Malloy's State of the State

[Charles Wiegert]

I don't know if any of you caught the governor's state of the state address yesterday, but he did a pretty bad job of convincing me CT will be turning around. The entire speech revolved around the budget deficit in one way, shape or form. He said that to balance the budget they will be cutting aid to Towns. We all know that translates to higher property taxes. He also mentioned education and revamping how the education system is funded. Meaning lower performing districts will receive more money and higher will receive less of a pot that he mentioned will also be diminishing. Who knows what that will do to the house markets and favorability of school districts. I also work for a Town and we recently found out that our portion of the education aid from the state will be decreased this year from what was promised and budgeted. We also just got word that the state over extended the LOCIP program which is state bond money for capitol improvements and that they are reneging on that promise also. I understand the quarrels and i get that concessions are required, but it recently came up that Connecticut is #4 for the most moved out of state and that 60% of all moves in CT are out of the state. I am seriously reconsidering buying anything else at this time but the best i can hope for is property value to be stagnant. What are your opinions on the state of our state?

[Joseph Baccash]

Without getting too political, yes it's sad that CT seems like a dying state. It's hard to be optimistic about the fiscal future of the state. From a RE perspective, you have to invest on the basis of cash flow rather than appreciation. You can't expect any "free appreciation" but rather appreciation must come from adding value to the property (i.e. new kitchens/baths) through sweat equity or paying for the reno. Of course there will be little pockets of gentrification and amenity build-out (think West Hartford) but that's the exception. High taxes => businesses leave => fewer jobs => people leave => rents decrease and buyer pool thins. Connecticut doesn't have the luxury of California's population growth/topography/weather/Silicon Valley critical mass to mitigate an unfriendly business climate. I think the best option is to be conservative with your numbers. Assume zero price appreciation, increasing taxes, and zero rent growth. There's a way to succeed in CT, plenty of people do. It's just more difficult than other parts of the country.