We have 217 listings on the market which is a record low for this week. We only have one listing under $700,000 which is 0.5% of the market. Under $1 million we only have 10 listings, and only 1 of those 10 listings has been on less than 45 days. Listings that have been on for 45 days in this market are feeling pretty middle-aged. We actually have more listings over $25,000,000 than we have under $1,000,000; 12 ultra-high-end listings versus the 10 sub-$1M listings.
So far, we have sold 33 single family homes, which if you monthlyize (which at least one other website says really a word), we might expect 43 sales by the end of September. This is a 64% drop from September 2021, when we had 118 sales, the highest sales month in 2020. Last year, we dropped to “only” 81 sales in August 2022.
Grossing up our 33 sales to 43 looks pretty poor against the Covid years. Those 43 sales are also lower than our 10-year pre-Covid average of 48 sales. However, it’s more the knock-on effects of the Fed’s dramatically raising interest rates, than the higher rates themselves that is causing the slow down in sales. Higher rates are leading to fewer contingent contracts, but the stock market drop is having a bigger effect at the high-end than higher interest rates which are mainly affecting sales under $1 million.
The increase in interest rates causes bond prices to drop and while at the same time encouraging investors to move money out of the stock market towards those higher interest rates causing the stock market to drop also. As a result, what’s really dropped is the wealth of high-end buyers with lower bond, stock and crypto prices. (It always amazes me the number of people in Greenwich who have some or a lot of money in crypto-currencies or crypto related companies.)
Along with this drop in wealth has come an increase in uncertainty. Nothing slows a housing market like uncertainty. A lot of the growth wealth we saw in the Covid years was on paper and many people are still up a good amount of where they were pre-Covid. Any crypto investors who bought in a while ago, are still seeing triple digit appreciation, but are these people going out to buy a $10 million house? But, are any of these wealthy folks more likely to invest in a house, when their wealth is dropping. Most people won’t, but the really smart money is considering doing just that as I found out this week from calls from two investors looking. They are looking for an inflation hedge with limited downside risk and a house to live in. That last factor is something that other types of investments can’t provide.
Also, since the Great Recession, we’ve seen many of our high-end sales happen from September to December. We do have 18 contracts for properties listed over $5M, this compares to 3 contracts over $5M in August 2018. We will see an upturn in sales over our 10-year average, for the $5 – 10 market with 78 sales so far compared to 31 sales in 2018. Does that make for 47 more smart buyers in 2022 or more than double. It remains to be seen, but they all have a nice house and a nice town to live in.
The one place that inventory is not tight is our over $10 million particularly least compared to the market under $5 million where months of supply is measured in a few months not a couple of years. This year we have had 8 sales over $10 million, but then that’s only 2 less than we had in the hot market of 2021.
This year , we’ve had no sales over $18 million and we have 18 listings above that amount. While the over $5 – 10 million have done well so far. That’s not the case once you get over $15 million. Don’t expect this number to go soon as we have no contracts over $10 million, though we do have 2 contracts on houses listed over $9.7 million. Not all of the lower ultra-high-end market is due to a weak buyer demand. Sellers are also keeping sales down with some aspirational pricing. In Greenwich, you never want to price your house off of national news stories regardless of the price.
The other thing that we are seeing are more price reductions. We have less than two months left in the fall market, so now is the time to take a price reduction. The property at 562 North Street just got relisted at $2,995,000 a price drop of $400,000 and that’s resulted in a lot more showings. If you have to reduce a listing, you want to only do it once, so make it big enough that that will get it sold.
Overall, our inventory is ticking up slightly, but contracts are falling as they do each year, but without more inventory, we are going to see the days on market continue to rise. The buyers that need a mortgage are feeling squeezed with the number of these buyers offers down, but so far, we’ve got plenty of cash buyers, or at least buyers that don’t need a mortgage contingency in their purchase contracts. Of our 78 contracts only have 15 have contingencies.
Stay tuned and hope that the month that came in like a lamb goes out like a lion . . .
Right now, there is a great information war going on on the Internet over real estate info and some of the sites are creating “alternative” information though often without the agendas that we see in the political arena. If you go out looking for information about your home or a home that you are interested in, you need to be careful that the “facts” you are getting are actually facts. The biggest offender of this inaccurate information is the biggest real estate website Zillow. Zillow has the lion share of searches, particularly when you include Trulia which they purchased a couple of years ago.
Only the FTC is keeping Trulia alive. As part of getting the FTC’s acquiescence for Zillow to buy Trulia, Zillow had to agree not to close down Trulia. Instead, what Zillow has done is to let Trulia, which used to be a pretty good site with several unique features, become a distant also-ran with outdated features and the same house price estimates as Zillow. Zillow has announced four new features just in the last two months. For Trulia nothing in awhile other than an imported Zillow feature.
The battle of the big three real estate websites is now down to the big two and unfortunately the number 2, Realtor.com has become a distant number 2. Like Avis, Realtor.com is trying harder, but they are constrained by reduced cash flow. I recently talked to one of the senior officers, and he said they have big plans to gain market share, but that’s yet to be seen. However, it’s still my go to website for public real estate information.
The interesting competition to Zillow is likely to be coming from CoStar, which owns the largest commercial real estate listing site, LoopNet.com and also Apartments.com. CoStar has announced a Zillow competitor in the residential information website, but it’s taking them a while to roll out that new site.
Zillow vs. Realtor.com
Realtor.com used to having a timing advantage over Zillow. Historically, new listing information from the GMLS goes directly to Realtor.com since it started out as the website of the National Association of Realtors. (The NAR then became the only trade association that I’m aware of that sold their own website to a private organization. Part of this is the way that Realtor.com was funded, from some of the brokerage firms, but not all.)
Zillow used to get their listing information from ListHub.com, which like Realtor.com, is a News Corp. company. This resulted in Zillow’s listings being hours out-of-date, which in a hot market can make a difference as to which buyers gets to see the house first. At the same time, most brokerage firms got their listing information directly from the MLS that they belonged to, just as Realtor.com does, getting it faster than Zillow did. For Zillow, this delay was bad news.
Zillow figuring if you can’t beat them, join them, did just that. Zillow is now a licensed broker in ever state, though they rarely do anything that looks like a traditional brokerage. Their brokers mostly just get the listing feeds form the various MLS’s and forward it immediately to Zillow.
Zillow, the brokers, are also looking to co-broke listings with agents so that instead of Zillow getting paid a few hundred dollars for advertising fees to produce leads, they are now going to take thousands of dollars, as a percentage of the local broker’s commission. Given Zillow’s market dominance this tying has major antitrust issues, but it’s working for them so far.
Some Zillow Data to be Beware of
I wrote an article last year, entitled Why Zillow Hates Greenwich, pointing out that Zillow’s estimated monthly payment is often thousands of dollars higher in Greenwich than the real carrying cost as they don’t use the actual Greenwich tax amount, but a countywide average tax rate to calculate taxes. Since Greenwich has the lowest tax rate in Fairfield County and Connecticut, Zillow constantly overstates the monthly carrying costs. I regularly point this out to my buyers so they know they can afford more house that Zillow says.
Zillow also has as an automated valuation model to determine the value of your house, their so-called Zestimate; and it’s often wrong. To their credit they do give a Zestimate range, but then come up with one number for their estimated sales price in a much bigger font. If you look at their chart of past Zestimates it bounces all around.
It looks like they give way too much weight to recent sales so that every time a house in that neighborhood either above or below there old valuation, the Zestimate jumps. It looks dramatic but is no way to try to figure out the value of house. You’ll notice that once a property is publicly listed the Zestimate becomes the same as the list price. I guess they figure the owner and their agent know more than they do. (They do.)
Lastly, Zillow is really bad about correcting bad information. I’ve had listings where for some reason, the acreage was wrong, multiple emails and weeks later they might get around to fixing it. Then a week later, that number reverts to the old number and you have to start all over again. If a number is important, you should have your agent check it out or you can check it out in one of the sources below.
Realtor.com has multiple AVM’s
One nice feature at Realtor.com is that it has multiple sources for their estimate of your property’s value. Banks have used two major AVM’s for years; CoreLogic and Collateral Analytics and both are available at Realtor.com. In fact, Realtor.com uses CoreLogic’s estimate for their top line estimate. These traditional AVMS have recently been joined by a new kid, Quantarium, which sometimes, though not usually, may be more accurate. At least you have 3 choices. Often, the closer all three are the better the estimate. To find these AVM’s on Realtor.com just input the property address and then scroll down to the Home Value tab.
The Greenwich Assessor’s FMV
Since you are in Greenwich, you are likely to get a much better estimate of value from the Town Assessor’s estimate of the fair market value of your property. Unlike the “numbers only” AVM, the Assessor adjusts for lot size, wetlands, highway traffic and over a dozen other factors that affect property value in Greenwich. To get your copy of a property’s field card stop by the Assessor’s office on the first floor of Town Hall or you can email them for a “property record card” at firstname.lastname@example.org, their more accurate model will cost you a buck.
The Greenwich Town Clerk’s Office Land Records
The Assessor’s field card is a wealth of information. One thing you will find in the upper right corner is the date of the last sale and the book and page where the deed for that sale is filed in the Town Clerk’s records.
The great thing is that our prior and present Town Clerk’s, Carmella Budkins and Jackie Budkins, have done a great job putting this information on the Internet via Town Fusion. Head over to GreenwichCt.org. Go to the Town Clerk’s page and click on the Digital Land Records link. You’ll need to set up an account, but it’s free. Find the book and page number search fields and put in those numbers from Assessor’s field card. Up will come the relevant deed even if it was filed in 70 years ago.
The deed will show the official names of the buyers, the present owners. Go back to search and search each name and you’ll find mortgages, easements, liens, lawsuits and a variety of other things that can affect the value of the property.
If you are really ambitious, or a lawyer, or title examiner, check out Exhibit “B” of the deed to find the book and page of prior encumbrances and the map number from when the lot was created. These are online too. Check these out if you wondering just what the neighbor or some utility company has a right to do on that property.
GIS, the Best Thing in the Basement of Town Hall
If you are looking for property info, head down to the basement of Town Hall. At the bottom of the main stairs is the Geographical Information Systems office. Bring your field card with it’s address and Tax ID number and Kerry will help you get a printout of dozens of layers of information from thetopography, to stone walls, ponds and streams, wetlands, driveways, bridges and lots of useful information. Alternatively, like the land records, you can use the GIS online order form. In addition, to the GIS map you can get an aerial map, both will cost you five bucks.
One note on wetlands, those are estimated from aerial images. To really determine the boundaries of any wetlands on your property you need to check with Inland Wetlands and Watercourse Agency on the second floor of Town Hall and hope that someone has filed a previous application and had a soil scientist map the wetlands.
The Sentinel and GreenwichStreets.com
The Sentinel archives lots of my and other authors real estate articles with information on various town neighborhoods, market reports and market segments. Just go to greenwichsentinel.com and click on “Real Estate” in the top navigation. You can also find these at GreenwichStreets.com which will have a major redo next week with some cool videos and also with an archive of my articles back to 2018. (Back to be added 2013 to be added.) We also have podcasts of our Monday morning show on WGCH.
Brokerage Websites Market Reports
All of the major firms produce very good market reports usually on a monthly basis. These reports usually have year-to-date information as well as the current months information broken down by neighborhood. Check in with your favorite agent and they will gladly arrange to put you on a mailing list. (I send out about 220 of these each week along with my open house list.)
One thing to note is that in Greenwich, these reports can be affected by the law of small numbers. This law says that when you slice a data set several different ways, the remaining small set of data numbers will jump around a lot from period to period. For example, the inventory in Banksville saw a 50% increase this year over last year. This is impressive especially when you note that at the same time, the town wide inventory went down 24%. The real story, the 50% jump in Banksville is because last year we had two listings in Banksville and this year we have three listings.
We have many other sources for real estate info, but you really should make your Realtor get the info for you. 🙂
In nearly every neighborhood in Greenwich, the real estate market is worse this year than last year. Overall, our total sales volume is down $750 million dollars or 33%. The hardest hit neighborhoods are Byram and the South of the Post Road neighborhood that includes Belle Haven, Indian Harbor and Mead Point. Our most affordable neighborhood and some of our priciest neighborhoods are the ones seeing the biggest drop in sales volume. Not only are our total sales volume down, but so are the number of houses sold through the end of August.
Last year at this time, we had sold 752 houses year to date. This year we are looking at a drop of 36% down to 479 houses. Once again Byram got crushed with a drop of 61% drop in the number of sales, but coming in second and third were two of our most popular neighborhoods; Old Greenwich is down 49% in sales and Riverside is down 45% in sales. The total dollar volumes in both neighborhoods took about a 45% drop. These are recession type numbers. In the Great Recession we saw a year over year drop of 47% in unit sales from 726 sales in 2007 to 460 sales in 2008. Our fall in number of houses sold and total volume sold is deep and widespread.
But wait, just last week you didn’t I write that it wasn’t all gloom and doom in Greenwich and that we were doing much better than the rest of the country. And, that’s true too. So, what is it? To see how our market can be both hot and cold at the same time, all you need to do is look at a color-coded map of the changes in our market from last year. The pink, “pro-buyer’s numbers” are in the number sold and the sum of sold dollars columns where sales numbers and total dollars went down. The second part shouldn’t be surprising, when the number of sales fall by 36% you’d expect the total sales volume to drop by a similar amount, which it did dropping 33%, even with some home price increasing. In many cities across the country that had the biggest run-ups, we are seeing the largest drops, that however is not what is happening in Greenwich.
All of the above apparently contradictory statements can be explained by one word, “inventory” or more accurately, lack of inventory. Last year at this time, we had 267 listings as our inventory took a steep drop from the prior June 2021 peak of 342 listings. If you go back to our last pre-Covid year, we had 585 listings at the end of August 2019.
Sometimes these numbers seem like an abstraction, but imagine you grew up in Riverside and want to bring your kids back home to be close to their grandparents. In 2019, you had a choice of 61 houses; in 2022 you only have a choice of 13 houses. Under $1 million you have a choice of one house. From $1 – 2 million you have a choice of two houses. On the flip side, if you are looking to buy your dream house, you have a choice of only two houses over $3.7 million: one at $4.8 million and another at $25 million. Be happy if you are looking from $2 – 3.7 million, at least you have 9 choices.
It’s a tight market for buyers, but it does vary from neighborhood to neighborhood. For example, our two highest months of supply are 7.6 months of supply North of the Parkway and 5.5 months of supply South of the Post Road. That also happens to be where we have the highest percentage of house over $5 million and over $10 million, which are our two weakest segments. That doesn’t mean if you are looking to buy a house for $2 or 3 million in those areas that you are going find a pro-buyer’s market. Houses under $5 million are tight everywhere.
Both backcountry and South of the Post Road are the only two areas that have a price drop from last year. But, they really haven’t. Once again that is due to the drop in high-end sales, and particularly, the very high-end town wide. So, the average price is down in backcountry is down 11%, but the sold price per square foot is up 6% over last year.
Prices are continuing to go up, because inventory continues to drift down. As I write this, we only have 194 listings down from 202 at the end of August only a week ago. As yet, we have not seen anything that you might characterize as the beginning of the fall market. In our office meeting, several properties were announced as soon to be listed, but it’s still not a lot.
In some ways for some groups, the sky is falling, or maybe better said, the skies have gotten gloomy. For example, if you are the town or state collecting conveyance taxes or if you are a real estate brokerage firm having to pay the same overhead you are seeing fewer dollars. Furniture companies and landscapers are likely to see down turns in new business as the number of sales have dropped. For buyers and sellers though they are still in a pretty tight pas de deux.
Stay tuned the fall market inventory has to arrive soon …
Greenwich real estate is doing much better than much of the U.S. real estate market. In fact, by most measures our market has gotten tighter in the last few months. To be fair the rate of increase in prices has slowed, but prices are still going up and months of supply remains very low.
Greenwich Prices are up both Y-o-Y and since April when the Fed started raising rates
Our average sales price for a single-family home in Greenwich year-to-date is $3,132,680. Sales prices are up 4.7% from April 2022, when the Fed started their big rate hikes, to August 2022. It’s not just the average price that is up, our median price is up 4.6% to $2,550,000. Think about that, half of the Greenwich homes sold in 2022 have sold for more than $2.5 million. Back in August 2018, the median price was $1.95 million, so we have seen an increase of 30.8%, since 2018, our last good pre-Covid year.
When talking about prices, particularly in Greenwich, you have to take the average sales price changes with a grain of salt as much of the change is due not to overall price rises, but to the change in the mix of what is selling. Our high-end can be very high and it doesn’t take many big sales to move the average sales price. Last year we sold 3 houses over $27 million, so far this year, we’ve sold none. Our highest reported sales price is $17.6 million. (Congratulations to Brian Milton and Yashmin Lloyds here at Compass).
To further see how the mix of high-end sales, and a decrease in sales under $1.5 million affected prices compare the median sales price to the sales price per s.f. Since April, our median price is up 4.6%, while our sales price per square foot is up 6.0%. The price per s.f. is less affected by the mix of what is selling, so it can be a better indicator. The bottom line is that all three price averages are up on a year-over-year basis. These indices are up for the last four months even as the Fed has jacked up the fed funds rate by 225 basis points this year.
Months of Supply stays tight and days on market continue to slide
Another indicator of a tightening market is a decrease in days on market of properties that are selling.
Our days on market have gone from 114 days in August 2018 to around 60 days in August last year and April this year. Since then, the market has got even tighter to only 32 days on market for sales in August 2022. At the same time our months of supply has stayed in the super-seller’s market of 3.4 months of supply up slightly from 2.8 months of supply in August 2021.
It may seem that the slowdown in the economy and the increase in interest rates has not affected Greenwich, but what we are really seeing are two countervailing trends. Sales have slowed from last year going from 751 sales last year by the end of August to only 477 sales at the end of August 2022. Had inventory stayed the same, our months of supply would have jumped this year, but right now our inventory is down 24% from last August. What’s really amazing about this, is that last August’s 267 listings were a record low for August. One most people didn’t expect to go lower, but we have dropped a lot lower.
Inventory peaked last year at a very low 342 listings and then continue to drop for 6 months to only 152 listings at year end. For the first quarter of 2022, we stayed at these unheard of lows. We actually set a new all-time low of 140 listing on March 21, 2022. From there we had a “strong” recovery to 222 listings by the middle of July. Since then, we seen inventory drift down to today’s 202 listings. All these numbers are still way below the 500 – 600 listings we’d expect this time of year. Combine decreasing sales and decreasing inventory and we’ve had a dynamic balance that has kept our market in the super-seller range, even as overall sales drop.
Sales climb back above average
In August we have had 74 sales compared to our 10-year, pre-Covid average of 67 sales. Our August sales were the same as our July sales, when usually August sales are much lower.
Sales below $1.5 million “fall”
As you might expect with rising interest rates sales at the lower end, which are more sensitive to mortgage cost increases have declined. A couple of clarifications though; first in Greenwich, we really don’t have a low-end. Every house in Greenwich has sold above the national average of $430,000. Secondly, sales are down in every price, except for $4 – 5 million where they are up only 8%. When you compare this August’s sales to August 2018, our last good pre-Covid year, sales below $1.5 million are down 47 sales, while sales above $1.5 million are up 52 houses this year.
What is even more revealing is that that this August we only have 15 contingent contracts out of 87 total contracts or 17%. In August 2018, 31% of 61 contracts were contingent, or almost double the percent contingent contracts in 2018. People needing a mortgage are being squeezed by both higher rates and also the tight market that disadvantages contingent offers. If you are looking to buy under $1.5 million in Greenwich, it really helps to bring cash or an underwritten pre-approval to the bidding process.
The market is slowing, but above $1.5 million, it’s actually doing fairly well, given how little inventory we have. The one exception is the over $10 million market which remains slow. Since the Great Recession sales at the high-end have moved later in the year as most financial people no longer get a big cash bonus at the beginning of the year. In August our market from $5 – 6.5 million did particularly well with 22 sales and contracts compared to only 26 sales for the entire prior part of the year.
If you want to be the prevailing buyer in this market, get a good Realtor, attorney and inspector. It’s still tough out there. At the same time if you are a seller, it’s a declining market and not the time to try an aspirational price.
The last full week of August is wonderful week to be in Greenwich, because so many people aren’t here. Would you like a parking space on Greenwich Avenue in front of your favorite store? You’ve got a good chance it’s there. Want to try out a popular restaurant? Reservations are available. Have a favorite audio book you’ve wanted to listen to on the library’s Libby app? Unfortunately, your neighbors that are away, checked it out to listen to in the car on their way to their vacation spot. Greenwich Point beaches and parking have lots of room as do the tennis courts, golf courses, and restaurants this week.
If you’ve been reading the real estate news, you’d swear that things aren’t going well, but in Greenwich there is good news, though not further improving good news. Let’s take look at the good fundamentals before we parse the downer information that so many articles have focused on.
Year to date our 404 single family home sales are up 9.0% from our 10-year pre-Covid average of 371 sales as of the end of July. In August we have had another 60 house sales so far for a total of 464 houses sales this year. If you look at the numbers that Cesar Rabellino did in his report elsewhere in this section, you’ll see twice the number of sales as listings.
Our median price for the year is median price YTD as of the end of July 2021 is $2,365,000 an increase of 6% over July 2021 and an increase of 34% over July 2019. This price rise is driven by basic supply and demand. For the last two months, inventory has been essentially flat with around 208 listings. This week we are down a little bit to 202 house listings. For comparison in July of 2019, we had 640 listings or more than triple the number of listings that we have now.
Why all the sturm und drang over the housing market or is Greenwich just an exception to falling sales. Much of this noise is attributable to the standard year over year comparisons so common in the marketplace. Last year, 2021, was by far the biggest year ever in Greenwich real estate and for just about everywhere else in the U.S. Comparing this year to last year is like comparing Frank Sinatra’s singing career to Frank Sinatra, Jr.’s singing career. Sales just don’t look nearly as good. However, inventory is even lower this year than last year.
Lower inventory is the main cause of lower sales this year. This is not to say that the Fed’s rate hikes has not damped some demand, but if we had more inventory, we’d have more sales. How do we know this? Of the 60 sales we have had in August 2022, 39 of them had been on the market for less a month. Of the 60 sales so far in August, 41 sold for full list over list. Of those 41 sales 14 of them went for more than 10% over list. Buyers are still snapping up good properties in only days or weeks and most of the time they are paying full list or over list.
But sales are down, limited new inventory has led to not only dropping sales, but also rapidly dropping contracts. We went from 154 contracts in the second half of May to only 89 contracts presently. This is a seasonal pattern that happens every year, with contracts peaking in May and dropping for the rest of the year, but this year we have dropped 42% from our high in May.
In summary, demand has slowed, but for the amount of inventory that we have sales have done remarkably well. Houses that come on well-priced more quickly. At the same time, half of our market has been on for more than 3 months. Of those that have been on for more than 3 months, half of those houses are listed for over $5 million. The high-end is the on part of our market that is slow.
Our market is slower, but it is still an excellent time to list your house, provided you price it to today’s prices.
One of the founding families of Greenwich, the Meads, had a large piece of land on the east side of North Street just north of the intersection with Taconic Road. They also had a lot of kids who needed something to do in the winter, so they expanded a pond into the perfect winter skating rink. Down a slope from North Street and surrounded by trees in mid-country, it froze earlier than ponds closer to the Sound.
Fast forward 100 years to the 1980’s, a young family was looking for home in Greenwich. They wanted a place where their children had a variety of activities, that would attract other kids. In those days, kids didn’t carry cellphones and being able to look out your window to see where the boys were was reassuring. Old Greenwich and Riverside were natural choices, but the lots are smaller than what you can get in north Greenwich. Backcountry was intriguing, but was a little too far out, so mid-country looked like a good compromise. But, where in mid-country?
Like many folks, building their own dream house designed the way they wanted was also a big desire. Even in the 1980’s there weren’t a lot of vacant lots available to build. The old Mead estate had been subdivided and one of those lots at the newly named 562 North Street might work well for a family. It had a pond for fishing and skating and slopes for sledding. In addition, there was a large flat area by the pond for playing ball.
The lot looked like it would work, but what would you build there. They wanted to capitalize on the natural setting, the sunrise to the east over the pond and the majestic trees. They also wanted something distinctive, but with traditional elements. Finding the architect in this situation is key. You want someone who can improve on your ideas and design something that meets your wants and needs, while still staying within your budget.
While the slope down from North Street made for good sledding, it created an interesting issue for cars. The architect’s creative solution was a large circular driveway in two sweeping arcs coming down from the entrance. This way whether you were pulling in or going out and whether you were going north or south your car was already pointed nearly parallel with the traffic making for easy entry.
The house itself also took advantage of the slope and the pond . The double height entry opened to a living room with large windows that overlooked the pond. The kitchen was to the left of the entry, and he designed in a T-shape. It had a large island, which wasn’t that common in 1988, and an eat-in breakfast area with bay windows. The base of the “T” had the sink and cabinets so that if you were entertaining, the dirty dishes weren’t right in front of guests. For bigger occasions, the architect made sure that the dining room and family room as well as the living room all overlooked the pond.
To take advantage of the view down to the pond and the sun rising in the east over the pond the architect had three of the four bedrooms facing east and each had a balcony. The master suite got a large walk-in closet, and three additional closets. The master bath was state of the art with marble floors and walls, two sinks and a separate bath and shower. The boys two bedrooms were right next door for easy access for health care or behavior correction.
Downstairs, the architect and the owners designed a flexible suite with its own entrance and full bath. The rooms could be offices (as they are now), guest bedrooms, staff rooms or even a pool room with its own changing room/bath for the pool that the architect had designed.
As part of the building permit in 1988, the owners got a pool permit, but didn’t plan to build it until later. After several years of renewing the permit, their activities had evolved in different directions, so the pool permit was allowed to lapse. Today’s post-Covid buyers want a pool, but the rules have gotten tighter. However, the original architect chose well and even with the tighter rules the pool could be built right out outside the side entrance to this first-floor suite.
While the pool didn’t get built, what was added was a huge stone deck spanning nearly the entire length of the back of the house. This has become a primary focus of the house with barbecue, dining table and sitting areas. Even good houses can be made better.
Amazingly, even as their family has evolved with kids off to college and the owners both working from home, the house has continued to work well for the family. The only major change was the stone deck in back. A good design makes room(s) for the evolving family and even changes in technology and lifestyle that couldn’t be anticipated when the house was built.
Inventory is up 58%, sales are half of what we had last year and still we have a market that favors sellers. This year, 2022, has been a strange year.
Some recent history can be very helpful to see how we got to our very contradictory real estate market. Last year inventory was about half of our average inventory. We peaked at 342 listing in the first week of June 2021 and then took a long, slow slide for the rest of the year. By the end of the year, we had dropped to only 152 single family homes on the market. This compares to our previous low of 299 listing over two decades ago and to an average yearend low of 390 listings. As a result, we started 2022 with inventory numbers that we didn’t have even a close precedent. We then proceeded to drift down week by week finally hitting a low point of 140 listings in March 2022.
With very little to sell, you’d think that contracts would fall too. You would have been right from June to September of 2021and then the strange things started to happen. Contracts stopped falling in October and remained flat until the year-end holidays, even as inventory took a steep dive. We had a lot of smart foresighted buyers. They correctly predicted that interest rates were going to rise, and inflation was going up too and house prices would continue to rise. Lots of buyers made the decision to buy one of the few houses that we had. They figured the house might not be perfect, but they could change that, what they couldn’t change was higher prices, higher interest rates and higher inflation so the fourth quarter of 2021 and 2022 were good times to buy.
As the Fed got serious about raising interest rates, contracts flattened out from April to June. Flat contracts numbers might seem like a flat market, but it actually represented a tight highly competitive market. Since total contracts is the difference between houses closing and going out of contract and listing going into contract, to have contract flat, meant that houses were closing just as fast as they were coming on the marketing. We saw this by the continuing decline in the days on market, a major sign of a hot market.
Our best indicator of how tight the market is, months of supply dropped from even the low levels of 2021. It was a small drop, but it led to March and April 2022, being the tightest markets, we have ever seen with months of supply measured in a couple of months and in some price categories measured in weeks.
Then came July 2022 and market dynamics changed quickly. Our inventory climbed 58%, sales were cut in half, and contracts dropped throughout the month, which should be an unmitigated disaster, but it isn’t, because 2022 is a strange year. This year we have massive tectonic plates (market factors) butting up against each other and it not at all clear which plate is going to be the subducted plate and which plate is going to be uplifted. We are coming off a trillion dollar plus stimuli from the federal government. This stimulus has a long lag and is a major cause of the inflation that we are seeing now. At the same time, any government spending this year is going to be a lot less than last year. So, sales should fall, and they have. Our sales are down dramatically from 143 sales in July 2021 to only 73 sales in July 2022. Having said that our 73 sales are identical to our 10-year pre-Covid average. This must mean that we are back to normal.
However, in this strange land, anything that looks like normal is purely a statistical coincidence. Our sales are the same as our 10-year pre-Covid average, but our months of supply are down to 3.8 months of supply from 16.4 months of supply in 2019. To see how much things have changed from anything that could be considered normal compare months of supply in 2019 and this year. In 2019 we had 39 months of supply from $5 – 6.5 million, as of the end of this July you are looking at 7.3 months of suppl or a drop of 2.6 years of supply. At the other end of the price range, from $800K – 1.0 million we are down from 8.7 months of supply in 2019 to only 2.1 months of supply this year. In 2019 a buyer had a choice of 32 houses listed from $800K – 1.0 million. In July 2022, a buyer only has a choice of 8 houses in that price range. That 2019 buyer had several choices in Riverside and Old Greenwich. Our 2022 buyer has a choice of one house in each of Riverside and Old Greenwich and the remaining 6 houses are clustered in southeast Greenwich along the NY border.
Another statistic that may look normal but is actually very strange take a look at our months of supply. MoS is fairly flat in most price ranges up to $5 million, what could be more normal than consistency. However, MoS normally increases from the low end to the high-end. Also, months of supply are fairly consistent whether you calculate months of supply with just sales to date, or if you include contracts, or if you just analyze the July sales you get about the same months of supply. What this means is that we have a “stable” market without big drops as you look further into the future. In this case “stability” is more a sign of broad uncertainty. It’s a strange stability, and months of supply is up a little from June, so this stability may not last long.
The question is we going to get back to a balanced market with months of supply around 6 months of supply? To do that, we have to have a lot more inventory or sales have to drop significantly, which with a very aggressive Fed is possible. However, it’s not likely given our very low days on market. There are still a lot more buyers than we have inventory; it’s just that, like all of us, they are suffering through a large amount of uncertainty. Uncertainty causes pauses and slowdowns, but so far, the dramatically bad predictions have not played out. The market has slowed, but over the last couple of weeks interest rates are down as is our inventory, both signs of a tighter market.
As you would expect, with higher interest rates we are seeing a drop in sales in those price ranges where mortgages are most common. In the first half of the year, sales under $1.5 million represented about 25% of our market share. Last month sales under $1.5 million represented only 19% of our sales. With mortgage interest limited to the first $750,000, this is what you would expect, but remember this is a strange year. From $1.5 – 2.0 million market share went from 13.9% to 19.2%, so there is only so much you can read in to one month. Also, the number of deals with mortgage contingencies is way down, but it’s not clear how many people are foregoing mortgages or just foregoing mortgage contingencies.
What is clear is that we saw big changes in the market in July, and unlike June, these changes were reflected in the number of sales and contracts. You shouldn’t, and in this market, it would be ludicrous to, take a ruler and connect two data points and extend that line and expect that where that line is in 6 months has any predictive value. Now if we get 2 more months of data along that line, we might actually have a trend. Right now, we have very powerful forces pushing in opposite directions and it’s not clear where sales will come out.
Real estate in Greenwich set a couple of records in first half of 2022. We had both the highest average price and highest median price at the end of 1st half. Our average sales price for a single-family home in Greenwich is now $3,089,555, this is up 24% over the $2.54 million average price that we had four years ago in June of 2018.
Record Median Sales Price
Amazingly, our median price appreciated 32% over the same period from $1.87 million to $2.53 million. What this indicates is that demand in price ranges under the median price are going up faster than our high-end houses. Not to worry if your house is over $3.1 million, every price range is up.
Record Low Inventory
All of this is driven by another record; the lowest inventory we have ever seen. Back in the middle of March, we actually got down to 136 single family home listings. Since then, we have “strongly” recovered to 207 listings. This is 71 new listing in inventory and an increase of 52%. However, we are still down 39% from where we were at the end of June last year. We are also down 72% from the 729 listings that we had at the end of H1 2019.
That inventory number was in itself a remarkably low number. Go back two more years to 2019 and had 729 listings at the end of the June. This 52% increase in inventory in the last couple of months is actually a decrease of 72%. Some our car has never had much gas in the tank, but it was replenished regularly just not as much as last year.
Low Inventory Limits Sales
In the first half we had 331 sales down from the 511 blockbuster sales that we had last year. While we didn’t have the Bugatti Chiron of sales that we had last year, we still had a pretty peppy Audi TT driving sales (my favorite car, I’ve every owned:). Given the record low inventory we had every week this year, those 331 sales are remarkable. If we’d had more inventory, we would have a lot more sales.
What about those sky-high interest rates?
You would think reading many of the news reports that sales have stopped due to sky-high interest rates. Sales haven’t stopped, and by just about any measure interest rates are not sky high. We had 69 sales in June this year, which is below our 10-year average of 91 sales, but it’s only 24% down, when our inventory is down 72%.
Interest rates were reported over 6%, but I don’t know that anyone in Greenwich saw that rate. All of the mortgage bankers that I work with have been sending me with their weekly emails with 30-year jumbo rates in the low to mid 5%’s. ARM’s are often under 5% and at least one bank will offer you a mortgage under 4% if you are willing to move your banking relationship over to them.
In Greenwich, thought most buyers aren’t using mortgage contingencies. Normally, we are about 50:50 in contracts, with half of our sales contracts having mortgage contingencies and half, being non-contingent deals.
For the month of June, it was more like a 25:75 ratio. It was a competitive market and removing the mortgage contingency would get the buyer a better price and moved to the front of the line in multiple offer situations.
The 75% of buyers without mortgage contingencies, may well be financing their house purchase. Smart buyers in this market are underwritten pre-approved and are willing to take the small risk, that the house might not appraise out and they will need to come up with more money.
Other buyers are eschewing the typical mortgage, especially now that federal interest deduction only applies the first $750,000. Buyers are using long term margin loans, art loans, and a wide variety of non-standard financing. Still, lots of those 75% of buyers without a mortgage contingency are all-cash buyers, reallocating funds from a risky asset into the relative security of a Greenwich real estate investment where supply still can’t meet demand.
Months of Supply also at Record Lows
You can see just how much excess demand we have for our limited inventory by looking at the months of supply numbers. This number tells you how long it would take to sell the present inventory based on how fast houses have sold year to date. The problem with this one number for months of supply is that if you have a hot first quarter and a slower June, months of supply may not accurately reflect the market right now.
Two things you can do to get a better feel for the market is to add in the contracts that are signed but haven’t closed yet and assume they will close, on average, in a month and a half. A second method is to take what closed this month and annualize that one month’s sales to see how hot the market is now. If months of supply with contracts is a lower number than months of supply only using closed sales and annualizing the current month of sales is even lower, you have an accelerating market.
When you do that in this market you see accelerating markets in several price ranges. For example, from $1.5 – $2.0 million, months of supply is a low 3.3 months, throw in the 19 contracts waiting to close and you are down to 2.9 months and annualize June sales and MoS is only 2.5 months of supply. If you are looking in that price range you presently have a choice of 25 listings, but 46 have already sold this year and 19 are under contract. It is not a soft market.
This accelerating market is seen in 4 of 11 price ranges. The other price categories are best characterized as flat with now clear signs of accelerating or decelerating. Having said that, they are already at ridiculously low levels all the way up $5 million. The only real pro-buyer market we have is over $10 million, where we have 29 listings and only 7 sales and contracts, but that was also true last year. If you are selling a house in that price range, you need to price it competitively and do a good staging job.
An Example of Today’s inventory
Russ and I put on 562 North Street on Tuesday last week at $3.395,000. It’s an architect-designed house sitting on 2 acres with a pond in mid-country. There is a large deck that overlooks the pond and plenty of room for a pool. It also comes with two downstairs bedrooms with a full bath. One of the first-floor bedrooms has a separate entrance. This gives the owner the option of two offices, a staff suite, mother-in-law apartment, or a two-bedroom guest suite.
We had the realtor open house that Tuesday, 7/5, and had several appointments for showings right after the realtor open house. Showings have gone well and the market for that house in that location is good. It’s also good, for most other Greenwich properties, which are newly listed at market prices.
It is not the market that we had in March. Today, listing too high is much more of a problem now than it was then. Today, there is a fair amount of uncertainty, and most buyers need a reason to move when such uncertainty is present. Smart buyers see this as an opportunity.
If you had some spare cash in the year 2000, one of the better places you could have invested it was in a house in the New Lebanon school district. In 2000, you could have bought the median-priced house in this southwest section of town for $395,000. Your “average” house would have been 2,095 s.f. and would have been on the market for 110 days. In 2021, your average size house sold that year was the same size, but up 120% to $870,000.
Equally remarkable, 2000 wasn’t a bad year in Greenwich sales. That year, we had 785 sales which was the highest number of sales prior to the Covid years of 2020 and 2021. Demand was high in 2000, but even higher in 2021, In the New Lebanon school district sales barely grew from 2000 to 2021. We went up 2 houses from 23 houses in 2000 to 25 houses in the New Lebanon school district last year. People like this area and tend to stay. Also, most of the properties already had a house, which was close to the FAR.
Townwide, in the last 22 years we have had roughly 14,600 sales of single-family homes. Of those 14,600 sales only 393 were in the New Lebanon school district or 2.7% of all sales. Limited supplies and good prices make for good appreciation over the years.
In total, we have 11 school districts. The school districts tend to be compact with similar sized houses and zones. Analyzing sales by school district is actually a good way to compare houses in the various areas in town. The best example is comparing the GMLS’ South of the Parkway area to Glenville and North Street school districts. In the GMLS stats, South of the Parkway has a variety of different neighborhoods and zones. The two school districts divide up the South of the Parkway area in to eastern and western halves. The northern portion, the traditional Golden Triangle, is included in the Parkway school district. This groups some of our more expensive 2-acres homes with the four-acre zone north of the Parkway.
No delineation of neighborhoods is perfect. Many of the RTM districts are pretty heterogeneous and the 63 neighborhoods that the Tax Assessor uses for detailed analysis have too few sales in each district for our realtor community to compare houses for our clients that are buying and selling.
When you do look at the school districts you can see why, in many ways, Greenwich is a small city rather than a more homogenous town. In 2021, our median sales price ranged from $3.2 million in the Julian Curtis district which includes downtown, Belle Haven, Mead Point and Indian Harbor to $716,675 in the Hamilton Avenue school district.
While our schools vary in the size of the districts, with Parkway School being by far the largest; they also vary in enrollment. Per the Connecticut state Edsight (https://public-edsight.ct.gov/, which by the way has a lot of useful information) the 2021-2022 enrollments of Greenwich public elementary schools are:
North Mianus is the largest elementary school with 498 students according to the state, while Parkway which has the largest district area wise has the smallest enrollment with 217 students. That 4-acre zone and the northern part of the 2-acre zone really spaces out students. Then again Parkway represents 1 out of 11 elementary schools, but the district paid 1 out of every 4 dollars that the town received in conveyance taxes too. The Parkway district had $8.3 billion of the $34.1 billion dollars of total sales from 2000 to 2022.
Greenwich is also known for its excellent private schools and their enrollment also appears on EdSight. Our largest private school in Greenwich is Country Day, that recently absorbed the Stanwich School. It’s enrollment in all grades totals 1,302. The second largest private school is Brunswick with 1,045 students. In total, EdSite says there are 4,853 private school students. This adds another 50% to our total student population. Many of these schools have good-sized waiting lists, but if you want to send your children to private schools, you’ll find more choice in Greenwich, than just about any place outside of New York City.
Not all students in Greenwich go to Greenwich schools, public or private. Covid has resulted in a nice influx of families with school age kids from New York City. A bunch of these families are continuing to drive their children to the New York City schools where their friends are. I know of three families that carpool to Horace Mann in NYC. We also have a lot of students that attend boarding schools elsewhere in Connecticut and around the U.S. and the world.
When looking at these numbers, you’ll notice some anomalies, such as we only had 8 home sales in the Hamilton Avenue school district last year, while the school has 324 students. A major reason for that is much of Chickahominy is in an R-6, two-family zone, so these duplexes and condo sales, as well as rentals don’t get counted in these single-family home sales numbers.
Overall, the number of home sales is up in every elementary school district with North Street being the big gainer going from 145 sales in 2000 to 208 sales in 2021 or a gain of 43%. That district is one where we saw a lot of new construction in this century.
If you look at total sales dollars, the biggest increase was the International School at Dundee. This increase is a little deceptive in that Dundee is a magnet school and many of the students get in by lottery from all over town. However, when they redistricted, the Old Greenwich elementary school district, more than 20 years ago, the properties on the north side of the old OG school district were redistricted to Dundee. These students got into the very popular international baccalaureate program at ISD by right.
Our excellent schools, both public and private, have been a major draw for home buyers. The number of choices also is very attractive to homebuyers. Greenwich is a good place to be educated.