The real estate market boom that was set in motion in the early days of the COVID-19 pandemic was still running at a madcap pace in Wilton in the summer of 2022.
But with summer transactions now closed, GOOD Morning Wilton is taking a closer look at how Wilton’s real estate market — both residential and commercial — has fared this year and what some local experts are observing now.
The Residential Market
For the first three quarters of the year (Jan. through Sept. 2022) Wilton’s single-family housing market has been marked by low inventory and high prices. According to our analysis of SmartMLS data:
- Inventory was down. There were 263 new listings for single-family homes — that’s down nearly 30% over the same period in 2021, which had 371 new listings.
- Properties moved extremely quickly. Single-family homes averaged just 45 days on market (from listing date to contract) compared to 64 days in the same period in 2021 — a 30% decline.
- Prices rose sharply. The median price of a single-family home increased significantly (+14%), from $935,000 in 2021 to $1,068,000 in 2022, with selling prices averaging 7% above list prices.
A Qualitative View
For insights on those market dynamics, GMW reached out to Tracy Armstrong, a realtor in Berkshire Hathaway Home Services‘ Wilton office. Armstrong has lived in Wilton for 23 years and has been a real estate agent for 21 of those years.
She believes the low inventory is a key part of the story.
“We’ve been dealing with the deficit of inventory ever since the pandemic started,” Armstrong said. “We had all this excess [inventory] and then all the houses were no longer sitting [unsold]. People who’d been waiting to [sell] put their house on the market and they sold it.”
“Our inventory is still really low right now,” Armstrong said.
In fact, as of Nov. 13, Wilton had just 35 active listings (31 single-family homes and four condominiums) compared to pre-pandemic levels of 150 or more listings.
Along with low inventory, interest rate hikes have proven to be a critical factor in the market. Following four interest rate hikes by the Federal Reserve this year, mortgage rates have climbed to 7% or higher.
“We still have a very hot market in the sense that there’s no [inventory] and there are still buyers out looking, and houses are still selling. But with the interest rates going up, it does change things,” Armstrong said.
“There are people that were priced out of the market,” Armstrong explained.
Potential buyers were not only dealing with escalating prices driven up in bidding wars, but also with declining affordability, due to rising mortgage rates.
Those dynamics, Armstrong says, are especially difficult for first-time buyers. Homes that were affordable to them last year may now be unattainable after factoring in the double whammy of higher interest rates on top of higher prices for those homes this year.
Armstrong thinks building inventory will be critical to get those buyers back in the market. She sees many of them as “taking a break” from their search rather than giving up entirely.
“I think buyers who were priced out will probably be ready to get back into it as the market pricing starts to stabilize,” she said. “That’s probably going to take a little bit of time. We have to build inventory before that.”
Bolstered by the current low inventory, prices aren’t expected to decline precipitously, in Armstrong’s view, but are more likely to “stabilize” from the frenzied bidding wars seen in previous months.
“We’re seeing some price reductions with some of the houses that are coming on [but] we’re also seeing some multiple-offer situations — not quite as many, but those are still happening.”
Armstrong says homes offering something unique or special are still commanding strong prices.
“There’s a demand for charm, character and specific locations, so those tend to go a little higher than expected versus some of the other homes” that Armstrong says may not have the same perceived value or turnkey condition.
More Than Seasonal Change
Seasonal slowdown is to be expected as the summer market has wrapped up and the holiday season approaches, but Armstrong senses another change.
“I wouldn’t say it’s quiet,” Armstrong said. “It doesn’t mean that things aren’t happening, but it’s definitely shifting a little bit and people are cautious.”
“The timing being what it is, which is fourth quarter, we typically start to simmer down,” she said. “But I also think people are sort of taking a break for now and they’re not in such a rush, whereas a year ago it was a frenzy.”
“It’s typical this time of year, but I also think that [buyers] are a little bit more cautious, particularly ones that don’t have the means to pay cash or put sizable down payments,” observed Armstrong. “Money is more expensive and people are just a little bit more cautious.”
That cautiousness Armstrong sees is not just among buyers.
“We’re not seeing as many houses coming on the market and part of it is the time of year, [but] I also think that there are a lot of potential sellers that maybe would like to sell their house, but they don’t know where they’ll go,” Armstrong continued. “The rental market’s hot. There aren’t very many rentals. There are people that want to move but are hesitant right now.”
The Commercial Market
If “caution” is the prevailing mood in the residential market, “redevelopment” is the operative word on the commercial side.
Redevelopment of outmoded office spaces to multifamily housing (or mixed use) developments is one component of the commercial market currently creating a lot of buzz in Wilton.
For insights on the commercial real estate market, GOOD Morning Wilton reached out to Jeff Kaplan, vice president of investment sales at TRUE Commercial Real Estate. Kaplan, a Wilton resident since 2006, is active in a number of projects in Wilton, such as the Wilton Heights project approved for 300 Danbury Rd. and a potential multifamily development at 19 Cannon Rd.
On Track for Change
Kaplan believes Wilton is poised for much-needed change in the market for office and retail space as well as multifamily housing development.
“Big picture? I think the Wilton [commercial] market is on a really good track for change,” Kaplan said. “That’s change that’s been needed for a long, long time, and it’s happening right now.”
One “tipping point” Kaplan highlighted is the shift away from large corporate offices — a trend that began before the COVID-19 pandemic but rapidly accelerated since 2020.
“The office market is on a decline, and those trends are not going to change,” Kaplan stated.
Some estimates have put Wilton’s office vacancy rate as high as 50%, with several notable corporate departures in recent months. Those departures include Toluna, a longtime tenant at Kimco‘s River Rd. complex (already under consideration for redevelopment) which moved to the Merritt 7 complex; Beiersdorf, which left a 46,000-sq.ft office at 45 Danbury Rd. for a new headquarters in Stamford; and multiple tenants at 20 Westport Rd., in the Wilton Woods office complex, now with over 300,000 sq.ft. of vacant space.
Even as employers like ASML, Blue Buffalo and Melissa and Doug (which relocated to 10 Westport Rd. in the Wilton Woods complex) continue to choose to locate here, Wilton still has excess office space that is unlikely to be filled.
“You have huge, beautiful [properties] in well-located areas that aren’t highest-and-best use anymore,” Kaplan said, citing several examples. “The owners of those properties are suffering. If you own a half-vacant building, you’re not making money anymore.”
“Those buildings are no longer viable in today’s economy,” Kaplan said.
Reasons for Optimism
Kaplan is nonetheless optimistic about the commercial market in Wilton, given the opportunity to “re-purpose” those outmoded office spaces, particularly along Danbury Rd. or in proximity to a train station.
“Wilton has one thing that none of the other towns around us have: Route 7. Wilton also has two train stations,” Kaplan said. “That sets the stage for tremendous opportunity for the Town to thrive.”
“What we don’t have are places for people to live that aren’t single-family houses.”
Kaplan says the Town needs more types of housing and a broader resident base before the Town can support more retail and restaurants. Indeed, Wilton’s Plan of Conservation and Development (POCD) and Affordable Housing Plan have identified a compelling need for more diverse and more affordable housing types in Wilton.
Kaplan emphasizes that Wilton is “highly attractive” to developers right now. But at first glance, Wilton’s inventory of commercial properties for sale seems even more scant than the residential inventory.
But properties listed for sale only tell part of the story, Kaplan says. Much of the activity is “off-market.”
“Prospective buyers do approach property owners even if a property is not publicly listed for sale,” Kaplan said. “That ‘off-market’ market is quite active.”
In fact, the activity Kaplan sees leads him to believe Wilton is “primed for a rebirth,” especially in light of successful applications for multifamily housing like 141 Danbury Rd., the former site of the Melissa and Doug headquarters.
“There are opportunities here, but [developers] have to know how to navigate, and that’s what the developer of [141 Danbury Rd.] did” in terms of working with the Town on negotiating acceptable setbacks, building height and density, without invoking the 8-30g affordable statute, Kaplan said.
“That shows the Town is ready, willing and able to work with developers,” he said. “I think we’re in a critical phase where we are about to go through this growth spurt.”
He added, “Wilton is so attractive for commercial development, I believe it will happen.”
Adapting to Changing Needs
Kaplan’s comments echo what First Selectwoman Lynne Vanderslice has been telling residents for some time: an era of redevelopment is here.
In an op-ed issued one year ago, Vanderslice explained why residents were seeing a flurry of applications for multifamily housing projects and what she called an unprecedented level of interest by developers.
“Demand for multi-family housing is strong. And there is an excess supply of commercial properties,” Vanderslice wrote. “One solution for owners of such buildings is to sell to a developer of multi-family housing.”
That solution also benefits the Town and taxpayers, as redevelopment improves property valuations and tax revenues.
Kaplan told GMW the model that benefited Wilton for decades — large single-family homes with residents who commuted to area offices — simply can no longer sustain the Town.
Vanderslice explained it this way: “20% of Wilton’s grand list is commercial… Any value declines reflected in the [next] revaluation will shift the associated tax loss to other taxpayers, including residential taxpayers.”
Bullish and More Bullish
Playing the lead role in economic development efforts for the Town, along with Director of Land Use and Town Planner Michael Wrinn, Vanderslice has been bullish in her outlook for commercial development for some time.
GMW spoke to Vanderslice on this subject back in March, when she hinted there were a number of potential projects in the pipeline. GMW reached out to Vanderslice again to see if her outlook had changed heading into the fourth quarter.
“I’m more bullish about commercial real estate than I was when we spoke in early March,” Vanderslice responded by email.
“ASML’s announcement of their intention to hire an additional 1,000 employees will have a significant positive impact,” she wrote. “ASML is already leasing space beyond their building at 77 Danbury Road. That expansion will need to continue.”
She also felt the ASML expansion would benefit Wilton’s residential market.
“The 1,000 employees will need both a place to live and a place to work,” Vanderslice said.
She cited Hartford Healthcare, located at 60 Danbury Road, as another example of a company expanding its footprint in Wilton. She revealed the company is taking additional space at 50 Danbury Road.
She emphasized that she and Michael Wrinn continue to talk with “a good number” of prospective businesses and property owners in ongoing economic development efforts.
“I expect we’ll see a good amount of activity in the first half of 2023,” Vanderslice predicted.