June 2021 Greenwich Real Estate Neighborhoods Report

Is There a Fly in the Ointment?

by Mark Pruner

Looking at the first 20 days of July YTD, we have 604 sales for the year, which means we’ve already sold 15% more houses in 2021 than in all of 2019 when we only had 526 sales. Of those 604 sales, 93 of them happened in the first 20 days of July, which is already 20 sales above our 10-year average for all of July.

The fly in the ointment is contracts. We have 191 contracts waiting to close in mid-July compared to 208 contracts at the end of July last year. Now 17 contracts is not a lot and sales from week to week are a roller coaster ride. We may still see contracts exceed last year’s numbers, but the trend is not in that direction. Our weekly contract signings peaked in the first week of May at 57 contracts and has been mostly down since then. Last week we were down to only 26 contract signings. The chicken littles may actually think the sky is falling, but this drop in contracts actually, but it probably just shows a return to some level of normalcy, though at a higher level than normal. Our sales nearly always peak in June, or occassionally in July. This means that contract signing are seeds that are planted in April or May, so that closings can bloom in June and July. This drop in contracts, may not be a fly in the ointment, but only a stray flake of pepper.

But since, we are looking for straws in the wind, another shiver down your back can be seen in our inventory numbers. If you look at the inventory numbers they look like a fraternity tug of war between the Betas and the Deltas. The Betas (contract signings) moved the flag slightly down for the first two month of the year to a low of only 273 listing at the end of February. For the first two months, we had more buyers than we had inventory, but only by a smidgen.

Then the Super Bowl came along, the official start of the spring market, and the brothes from Delta (new listings) started moving the flag back as more listings came on than went to contract. Our inventory was like Lindbergh trying to gain altitude on his take-off from Roosevelt Field. We were climbing, but not real fast. By May we were still climbing but we were still flying nape of the earth. Our altitude should have been in the 600’s and even the 700’s listing number, but the best we could do was to peak at 342 listings in the first week of June. Since then we have been on a gentle decline to 310 listings this week. At this rate, Lindberg never would have made it off of Long Island.

For the Greenwich market, this drop in inventory when our contracts are also dropping, means that a bunch of the Betas and Deltas have headed for the bar and of the ones that are left the the Betas are winning. (Beth also hates when you mix metaphors. 😉  This drop in inventory happens nearly every year, but not from such a low altitudes

Where are sales headed the year? If you use a pencil and a ruler to make predictions, then you can take our first half sales of 511 and double them and expect to see our first calendar year with more than 1,000 sales. July sales would say that we are well on their way of hitting that number, but our contracts, and more importantly, our sliding inventory make it look like we won’t break the millineum.

Another sign of slowing market from frenzied to how is the number of expired listings. In the first half of the year with sales up 93% and inventory down 45% making for an incredibly pro-seller market we still had 78 listings expire unsold. These expired listings were across the board in pricing from $749K to $32M. We have some very well informed buyers and pushing the envelope on pricing too far just pops the bubble.

That’s the story townwide, but how are our neighborhoods doing? The short answer is mostly they are doing very well to great and the areas that look like they aren’t doing doing well are mostly victims of the law of the small numbers. For example, the days on market in Banksville is up 90%, but that’s because one of the five sales this year in Banksville had been on the market for 650 days.

Sales in Banksville, Byram, Glenville and South of the Post Road were all up more than 150%. The average price north of the Parkway was up 85%, but that was due to more high-end houses selling. When you look at the average of the sold price/sf that was up 41% and the sales price to assessment ratio was up 27%. Backcountry is definitely back.

Every neighborhood, but Byram, saw the average sales price to the assessment ratio go up by double digits from 12% south of the Parkway to 27% north of the Parkway. Days on market dropped by 44% and the average sales price to original list price was up 9% to 95.6% with several neighborhoods being above 98%. Buyers are not getting much of discount off of list price.

In the first half of the 2021 we sold $1.54 billion of single family homes up 133% from last year’s first half. This number all of the numbers should be taken with a grain of salt as the record breaking months didn’t start until August of 2020. So we are comparing the best half year sales ever in Greenwich to what was actually a slow first half as the Covid lock down slowed everything.

 Stay tuned, this rest of the year won’t all be smooth sailing, but it looks like another America’s cup win for the town.

1st Half 2021 Greenwich Real Estate is All Time Record

and so is June and so is the second quarter and so is the last 12 months

First the superlatives; June 2021, Q2 ’21, H1 ‘21 and the last 12 months were all time records in Greenwich and in most cases by a significant margin. For the month of June, we had 134 sales which blew away our prior record of 118 sales in September of last year. Prior to that we had had 114 sales in June 2011, which happened because the Connecticut legislature raised the real estate conveyance tax by a quarter of one-percent. (Greenwich sellers are very tax sensitive.) The to get a pure market demand record you have to go back to July 2003 when we sold 108 houses.  

For the first half of this year, we had 511 sales, easily beating the prior first half record of 403 sales in the first half of 2007, which was the height of the go-go era of home sales in Greenwich. In the first half of 2021, four of the six months were all time record months and the other two months, January and March only saw higher sales in 2007 and 2006 respectively.

The even more remarkable sales numbers come when you look at the last twelve months from July 2020 to June 2021. For that period, we had an incredible 1,104 single family home sales. (In a normal year, we average about 650 sales a year.) The best we could do for any prior 12 month period was the 835 sales from the second half of 1999 to the first half of 2000, which is as far back as the Greenwich MLS online data goes.

As you might expect lots of us Realtors were pretty busy with all this activity. I was swamped last week and didn’t write have a chance to write an article, but did send in my charts. The Greenwich Sentinel publisher, Beth Barhydt, put in 3 charts, that I thought told a pretty compelling graphical story.

It turns out I was miserably wrong. Over the weekend, I was talking to two retired execs who looked at this kind of data every day during their career. Their comment about the graphs in the paper, “We saw them, but what the heck do they mean?” So, let’s take a look at just what information you can glean from these charts (and also what you can’t.)

The chart that Beth runs the most frequently, is monthly single family home sales for the last two years, plus the prior 10-year average. She and I likes it, because it’s what most people talk about; “How are sales doing.” To get a good feel of that start with the faint grey line, the 10-year home sales average. If the current and most recent month’s sales are above the grey line, we are doing well and if they sales line is way above the 10-year average we are doing very well.

However, if you look at the 2021 monthly sales, you will see that May 2021 had only 88 sales down from April’s 89 sales. That should not happen in a normal market. As the 10-year average shows our sales normally rise rapidly from their low in February to their annual high in June, so why did they move sideways in May. The short answer is that you can’t know. We can ask a bunch of agents, mortgage bankers and real estate attorneys and make an informed guess, but that’s all it is. (My guess based on a bunch of conversations is that’s of people took their first vacations in over a year in May as vaccinations became popular.)

May’s sideways move, means that June’s big jump is exaggerated. If you move 20 delayed sales from June to May then we get a more normal curve, albeit at a high level. The other thing that we don’t get, if you move these sales, is an all-time record as September 2020’s 118 sales would beat this month. We all like to see good records sets and writers like to lead with them, but look past these records and see if their might be a reason for them not directly related to market demand.

Another thing to note in the June sales is just how steep the line up is. If you look at the other two years of sales, even the huge second half of 2020’s sales, we don’t see any lines that steep. This usually means that the next month will not spike up as much.

The chart that is more complicated is the inventory, sales, contracts and current months sales bar-chart. It has over 40 bars by price range. Some price ranges have a hump in the middle and some decline from left to right. In addition, sales year-to-date only go one way up, so the November chart looks nothing like the February chart even though both months are traditionally slow months for sales.

One thing you can tell by looking at this chart is where the inventory is. If you look just at the dark blue bars, you can see the most inventory is between $2 and 3 million dollars, and that would be wrong. The most inventory is between $1 and 2 million, but this price range is split into two price ranges. The reason for that, is that these are roughly the price ranges that buyers will look in. Rarely, will someone look at both $1.2 million houses and $1.9 million houses, but most buyers that are looking at $5.2 million homes will also look at $5.9 million homes. So, be careful comparing the heights of the bars if the width of the price ranges are not equal. For me the price ranges under $1 million are $200K wide and from $2 – 5 million are $1 million wide.

Another thing to look at is how sales, contracts and current months sales are doing within each price range. If contracts are higher than th current months sales, you can expect sales to go up in subsequent months, a sign of a strong market. If contracts and the current months sales are about equal that’s a sign of a slowing market.

Also looking for missing bars. In June we had no sales over $10 million. At the top end, we are seeing our only weak price range with 25 months of supply over $10 million and 25 listings. But, another thing to realize is that all things are relative. In June 2019, we had 70 months of supply over $10 million. Another thing to note that you can’t see from a static bar-chart is most sales in the over $10 million market has changed from the first quarter, when folks used to get big bonuses to the late third and fourth quarter in today’s market.

These first two graphs are like looking in the Hubbel telescope, the light you are are seeing is coming from the past. Last year when the market started to change rapidly from month to month and even week to week, I created the MP index, which while partially egotistical is shorter than saying., ‘the sum of all weekly sales, contingent contracts, pending contracts and contingent contracts becoming pending”. (In the old days we simply called a pending contract, a non-contingent contract.)

The first thing you’ll see when you look at the index is it jumps around from week to week, so you want to take a longer view. Clearly though when we have string of weeks when the index trend is up, the market is getting better. This almost always happen in the spring, but that didn’t happen last spring when weekly transactions in March and April were essentially sideways as Covid took hold.

In 2021, we started off with a busy January, pulled back a little and then climbed through the first week in May, followed by a sharp drop off in May. In June and so far in July our activity is looking like it is going to be more like the busy period in the second half of 2012. Now, that last statement is not to be trusted. Graphs aren’t an accurate predictor of the future.

Graphs can show you where you’ve been, they can even give you a decent sense of where we are, but we have way to many exogenous events, black swans and viri to expect that present trends will continue without change. They are useful for determining what you are facing, whether a buyer or a seller. I find them a lot more useful than a series of anecdotes and chance encounters with people. Sometimes you get a representative sample, but you could also meet the most depressed Realtors and the most estatic buyers and get the wrong impression of the market.

 The best thing you can do, is to keep up a general knowledge of the market, so you can see when things are changing in your market, and hire a real estate agent who tracks all of this on a daily basis.

Covid Creates Major Shift in Real Estate Demand for Various Greenwich Neighborhoods in 2021

How is Your Greenwich Neighborhood Doing in 2021?

How is Your Greenwich Neighborhood Doing in 2021?

May 2021 was a Dickensian month. It started out as the best of times and while it didn’t quite end as the worst of times, we won’t from possibly the best week ever in Greenwich with 85 transactions to 45 transactions by the end of the month. Having 45 transactions (sales and new contracts) in one week actually isn’t a bad week, it just that by the end of May it looked the Greenwich real estate boom might be over.

Well, the short answer is that June transactions show it’s not, though it’s not quite as good as it looks. The first two weeks of June, we had 57 and 55 transactions and then last week we jumped up to 72 transactions. That exceeds the highest number of transactions that we had in our best weeks in 2020, which itself was a record year.

The 72 transactions we had last week is 6% over the best week of 2020, but the details show it’s a maturing market. When we set the record of 85 transaction in the first week of May, we had 57 contracts and 28 sales or 2:1 ratio of contracts to sales. Our 72 transactions last week were in a 1:1 ratio of sales to contracts with 36 contracts and 36 sales. That ratio is actually fairly normal as June is typically our month with the most sales and contracts start to fall these deals close.

What we actually may be seeing is normal on steroids with more sales each month, but a more typical annual sales curve. In the first 20 days of June, we’ve had 82 sales which is very impressive given that our 10-year average for June sales in 86 single family home sales. If you gross up those 82 sales for the whole month, you’d be looking at new all-time June record of 120 single family home sales.

I wouldn’t hold my breath, but it’s a definite possibility that June 2021 could be third all-time, consecutive record sales month after April and May 2021 (and February 2021 also). Having said that the general consensus among agents is that market is going from frenzied to just hot, and you can see that when you look at total contracts. In the third week of May we peeked at 267 contracts waiting to close. We are now down to 250 contracts, which is still very good, but we have had 4 weeks of a flat to slightly down trend. This is what happens every year, just not at these levels, as the spring contracts mature into summer sales.

                The Neighborhoods

So where are all the sales? The answer is everywhere. If you look at a map of our sales in Greenwich it looks like a we have blue measles with major concentrations in Old Greenwich, Riverside, central Greenwich, Glenville and Pemberwick, and not so much in north Greenwich, but what the map doesn’t show is zoning. All of our “busiest” areas are also the areas that are mostly half-acre and smaller zones. In an R-7 zone (7,500 s.f.) you get 6 sales per acre or 24 sales per 4 acres.

Sold YTD Mid-June 2021

So north of the Merritt Parkway take the dots and multiple by 24 times in the four-acre zone and 8 times in the two-acre zone south of the Merritt Parkway. If you do that, backcountry, and particularly mid-country, are doing better than the hot front country, but will that continue?

Contracts mid-June 2021

The best indicator of how each area will do over the next couple of months is the number of contracts and there Old Greenwich and Riverside stand out as they have 85 of the 250 contracts waiting to close. The other thing you see is the grouping of contracts along our western border with New York. It’s not only Covid buyers from New York City, but also a fair number of buyers from Rye and other Westchester town that want a short drive to their relatives and former neighbors.

Actives

The other factor that’s having a big impact on sales this year is inventory. We have 3.5 months of supply and if you throw in those 250 contracts that are waiting to close, we have a super tight 2.8 months of supply. It looks like inventory is going to limit sales in Old Greenwich, and particularly in Riverside where we only have 26 listings with only 10 of those south of the Post Road. The other thing we are seeing is some pushback on prices as we saw in 2018, when we saw sales spurt in Cos Cob and Glenville as prices per s.f. in Old Greenwich and Riverside appreciated too rapidly for many prospective buyers.

This year has been an amazing year for Greenwich real estate. Our sales are up nearly 100% from 191 sales through the end of May 2020, to 376 sales this year. Our average sold price is up $932,951 to $3,062,441 from $2,129,489. This is a jump of 44%, but that doesn’t mean that your house went up 44% in the last year.

The huge jump in the average price is more of a mathematical curiosity, than a useful number when it comes to buying a house or refinancing. It is a real number and can be used when talking to your father in NYC or your brother in Silicon Valley or your sister in south Florida, since they are probably reading about average price changes in their states.

Four things are driving the average price change.  First people want bigger houses. The median size of a Greenwich house sold in 2021 so far is 4,242 this is 573 square feet bigger than the median size for 2019. Arguably, 16% percent of the 44% average price increase is due to larger houses.

Second, we are seeing some inflation as the Washington continues to pour money into the economy and keep interest rates artificially low. Estimates put Y-o-Y inflation at over 4% through April. Third, are our base comparison issues. All these year over year numbers are comparing a very robust first 5 months in 2021 to two and half months of recovery in early 2020 and 2 and a half months of lockdown after the mid-March 2020 lockdown. Lastly, we are seeing real appreciation driven by increased demand for houses while at the same time we have decreased supply. Sales are up 97% while inventory is down 45%.

A better way to look at this price appreciation is by comparing either the sales price per square foot or the ratio of sales price to the tax assessor’s assessment. When you look at the sales price per square foot, we are up 26% townwide. If you look at the sales price to assessment ratio, we are up 16% year over year.

So how much have properties appreciated in Greenwich in the last year. Well, it’s kind of like the old lawyer joke. When the retiring CEO was interviewing for a successor, he asked his general counsel what is two plus two. The GC’s response, “What do you want it to be?” Our appreciation is like that. All of these numbers are mathematically accurate, they just measure price appreciation in different manners. One thing you can be sure of is, is that when all three factors are up, we are looking at real appreciation.

                Greenwich Neighborhoods Booming and Boomlets

If the CEO were to ask his COO/property manager what is 2+2 is response might be, “Well where are we talking about.” While our townwide average SP/Assmt ratio is up 16% Y-o-Y, in Glenville and Cos Cob, we are looking at 26% and 21% increases respectively. These are the areas that didn’t do well in 2019 as the SALT tax deduction limitations impacted Greenwich and their recovery looks bigger as it’s off a smaller base.

The other major area with above average appreciation this year is Backcountry where the SP/Assmt ratio is up 18% Y-o-Y. Backcountry was a major beneficiary of the Covid driven lifestyle. If a buyer wanted the much desired mini-country club with pool, tennis court and basketball court/enlarged parking area; it’s a lot easier to do that on 4 acres rather than two acres.

                Our Neighborhoods Leaders

                Greatest Y-O-Y Appreciation ($/sf) – Backcountry

Backcountry posted a 51% gain on price per s.f. This astounding number is a lot of real appreciation along with some big sales at a premium price per square foot. In second place was South of the Post Road, where we are some big waterfront sales and some real volatility in the high-end market. We have a bunch of folks putting their house on the market and bunch of people buying them almost as fast as they come on.

                Greatest 6-year appreciation (SP/Assmt) – Byram

Byram has some of our most affordable housing. It got hammered in the recession, but since the assessment it has come back strongly up 39% since our last assessment date of October 1, 2015. In fact, so strongly, that it’s up only 4% this year as there are good deals in other parts of town. (North Mianus actually did better but with only 5 sales and the same with Pemberwick.) Old Greenwich continues to do well as it does year in and year out. Since 10/1/05, OG has racked up 30% appreciation.

                Biggest percentage increase in sales

Byram once again does very well here as does Banksville. In the larger neighborhoods South of the Post Road saw a 187% jump in sales in the first five months of the year. Backcountry was up 124%. (Backcountry is back.)

                Biggest Sales Volume Increase

South of the Parkway our biggest GMLS neighborhood saw sales jump by $234 million from $156 million to $390 million in sales. Coming in second was South of the Post Road where all the move-outs allowed a lot of move-ins resulting in an increase of $142 million in sales.

                Overall, it’s a hot year and we are staying at a very busy level.

The 2021 Greenwich Rental Market

High Demand for High-End,  Little Inventory for the Lower-end

Last year was an amazing year for rentals in Greenwich. Our overall rentals were only up  25% for the year compared to our 10-year average, but rentals over $12,000 per month were up 233% from 60 rentals to 200 rentals. Above $20,000 per month, our rentals were up 468% from 14 rentals in a normal year to 79 rentals in 2020, and, those numbers are certainly an undercount. The rental market was so hot, that many listings never made it to a public listing in 2020. If you had a rental listing with a pool last year and let your fellow agents in your office know, three other agents would announce they had someone that wanted to rent it.

This year we are seeing the number of rentals return to more normal numbers, but the mix is different. Rentals below $8,000 are down in 2021, while rentals above $10,000 have doubled. This seemed curious, so I talked to our rental guru here at Berkshire Hathaway, Roberta Jurik, who said that people don’t seem to be moving around as much this year compared to prior years. The uncertainty of people’s office situation means they are often staying in place.

 10 Yr Avg20202020 vs 10 yr Avg 2021 Anlzd2021 Annlzd vs. 20202021 vs 10-yr avg
    
1-200012971-45% 70-2%-46%
2001-40003223509% 283-19%-12%
4001-600016119219% 137-29%-15%
6001-80008310122% 60-41%-28%
8001-10000527747% 60-22%15%
10001-12000295071% 43-14%47%
12001-140001636128% 360%128%
14001-16000142899% 293%104%
16001-180001032208% 7-78%-31%
18001-20000625331% 14-42%148%
>200011479468% 72-9%418%
Grand Total8361,04125% 811-22%-3%

The pandemic increased sales about as much as we saw in the depths of the Great Recession. In the recession, sellers, particularly developers couldn’t sell their houses, so they decided to rent. Also, many people who could buy decided not to do so not wanting to buy a declining asset. By 2012, we were back to a “normal” rental market of 780 to 860 rentals per year. In the post-recession years from 2012 to 2019, our rental market was fairly steady within those bounds. Our rental market was also fairly tight with most properties renting in weeks or a couple of months as our rental market is always tight below $6,000/month where the majority of rentals is.

In 2020, demand for homes took off as people wanted to get out of NYC. This increase in demand resulted in increased prices and this led to a big jump in inventory, which led to more home rentals. People who never would have considered renting their houses were happy to do so if they could $30,000 or $50,000 or more per month. Below $2,000, the number of rentals actually dropped as people who wanted to get out of apartments in NYC were not jumping to move into an apartment in Greenwich that also had shared hallways and elevators. Also price appreciation was pushing up the asking price for rentals above $2,000. This is particularly true with single family homes where they was big demand and significant price appreciation.

Once the pandemic hit in 2020, people did not wait around.  Our rentals took a huge jump in March of 2020 and stayed high all the way to October when rentals started to return to normal. In 2021 with an estimated 811 rentals if you an annualize our first 5 months of rentals,  it looks like we have dropped back to an average year, but that conceals major changes in demand by price range.

In 2020, our rentals under $2,000 were down by 45%. Annualized rentals our first five months of rentals under $2,000 are down an almost identical 46%. Part of this is a continuing reluctance to rent apartment style units, but much of it is just that we have have fewer units under $2,000 per month as prices have been pushed higher. Also as noted by Roberta Jurik, we are seeing fewer rentals come to market as people are waiting in place. Above $4,000, our rentals were up at all price ranges over the 10-year average, but particularly above $10,000/mo.

Above $10,000 our 10-year average of rentals is only 89 houses, but in 2020 that jumped 181% to 250 high-end rentals. If you annualize the first 5 months of rentals in 2021 we are on a pace to rent 202 houses above $10,000 a drop of 19%, but still 127% above our 10-year average. Above $20,000 per month, rentals jumped from the 10-year average of 14 to 79 rentals or 464%. At the present pace we will see about the same number of high-end rentals in 2021. Part of the increase in high-end rentals may be driven by the millionaire tax in New York encouraging high-income families to spend less than 6 months in NY and NYC.

Non-listed rentals

We have more rentals each year in Greenwich on the Greenwich Multiple Listing Service than we have house sales, but this is not all the rentals in Greenwich. Under $2,000 the majority of listings are done privately; either listed in the newspaper or put on Craigslist. Under this price we have between 100 and 150 rentals per year on the GMLS. The units available under $2,000 include everything from a one-room-garage apartments to smaller condos throughout town. If a place is livable in Greenwich and listed for under $2,000/mo. it goes pretty quickly.

Also as noted above, our high-end rentals often didn’t make it to the market for a public listing as they got rented quickly in the hot, high-end market of 2020. So take these numbers with a grain of salt. The actual numbers are higher.

                Inventory or lack thereof

As anyone knows who has been looking for a rental our rental market is very tight. At the present time we only have 91 rentals of any type listed on the GMLS. If you are looking between $10,000 and $12,000 you have a choice of two houses. If you are looking in Riverside from $7,000 to $12,000 you have a choice of three rentals.  The low inventory in the rental market makes the sales market look easy and it’s not.

Monthly RentInventory
1-20005
2001-400028
4001-600011
6001-800012
8001-100008
10001-120002
12001-140004
14001-160004
16001-180002
18001-200004
>2000111
Grand Total91

As mentioned at the lower price points most of our inventory consists of a variety of apartments, condos, garage apartments and the occasional small carriage house. From $4,000 to $6,000 we are about evenly split between single family houses and all other types of rentals. Above $10,000 per month nearly all of our rentals are single family homes. Overall, we normally are about evenly split between single family homes and all other types of rentals. This year 60% of our rentals are single family homes. If you are not looking for a house to rent, then you only have 37 listings to choose from. The result, says Roberta Jurik, is that we are seeing a lot more multiple offers in lower price ranges in 2021.

Even though Greenwich is considered a high-end town, when it comes to rentals 77% of our single-family home rentals in 2021 are below $10,000 and with lots of competition. Our high-end rentals are way up, but we also see 60% of our single family listings in that category. The result is that our overall days on market is down. We normally average around 74 days on market, but 2020 that dropped to 64 days and so far in 2021 we are down to an amazing 33 days on market.

 It’s a good time to be a landlord.

Greenwich Real Estate in the News (MP quoted)

Last week was a busy week for talking to reporters about Greenwich real estate.

You can check out In Greenwich, luxury rentals might be hotter than sales in the Real Deal by Suzannah Cavanaugh. Rentals have been particularly tight this year. For houses our inventory is down, but that hides a 60% increase in listings for 2021. It’s just those sales listings have been going off the market as fast as they are coming on. In the rental market, we haven’t seen a big increase in listing, but demand is up so the rental market is even tougher than the housing market.

In the Greenwich Time and the CT Post check out From Greenwich to Lyme, which CT towns are leading the real estate boom?, This is a really interesting article analyzing all of the municipalities in Connecticut. Greenwich was the big winner in most categories. One of the advantages of Greenwich is that it is the first town in Connecticut making for shorter commutes to NYC and for New Yorkers, they can hop across the border and still see their old friends knowing they are paying a fraction of the property taxes their New York friends are.

Home prices continue to surge in Connecticut, where real estate is already red-hot by Alex Soule – We are seeing real, and significant price increases in Connecticut. In previous years, what was characterized as a property increase in reality was often mostly just a desire for bigger houses. In 2021, we are seeing a clear drive to bigger houses in Greenwich and all Connecticut, but size independent price stats such as sales price per square foot and the sales price to assessment ratio are seeing double digit year over year gains. No matter how look at house prices are up.

Greenwich May 2021 Real Estate Report

May is Another Record, but is This the Inflection Point?

May 2021 was an interesting month in Greenwich. We had the same sales in May as we had in April at 88 sales. Our 10-year average for April sales is 47 sales and for May it is 61 sales, so both month’s sales are well above average. In fact, April and May are all time records for their respective months going back to 1999 when the GMLS records start. Townwide we are still at a ridiculously low 3.5 months of supply down 11.4 months from last May when we were in the heart of the pandemic shutdown. However, when you look at the details, our market seems to be going from very hot to hot.

When you look at weekly transactions our high this year was the first week of May with 85 transactions, (sales and contracts). By the last week of May we were down to 45 transactions in that week, which looks like a big drop until you look at contracts. Our contracts are at their highest level all year with 267 contracts up from 242 contracts at the beginning of May and only 136 contracts at the beginning of 2021. The number of contracts is like a bucket with a hole in it. For the level of contracts to go up, you have to fill the bucket with new contracts faster than the number of sales is draining away contracts.

Personally, I think part of what we are seeing is people breaking out of their Covid induced home confinement. In May, my wife and I went on a 4-day vacation, the first time we’d been on a plane in 15 months, we went to an indoor wedding (with an outdoor dinner), had my brother’s family over sans mask and I just went to a friend’s funeral indoors at the Hyatt. Things are getting back to normal.

The result has been a market that slow down a little in May, but even at the end of the month it was still well above average. We are very likely to see sales go up in June as the number of contracts waiting to close says May was probably a pause for people to celebrate the beginning of the transition to normalcy.

If you go back to May of 2018, our last year with somewhat normal sales, we are

  • Inventory is down 361 listings or 53%
  • Contracts are up 133 or an increase of 101%
  • YTD sales are up 170 or 83%, and
  • May 2021 sales are 35 sales greater than May 2018 or 66%

We barely saw a rise in inventory in March and April; months when the spring market listings normally cause big jumps in inventory. In May our inventory has been flat. We started the month with only 328 listings, and we finished the month with 326 listings. On the contract side we started with 242 at the beginning of May and by the end of the month we were up to 267 contracts. Both of these numbers are “holey bucket” numbers that are pushed up by one factor, new listings and contract signings and pulled down by another factor, contracts and closings.

When listings are rising, we are seeing more houses come on the market than are going to contract. In years past, we also had a fair number of listings expiring unsold pulling down the number of listings. We are not seeing as much of that this year. Last year in the first 5 months of the year we had 92 listings expire. This year we have had 69 listings expire or a drop of 25%. This proves that even in the hottest market you can still overprice a house.

What’s amazing is how contract signings this year have been matched by the number of new listings coming on the market, and that continued in May. We are actually up 60% in listings this year, but our increased pace of contract signings and closings have kept our inventory from rising. With the number of weekly transactions falling May, I would expect that we will start seeing our inventory rising.

Of course, we could see listings fall, to balance out the reduced transactions, but there is no inherent reason why listings should match contracts, in fact the reverse is true. Our market has a major seasonal factor with listings rising in March and April, contracts being signed in April and May and sales peaking in June and July. None of that happened last year. In 2020, the whole market froze, both listings and contracts from the middle of March to the middle of May. We then started climbing through the middle of July.

Most of those first half sales were our family market. We didn’t start seeing significant increases in our high-end market until July, when the unrest in New York City spurred people to look for a second home. We continued at a high sales rate through October, when we saw some seasonal drop in activity, but we were still well above what we normally saw in the months of November and December.

This year we started off at high level in January. We had an excellent February and transactions accelerated in March and April. May has been busy, but our transactions dropped back though the month, but still at well above average levels. June will tell whether May was an inflection point or whether it’s just indicative of our volatile market.

I expect that our sales will continue high as WOOFH (Working Occasionally or Often From Home) continues to be a major factor shaping our housing market. It is clear that the U.S. is not going back to doing business the way it was done pre-pandemic. Companies have seen that they don’t need their employees altogether every day from 9 – 5 pm. As a result, space needs are declining in the office market and increasing in the home market. Until we reach a new equilibrium between office and home space our sales will continue to be elevated, but the question is just how much.

Stay tuned ….

GREENWICH, CT 2021:  CONTEMPORARY HOUSES FOR MODERN TIMES

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Greenwich is sometimes characterized by outsiders as a land of white picket fences and colonial-style houses. These outsiders are mostly wrong about the picket fences and more than half wrong about the colonial houses. Since 1999 when the Greenwich MLS records start, we have sold 14,251 houses and less than half, or 47%,  were described on the listing as a colonial-style house.

Greenwich however is much more modern than that. Since 1999 we have sold 581 contemporary and modern houses in Greenwich. We’ve actually sold many more than that, but agents often take the safe way out and stretch the definition of a colonial a lot. A good example of a house that many agents might list as a colonial is my listing at 26 Parsonage Road. This house was built by Phil Ives for his family in 1948. Phil was a leading proponent of the International style and his firm, designed the famous Pan Am terminal at JFK.

26 Parsonage Road, 3.05 Acres, 4,031, 5BR/4BA, $4.295M

One of the things that identify the house as a non-colonial are the windows. The house at 26 Parsonage is sited on 3 acres in a one-acre zone and overlooks a sweeping lawn and some of the most amazing landscaping you will see in Greenwich. The windows are large and square and in three rows of three in the living room. This lets in lots of light.

With all of this light, siting and design become particularly important in a contemporary house. The house is designed with roof soffits that are wider than usual. What this does is to shade the upstairs windows in summer, but due to the siting and precise design lower winter sun lights up and heats the upstairs in the colder, darker months.

There is a very cool, mini-country club, contemporary at 665 River Road with a pool and tennis court. The house has lots of windows, some in non-traditional locations. The owner said, “Everyone who visits remarks, somewhat longingly ‘it is so … peaceful.’  We attribute that to being flooded with natural light and surrounded by nature. This is made possible by doors that open to the outdoors from every room, high ceilings and endless windows.

665 River Road living room, 3.36 acres, 5,846 s.f., 6BRs/6BA, $3.825M

Another example of how contemporaries use windows in unusual ways is my listing at 15 Laub Pond Road. This house has an indoor pool on one side and a breakfast nook off the kitchen on the other side. Both have semi-circular walls with large vertical windows. This gives the indoor pool an outdoor feel and the breakfast nook a panoramic view of the yard and the woods in the morning.

19 Laub Pond Road, 4.24 acres, 7,403 acres, 4BRs/6BA, $2.945M

In most of our contemporary houses in Greenwich, this panoramic view only works one way from the inside out. Owners tend to put contemporaries on larger lots and use natural features; trees and landscaping to provide privacy. The classic example of this is Philip Johnson’s Glass House in New Canaan. From the close in photographs, some wonder just how private a house, with mostly glass walls, could be. What the photos don’t show well are the surrounding trees and the distance to the neighbors.

In Greenwich you see this need for larger lots, when you look at a map of 22 years of contemporary sales. There are very few sales in our smaller zones such as Byram, Pemberwick and central Greenwich. Where you do see contemporary sales are along our western and northern borders with New York State. Westchester County has a lot more contemporaries than we do and downsizers from there often stay true to the style of house they raised their kids in. You also see a lot of our contemporaries along the shoreline, where the beautiful views are better enjoyed with larger windows and openness of contemporaries.

Contemporary Houses Sales in Greenwich, CT 1999 – May 2021

It’s not only New Yorkers, that like our contemporaries. Most of the showings that we have had for 15 Laub Pond Road have been couples where one or both members are internationals and some even from California. They grew up with these styles and our diversity of housing stock makes for a diversity of residents.

Contemporaries do better in good economic times. In 2000, over 5% of all home sales in Greenwich were contemporaries. This dipped to only 2% in the recession year of 2009 and has risen since then, hitting 5% of all sales in 2019. In the pandemic, contemporaries percentage of sales dropped, but the absolute number of contemporary sales increases as our market surged.

Style of House Sold in Greenwich, CT- 1999 – May 2021

Contemporaries have a lot of sub-categories. In fact, even using contemporary for all these sub-categories can be controversial, but it’s what the GMLS uses. Owners love their sub-category and will go out of their way to seek them out. With the rebound in the economy and the loosening of Covid restrictions you can expect more eyes looking at contemporaries of all types.

BTW: Meghan Lynch who grew up in the pool at 15 Laub Pond Rd is trying out for the U.S. Olympic swimming team next month at the age of 17 after just graduating from GHS this with multiple pool and state records, let’s all wish her luck.

April 2021 – Best April Ever in Greenwich Real Estate

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First Week of May may be Best Week Ever in Greenwich Real Estate?

Back in April 1999, we sold 67 houses in the month of April. Since then, we’ve had a couple of Aprils where our sales got to the low 60’s, but we’ve mostly been around our 10-year average of 38 sales. This April we broke out of the 60’s, zoomed past the 70’s and almost made it to 90 sales. We ended the month at 88 sales, 132% above 10-year average and 31% above a record that had stood for 21 years.

So far, May has been even better. Last year, we had two weeks where in one week, we had 68 transactions, the total of sales and contracts. Not surprisingly, these two weeks were in our biggest sales months, August and September 2020. Two weeks ago, in the third week of April we matched the 68 transaction in one week. Then came the first week of May and we had 85 transactions. To show how much the demand there is, only 28 of those 85 transactions were sales. The other 57 transactions were contracts evidencing better sales to come in the months ahead.

                A Very “Green” Spring

So far this year, we have sold 288 houses up 153 sales from last year, when we sold just 135 houses. Sales are up 113% from April 2020 and April 2020 sales were up 25% over April 2019. In total, sales are up 167% in two years.

I find trends easier to visualize when I color code a spreadsheet to showing the differences from the previous year. I use green for pro-seller numbers; higher sales, lower inventory and pink for pro-buyer changes. I have not been using much pink and none for this April’s numbers.

A quick glance might tell you that April sales and contracts for houses listed under $600,000 are down by 75%. That might seem pretty pro-buyer, until look over at the inventory numbers. The reason April sales and contracts are down this year is because we have no inventory, nada, zip, zilch, the bagel. Rising prices have pushed our lowest price range houses, of which there were never a lot under $600K, out of existence.

                2020 vs 2021 Months of Supply Tells the Story

If you want to see just how tight a market is check out months of supply. This tells you how long the present inventory would last based on the monthly sales demand so far this year. From $3 – 4 million dollars last year we had 16 months of supply. This year we have 4.6 months of supply or 71% lower. Throw in the 46 contracts that we have and assume they will the contracts close in a month and half and we have 3.0 months of supply. This is houses costing as much as $4 million, not for $300,000 condos. (BTW: We do have 4 listings under $300K, one studio apartment and 3 boat slips on River Rd. in Cos Cob. It even costs money to just float in Greenwich waters.)

We have not seen such low months of supply at such high price ranges possibly ever. The one slight area of concern are sales over $6.5 million. In April, we only had 3 sales and none over $10 million. However, you don’t need to worry about the market from $6.5 million to $10 million as we have 23 contracts waiting to close. This is up 1,050% from last year when we only had 2 contracts between $6.5 and 10 million. Our high-end sales have shifted to the 3rd and 4th quarter so I wouldn’t worry too much even over $10 million unless the Connecticut legislature passes some of the soak rich bills that are still circulating in Hartford.

If the legislature really wanted to increase tax receipts rather than just stick it to the rich, they could lower our top rate from 6.99% to 6.5%. The resulting influx of high-net-worth individuals would more than make up for the cost of lowering the rate by 0.49%.

We clearly saw this, when the Greenwich BET held our mill rate flat in 2018 due to the Trump $10,000 limit on SALT taxes passed in late 2017. Unlike the rest of the metro area, our house sales actually went up in 2018, as property tax refugees from NY jumped the border. With NY deciding to raise the income tax rates on their millionaires, a little top-end tax cut in Connecticut could raise a lot of tax dollars from a lot of new residents.

                A Deep Dive into the Inventory “Problem”

While we have high demand for housing, it’s the persistently low inventory that has led to these record low months of supply. However, if you look at listings over time our shortage of inventory is not as bad as the charts make it appear. As of the beginning of May, we only have 328 single-family home listings.  This is down 185 listings from this time last year.

But our inventory is even lower than it appears in the year over year comparison. In April 2020, we were in the middle of the first lockdown from Covid. Everyone was staying home, and we were seeing minimal new listings, hence listings dropped to 513 single-family homes. If you go back two years to April 2019, we had 693 listings, which means that we are actually down 291 house listing from 2019 or -53%.

Inventory is just a picture at a point in time. It is like looking at a picture of a river and trying to guess how much water flowed by in the last month. Our inventory is a very dynamic process. We have new listings constantly coming on, pushing up our inventory, while at the same time other listings go to contract or expire pushing it down.

Inventory reductions from sales and contracts get most of the attention, but so far this year, we’ve had 58 listings expire. Now you might ask how in what is possibly the hottest market ever, a listing could expire unsold. Most of these expiring listings are over-priced, but they may actually comp out based per acre or dollar per square foot basis. They may not have sold at a “comparable price” because they are next to one of our highways, or the property could have lots of wetlands, or it’s a funny shape, or it smells like cat pee (seriously we have listings that do) or the house could need lots of work.

Alternatively, houses can be over-priced because the owner, or one of them, doesn’t want to sell. In both estate situations and divorces, the resident owner may want to stay and doesn’t want the house to sell. You see the same thing with foreclosures and financially distressed owners. One of the more interesting listing is a situation where the bank foreclosed and has title to the property, but the former owner refuses to leave. The property is listed, but you can’t go inside to see what condition the property is in.

Another way that listings shrink is through cancellation and being taken off the market. So far in 2021, we’ve had 65 listings this year that have been cancelled or are temporarily off the market. Last year, we saw a big jump in listings that were temporarily off the market, since owners didn’t want to show their houses during the height of Covid. This year most of our 48 cancellations are for properties that had been doubly listed as “for sale” and “for rent”.

Our rental market is actually hotter than our sales market, so the odds are good that if an owner lists a house for sale and for rent that they will get more offers and sooner for the rental listing. When my clients want to test both markets, I suggest giving the sales market at least a month, before putting on the rental.

But, back to why we don’t have an inventory shortage, or at least not as much as people think. So far this year we have had 498 listings come on the Greenwich MLS this year. This is up a huge 63% from last year’s 305 new listings. Of those 498 listings, only 187 are still active. We have 96 closed already and another 187 have gone to contract. Only 2 have expired and 26 have been withdrawn or cancelled.

Interestingly, of the 498 new listings in 2021, we have the exact same number still active as have gone to contract. We have 187 listings still listed and 187 contracts. (To be clear, this doesn’t count the 291 listings that we began 2021 with.)

Our inventory is a swan, on the surface the swan is moving serenely at a nice and steady pace, but underneath there is a lot of churning activity.

How many houses could we sell this year? Based on our 10-year average, the first four months of the year average 24.4% of our yearly sales. If you take our 288 sales so far this year and divide by .244 you get 1,180 in 2021, which would break last year’s record of 863 sales by a lot. It all depends on the number of new listings we get, and not whether our inventory stays low.

Stay tuned…

The Greenwich Real Estate Market from 2020 to April 2021

An Unprecedented Period

Last year, Covid drove lots of people, and particularly families, out of New York City. Initially this resulted in a hot rental market and an amazing summer rental market. We had dozens of houses renting for more than $20,000, $30,000 and several at $50,000/month. These summer rentals also extended into the fall. Local families with beautiful houses, that I never thought would consider renting, once they saw what they could rent for were only too happy to take an extended summer vacation and come back with extra money in the bank.

              Summer rentals

Having said that we had a huge shortage of summer rentals last year. I rented one house with a pool for $25,000/mo. in five hours with multiple offers. I was able to find another renter a summer rental, but had four clients that I couldn’t find a summer rental for. This summer we still have very good demand and lots of the folks that rented last summer are renting the same place again this summer. We have good demand, but this year we are seeing, or better said, we are not seeing new summer rental inventory.

Our rental market then, as now, became very active, but lots of people decide it wasn’t renting, but buying that they should be doing in Greenwich.

              Home Sales – Five Quarters and One Month

The year 2020 started out pretty normal. In the first quarter of last year, the Greenwich real estate market had a typical first two and half months with transactions (sales and contracts) building week by week. Our first quarter market proceeded normally with little thought that a virus spreading from a wet market in town most people hadn’t heard of was going to upend the entire world including Greenwich starting in the third week in March.

From that third week in March 2020 until the first week of May our market took a major Covid-induced pause with transactions eking along at about 20 sales and contracts total per week. Then came the second week of May with transactions shooting up to 33 transactions and followed by 43 transactions the next week. By the end of June our transaction hit 64 in one week.

              3rd and 4th Quarter 2020 Sales Take Off and Stay High in 2021

Then the third quarter of 2020 came along and we have not had a slow period since, particularly if you seasonally adjust the numbers. Our sales peeked in September with 118 sales, a new record for September sales. This record September had followed a record 108 sales in August 2020, which was 41 more sales than normal. Our sales did fall in October and November, but they were 58 and 53 sales respectively higher than our 10-year average.

 This activity continued into the first quarter of 2021, where we averaged 30 sales higher each month in what is normally our slowest quarter of the year. Our 193 sales in the first quarter of 2021 is almost as much as we had in the whole first half of 2019.

              April 2021 – It’s All About the Inventory

In the second half of 2020, even as we were setting new sales records monthly, our inventory was down only a little bit. Our shadow inventory was constantly resupplying fresh inventory, so we had enough inventory to sell. Then came January 1, 2021 and inventory dropped like a rock.  We went from 378 listings at the beginning of December 2020, already a very low number, to only 287 listings on January 1, 2021. A drop of 24% in one month, now that’s a little dramatic, since we always get a lot of listings expiring on December 31st and we get several listings that start on the first business day of the new year. In 2021 that barely happened.

By the end of the first week of January 2021 we had only recovered to 293 listings. We just don’t see inventory numbers in the 200’s, but we did this year. We didn’t break 300 listings until the third week of March this year and it wasn’t until April that our inventory was able to stay above 300 listings, which is just absurdly low>

So far this year our weekly inventory numbers have varied between a low of 273 listings at the beginning of March to last week’s high of 317 listings. (On Tuesday, 4/27/21 we actually jumped up to 332 listings only 35% lower than last year’s 517 listings at the beginning of May. 2020. However, it is 52% lower than the 693 listings that we had at the end of April 2019.)

              2021 Inventory – A Dynamic Equilibrium

Given our increase transactions our inventory should be dropping, but so far this year our market has been like the fraternity trash can punch (Green Machine punches at Dartmouth). As fast as the seniors can drink the punch, the freshman are filling the punch bowl. Though in Greenwich, a better analogy would be that the freshmen with their younger families are taking houses off the market while our seniors are supplying the inventory and downsizing to condos or moving south for the winters.

              Is April the Beginning of the End  or the Beginning of a New Trend?

So far, we’ve had 61 sales in April 2021. If you monthlyize them (there has to be monthly equivalent of annualize that doesn’t involve the word “gross” as in gross up) you come up with an expected 68 sales for the whole month, which is a record for April, but it is only 21 sales above our 10-year average for April sales. This is down from an average of 30 sales above our 10-year average in the first 3 months of the year.

The pessimists can argue that we may see a continued drop in sales as the vaccination rate goes up. Per Senator Kasser’s weekly email, 66% of Connecticut residents have gotten at least one shot and an amazing 90% over the age of 65. (Let’s hear it for us seniors, but particularly for our governor and the government employees who made this process run pretty smoothly. And, thanks to all the hospital and charities and their personnel who have taken the risks to make this happen. It’s really nice when things actually work in Connecticut as well as Greenwich usually does.)

For our optimists, the key thing is that our inventory has been coming on fast enough to meet most demand for housing. If not, inventory would have dropped and the last three weeks, it’s been going up like it is supposed to do in our spring market. At the same time, it’s combat-buying out there. Nine of our 61 sales so far this month went for over list and another 15 went for list price.

That latter number is actually deceptive as 12 of the 15 sales at full list price never made to a public listing. These sales were FRPO’s [not to be confused with FSBO’s (for sale by owner]. FRPO’s are listings that appear on the GMLS “For Reporting Purposes Only”. These properties sold in private sales and are always reported as being sold at 100% of original list price. An increase in FRPO’s mean that sellers can more easily find buyers due to their number and motivation to buy.

              WOOFH Will Drive Sales for Many Years

In the second half of the year, we are going to see a lot more people who buy houses for WOOFH’ing. These are the folks that are “Working Occasionally or Often From Home”. Some businesses are reporting more production from having people working from home, while other businesses in the same industry are pushing to get employees back in their offices. It’s not clear just exactly how much people will be WOOFH’ing,  but it is clear that there will be lots more WOOFH’ing post-Covid than pre-Covid. The need for two and even three offices and home schooling rooms are pushing both New Yorkers and Greenwichites to buy larger houses.

              High-End Sales to Get Even Better?

I also expect that high-end sales will pick up, as in one of New York’s dumber moves they just raised taxes on very high income people to 15%+ when NYC taxes are added in. This at a time when huge numbers of high-net worth people had already relocated to low tax states and Connecticut’s lower, but low taxes. Greenwich is just looking better and better for New Yorkers.

We have lots of forces pushing Greenwich sales and inventory in both directions. Will we beat last year’s 863 single family home sales. In this over/under bet, I’m taking the over, but I think it’s an even bet at this point.

Stay tuned the second quarter will probably set the tone for the rest of the year.