February 2021: Greenwich Real Estate Transactions Double – Inventory Cut in Half

February 2021: Greenwich Real Estate Transactions Double

 Inventory Cut in Half

The number you want to remember for Greenwich real estate in February 2021 is “2”. Our sales and contracts are 2x what they were last year in the second month of the year. Our February sales were more than double last year, and contracts were nearly double. Our inventory is down to barely 1/2 of what it was last year. Our median price for 2021 sales so far is $2.2 million, which is up almost 20% from February last year. We have too little inventory for sales to continue at this pace.

Once again, the Greenwich real estate story has been turned on its head. Sales are important, and they are up this year. To be precise sales for the first two months of the year are up 68 sales from 2020 to 129 sales this year or an increase of 90%. Our contracts are up from 75 in 2020 to 148 contracts in 2021 or 97%. While this is a stunning change, it is not what’s going to define our market in 2021; that is our inventory numbers.

Our inventory is at record lows. As of the end of February we only had 277 single family home listings in Greenwich. This compares to 513 listings at the beginning of March 2020. We started the year at 287 listings also a record low and briefly struggled up to 300 listings, but since then we have actually been drifting down in the net number of listings. Right now, we should be adding dozens of listings each week as our spring inventory comes on the market and sales are usually at their low point for the year.

When you look at certain price categories you can see just how tough it is for buyers out there. From $800,000 to $1,000,000 we have 7 listings; last year at this time we had 25 listings. We actually have almost as many contracts as we have listings in this price range. The result is that our months of supply in this price category went from 16.7 months of supply last year to 2.8 months of supply this year or a drop of 83%.

Under $600,000 our months of supply is zero, as in we don’t have any houses, when at least last year we had 4 listings. This really speaks to how unique our market is. According to the NAR, the median house sales price for the entire US in January was $303,900. Half of the houses in the U.S. sold for less than $304K and that median sales price was actually up 14% from last year. In Fairfield County as a whole, the median sales price was $550,000, which was up 22% from January 2020 according to the Smart MLS. Right now, the lowest price house on the GMLS is $625,000 more than twice the national median and $75,000 higher than the Fairfield County median sales price. We live in a very unique market.

It’s not just the lower end of our market that is seeing these remarkable year over year changes. All the way up to $5 million we are seeing 6 months or less of supply. When you throw in our 97% increase in contracts, then we are seeing about 6 months of supply all the way up to $10 million.

Above $10 million we have 23 listings down 21% from last year’s 29 listings. We are looking at 15.3 months of supply at the ultra-high end due to our 3 sales (and we have two more ultra-high-end contracts). I can’t compare these sales to last year’s sales as last year we had no sales over $6.5 million last year through February. In fact, in 2020 our first sale over $6.5 million didn’t happen until May 11, 2020 despite having over 80 listings.

                Inventory our 2021 sales determinate

Inventory, at all price ranges, is going to define what kind of market we have this year. If we get back to anything like normal inventory levels, we are likely to have a very good year. We have two big Covid related factors that are driving our market. Clearly, we are seeing many New York City families and other individuals looking for more space in their homes and no shared hallways, stairs, or elevators. They want to be able sit in their backyard and not have to wear a mask. The pre-pandemic perks that kept people raising children in a 1,200 s.f., NYC apartment are all shut down or have limited access. Museums, concert halls, lectures, exhibitions, and restaurants aren’t available or are restricted, making those apartments feel smaller every day. NYC is just not as cool as it was before.

The other factor that doesn’t get nearly the attention that it deserves, is the number of Greenwich families that decided to upsize in 2020. I had six sales last year where the buyers were doing just this. I was elected to the Board of Assessment Appeals and we are hearing assessment appeals this week. Three quarters of the appeals that I heard were from Greenwich residents who had bought another house here in Greenwich.

It could be that our out-of-town buyers didn’t know about the appeals process, but I will say that every buyer I had last year asked about taxes and assessments. It could also be that our local residents know how to find particularly good deals even in a pandemic. Regardless, lots of our Greenwich residents have been upsizing and our older homeowners continue to downsize here in Greenwich at similar historical rates. Some are going to Florida and other southern climes, but they have already done. The impression is that in the Covid era, that’s increased, but there is no good way to quantify people’s reasons for moving.

One thing that is clear is that we had lots of local homeowners that were willing to list their houses last year. Our sales were up 334 houses in 2020 over 2019 for total sales of 861 houses. Much of this additional inventory were from the so called “shadow” inventory of people that had been waiting years to sell. The question is how much shadow inventory is left, based on the first two months, the answer maybe not much. Then again sellers may be waiting for the crocuses and the climatic spring.

                The Covid Housing Paradigm Shift

One of the main factors driving our intra-Greenwich buyers is that lots of Greenwichites need a different house. Today’s buyers want two, and even three offices. Kids also need virtual schooling area(s). Parent’s don’t want the school site to be in a remote bedroom on the third floor. At the same time, we are seeing some movement away from the very open floor plan. When the whole family is home, the whole day, for the whole week, having some private get-away space becomes a necessity.

The next couple of years will show whether these shifts in peoples housing needs becomes the new normal or if this is only a phase that will pass when Covid passes away. Given that the present predictions are that Covid may hang around much like the flu, albeit at much lower number of infections, the most likely result is that we will see a little of both. Some renters will return to NYC permanently and some pandemic renters have decided to take up full time residency here.

                Summer rentals

What isn’t going away are summer rentals. Many Greenwich homeowners who rented their houses last summer found it was a nice way to make a good amount of money in short time. It looks like most of the tenants liked their summer rentals as there are presently zero summer rentals available, though inquiries show that the many landlords are re-renting their houses again this summer.

                A good time to list

I hear that some people are waiting for warm weather to list their house. With all the snow we’ve had it doesn’t look very springy, but it’s not the calendar or the weather that determines when the best time to list a house is but supply and demand. We don’t have much of the former and so have lots of the latter so now is a good time to list a house.

 Stay tuned from a real estate viewpoint, 2021 has the potential to be even more nail biting than was 2020.

Price Increases Increase for Greenwich Real Estate

Greenwich had an amazing year last year in sales, and 2021 has been even better. Our median price went from $1,866,666 for all on 2019 to $2,080,000 at the end of 2020 or an increase of 11.4%. Our average price went from $2,376,978 in 2019 to $2,677,179 or an increase of 12.7%.

 In 2021, this price increase has continued to grow. Our median price for single family homes through the middle of February is $2,342,000 or an increase of 25.5% over 2019 and a very surprising 12.6% median price increase in a month and half. This is more of a price increase than we saw in all of 2020.  

So why is this happening and if we are getting 12.6% price increase in 48 days can we expect to get a 100.8% increase for the entire year? (OK that last part was just checking to see if you were actually looking at the numbers.) But why are we seeing 12.6% growth in our median price only 6 weeks of the new year. The reason is that our inventory is down and pretty much the lower you go in price the less we have to sell. For example, we still have yet to have a new listing under $600,000.

 As of February 17th, we have already sold 115 houses as compared to 68 houses in 2020 for the first two months. In the first 17 days of February 2021, we have had 49 sales compared to 30 sales for all of February 2020. We started the year at an all time low of 287 single family homes, when we should have been in the 400s for listings. We saw a slight climb of inventory in mid-January, but then sales started to outpace inventory additions and inventory shrank.

NumbersMo to Mo % Change
MonthSales Average of Sold Price/SqFtAverage of SP/ASMTAverage of SP/OLPSales % % SP/SF% SP/Assmt
Jan38$       5371.51387.1%
Feb30$       5031.49785.3%-21%-6%-1%
Mar35$       5101.44890.1%17%1%-3%
Apr34$       4621.42688.6%-3%-9%-2%
May54$       4961.34088.1%59%7%-6%
Jun77$       5651.41787.5%43%14%6%
Jul85$       5351.50094.1%10%-5%6%
Aug108$       6161.55593.6%27%15%4%
Sep118$       5611.60393.8%9%-9%3%
Oct100$       5771.55093.1%-15%3%-3%
Nov92$       5421.55892.0%-8%-6%1%
Dec91$       6061.65692.6%-1%12%6%
Jan66$       6061.60294.3%-27%0%-3%
Feb49$       5971.57495.1%-26%-1%-2%

As of now, our 280 house listings make for a new all time low. As of March 2nd, last year we had 513 listing, as the spring market started hit its stride last year. We won’t be getting close to 513 listings this year.

As a result, we are seeing upward pressure on prices. In December, January and February, we continued to see the sales price per square foot around $600/square foot. This is all the more remarkable when you realize that at the beginning of the pandemic, we actually slid to a low of $462/s.f. in April of 2020. This meant we saw a 31% increase in real prices from April to December.

If you take our 49 sales so far in February and annualize them (monthlyize them(?), There has to be a word for that) you come up with 80 sales for the present month if the second of February see sales at the same rate as the first two weeks. If we keep getting inventory, we just might make it, because demand has not slackened.

When you look at transactions, sales and contracts, we took a slight pause for two weeks at the beginning of the year and then transactions took off. Last week we had 22 sales and 36 new contracts making for 58 transactions compared to 13 transactions for the same week last year. No wonder inventory is going down.

Curiously, the roll out of vaccines may actually have slowed some people from listing their properties. Their thinking is why risk my family when in a month or two they are likely to be vaccinated. Another factor which hasn’t gotten much discussion, but is blatantly obvious, to anyone who has a window is that we are having a classic New England winter with frequent snowstorms. It’s not the most conducive to holding Realtor or public open houses.

The result is market that was tight in December, stayed tight in January and then got downright constrictive in February. The result is that our sales price to assessment is well over 1.42. Since our assessment ratio, the percentage of the assessor FMV that is actually taxed is 70%, anything about the reciprocal of 1.42 indicates that houses are selling above their October 1, 2015 assessed value. That date 10/1/15 is the last time that all of the property in Greenwich was reassessed.

Given that property values in backcountry and mid-country have fallen since then and are only started recovering starting in 2020, means a broad spectrum of properties are seeing price increases. December’s 91 saw a median sales price to assessment ratio of 1.656 or 16.6% higher than in October 2015. Our sales price to original list price is also up to very pro-seller amount of 95.1% and has been high for months.

Unless we see a flood of inventory or a major drop in demand, you can expect some significant price appreciation this year. Interest rates are still very low, the stock market is at record highs, we burned through lots of stale and shadow inventory, leaving a small relief valve of reserve inventory. It’s a good time to be a seller (if we only had more.)

Why Zillow Hates Greenwich

and, Why Most Realtors Wish There Was a Zillow Alternative

Every day Zillow is putting Greenwich homeowners at a significant disadvantage, by falsely raising the monthly payments they claim are due on houses in Greenwich.  This inaccurate amount appears in the header of every Zillow listing and stays on the page even when you scroll the data column. The estimated monthly payment is a key determinate as whether someone will buy, or even look at house in Greenwich. (I’d love to know if this is a nationwide issue.)

Zillow grossly inflates the taxes due on a house in Greenwich, thus increasing the monthly cost by thousands of dollars. The actual amount of the Greenwich property taxes appears in the Zillow listing, but Zillow don’t use the actual tax number in calculating the crucial monthly payment amount.

For example, 22 Byfield Lane in Greenwich pays $13,623 in annual property taxes to Greenwich. Zillow, however, estimates this property’s taxes at $42,665 or more than $29,042 higher than the actual taxes. This is 213% of the actual taxes and increases Zillow’s estimate of monthly expenses by $2,420. Cheryl MacCluskey, my co-columnist at the Greenwich Sentinel estimates that a buyer would have to have an additional $70,000 income to pay these fake taxes. The result is that many people think that they can’t afford to live in Greenwich and look elsewhere.

Even if they can afford that house in Greenwich, houses in other towns look more attractive. If you compare 22 Byfield Lane in Greenwich to 25 Common Mile Road in Easton they are both at about $2.5 million. Zillow says that you would have to able pay about $12,580 in monthly expenses to buy either home. Zillow is wrong on both accounts. The taxes they calculate for the Easton house are high by $9,733/year or $811/mo. In Greenwich, the taxes are high by the aforesaid $29,042/year or $2,420/mo.

This overestimating of taxes gets worse the lower the tax rate. For Greenwich with the lowest tax rate in Connecticut, the over estimation of monthly taxes is high by 100%, 200% and even more.  

              So why are Zillow tax calculations so bad?

You would think all Zillow needs to do to calculate the tax portion of a monthly payment is take the actual taxes paid for the house as entered by the listing agent on the Greenwich MLS listing and divide by 12 months. The correct tax number is on Zillow and that number is usually accurate.

That’s not how Zillow does it. They take the list price of the house and multiple it by 1.71% and divide by 12 months. They make not one, but three basic mistakes in calculating the monthly taxes. First, the mill rate in Greenwich is 11.59 for houses not in the sewer service area (think of it as 1.159%) not Zillow’s 1.71%. Second, the mill rate is not applied to today’s list price as Zillow does, but to the assessed value on October 1, 2015. Third, the assessed tax value is 70% of what the Assessor thinks the fair market value was on October 1, 2015. So, taxes on a $2,500,000 house whose value hasn’t changed since 10/1/15 are only $20,282.50 ($2.5M assessment x 1.159% mill rate x 70% assessment ratio) not the $42,750 that Zillow reports.

              Why Realtors Don’t Like Working with Zillow

Long time Greenwich agent, Denise Rosato, pointed out this bad monthly payment issue to me at an open house recently. She had been trying to fix this problem for her client by contacting Zillow. As any agent who has had to work with Zillow knows it’s a nightmare trying to get Zillow to change anything. It can take days and weeks for them to even get back to you with anything, but an automated reply. Agents know that gong through regular Zillow channels for an individual agent is a lesson in frustration.

To add insult to injury, once you do get Zillow to change something, it’s very likely that when they refresh their database in a couple of days that it will revert back to old erroneous data and you have to start all over again. I’ve had to correct the same error as many as three times.

You can take “ownership” of a listing and make certain manual changes, but once you do that, you become a slave to Zillow. All updates for open houses, price changes, status updates and anything else will now have to be entered manually by the agent forever. Lots of wrong data stays on Zillow, because it’s just too much work to fix it.  

Denise sent multiple emails she had sent to Zillow trying to correct the bad tax information. She eventually got back an email from a real person at the “Zillow Help Center” that Zillow uses a county-wide blended tax rate of 1.73% times the Zestimate. (They actually use 1.71% times the list price not the Zestimate as you can see when you click the down arrow next to Property Taxes in the Monthly Cost box on any listing.)  

The result of all this is Greenwich loses buyers to other towns with higher tax rates, because the Zillow data is wrong. It is wrong everywhere in Fairfield County, it is just more wrong in Greenwich.

              Other Zillow Issues with Real Estate Agents in Greenwich

Zillow has been on quite a run this week, but they have not treated agents very well. Even I was shocked at the visceral hate that many agents have Zillow. Were it not for Zillow Group’s market power, they would work with another company.

For example, Zillow has the notorious Zestimate which is their estimate of what your house will sell for in Greenwich. These estimates can be wrong by millions of dollars both high and low. Several years ago, a brave Zillow salesperson came to one of our weekly office meetings. Several agents complained about how far off the Zestimates could be, (they were even worse then). He finally said, “We know they are off, but they are a great way to start a conversation with a prospective client.” It wasn’t a great selling point for us to recommend Zillow. At least with Realtor.com you get a choice of multiple valuations.

 Another major problem with the Zestimates is if you look at the history, they jump around by huge percentages often for no apparent reason. I listed a property for $4.3 million and the Zestimate went from $2.6M to $4.2 million literally overnight. (I don’t know why. Maybe they thought I knew something they didn’t.)

In some ways, I feel for sorry for Zillow and the Zestimate, as Greenwich doesn’t have hundreds of identical tract homes. Even when we do have two identical floorplans, one may have a third more square footage on the tax card, because one has a walkout basement and the other house’s basement is  partially buried and not part of the square footage on the tax card.

The problem is that buyers rely on these numbers. They make decisions on what to go see and how much they should offer based on the Zestimates. House don’t sell, because of Zillow’s misinformation and the difficulty of correcting this information.

Besides the monthly estimates, all of which seem to be wrong, lots of other Zillow “data” have problems. A friend of mine listed a house this week and Zillow showed it had been on the market for 75 days, not a good way to get buyers to your house in a hot market. A third agent got challenged at open house, because the list price was so much lower than the Zestimate. The house was right next to i-95, while Zillow was pricing it off of waterfront houses that weren’t near I-95. A fourth agent had an issue where the dual listing on the SmartMLS was predominating over the Greenwich MLS listing and Zillow was showing that the seller was still taking backup offers when they were not.

Bottomline, Zillow is not built for a small market, with lots of housing types, of different ages, and vastly different values and they mistreat agents and can make homes more difficult to sell.

              None of this really matters to Zillow

Zillow has now become a digital monopoly like Facebook, Amazon, Google, or Microsoft. Digital network effects have kicked in strongly. In 2021 homeowners and agents have work with the Zillow Group. The FTC made a major mistake, when they allowed Zillow to acquire Trulia, which Zillow is putting minimal market effort behind. At this point, Zillow is buy up competitors to consolidate their market power and their zooming stock price expand into affiliated areas.

Not only is Zillow looking to control the horizontal real estate information space, they are also moving quickly to control the vertical space. Zillow now has a statewide brokerage license out of East Berlin, CT (which is a somewhat ironic location) and is a licensed broker in every other state. They have finance and closing divisions. They own Dotloop, a leading digital documents company. They are buying tract homes at bargain prices in Atlanta, Las Vegas, Phoenix, Denver and other cities and reselling them with their own agents.

The Zillow Group now has about 2/3rds of all Internet searches and is growing rapidly. Their stock has gone from $25 to an intra-day high of $200 in 11 months as analysts see them squeezing out the competition and leveraging their market power. They have become the 16,000-pound killer whale.

They are so large and growing so fast that issues like really bad data don’t matter to them. Right now, if you want to get your data corrected on a timely basis you need to sign-up as a Zillow Premier Agent for which you will have to pay thousands of dollars. To be a premier Zillow agent, you don’t have to have ever sold a house just pay them lots of money under long term contracts just to get your face on their site. They also have grown so large that they now have to grow even faster on a dollar basis to keep up their compound percentage growth. They just started to charge for apartment listings and if that works agents can expect fees for house listings that are likely still to have bad data.

Lots of their money comes from payments by agents to Zillow, they really should treat us better.

2020 an Amazing Year for Greenwich Real Estate – Chairman’s Circle Gold Award for Mark Pruner

Greenwich had amazing year in 2020 for real estate and it is continuing in 2021. It was a lot of late nights and early mornings for me, but it paid off with my first Chairman’s Circle Gold Award. If you want to see what I was up to just click the video below.

Thank you to my clients everyone that was a part of that amazing year.

The Future of Greenwich Real Estate in 2021 – Takeoff or Gridlock?

The January 2020 Greenwich Market Report

January 2021 was another hot month for sales in Greenwich, but it didn’t start out that way. For the first three weeks our transactions, closed sales and new contracts, slowly fell from 32 transactions to 31 transaction to only 27 transactions in the third week. Then came the fourth week of the year and transactions nearly doubled from 27 transactions to 50 transactions. Of those 50 transactions, 32 were new contracts which give us 134 contracts, so our sales will continue to be busy for at least the next couple of months.

We sold 64 single family homes in January 2021 up 68% from January 2019, but down 30% from a record December 2020 with 91 sales. The year-end holidays slowed down showings and contracts leading to lower sales January, but what really hurt January sales was the lack of inventory. At the beginning of the year, we had a new record low inventory of 287 listing easily breaking the prior low inventory record of 299 listings.

As of 2/2/21InventoryContractsLast Mo. SoldsLast Mo Solds+ Contracts YTD Solds YTD+ ContractsMos SupplyMos w/ ContractsLast Mo. Annlzd
< $600K050505.0.0.
$600-$800K1474114113.53.23.5
$800K-$1M6729293.01.73.0
$1-$1.5M2820163616361.81.91.8
$1.5-$2M2413102310232.42.62.4
$2-$3M5132124412444.32.94.3
$3-$4M4022113311333.63.03.6
$4-$5M2873103109.37.09.3
$5-6.5M337181833.010.333.0
$6.5-$10M421041441410.57.510.5
> $10M234151523.011.523.0
          
TOTAL28913464198641984.53.64.5

Last year we started January with 432 listings and added a net 21 listings by the end of the month. This year we started with 287 listings and only managed to add a net 2 listings. We went from our inventory being down 34% at the beginning of year to being down 37% at the beginning of February. Inventory is the gas that keeps the sales engine going and the gas gauge is dropping toward empty when it should be rising.

Our inventory is down by 164 listings from last year and we are seeing big drops in inventory all the way up to $5 million. I had a listing on Lake Ave in back, backcountry. I held an open house in December, and no one came. It was a cold, cloudy day before Christmas and I wasn’t the only one to have slow day. In January, I held another open house there and 14 groups came to see a $3.2 million dollar that had been on for over 6 months. The next day one of the open house attendees made an offer and we are under contract now. I’m also working with another one of the attendees that wants to move into a newer house with room for a tennis court and there is practically nothing under $4 million.

Of course, if you want to see a really tight market, take a look at our listings under $600,000. Actually, you can’t because there aren’t any. The market isn’t tight it’s non-existent. We never have a lot of listings under $600,000, but last January we had five listings and over the course of 2020 we sold 17 houses under $600K.  This year we have 5 contracts and no listings.

Traditionally, the spring market starts after the Superbowl, which luckily is this weekend. I’m hoping the sluice gates will be opened and we will be flooded with over 100 listings, but I’ve only got two coming on and I was talking to three top agents at an open house and combined we only had 6 new listings coming on. In a normal year, that number would be double or triple that.

Contracts are eating up our inventory. The 134 contracts we have now up 74 contracts over last year’s 60 contracts and contracts are up in every price category. Our lowest listing under contract is at $450,000 and we have three houses listed for $11.99 million under contract. From $6.5 to $10 million, we have 10 contracts up from zero last year. Each of the five price ranges above $2 million are up by more than 100% in contracts.

The result of low inventory and high sales in January is months of supply so low I had to change the scale of the chart. It was not that long ago we measured supply at the upper end in years of supply not months. In January 2020, everything over $2 million had more than one year of supply. Last year above $6.5 million, we had 63 listings, no sales and only 1 contract. This year if you look at months of supply and include contracts all price ranges, even over $10 million is under year of supply. This year, there are 18 transactions above $6.5 million compared to the 1 transaction last year. From $3 – 4 million months of supply is down 75% from 12.1 months to 3 months of supply. (Please list your house.)

We are also clearing out a lot of stale inventory. Of our 134 contracts, 40 of them had been on for more than 6 months and were on when each month set a record for sales. Fourteen listings had been on for more than a year and one had been listed for 1,342 days.

Takeoff or Gridlock

Are we going to see market take off in 2021 or is gridlock going to cause 2021 sales to fall.? On the demand side we have lots of things pushing Greenwich toward more record sales this year.  Interest rates are very low, Covid unfortunately is still widespread in NYC and crime is up there. Greenwich has also been redefined in the marketplace as possibly the best alternative to NYC living. It’s close to the city, has plenty of land, and lots of amenities. We also have an excellent school system that is large enough to accommodate additional enrollment and a top hospital. These last two items you don’t find in high-end, but isolated vacation areas. With enough inventory we should take off this year.

But will we have enough inventory to meet demand? Right now, I have a client that is gridlocked. They can’t list their house until there they have a place to move too. (They need a high-end condo in central Greenwich.  (if anyone knows of something not on the market, please let me know.) I get emails every day from agents whose clients can’t find what they want in the little inventory we have.

The market is so hot that many listings never make it to the market. It’s a common practice in most brokerages to send an email alert when you have a listing coming on. In 2019, that intra-office email usually proved fruitless, now days, there is a good chance that another agent does have a buyer for that property. The fastest deal I ever did took 11 days from my announcing it at a Monday office meeting to closing the following Thursday.  

It also looks like shadow inventory may be a shadow of its former self. Last year we had 404 more houses sold or under contract than we did in 2019. Lots of those houses were people who had been waiting for years to sell. A really big question is how many more of them are still out there. I’ll be very surprised if there are another 400 homeowners that are still waiting.

We may actually be seeing a peek at the other side of the shadow inventory coin; people waiting for waiting for house prices to go up. Last year our influx of shadow inventory kept our price/sf price appreciation to around 4%, I’ll be surprised if it is not higher this year, but does mean you should wait for the price to go up? Waiting for a few percent more is a dangerous game. I’ve met lots of people who turned down offers in the digit’s decade for much more than they can sell their house now. It doesn’t take much imagination to see factors that could lead to a recession this year. Striking now, when you know we have a hot market, may be a better option than waiting another year.

 Stay tuned, what happens in February may define the rest of the year.

2020 – A Very Good Year for Greenwich Condo Sales

Like the Greenwich single-family home market, 2020 was a very good year for the condo market. Our unit sales were up 51% to 220 sales in 2020 compared to only 159 sales in 2019. Now 2019 was a bad year all around. Sales in 2019 were down 12% from 2018’s 181 sales. Even better than our condo sales number was our 2020 condo sales volume. Sales dollars in 2020 were up 51% compared to 2019’s sales volume of $217,830,079 dollars. If you look at our condo sales in 2018, you see a more average year with 181 sales, even so our 2020 sales at 220 sales were up 22% over this “average” year.

201820192018  vs 20192020  2019 vs 2020
 # Sold$ Sold# Sold$ Sold% ch # sold% ch $ sold# Sold$ Sold% ch # sold% ch $ sold
Jan11$8,901,50012$15,251,5009%71%13$13,191,5008%-14%
Feb9$6,917,7759$9,013,2500%30%13$15,503,00044%72%
Mar11$8,316,90015$10,367,50036%25%15$8,335,4000%-20%
Apr18$19,492,00017$16,954,500-6%-13%11$10,979,500-35%-35%
May13$17,610,00012$9,492,500-8%-46%11$5,729,280-8%-40%
Jun22$23,365,50017$16,105,625-23%-31%16$13,503,750-6%-16%
Jul18$11,953,07717$11,980,500-6%0%17$19,745,0000%65%
Aug22$14,767,0447$6,101,000-68%-59%26$26,990,500271%342%
Sep6$6,630,00012$13,032,250100%97%19$17,960,52458%38%
Oct14$17,843,00013$12,276,500-7%-31%31$26,116,000138%113%
Nov14$15,255,00013$11,315,500-7%-26%17$12,469,00031%10%
Dec23$24,066,00015$11,984,000-35%-50%31$47,306,625107%295%
 Total181$175,117,796159$143,874,625-12%-18%220$217,830,07938%51%

Our sales by month show just how remarkable 2020 was. Our 38% increase in annual sales occurred in just the last five months of the year. We did better in January and February 2020. March was even. April, May and June actually saw sales declines in sales below the same months in an already poor 2019.  Then came the five months of August to December 2020, where sales were 107% higher than in 2019.

Curiously, we had started the year out pretty well with condo sales up in January and February, then came March and sales were flat. April, May and June saw a sales decline over an already poor 2019. We got back to even in July and then the boom started.

We also saw a jump in prices in 2020, though a recovery might have been a better word. Our average condo sales price in 2020 was $990,136 up 9.4% over 2019 when we had dropped to $904,872. However, when you compare 2020’s average sales price to the average in 2018, we were up only 2.3%,

This average illustrates another factor in the condo market, which is that it provides some of our most affordable houses. In 2020 the average house sold for $2.67 million compared to $990K for the average condo. In 2020, condos (which for purposes of this report include the handful of co-ops associations that we have in Greenwich) represent about 26% of our houses sales (220 condos/861 houses). This is down from 2019 and 2018 when condo sales were about 30% of house sales both years. So, in 2020 we saw more people buy condos in Greenwich, but the increase in single-family home sales was even greater. People wanted out of New York City, but most wanted a yard and not a shared hallway and elevator, which they already had in NYC. We do have lots of townhouses and other condos without shared spaces and those were particularly desirable in a pandemic.

Condos sales are concentrated at the lower end. Sixty percent of our condo sales are concentrated under $800,000 even though only represent about 40% of our inventory. That wasn’t true in December, where we saw lots of sales over $2 million. These high-end condo sales represented 32% of December sales compared to only 13% for all of 2020. Many of these high-end sales are units in new developments, where both owners and developers wanted to book the sales before year-end.

Our condo market was very competitive at most price ranges. Under 6 months of supply is the traditional dividing line between a pro-seller and pro-buyer market. Under $800,000 we have only about 3.5 months of supply which is a hot market and from $600 – 800K it is getting even hotter as shown by months of supply with contracts included and December sales annualized. When these bars drop in a steady line, the market is only getting hotter.

Normally, months of supply market-wide is an increasing curve from the lowest price range to the highest price range, but that’s not the case in January. Our most pro-buyer market is from $1.5 – 2.0 million where we have 13.2 months of supply. If you go up to the next price range, we only have 4.7 months of supply from $2 – 3 million. This is partly real and partly the law of small numbers. Right now, we have 11 listings between $1.5 and 2.0 million and only 7 listings between $2 and 3 million dollars. Switch a couple of listing from under $2 million to over $2 million and this dramatic market demand difference shrinks a lot.

What you do want to look at is the market wide condo/co-op months of supply which is a tight 4.9 months of supply, then a slightly tighter 4.7 months of supply when you add in contracts and an amazingly tight 2.9 months of supply when you annualize December 2020 sales.  

Our contracts indicate that we will see a bunch of sales in the $600,000 – 800,000 in the next few weeks. Unless we get a lot more inventory in the next few weeks, this market becomes combat-buying. The victors will be the buyers that enter the process fully prepared.

A Condo Search Strategy

What is a buyer to do? A couple of hopefully helpful thoughts. Try to figure out what neighborhoods you don’t want to live in. A good deal on a nice house, in neighborhood you don’t like, is not a good deal. Open houses are great for this. You can check out the area as well the house. This also saves you time going forward, because you don’t have to look at the houses that are in the wrong neighborhood. Also, when you have a longer time horizon, you can attend open houses looking for features you like and don’t like in a house.

One fun thing to do after seeing a house is write down what you think the house will sell for and then when it does close, check and see how you did. This way when you do find your dream house, you’ll know whether it is properly priced.

In this hot market, with the likelihood of rising interest rates, you may still be willing to wait for the right house to be listed, but be prepared to move quickly. This can make all the difference between winning and losing a bidding war. You can check with your stockbroker about the process and time to cash in stocks if need them for a downpayment. You should talk with your banker and go ahead and get pre-approved. Once you think you will be making an offer in the next 60 days, get underwritten pre-approved so the only thing the bank will need to do is an appraisal.

If you are seller, you want to list your condo at the worst time of the year, the middle of winter, i.e., now. It’s carpe emptor, seize the buyers when they are there. I’ve been involved in three bidding contests so far in January and the one winner in everyone of them was the seller.

Stay tuned, it’s likely to get even more interesting.

Chart, bar chart

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Our biggest month by far for sales was December as people wanted to close before year-end. The election also had an effect as November was slower than either October or December.

Covid Increases Sales by $1 Billion in Greenwich, but Some Neighborhoods See Little Change

In Greenwich’s Hottest Sales Year Why are Some Neighborhood Stats Down?

Covid has had distinctly different effect on neighborhoods in town. It was very much the Goldilocks effect. You didn’t want lots that were too small, but you didn’t want them too far from town. And, while 2020 was amazing year for Greenwich real estate, it was really only an amazing for five months. The first seven months were up and down but averaged out to an average year. Several factors came together in the last five months to make the period from August to December a really incredible period.

Neighborhood# SoldSum of Sold PriceDOMAverage of Sold PriceAverage of List Price/SqFtAverage of Sold Price/SqFtAverage of SP/ASMTAverage of SP/OLP
Banksville5$4,382,500 48$876,500$390$379    1.42897.2%
Byram16$13,485,000169$842,813$453$4331.94493.3%
Cos Cob84$116,042,250204$1,381,455$459$4421.51892.6%
Glenville37$43,902,575142$1,186,556$463$4451.67193.8%
North Mianus13$22,723,450105$1,747,958$524$5131.59996.0%
North Parkway102$300,697,949277$2,948,019$488$4601.33987.5%
Old Greenwich128$299,579,631137$2,340,466$654$6301.62994.2%
Pemberwick9$7,512,000161$834,667$426$4112.16795.0%
Riverside133$345,931,079152$2,600,986$666$6221.50693.2%
South of Post Road84$328,530,352211$3,911,076$784$7211.67490.6%
South Parkway249$816,260,716254$3,278,155$577$5481.44190.2%
         
Grand Total861$2,300,247,502205$2,671,600$589$5571.52691.5%

Townwide, we sold 2.3 billion dollars’ worth of single-family homes in Greenwich in 2020. This was up over a billion dollars or 84%. You can see how these sales were Covid driven as two areas that did particularly well were the four-acre zone North of the Parkway and the two-acre zone in the South of the Parkway neighborhood. The latter was the Goldilocks zone, having larger lots for plenty of social distance seen and being closer to town than the even larger lots north of the Merritt Parkway. Let’s take a look at the neighborhoods and see how each one did in 2020

              South of the Parkway – The 2020 winner, mostly

We had a total of 240 single-family home sales South of the Parkway in 2020. This is up an amazing 120 units from last year or 93%. The total value of houses sold in that neighborhood was $435 million. This was up 114% over 2019.

Now you would think that when sales go up almost 100% that prices would also take a jump and they did but it was more like a small hop. The average sold price per square foot went up 3.2% and the sales price to the assessment ratio went up 2%. The average price actually did go up 11%, but as often happens in Greenwich the jumps in the average and medians is more due to the fact that we had more high-end sales last year pushing these averages up. Townwide sales over $3,000,000 are up 100% last year. While mid-country was where the action was this year, the sales price/sf only went up 2.0%. Lots of folks that were thinking about moving provided enough inventory for 120 more sales.

              Cos Cob

Coming in second place for the largest percentage increase in sales was Cos Cob. This neighborhood checked a lot of the boxes that young families fleeing high-density NYC were looking for. Prices were more reasonable there, than in the two-acre zone in mid-country. Cos Cob also has a variety of lot sizes, 1/6-acre, 1/4-acre, 1-acre and 2-acre zones, so something for everyone.

Another reason that Cos Cob did so well this year is that it had further to come. In 2019, Cos Cob and Riverside got hammered as the SALT limitations on property tax deductions took a big bite out of sales. In 2019, we only had 48 sales in Cos Cob compared to 75 sales in 2018. So, this year’s second place finish is more a Superball bounce. Sales went from 75 to 36 to 84 in 2018, 2019 and 2020 respectively. Having said that sales are up over 2018 which was a good year for Cos Cob as families that didn’t want to pay the premium for Old Greenwich and Riverside found Cos Cob a good alternative.

              North of the Parkway

North of the Parkway had another good year for sales. I say another good year, because backcountry had been the weak sister of neighborhoods for almost a decade. Starting in the 4th quarter of 2018, backcountry properties were such a value, that we saw sales increases from 45 houses in 2018 to 59 houses in 2019 or an increase of 31%. Then came 2020 and sales jumped to 102 sales or an additional increase of 73%. In two years, we saw an increase of 126% in houses sold.

This increase was driven by multiple factors with Covid being the most public factor. Above our backcountry average of $2.95M we a big increase in high-end house sales. Below $3 million, low interest rates and good values drove sales. Another factor that didn’t get much attention, except for here in the Sentinel, was the number of Greenwich upsizers. The common wisdom is that lots of folks were selling their houses and moving to Naples or Hilton Head or Charleston and that does happen and has happened for generations.

This year many Greenwich sellers are upsizing and moving to backcountry. They may be coming from a smaller Greenwich house, or a rental, or be desperate to get out of their parent’s home. (I had all three type backcountry buyers this year.)

Backcountry houses continue to be good values. In 2020, the average sales price in backcountry went down $325,275 and the average price per s.f. went down 4.7%. On the other hand, the sales price to assessment ratio went up 1%. Whenever you see indicators pointing in different directions, it’s an indication that there isn’t only one trend going on in the market.

One trend that we are seeing is that houses that have sat on the market in some cases for years are selling. Of our 102 sales 20% had been on the market for more than a year; two for 6 years. The actual percentage is higher as we still see lots of owners taking houses off for the winter and then putting them back on 90 days later. This tactic is used to reset the Greenwich MLS days on market back to zero so houses that had been on and off the market for years looked like a new listing. Also, big yards are easier to sell on sunny days when they are covered with grass and bordered by flowers rather than snow and dead bushes.

Today, most buyers get their days on market information from the public websites who don’t use Greenwich MLS DOM, but their own DOW or days on their website. We have also seen a bunch of winters with little or no snow, particularly, this winter, so this year winter buys allow for spring renovations and weekends all summer.

              South of the Post Road

This is an interesting area. It runs from Chickahominy to Mead Point and from Milbrook to Belle Haven. It’s a real mix, but sales were up 71% in that mixture of neighborhoods. Total dollar volume was up 102% to $329 million. When the percentage jump in dollar volume is greater than the jump in percentage number of sales, it is a sign of stronger high-end sales.

Days on market also dropped by a month and half, while the sales price to original list price went up from 88% to 90.6%. Both are signs of a tightening market. If you are looking to buy in this area. For the value hunters you have 41 houses, but none are under $1 million. At the high-end you have 8 choices over $10 million, but this is down as we had 8 sales in 2020 over $10 million plus one under contract for $12 million.

              Riverside vs Old Greenwich

In the continuing battle of angels on a head of a pin as to whether Old Greenwich is better than Riverside; Riverside has made a stunning comeback. Last year, Old Greenwich wiped the floor with Riverside as OG sales went up, while Riverside had the second biggest sales decline of any neighborhood after Cos Cob. In this case, SALT caused the wounds as Riverside sales dropped to only 78 sales down 23% from 2018.

This year Riverside sales jumped up to 133 sales an increase of 70.5%  compared to Old Greenwich’s below town-wide average of 33%. Old Greenwich had 128 sales after having 96 last year. Riverside also saw its average price jump by 30.2% to $2.60 million while Old Greenwich’s average sale price was $2,340,466 up $27 from 2019 or a .001% increase.

Not to worry Old Greenwichites, your average sales price to assessment ratio was up 5.4% from last year, while those folks in Riverside actually saw a 4.7% decrease in their average sales price to assessment ratio. When someone from Old Greenwich points out this 10.1% difference, Riversideans should counter with the fact that their average sold price/sf was up 13.5% while the OG SP/sf was down 1.4% or 14.9% better.

So, what does this mean? Just that we have a may have a very busy market, that is undergoing a paradigm shift. Last year we had a lot of shadow inventory, so we didn’t see an inventory shortage in 2020 in most areas of town including Old Greenwich and Riverside. As a result, we are seeing a mix of numbers some up a little, some down a little, but it is the mix of the sales that is causing this momentary “confusion” in the directions of prices. We are certainly not seeing any confusion in the amount of demand.

              Glenville, Byram & Pemberwick

These three neighborhoods starkly illustrate the effect of Covid. You can drive from Glenville to Byram in 5 minutes (1 minute if starting on the Merritt counts). Sales in Glenville were up 43% this year, but this is over a poor 2019 and is also below our town-wide average of a 64% increase in sales. Glenville however looks pretty good when compared to Pemberwick where sales were down 18%, which means they dropped from 11 sales in 2019 to 9 sales in 2020. Part of this is that Covid refugees what more space and part of it is just data randomness. In Byram, sales went from 14 to 16 or an increase of 14%. If you combine Byram and Pemberwick sales were flat.

You should actually take these numbers with an even larger grain of salt as several agents try to take advantage of higher price per sf in other neighborhoods. For example, a half dozen listings around Pemberwick are claiming to be in Glenville and several houses on Byram Shore Drive are using the South of the Post Road neighborhood.

Bottomline, houses under $800,000 sell quickly in Greenwich if they are price properly.

              Summary

Land, square footage, mini-country clubs are all in demand. However, we are still waiting to see a significant uptick in prices. If you slice and dice the data finely enough you can find groups of houses that saw double digit increases, but it will only be when we see the median, average, price/sf and sales price to assessment ratio all point up that we are seeing a general rising price trend.

We may well see this in 2021. Our inventory hit an all-time low at the beginning of the year falling to 287 houses. We are not yet seeing any surge of new listings this year. Assuming we used up most of our shadow inventory of folks that wanted to move Greenwich inventory could stay tight all year.

If the paradigm shifts back to historic norms of people preferring large houses, larger lots and more amenities continues in 2021, prices could spurt quickly

On the other hand, we have world of big issues, so stay tuned.

OVER 1,000 TRANSCATIONS – ONE AMAZING YEAR IN GREENWICH REAL ESTATE

The 2020 Year End Real Estate Report

by Mark Pruner

One thousand and three transactions, that’s what we did last year. These 1003 transactions consisted of 861 sales up 334 houses from 2019 or 63% and 142 contracts up 70 houses or almost a 100% increase. And, it wasn’t like these sales and contracts were concentrated in any particular price range. Literally, every price range, except our lowest price range was up. Even, the fact that sales under $600,000 were down, may indicate a stronger market as houses were priced out of our lowest price range and pushed over $600,000.

As of 1/1/21 (GMLS)InventoryContractsLast Mo. SoldsLast Mo Solds+ Contracts YTD Solds YTD+ ContractsMos SupplyMos w/ ContractsLast Mo. Annlzd
< $600K121317190.70.71.0
$600-$800K12871546543.13.01.7
$800K-$1M12681455612.62.71.5
$1-$1.5M362814421491772.92.72.6
$1.5-$2M191916351541731.51.51.2
$2-$3M483519541922273.02.92.5
$3-$4M381910291231423.73.63.8
$4-$5M241141545566.45.86.0
$5-6.5M2736940438.18.54.5
$6.5-$10M459413253421.617.911.3
> $10M25224151720.019.912.5
          
TOTAL2871429123386110034.03.93.2

Our biggest winners this year compared to last are sales and contracts from $3 million all the way up to $40 million. In all 5 of these high-end price categories, transactions were up by over 100%. By numbers, we saw an increase of 155 more houses sold or under contract at our high-end. The biggest winner for the year was the $3 – 4 million price range where sales were up 132% from 53 sales last year to 123 sales this year.

In our highest price range, over $10 million, sales were up 114% from 7 to 15 this year. Now when you have 861 sales in a year, 15 sales may not sound like that much, but those 15 sales totaled $217,400,000. If you start with our least expensive sale and go up, you need 224 sales to total the $217 million represented by these 15 years. Our over $10 million market was actually better than that. These are the Greenwich MLS sales numbers, and they don’t include the $42 million sale on Indian Head Road in Riverside, nor does it yet include the John Street contract for Tommy Hilfiger’s house listed at $47,500,000. If you include just those two sales, you’d be looking at over $300,000,000 of ultra-high-end sales (assuming the John Street house gets close to list.)

              $2.3 billion in total home sales

In total for 2020 sales, we had $2.3 billion in single family home sales in 2020. This is in one year, in a town of only 62,000 people. Back in 2019, our total sales volume was only $1.25 billion meaning our total volume was up 84%, most of which happened in the second half of the year.

What is really remarkable is that 2020’s $2.3 billion in public sales exceeds our previous record for sales which was set 16 years ago in 2004. That year we sold 978 houses for a total of $2.17 billion dollars, and that number includes both public and private sales.

              A remarkable 2nd Half and 4th quarter

The 4th quarter saw sales increase by 143% over the 4th quarter of 2019. Total sales volume increased even more from $251 million in sales in the 4th quarter of 2019 to $804 million in sales or an increase of 221%. Even in this remarkable year, our 4th quarter was head and shoulders above the prior quarters for percent increase, which bodes well for the first quarter of 2021.

                            Quarterly Sales Numbers

While the first quarter was better than 2019, it was much like our 10-year average. In the second quarter, when Covid had its greatest negative impact, April was slow as we went into lockdown followed by a better May and June as we saw the beginning of an exodus of families from New York City. Our second quarter while better than the poor Q2 2019 was still a little below our 10-year Q2 average. Then came the third quarter and sales took off. July was better than average and August and September were our highest months of the year.

2020 QuartersNo. of SalesSales VolumeSales DifferenceVolume Difference% Sales Diff% Volume Diff
Qtr1103$219,985,16629$49,607,11839.2%29.1%
Qtr2165$443,697,56313$62,933,7128.6%16.5%
Qtr3311$833,006,153127$385,327,26369.0%86.1%
Qtr4282$803,558,620166$552,962,154143.1%220.7%
Grand Total861$2,300,247,502335$1,050,830,24763.7%84.1%

What was amazing about the 4th quarter was that sales just stayed high. Normally the 4th quarter has about 21% of our sales as things slow down for the holidays; that’s not what happened in 2020. We got 3 consecutive months of sales numbers in the 90’s. The 4th quarter of 2020 represented 35% of sales. The 4th quarter sales numbers were 282 house sales, up 166 houses from 2019 or 143%, and up 147 sales from our 10-year average.

                            High-End Sales in 2020

We saw a big jump in the average sales price from $2.14 million in the 1st quarter to $2.85 million in the 4th quarter or a 33% price increase. This price increase was driven by the increase in the high-end sales in Greenwich that started in June. The June increase was expected as many sellers wanted to avoid the Gold Coast tax; the 1% increase in the state conveyance tax for sales over $2.5 million that kicked in on July 1st. What was surprising was the continuing increase in high-end thereafter. While these high-end sales increase are certainly encouraged by Covid; it also seems to be tied to higher levels of violence and shootings in New York City.

              Average Greenwich sales price up 12.4% in 2020

In 2020, our average sales price was $2.67 million up 12.4% from our 2019 average sales price of $2.38 million. The median sales price was $2.08 million up 11.4% from 2019’s $1.87 million median. Our average sales price peaked at $2.97 million in 2007. We still have a way to go get back to our 2007 peak, but we are getting there with double digit appreciation. (BTW: All this historical data is from my brother Russ, who has a great website with historical data at russellpruner.com.)

Now, as I constantly write, most of the change in both the average and the median sales price is not due to a general appreciation of all houses, but a change in the mix of what is selling. If you double the number of sales over $3 million you will get a big jump in our median and average sales price.

A better way to get a feel of how your house value is doing is to look at the changes in the sales price/s.f. and the sales price to the assessment ratio. Our sales price per square foot is up 4.1% over 2019. Our sales price to the tax assessor’s assessment is up 3.1% over last year’s SP/Assmt ratio. So, by this measure, house values are up 3 – 4% in Greenwich for 2020, but if you are talking to someone from Darien you can let them know our average price is up 12.4%.

              Inventory and Months of Supply Way Down

The one stat that probably should get more attention right now is inventory, because it is at record lows. Our 287 house listings are down 145 listings from last year or a drop of 34%. For the last several months our inventory has been down about 25% from last year, but it held steady at that level, meaning that new listings were coming on about as fast as they were going off.

In December, as usually happens during the holidays, new listings slowed down, while sales stayed high with 91 sales compared to a 10-year average of 54 December sales. The result was both inventory and contracts shrank. At the beginning of December, we had 378 listings and 171 contracts, by January 1st we were down to 287 listings and 142 contracts. The drop in inventory was not solely due to sales, we had 17 listings expire unsold at year end on December 31st. Regardless of the cause, 287 home listings is a historic low for inventory. 

If you compare the months of supply at the beginning of 2020 with months of supply at the beginning of 2021, the difference is startling. Last year from $4 – 5 million we had 26 months of supply. This year we have 3.7 months of supply. That dramatic drop is true across all price ranges. For the entire market we went from 9.8 months of supply at the beginning of 2020 to only 4.0 months supply at the beginning of 2021.

              We Need a Lot More Inventory

I was hoping that a lot of sellers were waiting for the new year to put their house on the market, but that is not what we are seeing so far. In the first few days of 2021 we have seen only a handful of new listings. This lack of inventory is the biggest present threat to 2021 being a good sales year.

 If you are thinking of selling your house call me or take advantage of the fact that everyone in Greenwich has zero degrees of separation from a Realtor. With over 1,100 dues paying GMLS members, you probably have a neighbor, a tennis buddy, a club member, a carpool friend or a fellow school parent that is an agent. Call me, call them, please do it this weekend.

The ideal time to put a listing on the market is when supply is low, and demand is high. This is exactly what we have now.

              What Will Happen to Greenwich Real Estate in 2021?

How will this year play out? The one thing you can be sure of is that no one knows. Covid cases are reaching record highs across the U.S., but Connecticut has been one of the most successfully states in getting people vaccinated. We have a hot market, but low inventory. It is a great time to list your property, but January is not known for a lot of listings.

In 2020 we had lots of people who had been waiting for years to list their properties for sale, do we still have that number of people or has our shadow inventory mostly disappeared? Prices in New York City are dropping, and people are getting the vaccines, will the NYC real estate market return to normal? Federal relief bills are authorizing record amounts to stimulate the economy, leading to record amounts of debt, what happens when interest rates tick up? I could go on and on with countervailing factors, but there is no way of knowing which factor will outweigh their countervailing factor.

Stay tuned, it’s going to be a really interesting first quarter.

CNN – Greenwich Real Estate on Fire (MP quoted) – Conversations Matter (MP Interview)

CNN has a good story about just how hot the Greenwich real estate market is. You can read it here, In Greenwich, Connecticut, money is no object. Real estate there is on fire. Anna Bahney did an excellent job of summarizing just how busy the market has gotten. The story features 22 Cherry Tree Lane, Patty Ekvall and my listing on Long Island Sound for $7.25 million. I get quoted several times on why people are moving and whose looking in Greenwich. When you get mentioned in a CNN article your wife’s cousin from Colorado sends you an email. 🙂

Candace Adams, Berkshire Hathaway – New England’s president has an interest blog at Conversations Matters. She interviewed me last week, about what it’s like being a Realtor in the Covid era, how I got to be a Realtor and how I’ve been working to redefine the Greenwich real estate market. You can hear the podcast here or subscribe via the podcast app in your phone.

Greenwich Home Sales Set a New Record

But For How Much Longer

by Mark Pruner

 Berkshire Hathaway Greenwich, CT

The human mind tends to get bored with the same thing over and over, even when it’s another superlative, which is my way of saying that we set another record for sales in November 2020. November 2020’s 91 sales did not beat last year by just a little bit; it was more than twice November 2019’s 40 sales. These 91 sales are also more than our 10-year average sales in our busiest month of June, which only averages 86 sales. Or course, our sales in August, September and October 2020 exceed our June average as well.

The question is can December do the same thing and the answer is very likely, yes! But this may not be the answer for January, but more about that later. Right now, we have 171 contracts waiting to close. The odds are that December will be better than November as many of these buyers and sellers are tax motivated and want to wrap it up before year-end. Over the last 10 years we’ve had 38% more sales in December than in November. We also have more sales in January than in February as today’s sellers want to put off paying capital gains taxes until 2022. Right now, I have two clients who are pushing me for a sale this year.

In bad years, life-changing moments drive the market: births, marriages, divorces, and deaths. Covid and its associated changes are causing some changes in these life-changing moments; more deaths and divorce pressure, and some delayed marriages (Though my niece got married in our backyard last month. The groom’s father got ordained as a minister, so that they could keep the number of attendees under the state limit of 10 people.) Supposedly, births are down, but since blackouts lead to increased births, wouldn’t lockdowns do the same things? Regardless, these 2020 life changes in aggregate are not what is driving the number of contracts up 163% and November sales up by 127%.

So, if life changing moments aren’t increasing sales much, what is it? We have multiple factors that have combined with synergistic effect to increase our sales in Greenwich. The desire for young families to have an outdoor space for their kids to play is a major and well publicized factor, but maybe not the majority factor. Low mortgage rates also are driving increased sales nationwide. If we did not have record low mortgage rates, the number of Covid motivated buyers actually buying would be smaller.

Low interest rates don’t account for the fact that our median sales price is up from $1.87 million in 2019 to $2.1 million in 2020. This is an increase of 12.5%, and I would love to tell folks that their $2,000,000 houses last year are worth $2,250,000 this year, but that’s not the case. As usual, and as most reporters don’t focus on, what is driving the change in the median price is not a general price appreciation, but more sales of houses above the median price point pushing the median up.

For 2020 so far, the median sales price/s.f. is up 4.0% and the sales price to assessment ratio is up 2.4%. Both metrics are better measures of overall price appreciation than the change in the average or median price.

Above average-priced sales are up, but what is driving these sales? Part of it is buyers looking for more home amenities, the “mini-country club effect.” Last year many buyers saw a pool as an additional expense that required daily maintenance. In the Covid era, a private pool means summer fun, without having to be part of the crowds at the beaches and clubs, and also a personal sized hockey rink in the winter (well OK maybe not that yet.) People also want room for other adult family members to join them when needed. Buyers also need two, three or even more home offices/remote schooling locations. What was not needed last year is now a requirement for many buyers.

Another factor that has really impacted the very high-end sales are concerns about increased unrest and shootings in New York City. From Jan. 1 through Nov. 29, the NYPD recorded 420 murders, compared with 304 murders during the same period last year. The number of shooting victims in the city has more than doubled. All this is encouraging more sales, and especially sales at the high end.

I’m also seeing a few buyers with houses in the Hamptons who are realizing that the Hamptons are not the ideal place to sit out the Covid era. It’s not an easy commute to New York City, even if you only have to go once a week. School space is limited, and they don’t have a Yale affiliated hospital minutes away like we have at Greenwich Hospital. For Covid motivated buyers, Greenwich looks pretty good.

Lastly, in my experience another major factor is that people in Greenwich are upsizing. For decades, Greenwich people moving up was a major factor in purchases and sales. You bought a house and in five to eight years, you could take the appreciation and buy a bigger house. Post-recession there wasn’t lots of appreciation. The move-up pipeline got clogged and many people fixed up their present houses. This year, we’ve had a Covid roto-rooter clearing out this pipeline of people whether waiting to upsize, downsize or move out of town.

Can we keep this high level of sales up?

            Year to date, we have 940 total sales and contracts. This is up 385 transactions from last year or 70%. Where did those additional 358 homes sales come from? Very little is from new construction as only 4.6% of our inventory was built in the last two years. Much of the rest of the 95% of inventory comes from Greenwich homeowners that wanted to change their present housing situation and felt stuck. The problem is that we are rapidly running through this shadow inventory of homeowners that have been waiting years for this market. You can see that it is shadow inventory coming on, as house prices have not gone up much even with the increased demand and sales.

Once we see the people wanting to move who have actually done so, are we going to get additional inventory? Our present inventory levels of only 378 single family homes listed on the GMLS make this question of more concern. We are down 142 listings from this time last year. We always see inventory drop in November, but usually not this low and not this early.

Our demand has not slackened, transactions were down last week, but only because it was a 3-day work week. On a per diem basis our sales were up last week.

Prices are going up slightly, a nice turn around for backcountry and mid-country and other areas of town. Increased prices do lead to increased inventory. This summer even some of our wealthiest families put their houses on the market as summer rentals at prices we hadn’t seen before, which led to inventory we hadn’t seen before.

I’m putting a couple of new listings on the market in the coming weeks of December, something I probably wouldn’t have done last year at this time, but “Winter is the New Spring” in this real estate market.

So, if you are thinking about selling your house in the next 12 months, now may actually be an excellent time to do so. Check out this week’s sales and new listings that Cesar Rabellino does for the Real Estate Dashboard: 54 sales and only 28 new listings. Inventory is down a lot this month and sales and contract signings continue to be just as hot as they have been for the last five and a half months. It’s worth a call to your Realtor.