Bridgeport, Connecticut
“Park City” Real Estate Bucks Post-Pandemic Trends, Presents Headwinds
By Carole VanSickle Ellis
All around the United States, luxury real estate markets are softening, but Bridgeport, Connecticut, also known as “Park City” for its 1,300 acres of public parks, is home to one of only three luxury markets bucking the trend. In the northeastern town that shares a metropolitan statistical area (MSA) with Stamford, Connecticut, luxury property listings increased toward the end of 2023 while prices in this housing tier continued to rise. In fact, the entirety of the Bridgeport market is still going strong in 2024 due to ongoing, strong demand for housing in the area and limited inventory.
Bridgeport is part of a cluster of northeastern markets designated by Realtor.com as some of the hottest housing markets in the country. These markets, wrote Realtor.com economic research analyst Hannah Jones in June of last year, “boast strong employment conditions…high housing demand, and tight inventory.”
For real estate investors, the Bridgeport market is more accessible than many other northeastern markets due to the availability of land for multifamily development and a relatively large number of older WWII-era homes in need of updates and renovations.
“About 40% of Bridgeport’s housing stock was built prior to 1940 and would benefit from the kinds of energy-saving, cost-saving upgrades that would occur more routinely in a housing market that features significant new production,” noted city planners in a 2023 housing analysis. “Bridgeport is home to a great concentration of construction-related businesses… [and] this industry-cluster uniquely positions the city to capitalize on increased housing production,” the research team concluded. “Residential development can be a core industry within Bridgeport just as it is in the U.S.”
“[Bridgeport] has been sort of a diamond in the rough, but we are getting discovered,” local developer John Guedes told the New York Times in late 2023. Guedes. His construction firm had just acquired a former Holiday Inn and announced plans to convert the 268-room hotel into roughly 100 one- and two-bedroom luxury apartments catering to young professionals.
Guedes predicted his residents would likely “take the train for work to New York City” and would pay rents averaging $2,750 a month. The project has been underway since 2022, when the hotel closed its doors and fell victim to hospitality industry struggles in the wake of the COVID-19 pandemic.
Guedes’s company, Primrose Companies, recently received approval to move forward with a riverfront condominium development on the Housatonic River after a local judge ruled its application for development rights could not be denied by the municipal Planning and Zoning board, which had bogged down the process for six years. Guedes expects those townhouse units to list for just under $500,000.
The ruling is important for Guedes and other local developers because the judge stated in the ruling, “If an application conforms to regulations, the board has no discretion and must approve it.”
As is the case in many markets presently, Bridgeport’s housing inventory struggles with affordable housing availability. For investors, the acquisition process is challenging because many owners are electing not to sell due to difficulties finding and financing another home in the area.
A Prime Location for Commuters, but More Single-Family Housing is Needed
Thanks to a median home price more than $100,000 lower than national prices, more than $450,000 lower than median prices in New York City, Bridgeport has emerged as an ideal location for commuters to the Big Apple. Trips into New York City and surrounding areas are entirely manageable by train, bus, or ferry. Commuters on the Metro-North railroad reach Manhattan in less than an hour.
To serve this commuting population, Bridgeport has a number of multifamily developments currently underway. However, local inventory of single-family residences remains low. In 2023, Bridgeport posted a 61% year-over-year increase in housing permits, but most of those permits were for multifamily buildings. Interest in multifamily assets from out-of-state investors has also pushed demand for these developments (and their price tags) higher, creating a space in the market for investors willing to think creatively about the creation and acquisition of single-family properties.
Connecticut Realty Trust chairman Robert Kligerman told the Hartford Business Journal in late 2023 rising prices in the distressed multi-family sector pushed his family company into build-to-rent single family residential (SFR) construction and duplex developments. Kligerman leveraged the purchase of a multifamily property with an attached 35 acres approved for single-family development in neighboring Danbury to ultimately build 23 duplex-style houses and 19 single-family homes that will be exclusively rentals. The community includes a pool, clubhouse, and dog park, and residents pay between $3,400 and $4,500 a month in rent for their units.
However, there is an ongoing need for more single-family housing. In March 2024, Construction Coverage ranked Bridgeport in its “Bottom 15” for small cities with single-family homes. Currently, only about 41% of housing in Bridgeport is single-family. Local real estate professionals and analysts blame the failure of local, residential construction to “bounce back” after the 2008 housing crisis. According to data from the Connecticut Department of Economic and Community Development, residential construction rates were far below peaks reached in the early 2000s and actually falling in 2015 and 2016, when the rest of the country was marking the start of recovery from the Great Recession and the housing and financial meltdowns.
A combination of suppressive factors contributes to Bridgeport’s lack of single-family residential construction, writes CT Mirror housing reporter Ginny Monk. “The state faces a shortage of construction workers as well as rising costs of land and materials,” she said, adding, “Many construction projects are also slowed or halted by what experts say are restrictive local zoning ordinances.”
For an investor able to acquire properties for renovation or develop new single-family units, there is great opportunity in Bridgeport. Connecticut has tried to incentivize developers to build more units of all types and consistently include “middle-income units” through a combination of tax credits, loans, and grants, but experts say inventory will not loosen any time soon.
Nandini Natajaran, CEO of the Connecticut Housing Finance Authority, recently warned the dearth of single-family starter homes would likely continue in Bridgeport and around the state because there are programs to support the renovation and repair of existing homes, but there is little support for new construction.
“Unless it is being highly subsidized, I would say virtually nothing is being built that [could be] considered a starter,” said CEO of the Home Builders and Remodelers Association Jim Perras. He added housing will continue to get more expensive as long as state and local governments continue to create roadblocks in the permitting and zoning stages of new construction. “There is no secret…that restrictive zoning really artificially inflates the costs of land,” he said.
Proceed with Caution
For real estate investors considering entry into the Bridgeport market, it will be important to factor in local complications associated with starting new projects prior to getting started. Due to the cost of land, cost of labor, and holding costs associated with renovating homes in Bridgeport, WalletHub actually ranked the market as one of the worst in the country for fix-and-flip strategies in 2023, positioning it as 161 (of 172) for remodeling costs, and 89th for market potential. Longer-term strategies like rental ownership will likely be a better fit in this area, although it seems probable that exiting a fix-and-flip deal, once it is completed, will not take long. However, even with prices projected to rise more than 7% in 2024, high project costs could depress returns.
Bridgeport is a market to watch for future opportunities, but be aware of the headwinds investors face when participating in this market.
SIDEBAR
By the Numbers
6.2 // percentage luxury listing page views of properties in Bridgeport rose in 2023 (Realtor.com)
10 // percentage by which high-end housing supply fell in Bridgeport during the same time period (Realtor.com)
$335,000 // median sales price in Bridgeport as of March 2024 (Rocket Homes)
11.7 // percentage by which sales prices in Bridgeport have risen year-over-year as of March 2024 (Rocket Homes)
62.7 // percentage of homes currently selling over asking price (Rocket Homes)
15 // rank on Realtor.com’s 2023 “Hottest Housing Markets”
28 // rank on Realtor.com’s 2024 “Hottest Housing Markets
