research the specifics of each town before investing.
Not Tax-Friendly for Retirees
Retirees in Connecticut have to pay taxes on their income. This tax extends to the withdrawals they make from their retirement accounts and the social security they receive. However, the state of Connecticut excludes low-income retirees from social security taxes. However, taxes on property aren’t safe from taxation. This can make it difficult for low-income retirees to own homes.
One of the things that determine whether an investor will get profit from real estate is the ability of individuals to purchase or rent homes. The kind of tax system in place in a location often determines the number of homeowners or renters in the market. Not knowing the level of tax-friendliness in an area can be costly in the future. The taxes can often point you in the direction you should go when it comes to your real estate investment.
High Tax Rates
The state of Connecticut has property taxes that are much higher than the national average. It is the state with the 4th highest property tax in the country. The income and sales taxes are high as well. These can make it difficult for residents to own homes in Connecticut.
Just like with taxes for retirees, you need to be sure of the property and sales tax system in your locality. This is so you can have proper guidance on how best to invest. Considering home affordability is an issue due to the taxes, it may be wiser to invest in rental property.
Delinquency rate with high mortgage
Like other things in Connecticut, the mortgage delinquency rate is above the national average. With recent pressures from the national economic stress, a lot of homeowners are barely treading water as regards their mortgage payments.
Between high tax rates for retirees, astronomical property taxes, and growing mortgage delinquency, Connecticut is a hard place for homeowners. However, this has increased the need for more rental property. For anyone looking to invest in real estate in Connecticut, rentals may be a better option since most of the present factors make it difficult for people in Connecticut to afford their houses. A lot more people have begun leaning into staying in rental property. For an investor studying the real estate market in Connecticut, the rental property just might be an untapped gold mine.
What Markets are Best to Invest in Connecticut?
One of the most sought-after locations in Connecticut is Glastonbury. Not only is the economy more stable than its neighbors, but it also has a relatively steady population growth rate with a low unemployment rate. Also, it had a lower commute time than the national average. It is one of the country’s best teleworking and remote work cities.
Even though house affordability is a bit of an issue, the demand for residential property is gradually increasing as the state’s economy becomes stable. West Hartford and Portland are other real estate markets worth looking into in Connecticut. They each have high per capita incomes and all the perks of being in a big city without the high cost of living that discourages people from big cities.
