Mergers and acquisitions have been the buzzword in the banking world for the past couple of years, but this year “M&A’s” were more common in the world of residential real estate.
Meanwhile, the market began to flatten out, and a Supreme Court case had all eyes on property rights in New London and throughout the nation.
Coldwell Banker Residential Brokerage and Prudential Connecticut Realty jockeyed for the No. 1 position in the state through a number of mergers and acquisitions in 2005. All the activity has changed the way smaller firms are advertising and has made it nearly impossible to determine market share, according to Barbara Pearce, president and chief executive officer of New Haven-based H. Pearce Co.
“That’s kind of changed a lot of the landscape of things,” Pearce said. “It’s a different kind of competitive landscape.”
Coldwell Banker and Prudential Connecticut took turns announcing acquisitions almost all year. In June, Rocky Hill-based Prudential Connecticut announced a merger with Waterford-based Pequot Properties, which expanded the company’s footprint and allowed it to cross the border into Rhode Island. Pequot had 160 sales associates and offices in Danielson, Mystic, Norwich, Stonington Borough, and Watch Hill, R.I. The company had more than $390 million in sales volume last year in residential, investment, commercial and industrial properties.
Also in June, Coldwell Banker announced it had added an office in Woodbridge after purchasing a well-known firm, Harriet Cooper Assoc., its first acquisition in Connecticut in 2005.
Cooper’s firm accounted for a total closed-sales volume of more than $55 million during the 12 months before the acquisition. Cooper has been a top producer in the Woodbridge market for 30 years and will continue to work with Coldwell Banker Residential Brokerage. The 16 associates who worked at her firm will work for Coldwell Banker.
Two months later, Prudential Connecticut announced it had acquired the 16 corporate-owned offices of New Haven-based The William T. Beazley Co. The acquisition was designed to strengthen the company’s presence in and around New Haven.
In October, Coldwell Banker announced the acquisition of the well-known Orange-based firm William Orange Realty, which also operated offices in New Haven and Woodbridge. Coldwell Banker also had acquired Newtown-based Curtiss & Crandon Realtors and Rochelle, N.Y.-based Marjorie Whol-Town & Country by that time.
A month later, Prudential Connecticut announced that it had purchased the assets of the Beazley Co.-Hamden. The acquisition of the affiliate of the former New Haven-based The William T. Beazley Co. followed Prudential Connecticut Realty’s August purchase of Beazley’s 16 corporate-owned offices.
All of the changes made it difficult for smaller companies to determine market share – both Prudential Connecticut and Coldwell Banker routinely claim to hold the most. And the way that the market share is calculated adds to the confusion, Pearce said. Coldwell Banker, for instance, is actually made up of different companies, although it advertises itself as one.
The acquisitions also make it difficult to determine companies’ advertising strategies, Pearce said. Many smaller firms are waiting until next year before figuring out their own strategies.
A Balanced Market
The acquisitions and jostling in the marketplace came during a year when residential real estate shifted away from the seller’s market that has been in place for the past several years. It is not yet a buyer’s market, but it is a more balanced market, according to Connecticut Association of Realtors President Robert Fiorito.
“You’re seeing houses on the market for longer periods of time,” Fiorito said.
But experts have been predicting such trends for about four years, and now they are actually happening.
“It’s pretty much what we were expecting,” Fiorito said.
Pearce said she saw similar trends.
“The market’s much slower than it was at the beginning of the year,” she noted.
People are changing how they are pricing homes they place on the market. Before the flattening began, sellers were taking the price that the house sold for previously and tacking on $20,000. Now, that is not working, Pearce said.
“Those days are over,” she said.
But Peter Helie, chairman and chief executive officer of Prudential Connecticut, has a sunnier outlook for the market. On the national level, some factors, like the hurricanes in the South and rising energy prices, kept buyers back. That had an impact on October’s sales. But then November picked up, and Helie expressed hope that December’s final numbers would be equally strong.
“Basically, it was one of the best years in the history of real estate,” he said.
One of the biggest developments in residential real estate this year had to do with property rights.
In July, the U.S. Supreme Court voted 5-4 that New London could take a group of privately owned homes to build a private development that the city government says will help revitalize its struggling economy.
The case, Kelo v. City of New London, centered on a group of homeowners, including Susette Kelo – who is named in the case – fighting to save the homes where many of them have lived for years.
The New London Development Corp., a not-for-profit group that works to revitalize New London’s economy, was transferred eminent-domain powers and decided to use them for a mixed-use project that will include a hotel and conference center, 80 units of housing, office space and other developments designed to spur economic recovery.
Many local officials and organizations – including the Connecticut Association of Realtors – are hoping legislators will pass laws that will limit eminent domain and protect property rights.