There is no season like autumn in the US, and there is no better place to experience it than Connecticut. It may not have the raw, wild beauty of Maine, but the scattering of genteel villages, peaceful rivers and cobalt-blue lakes that break up the foliage here especially in the forested, tranquil Litchfield Hills more than make up for it. The mere glimpse of this is enough to make you want to set up home in the Constitution State. Except, of course, that hard-nosed property investment and autumnal romance don’t always go hand in hand. And just now, British buyers looking at the American market must be wondering whether they would do better to ‘leave it well enough alone’, as they say in the US.
US housing saw a sharp increase in value between 2001 and 2005, which was linked to low interest rates and renewed attention to property investment. However, as was well documented in the UK press, the market was hit this year when a rise in interest rates triggered problems in the ‘subprime’ market. In the ensuing months, property transaction volumes and, in some cases, prices have dropped. Even Connecticut was affected, despite its affluent demographics. Ray Kehrhahn from the University of Connecticut explains: ‘In Connecticut, we don’t have the issue with the subprime lending crisis that other areas of the country have. [But it] has reduced the availability of mortgage money across the board.’
However and it is a big however sterling-heavy British investors have a sizeable inducement to buy Connecticut property at this wobbly time: the weak dollar. And cash-in-hand buyers, British or otherwise, are going to be particularly welcome in a market where transactions risk falling through because buyers find it harder to secure financing. When it comes to premium country homes, it also helps that the luxury market in Connecticut follows slightly different dynamics from the mainstream one. In Litchfield County ‘values for the most sought-after properties are continuing to climb’, according to Sean Aikman of Sotheby’s International Realty. ‘The number of sales to date this year for properties listed over $1 million has increased 37.4% over the same period last year, and the average selling price has increased by nearly 9% during the same period.’
Indeed, prime American buyers remain remarkably positive about the value of their homes, according to a recent survey by agents Coldwell Banker Previews. More than a third of the respondents believe that the value of their primary residence will increase significantly over the next five years. Jim Gillespie, president and chief executive officer of Coldwell Banker Real Estate Corporation, says: ‘It is important to remember that in addition to being a home, real estate is a long-term investment, one that can withstand periodic changes in the market.’
In Connecticut, in particular, quality homes in prime locations such as Greenwich a waterside town 40 minutes’ by train from Manhattan, which is home to as many antiques shops as hedge fund companies look set to remain a sensible buy. Weekend homes in the Litchfield Hills are also sought after, both by New Yorkers and by people who do business in the City. Many believe real estate in the north-east of the US is a safe haven for money.