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Property Rounds: Waterfront properties making a comeback
Jan 07, 2015

Waterfront homes in southwestern Connecticut, those shoreline gems that give the region its Gold Coast reputation, are back in favor following a slump prompted by a recession and hurricanes, according to a new report from William Pitt Sotheby's International Realty.

"The real estate market for waterfront homes has been in flux for the last six years," said William Pitt Sotheby's CEO Paul Breunich. "And the biggest turnaround now wasn't just in time since the storms had passed, but it's really been the stability of the Homeowner Flood Insurance Affordability Act of 2014. I think that's what brought it back."

In March, President Barack Obama signed the act, which has made flood insurance easier to obtain for most buyers. The bill reinstates grandfather-clause subsidies for homes built before flood maps were drawn and restores the ability for a seller to sign their insurance policy over to a new buyer.

"Waterfront property here is some of the premium property in the country," Breunich said. "The market is coming back and the supply and demand is shifting more in demand, and you're seeing that with an increase in sales."

A report released last month by the real estate agency shows that waterfront properties -- especially in the high end -- have come back with a vengeance this year. Through the first three quarters, 91 waterfront properties closed in the towns of Darien, Fairfield, Greenwich, Norwalk, Stamford and Westport, up from 62 during the same period of 2013. And the sale prices are soaring as well -- up to an average of $3.9 million per home in 2014, compared to $3.3 million last year.

Getting sea legs back

In Stamford, nine waterfront homes sold in the first nine months of the year, up from five during the same period last year. The average price climbed 4 percent to $2.2 million.

Much of that is due to a newfound confidence, said Breunich.

"This is why real estate is so great: It's pure capitalism," he said. "If buyers think there's too much risk or it costs too much, they're not going to buy. But when it's right, you see movement."

And Stamford isn't the only market making gains. In Darien, real estate agent Pam Roberts represented a $1.2 million closing at 85 Goodwives River Road earlier this year. The property was originally listed back in June 2013, and was on the market for 11 months before going under contract this May.

"I'm surprised it didn't sell faster," Roberts said of the two-bedroom farmhouse situated on Gorham's Pond, a saltwater body just off the Long Island Sound. There are water views from each of the home's seven rooms. "People didn't understand the flood insurance laws and what had to be done."

Now that it's been a few years since a monster storm has rolled through Fairfield County, people are starting to get their sea legs back.

"We haven't had anything now since (superstorm) Sandy, and I think people think the danger has sort of passed," said Jill Bregy, an agent who recently sold a four-bedroom waterfront property at 1 Stony Point Road in Westport. "There will always be a market for direct waterfront."

And that market is geared toward luxury clients, purely as a result of economics. A study published by the Journal of Urban Economics in 2010 mapped every home in Greenwich between 1994 and 2007 and found that being within one mile of the harbor increased a home's value by 17 percent, while having a view of the Sound added 8.5 percent.

High risk, great reward

Still, owning waterfront property comes with costly risks. Sandy alone resulted in $500 million in private insurance claims in Connecticut, according to the Insurance Information Institute.

"You may take a beating, but there will always be a market because there's only so much of it," Bregy said.

And people are willing to take risks to make their way into those kinds of prestigious properties.

"We have plenty of people who, when a storm comes, they roll up their rugs and move their furniture to the second floor," said Roberts. "And then they go right back to living. The reason you're buying into the lifestyle is to have the beach nearby and the beauty, and they say, `Can we have a couple days inconvenience every 10 years? Yes,' and that's really all it is."

That kind of attitude seems to be back here in southwestern Connecticut, and Breunich said he thinks it will continue on in coming months as the market stabilizes and strengthens.

"When you look at these numbers, it's very overwhelming and exciting news," he said.