The 2018 Co-op & Condo Market in Greenwich, CT

In Greenwich, we have two condo markets; one pretty good and one that appears to be not so good with a sweet spot in the middle. As of 8/8/18 we have 139 condominiums and co-ops on the market here in Greenwich. Of those 139 listings, 103 of them are below $2 million, leaving 36 above that price. This a 75:25 split above and below $2.0M.

Curiously, we only have 5 listings between $1.5 and $2.0 million, while we have 22 listings between $2 and 3 million, the next higher price range. As a result, the price range from $1.5 – $2 million is the sweet spot in the middle with a very low 4 months of supply.

8/8/18 Inventory Contracts Last Mo. Solds Tot. Solds+ Contracts  YTD Solds  YTD+ Contracts Mos Supply Mos w/ Contracts Last Mo. Annlzd
< $600K 34 4 8 12 37 41 6.7 7.3 4.3
$600-$800K 24 3 4 7 22 25 7.9 8.4 6.0
$800K-$1M 23 2 2 4 17 19 9.8 10.6 11.5
$1-$1.5M 17 1 3 4 14 15 8.8 9.9 5.7
$1.5-$2M 5 1 0 1 10 11 3.6 4.0
$2-$3M 22 2 0 2 6 8 26.6 24.1
$3-$4M 10 1 0 1 1 2 72.6 43.8
$4-$5M 4 0 0 0 0 0
$5-6.5M 0 0 0 0 0 0
                   
TOTAL 139 14 17 31 107 121 9.4 10.1 8.2

On sales side this dichotomy above and below $2 million is even larger. Below $2 million we have 100 sales so far this year, while above $2.0 million we only have 7 sales or a 93:7 split. Once again, the $1.5 – 2.0M price range stands out with nearly twice the sales of the $2-3M price range, even though the higher price range is twice as wide, a $1 million range versus a $500,000 range.

To be clear, $2.0 million is not our median for condos. For inventory, half of our inventory is below $899,000 and half is above. On the sales side the condo median is $720,000. This compares to our single-family home inventory median of $2.95M and our sales median of $1,855,000. What’s obvious is that the two markets are very different.

Not only are the prices different, the buyers are different, the primary difference being kids. A lot fewer kids live in condos and co-ops in Greenwich than in single family homes. That not to say that we don’t have children in condos. The Old Greenwich Gables has a surprising number of children. It’s a nice complex and it also a lower cost way to get into Dundee ISD and Eastern MS, than the houses in Old Greenwich. In general, however, most of the people enjoying the lower maintenance lifestyle and the additional amenities you get in condos are younger singles, couples and downsizers.

More amenities have become a battleground in NYC, which has experienced lots of new, luxury condo construction. In Greenwich, we have not seen much new construction of condos until the last two years. If you look at the whole condo market both active and sold units this year, we only have 4 condos built between 2010 and 2106. Now more than 4 condos were built during that period, but (a) not a lot were built, and (b) most of the ones that were bought haven’t come back on the market.

Most of what was built during this condo developments nadir were smaller developments, particularly in the R-6 multi-family zone in Byram and Pemberwick. Starting in 2016, larger projects got underway, particularly in downtown Greenwich. As some people became concerned about the density of these developments, Planning & Zoning shut this door, by only allowing 2 units per R-6 zone lot, so we instead of the R-6 zone being the multi-family zone, we can call it the duplex zone going forward.

In our luxury condo market, the prices range from $2 – $4 million where we have 32 listings. (We do have 4 condos from $4 – 5 million, but nothing above that price.) This market looks more challenging for sellers as we have 2 years of supply from $2 – 3 million compared to less than a year of supply below that amount. Part of this is that a significant part of the listings in this price are still under construction and those units are harder to sell until completed. On the plus side, several of these luxury units under construction are also under contract. As these units are completed, C.O.’s are issued and the sales close, this will push our luxury market months of supply down.

 

 

 

 

 

 

 

 

 

July 2018 Greenwich Real Estate Sales Take a Large Jump from June

My wife really likes barn swallows. I do too, but when they set up a nest in our garage and proceeded to sit on one particular rail over the back of my car and mess up my back window every day as they grew to maturity; I was a little less joyful. By July, all of the babies had fledged and were out looking for any flying insects. The cool thing is when I’m mowing the fields on my tractor kicking up lots of insects, it looks like a World War I dog fight with swallows flying in every direction including right at me and then dodging away at the last second.

08/01/18 Inventory Contracts Last Mo. Solds Tot. Solds+ Contracts  YTD Solds  YTD+ Contracts Mos Supply Mos w/ Contracts Last Mo. Annlzd
< $600K 3 2 1 3 9 11 2.3 2.3 3.0
$600-$800K 17 5 6 11 29 34 4.1 4.3 2.8
$800K-$1M 28 11 5 16 34 45 5.8 5.3 5.6
$1-$1.5M 78 12 16 28 61 73 9.0 9.1 4.9
$1.5-$2M 78 17 15 32 60 77 9.1 8.6 5.2
$2-$3M 141 16 17 33 65 81 15.2 14.8 8.3
$3-$4M 100 13 6 19 41 54 17.1 15.7 16.7
$4-$5M 47 3 5 8 20 23 16.5 17.4 9.4
$5-6.5M 63 4 3 7 19 23 23.2 23.3 21.0
$6.5-$10M 52 3 1 4 5 8 72.8 55.3 52.0
> $10M 36 0 1 1 8 8 31.5 38.3 36.0
 
TOTAL 643 86 76 162 351 437 12.8 12.5 8.5

The reason I mention this is that there is a saying that a single swallow does not a summer make. Well it’s July and lots of swallows do make a summer. Our sales are up a lot over June, which is unusual as June is almost always our highest sales month.

For those folks who read my June report you may have been expecting this as while June 2018 sales were down over 2017 we had a lot of pending contracts. Well in July 76 of those contracts closed. This was a 43% jump over the 53 sales that we had in July of 2017. Also, our overall sales are officially ahead of last year 351 sales to 342 sales.

Not only are our July sales higher than June 2018 they are also above our 10-year average. Contracts are continuing to look good with 86 contracts waiting to close which is 6 contracts more than at the end of July 2017, so August 2018 should also be a good month.

On the inventory side, we are continuing to run high with 643 single-family homes up 44 listings from 599 houses last year. Folks that might have moved over the next couple of years, have decided that with the new Tax Act that they are going to move in 2018, leaving us with April level inventory in August when inventory is normally down significantly from its spring peak, but in just about every other way things are looking up sellers. Our total monthly transactions, sales plus contracts, are up significantly with 29 more transactions as of the end of July 2018; from 133 in July 2017 to 162 houses in July 2018.

From $800,000 to $1,000,000 contracts are up 9 houses over last year and year to date sales are now u over last year. This is a total of 14 more transactions this year than last year or a 33% increase.

The result is that the lower end of the market is tight. In fact, the extra inventory we’ve gotten under $1 million has been helpful as it is giving people in an area where we normally have a strong sellers’ market a few more options.

The additional sales in July were concentrated from $1- $4 million where we were up 20 sales over last year. This is also the area where we have had an increase of 33 houses in inventory, so as of July, more inventory is finding more buyers. The word seems to be getting out that we have some low property taxes for the NYC metro area.

There are two area where we continue to see some signs of weakness, one is getting better and one still needs some improvement. In our market from $1.0 – 1.5 million market. We had good sales in July, but we are still down 13 sales from last year.  At the high-end our over $10 million market has been doing stellar, but the market from $6.5 – $10 million has lost some of the momentum that it had earlier in the year. Inventory is still down as more people are deciding to stay in their houses in this price range, but total transactions are down 9 from last year. The result is a big jump in months of supply for this price range.

Now I’d like to say that July 2018 was a great month with sales way up over last July, but, last July like this June was a poor month for sales. When you look at the 10-year average for sales it was only a pretty good month. July 2018 sales had 76 sales, up 23 sales from last year, but up only 3 sales over our ten-year average of 72.9 sale. You might think we just switched poor sales months, but when you add June and July together this year and for last year, 2018 sales are still up by 8 sales.

The key thing is that it is up. As several articles have pointed out Westchester County and NYC have been suffering significant sales drops over last year. To have our sales go up, when our surrounding areas are going down is a significant factor.

The even better news is that contracts continue to be up over last year with 6 more contracts than last year. The odds are therefore that we will do better than last year in August 2018, but not by as big a margin as we saw in July.

If you are in the NYC Metro area, it’s a good time to be living in Greenwich.

 

WHY AVERAGE HOUSE APPRECIATION NUMBERS AREN’T ALL THAT USEFUL FOR BUYERS AND SELLERS

Real estate appreciations statistics can be dangerously deceptive leading both buyers and sellers to make expensive decisions that in hindsight they wouldn’t have done. Here’s a guide to some of the bigger red flags to watch for.

       How are average price appreciation numbers deceptive?

When you see a figure like average house prices have increased by 5.803% you need to ask a bunch of questions for that number to mean anything and even then, for most sellers and buyers, that number is of only marginal usefulness. Often this appreciation is stated as Y-O-Y or year over year, but are they looking at all sales in the first half of 2018 compared to all sales in the first half of 2017 or is it just June 2018 versus June 2017 sales.

      How many sales?

If you are talking just the monthly sales, then the appreciation number is less reliable as it contains fewer sales. Even worse, if we are talking appreciation on a monthly basis for a small subset of houses, say just sales in Cos Cob, the appreciation number is practically worthless since purely by luck you might have 5 predominantly higher sales this year compared to 8 predominantly lower-end sales last year. This is no way to determine if houses in Cos Cob are appreciating.  So, look at the time period and the number of sales that are compared in year over sales.

     The end price ranges works a little, the middle doesn’t

Some people look at appreciation within a price range. The problem with this approach is that houses appreciate out of the price range, so a house that was $989,000 and appreciates to $1,044,000, an appreciation of 5.6% i,s not counted in the under $1 million dollar range and may actually be bringing down statistics, like $/s.f., for the over $1 million price range.

For the middle price ranges this effect applies at both the top and bottom of the range and rarely does what’s moving up into the price range balance out what is moving out of the price range. So looking just at the price appreciation from say $1 million to $1.5 million doesn’t tell you anything. Prices could be going up, but if 6 houses move out of the high-end of the price range and 3 move in at the bottom due to significant market appreciation, the average price for that range could actually show a drop in average price.

For the very top and bottom ranges, this effect is a little ameliorated as houses can only move into the bracket one way. If house prices are going up at the high-end for all houses over $10 million or down at the low end you for all houses under $600,0000 you can be sure that is a real price change, but the same can not be said for the reverse.

             Luxury is not a percentage

Another variation of this is defining the luxury market as the top x% of the market, say 10%. The problem here is that sales vary from month to month so sometimes the top 10% in Greenwich might be at $5.5 million and other times it might be at $4 million. The result is that the average price for “luxury” sales in the 10% has very little meaning.

This luxurry by percentage also doesn’t work for more homogeneous communities, where the top 10% is similar in price to the top quarter. Lastly, I don’t want to be the one telling someone with a gorgeous multi-million dollar house that it is not a luxury house because it’s not in the top 10% of a high-end community.

                 Is seasonality a factor?

Another number that you see for appreciation is quarter-to-quarter sales price appreciation. This is another number that I personally ignore. The problem is that residential real estate has a major seasonality effect as you can see in the 10 year average line below. What is mostly selling in the first quarter are the leftovers from last year which tend to sell at a discount; whereas in the second quarter you have a lot of new listings selling with much shorter days on market and at closer to original list price. Each quarter has a different mix that problem so what appears to be a price appreciation/depreciation from one quarter to another is often just the seasonality of the sales.

                Differences in what price ranges are selling

But, by far, the biggest issue is a change in the mix of what is selling. Let’s say house prices are flat, heck let’s even say some high-end house prices are drifting downward, but if we have fewer low-end sales and more high-end sales than in the prior period the average is going to go up even though the value of individual houses is going down. This is just what happened this year. Our sales below $1.5 million are down while our sales over $10 million are up 350% from 2 sales to 7 sales. The result is that our average sale went from $2,402,151 to $2,541,557 this year an increase of 5.8%, but house values haven’t gone up nearly 6% in one year.

               Median helps, but still has a mix problem

What some people say is don’t use the arithmetic average a/k/a the mean, use the median. (Instead of adding all the numbers up and dividing by the number of sales. Let’s line all the sale prices up and take the one in the middle.) In 2017 our first half median was $1,817,500 and the median for the first half of 2018 was $1,865,000 or an increase of 2.6% in the median price Y-O-Y or less than half of the Y-O-Y appreciation in the mean.

The median has the advantage in places like Greenwich where the high prices are so high of having lower volatility, so seven more high end sales only move the median the same as seven fewer sales below the median. The problem is still that if you have fewer sales below the “middle” number and more sales above that number the median is still going to go up even if all the values of the houses are drifting downward.

            The better way: sales price to assessment ratio

Now the ratio that I like to use is the sales price to assessment ratio. This compares what the tax assessor thought the value was at the last revaluation (10/1/2015) to what is sold for this year. Now some folks think that the Tax Assessor wants a high value for houses, but that isn’t so. What she really wants is for the relative value of all the houses to be correct so each house pays it’s fair share of the total budget as approved by the RTM. If the relative value of every house was increased equally, you’d still end up paying the same tax, so she has no incentive to inflate house prices.

            Problems with SP/Assmt ratio

The mandated assessment ratio is 70% so if a house sells for 1.42 times the assessment, (the reciprocal of 0.7) then there has been no appreciation. Now you would think that you can simply compare this year’s SP/Assmt ratio to last year’s ratio and get a better estimate of actual house appreciation in Greenwich and you’d be right, but it’s not quite that easy.

The problem is two part; changing properties and garbage data. The SP/Assmt ratio number are usually pretty tightly grouped between 1.35 and 1.70, so if you throw in a larger number say a ratio of 4 or 5 it moves the average a lot. This happens when a property is sold for land value and then a big house is built on it. It’s great appreciation, but most of the additional value comes from the beautiful new house.

The other issue is just bad data, agents miss a decimal point or two and the assessment ratio comes out to be 1,301 rather than 1.301 as happened on one listing this year. That single number totally destroys the average, so a couple of times a year I calculate the SP/Assmt ratio after taking out the top 10% and the bottom 10%.

Does knowing the sales appreciation percentage help in ?

Now you would think that is a pretty good number, new construction is removed (as well as a few demolitions), most human errors are removed and seasonality is not a major factor, but just what good is that number? If you are a buyer or seller trying to negotiate a sale does it really tell you what the value of that particular house has done. It’s of some help, but you really need to look at what houses of similar style, price range, condition and age have done in that particular neighborhood. When you do this in Greenwich you will find that there aren’t enough sales to be statistically significant. So the tow wide appreciation percentage may be the best hard number you can get as to what the overall market is doing, but it’s not going to tell you whether your particular house has gone and by how much. And, it definitely won’t help to figure out what it’s value is likely to be over the next couple of years.

In the end the best thing to do is consult an experienced Realtor when it comes to making those decisions and take all those numbers out there with a grain of salt.

 

 

 

 

 

Six Thoughts on How to Make Greenwich Better

Greenwich is a great place to live. One of its greatest assets is the people that volunteer to serve on a wide variety of boards and in elected offices. These people bring a wealth of talents, education and prior experience to these positions and in the main come up with useful, cost effective solutions to problems.

Having said that one of the things that the Town could be do better is adopting more innovative solutions, more quickly. Some things I’d love to see are:

 

  1. A “Greenwich Card”

Right now, you have to have a beach card, a library card, a golf card, a parking card and several other forms of licenses to enjoy many of the benefits in Greenwich. The question is why do we need a different card for every activity. This system penalizes the occasional user. If you only play tennis once a year a $35 annual fee is excessive, particularly for a resident whose taxes help build and maintain these facilities.

Let’s have one card, that you only have to apply for one time, that lets you use the beach, the library, the golf course and can even be used to pay parking fees. One card would save both residents and government time and its basic cost could be rolled into our taxes. If you wanted to go the beach once a year, no problem and no standing in line for a beach card whether one time or annual. (Let’s also throw in 10 hours of metered parking.)

 

  1. Simplify and Make More Certain Land Use Decisions

At the present time, lots of simple land use decisions require lots of time, lots of money and lots of professionals. The usual procedure is you need to file an extensive formal application and will likely need to hire an attorney, a surveyor, a soil scientist and possible others. You and your hired professionals may also may have to appear before three or four land use agencies and wait hours for your application to be called. At the end of the day most of the applications end up getting approved.

But, that’s for the people that apply for permits. What we as Realtors see every week, are the number of people that got someone to do the work without the permits and are now having problems selling their homes. We see this kind of “illegal” work on properties in Byram on 0.1 acre and in the backcountry large lots and everywhere in between. We need an intermediate system where proposals that are likely to be approved, can be reviewed, tweaked as necessary and permitted quicker and for less money.

Now I’m not suggesting this procedure for big projects, but things like variances to setbacks for a deck where there are no neighbors shouldn’t need a full review. Either staff could approve the change or where a state statute requires the approval of the Commission these items could go on the consent calendar as the RTM does with motions. Any item needing a full review could be pulled off of the consent calendar with a majority vote.

As part of this the staff in each agency should be given more authority. Right now, the staff can’t say yes. They can say maybe or it’s possible, but woe be it if they say the full commission would allow something no matter how certain. At present lots of small things require full hearings. These commission hearings can go on for hours and even into the next day, before the application is heard. Once heard it may have to come back, for review of even smaller tweaks and then the homeowner may have to go to another commission who may not meet for another month(s). A lot of these decisions could be made at the staff level. If so we’d have shorter hearings, less expense for applicants and more compliance with the regulations.

 

  1. Making More Use of Under-Utilized Schools

Today, we have several elementary schools that are operating at full, or more than full capacity, and other elementary schools with empty classrooms. The geographic lines are very strictly drawn about where you have to go to school. I have a client whose son goes to Parkway, which does an excellent job, and they’d like to keep their son there with his friends. They are reluctant to move, because if he moves even a short distance out of the district he’ll have to go to a different elementary school unless he can get special permission.

Why not let students anywhere in town select any of the under-utilized schools? We relieve pressure on one school and better use the facilities at another school. It might actually help with some of our redistricting issues. If the parents bear the cost of transportation, it’s worth a trial.

 

  1. More Vacation Homes in Greenwich

For over a century Greenwich was known as a great place to have a summer house. We need to bring that back. Much of the pressure on sellers in the 2 and 4 acres zone is due to the loss of demand for summer and weekend homes. When I moved to the backcountry 20 years ago, half of the houses on our street were owned by people who lived out of town.

The real estate agencies here in town need to do a better job of bringing this market back. If you are a homeowner who has a house that would be a great weekend house, ask your agent what their firm is doing to reach out to the weekender and vacation home market. If you live here, tell your friends from out of town what a great place this is for weekenders and summer people. And if you are in town government there could always be a summer version of the Greenwich Card.

 

  1. Publicize our lower taxes to encourage buyers

When you got your tax bill for this fiscal year it was the same as last year or may even have gone down. Not many people outside of Greenwich know that. If you do a news search on Google for Greenwich lower property taxes 2018, very little comes up. My article from last week’s Greenwich Sentinel is there, but not much else. We have a great story to tell, but it isn’t getting much coverage.

Our sales over $10 million are up 350% from last year and our contracts are up 25% (now sales overall are down 5% for the year, but that’s mostly due to the $1.0 – $1.5 million range which seems to be a problem throughout the area). If you a reporter, you should tell your assignments editor there’s a story here and it’s likely to get better as those 120 contracts close.

  1. Support the Greenwich Sentinel

One of the great things about Greenwich is we have an excellent weekly paper covering a wide variety of people and stories and it deserves your support. It helps build the sense of community here in Greenwich and gives local vendors a way to reach people here in Greenwich. If you’ve been getting it free you should take out a paid subscription and support hometown news.

 

FIRST HALF 2018 GREENWICH REAL ESTATE MARKET REPORT – Taxes Down, Transactions Up

For the first half of 2018, we had 273 sales of single family homes. This is down 13 sales from the first half of 2017 or 5%, but the good news is that we have 120 contracts waiting to close which is up 25 contracts from last year. When you add the contracts to the sales we have 393 houses that have gone off the market or an increase of 3%. So, you could say that the first half of 2018 was much like the first half of 2017 and you would be partially right, but we do have several significant differences.

Most of these changes can be attributed to Greenwich’s low property taxes and the BET’s remarkable ability to keep our already low taxes flat for this year. Our mill rate for sewered properties continues to be 11.871. If you leave outside of the area with town sewers (mainly the 2 and 4 acres zones) your Greenwich property taxes actually went down for the July 2018 – June 2019 fiscal tax year to 11.369. These folks are only paying $7,958 per million dollars of valuation.

As of 7/1/18 Inventory Contracts Last Mo. Solds Last Mo. Solds+ Contracts  YTD Solds  YTD+ Contracts Mos Supply Mos w/ Contracts Last Mo. Annlzd
< $600K 5 0 1 1 8 8 3.8 4.7 5.0
$600-$800K 13 8 3 11 23 31 3.4 3.1 4.3
$800K-$1M 33 10 7 17 29 39 6.8 6.3 4.7
$1-$1.5M 76 22 11 33 44 66 10.4 8.6 6.9
$1.5-$2M 91 21 11 32 45 66 12.1 10.3 8.3
$2-$3M 143 27 13 40 48 75 17.9 14.3 11.0
$3-$4M 105 16 11 27 34 50 18.5 15.8 9.5
$4-$5M 54 5 2 7 15 20 21.6 20.3 27.0
$5-6.5M 62 6 5 11 16 22 23.3 21.1 12.4
$6.5-$10M 53 5 0 5 4 9 79.5 44.2
> $10M 35 0 2 2 7 7 30.0 37.5 17.5
TOTAL 670 120 66 186 273 393 14.7 12.8 10.2

Under $800,000 sales are down, in fact under $600,000 our transactions (sales + contracts) are down 33%. This dramatic drop in sales does not mean that all of a sudden entry-level buyers and downsizers moving to more modest homes are suddenly fleeing the Greenwich market. What it means is that we have fewer houses to buy.

That 33% drop in transactions under $600,000 is only 4 fewer transaction in 2018 than in 2017, down from 12 transactions to 8 transactions. If we had more inventory under $800K, we would have more sales. What is encouraging is that the reason for less inventory is not fewer listings. We actually have more listings under $2 million, but the houses that were under $800K, and particularly under $600K, have appreciated nicely over the last couple of years, so our low end has gotten higher valued.

Overall, if you take what used to be called the Klein index (sales price/assessment), when Stanley Klein’s numbers were the bible with what was going on in Greenwich real estate, you get 7.8% appreciation for all the sales since the Tax Assessor’s last revaluation as of 10/1/15. If you do the same calculation for the 8 sales under $600K that we have had in 2018, you get 13.7% appreciation or 75% more appreciation that the rest of the market saw on average. So, if you are looking to buy in Byram, Pemberwick or the R-7 zone north of the Post Road in Old Greenwich and Riverside, you had best be prepared to move quickly.

As stated above, we are down 13 sales in the first half of this year compared to last year and if you want you can blame nearly all of it on June’s lackluster sales which were down 12 sales compared to last June. If you want to get really specific you can blame all of that June loss in sales on the price range from $1.0 – $2.0 million where sales were down 10 houses compared to last June.

Fortunately, there is no need to panic as this same segment was also strong for contracts with 43 contracts waiting to close up 9 contracts from last year. This increase in contracts is very promising as the tax changes seemed to hit this price segment particularly hard earlier in the year We saw more inventory and lower sales. We still have significantly more inventory from $800K to $4 million than last year with 41 more listings, but that’s also the exact same price range where contracts are up 28 over last year. Bottom line you should see a strengthening mid-market in the next couple of months.

At the high-end the market has cooled a little, but we are still doing better than last year, particularly over $10 million. In the first half of 2018 we 7 sales over $10 million compared to only 2 sales in the first half of 2017. These high-end sales have a disproportionate impact on sales volume.

Through the end of June $693,845,087 worth of houses sold in Greenwich, CT, a town of 62,000. This gave us an average sale of $2,541,557 and a median sale of $1,865,000. There are a few other towns that have higher averages, but not many of towns of our size can match our sales volume.

 

The one area in the high-end that has seen a significant June retreat is the $6.5 – 10 million price range. While inventory is down 9 listings from last year to 53 houses in this price range our June sales were down from 5 sales last year to no sales this month. We do have 5 contracts in this price range which is up 1 from last year. The result is that month of supply for the $6.5 – 10 million price range jumped from about 4 years of supply to 6.7 years of supply (literally off the chart.)

This is at the same time that we had only 2.5 years of supply of houses over $10 million or down an amazing 7 years reduction in months of supply from last year. At the high-end, a half dozen sales or more inventory can make these numbers jump around, but before June 2018 all the high-end was looking good.

We could still do with more buyers and with a little less uncertainty from Washington, we might get some. Still we are chugging along, with nearly every price range having something that is good news.

 

Surviving the Move: Three Mid-Market Listings in Greenwich

by Mark Pruner

mark@bhhsne.com, 203-969-7900

They say that there are seven events that are major traumas in your life. Most of them are dramatic and soul rendering; death of a parent or child, life threatening illness, divorce, loss of a job, imprisonment and then there is moving. The good thing about moving is that you actually have a fair amount of control over that last event, unlike the other major life stressors.

I know because before I was 12 years old, my parents had moved 13 times and were experts at minimizing the trauma of losing your friends, school and neighborhood. My father had a successful career at an international oil company and they way they promoted you then was to give you your bosses job, but in another office, and usually in another state.

My mother was wonderful at making a move an adventure. From the ages of 2 to 12 for me, and even younger for my brothers, Russ and David, we always looked at moving as a way to meet new friends, experience different world outlooks (though we wouldn’t have described it that way at the time) and move to new and interesting neighborhoods.

Today, I have listed houses for sale for three families that are doing the same things all from very different neighborhoods in Greenwich. They include a couple moving within Greenwich and downsizing, a couple whose kids have left home and they are moving to NYC to be closer to work and the activities there and an international family being transferred to Florida. Each seller presents a different challenge to make the house most appealing for today’s market.

31 Guinea Rd., Greenwich, CT 06830

The couple downsizing have a beautiful colonial off of Stanwich Road in the northeast section of the 2-acre zone. The house, located at 31 Guinea, is an immaculate, beautifully cared for, 4-bedroom house, that could of have had an open house the day that I first walked in to meet my clients.

The 4,722 s.f. house sits on 2.3 acres and was reduced to $1.85M. It would be appealing to a younger downsizer whose kids come back for holidays or a growing young family. It’s Parkway ES and Central MS, but it has a bit of their parent’s house feel for younger buyers. While I thought it was move-in condition, one young couple who came back twice estimated it would take $500K to make it “their house” with their look and feel.

Front3

Meanwhile, in Riverside, I have another house at $1.75M located at 11 Wilmot Lane in Riverside. My clients took a 1927 colonial with3,479 s.f.  on 0.25 acres that had been expanded and renovated, but not well. In some ways, they unrenovated fixed it. They only owned for it 4 years, but each year they improved a major aspect of the house and created a very- comfortable colonial with a modern feel.

When they moved in the whole first floor had an exaggerated open floor plan; it was literally one big room. They smartly added a wall along the central stair case defining a family room/kitchen area on the left side and a formal living room with fireplace in the center. They also enclosed another open area on the left side and made a comfortable media room with a huge flat screen TV for movies and cartoons for their young daughters. (Disappointingly for me, even though they are from a country that is participating in the World Cup, they are not using this Cinemascope experience to watch the World Cup limiting my pre-showing conversations with them.)

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Meanwhile over at 108 Pecksland a couple raised a family on 2.54 acres in a 3,127 s.f. house with a pool and pool house and is on for $2.15M in what has become the new Golden Triangle. Pre-recession the Golden Triangle was the north central section of the 2-acre zone that nestled below the Merritt Parkway along Lake Avenue.

Now, that post-recession people are looking for places closer to town, the Golden Triangle has moved south, closer to town as evidenced by days on market and sales price to list price ratio for listings in this new Golden Triangle. This house is a very elegant 1936 house with a modern kitchen and a family room addition that can accommodate the large screen TV on the wall above the new third fireplace. (Large screen TVs have done more to reshape today’s layout than anything since the large center islands in kitchens.)

This classy house could be a movie set for a 1930 romance or a black and white film noir where Philip Marlowe visits his upscale clients, but the interesting thing about it is that also a candidate for a historic overlay. If P&Z were to grant a historic overlay then you could put a second house on this lot just as if this 2.54 acres were in the 1 acre zone. The historic overlay zone was designed to permanently protect our historic houses and this house would be a great one to preserve.

All in all, these three houses epitomize what is going on in mid-market for both buyers and sellers. One family is downsizing within in Greenwich to a condo, an empty nester is returning to New York City for all the city has to offer, and one family is going to Miami for the career opportunity. It will be interesting to see who the buyers are for each property.

May ’18 Greenwich Real Estate – New Tax Law Increases & Decreases Sales

May 2018 was a good month for transactions, but not everyone may feel that way as the tax acts changes explained below work their way through the housing market.

In May, our single-family home inventory was up significantly to a monthly high for the year of 687 single family homes listed on the Greenwich MLS. This is 33 more listings more than we had at the end May last year or an inventory increase of 5%. The mid-market price range saw an even greater percentage increase. Between $800,000 and $2 million we saw an increase of 51 listings which was a 31% increase over last year. This increase was partially offset by a decrease of 20 listings in our over $4 million market or a high-end inventory decrease of 9%.

As of 6/2/18 Inventory Contracts Last Mo. Solds Mo. Solds+ Contracts  YTD Solds  YTD+ Contracts Mos Supply Mos w/ Contracts Last Mo. Annlzd
< $600K 4 1 1 2 7 8 2.9 3.3 4.0
$600-$800K 16 7 5 12 19 26 4.2 4.0 3.2
$800K-$1M 29 10 5 15 22 32 6.6 5.9 5.8
$1-$1.5M 94 19 12 31 33 52 14.2 11.8 7.8
$1.5-$2M 91 27 9 36 34 61 13.4 9.7 10.1
$2-$3M 147 34 6 40 35 69 21.0 13.8 24.5
$3-$4M 101 13 7 20 23 36 22.0 18.2 14.4
$4-$5M 56 8 2 10 13 21 21.5 17.3 28.0
$5-6.5M 63 9 3 12 11 20 28.6 20.5 21.0
$6.5-$10M 55 3 1 4 4 7 68.8 51.1 55.0
> $10M 31 1 2 3 5 6 31.0 33.6 15.5
TOTAL 687 132 53 185 206 338 16.7 13.2 13.0

On the sales side we had 53 sales up 4 sales from last May. The good news is that the price ranges where increases in sales were the greatest are the two price categories where we were also seeing the biggest increase in inventory; $1 – 1.5M and $1.5 – 2.0M. This increase in sales brought down the months of supply for the $1.5 – 2.0M price range by 2 months to 13.4 months of supply, (Months of Supply: If no more listings came on the market in that price range it would take 13.4 months to sell all the listing at the sales rate so far this year.)

Now 53 sales is better than last year, but it is not as good as our ten-year average of 58 sales. All the cold, damp and snow weather earlier this year has not been great for sales. Luckily, by May people were out looking and making offers faster than last year so our contracts are up over last year.

The price range where people were really busy was $2 – 3 million where we were up 14 contracts over last year. This will catch us up, and then some, with the YTD drop in sales in that price category, where YTD we are down by 10 sales. Somebody, who looks on at sales will report this drop in sales as a problem. Luckily, it is a problem that will cure itself in the next couple of months as these contracts close.

We have 147 houses listed between $2 and $3 million, but unlike the next three lower price ranges this is the same as last year. Year-to-date we have 35 sales from $2 – 3 million, 34 sales from $1.5 – 2.0 million and 33 sales from $1.0 – 1.5 million. The two price ranges between and $1 and $2 million are very interesting. From $1.5 million to $2.0 million our sales are up 8 sales from last year to the aforesaid 34 sales, and we have 27 contracts pending which is up 3 contracts from May of 2017. Just below that from $1.0 – $1.5 million our sales are down 11 houses and we have 19 contracts pending down 3 from last year.

The curious thing is that if you ask agents the whole segment from $1 – 2 million feels slow with significant amounts of time between both showings and offers. This is because we are up 185 listings in this price range, 43 more than last year. The 2017 Tax Cut and Jobs Act has encouraged owners thinking about moving to a low tax state to retire to accelerate their plans resulting in more inventory.

This $1.5 – 2.0 million range is where we see another issue for Greenwich house sales which is the locked-in, working, Westchester downsizers. Before TCJA, the Westchester downsizers generally waited until after they retired and had to pay the high Westchester property taxes out of their savings, before they sold their place in Westchester and bought a place in Greenwich. These retiring downsizers were principally in the 65 – 75 year age range.

With the loss of deductibility of these high property taxes caused by TCJA, they are looking to move earlier, often when they become empty-nesters in the 50 – 65 year age range. The problem for them, is that unlike the buyers who are driving the over $4 million market, carrying two houses is not easy and they are having trouble selling their houses in Westchester. The result is more inventory, more lookers and a couple more sales, but not enough to heat up the market.

The price range, from $1.0 – $1.5 is where TCJA has had its greatest impact. Our inventory is way up from 62 listings to 94 listings as many of our own retiring downsizers decamp to Florida where sales over $1 million are seeing a nice bump up. We have always had folks retiring and moving to Florida. This increase in people selling is likely just a one-year bump as this group adjust to a new steady state moving rate at an earlier age.

The demand side of the $1.0 – 1.5 price range is where TCJA’s $10,000 limitation on the deductibility of property taxes and SALT is having the greatest impact. Most of the people buying in this property range, like most of America, need a mortgage to purchase a house. To buy in this price range they are also likely earning over $198,000 where Connecticut income taxes exceeds $10,000 for a joint return. Alternatively, on the property tax side, those buying a house assessed at over $1.2M FMV are paying more than $10,000 in property taxes to Greenwich. So, in total buyers in this price range are going to be paying a significant part of their Connecticut income tax and Greenwich property tax burden in after tax dollars.

As a result, they have less money to spend on monthly payments at the same time that interest rates are rising. For young families the result is that they can’t get the house they want. This segment is also losing demand due to the locked in Westchester downsizers, whether working or retired, who want to move, but can’t.

This is not a Chicken Little situation; the sky is not falling in Greenwich. Transactions, sales and contracts, are up. Sales last month were up over last year. Inventory above $4 million is down. Under $1 million it is still a seller’s market.

What we have is a series of adjustments as a result of the new tax act effect working their way through the NY metro real estate market. Much of that will be accomplished this year and the worriers will have to find something new to worry about next year. However, at least for this year, the young family reaching above $1 million for a house for their growing family, and the locked-in Westchesterite, and the Greenwich retiree wanting to move to warmer weather with a house under $2 million may find that 2018 is not be the best of times. For folks with houses over $4 million they are seeing a much better market than last year with months of supply way down due to the lower inventory and higher sales.

If you would like more information please feel free to contact me: