Real Estate

It sure seems that houses are popping up all over our region. Main Street’s June monthly real estate feature looks at new house construction, and explores the reasons for this sudden burst of activity. How long will it last?

Who is building? Why?

At the same time that many Americans can’t pay their rent, a brew of economic, market, and demographic changes are fueling the new house boom in our area. With the stock market at an all time high, for some it seems like a time to take some profits and invest in hard assets, especially while interest rates are low and construction lending is available. Many Millennials have discovered they can live and work full-time within the weekend radius of a 100 miles from their pre-Covid offices. They can have lunch at home, avoid a commute by subway or highway, take a break in the garden, and go hiking at the end of the day. Covid may have driven them to the country, but working remotely has changed everything. For others it’s just the time to build the dream house they always wanted, despite the high cost of materials.

But why build when you can just buy an existing home? That’s not easy in this real estate market with historic low inventory of houses listed for sale, and high prices coupled with the need to renovate. Making a decision to buy on the spot and bidding wars with multiple cash bids over asking price make potential buyers feel hopeless. On top of it all, there are fewer buyers who like antique, or just old houses. They don’t want to renovate and are suspicious of the maintenance older homes may require. They imagine a house that suits their needs today – a home with space for living and working, offices, rooms, studio and gym space, and land.

“My goals for the new house have always been: simple, light-filled, and energy-efficient,” reflected one new homebuilder. “It is sited perfectly to take advantage of a beautiful view, the sun and privacy from the road.” (See photo of model below). “My existing house was deemed by a home inspector 15 years ago as only good for the short-term. It was an early design pre-fab and had not held up well. The wood was not high quality and is rotting. The insulation, if any remains, is way below effective.” Another Brooklyn couple purchased an old farm in Pine Plains, NY, and is waiting for a custom prefab to arrive on site to experiment with country living.

Start at the beginning

In order to build a house you have to start with something to build on. In the past it’s taken awhile to sell raw land, especially large tracts of land. Some properties have been listed for sale since the housing bubble. An example might be, according to www.realtor.com, a 91-acre property on Sawchuck Road in Millerton, NY, which was originally listed for $1,850,000 in 2008 and, after no takers and many price drops over the years, remained unsold until April 2021 when the parcel closed at $800,000. A modest one-acre building lot in Pine Plains came on the market in October 2020 sold quickly for $80,000 in April.

New York State data shows a 54% increase in land sales in 2020 compared to 2019 for towns in Dutchess and Columbia counties in the circulation area of Main Street Magazine. Over the border in Connecticut, land sales in the towns of Salisbury, Sharon, Canaan, Cornwall, and Kent reveal a similar pattern. In these five towns combined there were only 21 land sales from May 2019 to May 2020, but in the last 12 months there were 65 – more than triple the previous twelve months! And most of the homes planned for this land are just in the planning stages.

The septic test

In a rural area where sewers, if they exist, service only town centers, requests for septic permits are another indicator of construction activity to come for new houses, additions, and swimming pools. The Torrington Area Health Department was very helpful with our inquiry about requests for septic permits and ran a special report. We discovered that permits and inspections in the Torrington Area Health Department increased 51% in the first four months of 2021 compared to the previous year. More new houses are on their way. Septic installation firms confirmed that they are “backed up” with orders for installation of new septic systems.

Call back in the fall

“It’s off the charts – I have never seen it this busy. We can’t keep up,” responded Millbrook, NY, architect Jimmy Crisp. “I have to tell people to call me back in the fall if they can’t find another architect. I can’t even tell them when we can work with them. You can only do so much. We are working on a dozen new houses and I can’t count the number of additions. Almost every project has at least one or two home offices. There’s no sign that it’s slowing down, but this can’t last forever. Because of Covid people realize that they don’t have to be in a city office, they can be up here in the Hudson Valley and the Berkshires. But they still want to be close enough to go into the city when necessary.”

Builders, contractors, trades, and subs

It’s even harder to find a builder to add your house to their schedule. Construction firms specializing in already designed prefabricated houses, which often seem like a solution to save time and money, are also fully booked because of increased demand and COVID-related slow downs. Bob Segalla of Segalla’s TurnKey Housing in North Canaan, CT, was too busy to talk long but had time to say, “Every day two or three new potential clients call to ask about a prefab house. I wish we could spread them out over three or four years.”

High-end custom builders, like David Prutting of Prutting + Company Custom Builders, have followed their customers north from New York City as they have bought large tracts of land for new homes and a new way of living and working. Prutting even opened a satellite office in Millerton, NY, to strengthen his relationship with local trades and service his clients. According to Prutting, “The land is relatively affordable and people are taking money out of the stock market and investing long-term. They are thinking of creating gardens, raising animals, and even planting vineyards. The trend is remarkable and significant. It’s because of COVID and working remotely.”

Since it takes about a year from first contact with a builder to actually start construction expect to see more new houses going up.

Fridrik Kristjansson, the owner of Nailed It Building & Construction, [also the brother of this magazine’s owner] is building a large, modern farmhouse just outside the Village of Millerton, NY, based on a design he saw in a magazine. He secured the plans, modified them slightly, and construction began in January 2021. The 5,200 square foot house with three bedrooms was listed for sale in February at $1,495,000 and already has an accepted offer even though the house won’t be ready to move into until August (see photo above). “People are constantly calling about building new houses,” according to Fridrik. “I’m just trying to fit everyone into a schedule. It’s crazy out there.”

New house permits

Although land sales are up, architects are crazy busy and contractors are booked, evidence of a dramatic increase in new home building permits is mixed. Issuing of building permits happens after land is purchased, septic is approved, an architect is hired, and a builder selected. Mike Carbone, Salisbury’s Building Inspector, looked at his records and reported that there were five new houses permitted in 2020 and he expects eight or nine this year. Amenia’s building department has issued only two new house permits this year in the town – both for modular homes. BUT Silo Ridge Club applied for ten new houses inside the gated community owned by Discovery Land. In the Town of North East, Ken McLaughlin issued permits for four new houses in 2020 and expects about the same this year… he may be surprised.

What’s next?

There is a definite uptick in new house construction, not only driven by wealthy owners who can afford to spend $400 to $1,400 a square foot for a large luxury home. While in communities like LaGrange where 20 new permits were issued in one week, and Poughkeepsie where more affordable new housing is going up to meet the needs of the expanding medical and educational complexes, many new homes in our area are design driven and more expensive. Many of these houses will be appearing up long driveways on big pieces of land. They do not solve the problem of affordable housing or the general housing shortage. However, new house construction does supply jobs and will increase the assessed value of a town’s property tax base. There is no reason to suppose these trends are going to reverse anytime soon. It’s just beginning.

Christine Bates is a registered real estate agent with William Pitt Sotheby’s International Real Estate in New York and Connecticut. She has written monthly for Main Street Magazine since its very first issue.