New York Times and Hartford Courant quote Mark Pruner this week

New York Times logoThe New York Times has an excellent, and to their credit, a balanced article about backcountry Greenwich. Lisa Prevost wrote this excellent article entitled “Living in Backcountry Greenwich“ with Jane Beiles adding some beautiful pictures that do a good job of capturing the spirit of backcountry Greenwich.  I got quoted on how sales were this year and last year in backcountry. (They are even better since the story came out as you can see below.) My listing at 633 Round Hill Road is also featured with a photo by Jane. That listing has been getting a lot of attention. It’s in excellent shape, has a beautiful pool, waterfall and hot tub and at $1.69M is on for less than $300/s.f. about 60% of the average list price per square foot. We are seeing more activity in backcountry with sales up 69% from last year as it’s seen as the value place to buy.

Hartford CourantNeal Vigdor wrote an article for the Hartford Courant entitled “Mansion tax draws the ire of the wealthy, real estate industry”. The article is a political analysis of how the law got passed and the reaction in the real estate community, which as you might imagine is not good. I got quoted on the number of sales statewide and prepared a map that got used in the story showing that the sales are concentrated in the Gold Coast towns of Greenwich, Darien, New Canaan, Westport and also Fairfield. He also quotes me about the big spike in sales in June 2011 the month before the last conveyance tax increase on July 1, 2011. You can read more of my comments on the new conveyance tax in my May market report and see the 2011 sales spike in the graph that was featured in the print version of my Greenwich Sentinel column.

I’d also like to thank Neal Vigdor for his many years of covering Greenwich at the Greenwich Time and Connecticut politics for the Hartford Courant. He was a reporter you could trust to present the story fairly including lots of information in a concise writing style. He got a great offer to covering breaking news for the New York Times, who recognized his excellent reporting. Connecticut will miss his insightful reporting.

May 2019 Greenwich Real Estate Report – Sales are Up

A good average month and a new conveyance tax

by Mark Pruner

Many years ago, I took taekwondo classes. When we would spar, my instructor had a tactic where he would feint three quick kicks to my head and pull them back. Each time my arm would go up to block the kick and then come down to be ready for his next move. The fourth time the kick would start out looking just the same, and I again raised my arm to my head to block the kick, but this time he’d go for my now exposed ribs and connect every time. It didn’t matter how many times he did it I’d get kicked in the ribs every time because my instincts told me that fourth kick was also headed for my head.

This is kind of like the May market. We had three down months and the first two-thirds of May looked to be just the same and then sales picked up. We closed the month of May with 56 sales and 24 of those sales were in the last 10 days of the month. Those 56 sales were 2 more than last year and just one less than our 10-year average. So, all in all an average month, which looks pretty good after 3 down months.

6/1/2019 Inventory Contracts Last Mo. Solds Last Mo Solds+ Contracts  YTD Solds  YTD+ Contracts Mos Supply Mos w/ Contracts Last Mo. Annlzd
< $600K 5 4 1 5 6 10 4.2 3.3 5.0
$600-$800K 19 5 5 10 9 14 10.6 8.8 3.8
$800K-$1M 40 11 3 14 12 23 16.7 11.3 13.3
$1-$1.5M 74 17 11 28 33 50 11.2 9.6 6.7
$1.5-$2M 106 16 9 25 27 43 19.6 16.0 11.8
$2-$3M 165 24 16 40 42 66 19.6 16.3 10.3
$3-$4M 113 15 6 21 18 33 31.4 22.3 18.8
$4-$5M 74 6 4 10 9 15 41.1 32.1 18.5
$5-6.5M 54 4 1 5 3 7 90.0 50.1 54.0
$6.5-$10M 52 5 0 5 3 8 86.7 42.3
> $10M 36 1 0 1 3 4 60.0 58.5
TOTAL 738 108 56 164 165 273 22.4 17.6 13.2

The corollary of more closings is fewer contracts waiting to close. So, we are down 24 contracts from last year to 108 contracts this year, but I’ll take sales over contracts any day.

On the inventory side we are still up at record post-recession levels with 738 single family home listings, up 51 listings from last year. This extra inventory and slower sales from February to April means that for the whole market we are up 5.7 months of supply to 22.4 months compared to last year. This is high, but it’s lower than the 25.7 months of supply we had at the beginning of May.

Backcountry sales up

That the 5,000-foot view, but the situation is more nuanced as you get to treetop level. For the month of May, it’s the backcountry trees that are sticking up particularly high. Last year we only had 13 sales in backcountry at the end of May 2018 with 4 of those 13 backcountry sales in May. This year backcountry sales are up 70% with 22 sales and 10 of those sales were in May. (I have two listings in backcountry, and they are both getting a lot of activity.) Lisa Prevost at the New York Times also wrote an excellent article about “Living in Backcountry Greenwich“.

It’s not all rosy for backcountry as half of our inventory over $5 million is in backcountry. Townwide in that price range we had only one sale in the month of May out of 142 listings. June will be better as we have 10 contracts over $5 million waiting to close. The lack of sales in this price category is worrisome as so much of our total volume is in that section, but the legislature is working to increase sales there as you can read below.

Backcountry’s 22 sales do add up to $79 million in sales, second only to the mega-section, South of the Parkway, which has 40 sales totaling $106 million. In third place Old Greenwich has 30 sales, which total $75 million. Old Greenwich’s days on market is 150 days for sold properties versus 258 days for backcountry.

May sales up to average

When you look at the sales just in May it’s a mostly average month with two areas that stick out. One is the poor sales over $5 million, though inventory is lower there. The other is the jump in sale in the $2 – 3 million range where we are up 10 sales over last year 42 sales YTD. When you map these sales compared to last year, the 2019 increase in sales are mostly in the southeast in Old Greenwich, Riverside and Cos Cob.

This price segment also has the highest increase in inventory, up 18 listings from last year to 165 listings. This segment has the most inventory and the most sales and it equates to 19.6 months of supply, which is not great, but is still down from 21.0 months of supply last year and this includes our poor February to April sales. If you annualize the May $2 – 3 million sales, you come up with a pretty good 10.3 months of supply.

Our $1 – 2 million price range actually has more listings at 176, but this is traditionally broken down in to two segments above and below $1.5 million. It’s a good thing, because this year, as we often see, the $1.5 million price is a break point for demand changes. Below that price range we are looking at less than a year of supply, particularly when you add in contracts, which show where the market is going. Above that price range you have more than a year’s supply and above $4 million you are looking at more than 2 years supply.

The New Higher Connecticut Conveyance Tax

Our legislature is doing what they can to encourage sales above $2.5 million for the next thirteen months. They increased the conveyance tax for sales over $2.5 million by 1% to 2.25% starting on July 1, 2020. The last time the conveyance tax was raised was in July 2011. That month the conveyance tax was increased by only 0.25% all price ranges. The result was that, the prior month, June 2011, was our biggest sales month ever with 114 sales when we normally have 83 sales.

2011 Single family home sales in Greenwich showing sales spike in June 2011, the month before the Connecticut conveyance tax went up by 0.25%.

2011 Single family home sales in Greenwich showing sales spike in June 2011, the month before the Connecticut conveyance tax went up by 0.25%.

 

An unique, and possibly unconstitutional, feature of this new tax is that after 2023, the tax is refunded at the rate of one-third per year if you don’t move out of the state. You would need to stay for six years to get the full amount refunded. That kind of burden on interstate commerce will have a tough time getting past the U.S. Constitution’s commerce clause. (For more analysis of this tax increase check out Neal Vigdor’s article, “Mansion tax draws the ire of the wealthy, real estate industry” in the Hartford Courant.)

This tax is aimed squarely at the Gold Coast towns of Greenwich, Darien, New Canaan and Westport, and also Fairfield which has been quietly putting in a fair number of sales over $2 million to join the “golden” four. Of these towns, Greenwich has the majority of $2.5 million plus sales with 196 sales last year. In the rest of the state, there were less than two dozen sales over $2.5 million in 2018.

2018 Connecticut sales over $2.5 million showing concentration of sales in Fairfield County Gold Coast

This tax won’t raise a lot of money in the just passed $43 billion budget. Last year we had 196 sales that sold for $2.5 million or higher. These sales totaled $870 million, when you subtract the $2.5 million base and apply the additional 1 percent you get an additional $3.87 million of conveyance tax from Greenwich.

2018 Sales over $2.5 million showing sales in Greenwich, Darien, New Canaan, Westport and Fairfield. Data is from the SmartMLS and only shows about half of the over $2.5 million sales in Greenwich which are shown on the Greenwich MLS.

So why would the legislature pass a tax that will only raise a tiny fraction of a percent of the $43 billion needed for the budget? It all goes back to Hartford tradeoffs. Senator Looney and others wanted to raise the capital gains tax, the top income tax bracket and other changes that would impact lots of Greenwich residents every year and not just when they sold their house. This would have had much more impact on the housing market, so given the choice between a higher conveyance tax and higher income and capital gains tax, I’ll take the conveyance tax. What I can tell you is that June 2020 will be a really good month for high end sales.

April 2019 Neighborhood Report

and, a little bit of May info

by Mark Pruner

                May Update

This week we are going to look at how each neighborhood in Greenwich is doing, but first let’s see how the market is doing so far in May. On the inventory side we are seeing an increase in inventory with 731 single family home listings. This is up 6.4% from last year’s 687 listings on June 2, 2018, the closest 2018 date I have data for. Our inventory is also up 38 listings from the end of last month.

On the sales and contracts side, we continue to be slower than last year. So far in May we have had 36 sales compared to 53 sales last year and our 10-year average of May sales is 57 houses. Let’s hope we finish with a spurt of sales in the rest of May. Unfortunately, this isn’t likely to happen as we have 110 contracts, which is up 9 contracts from the beginning of the month, but down from the 132 contracts we had at the end of May 2018.

The accumulation of slower sales each month starting in February does have a cumulative effect. Through May 21 we have 145 sales. As of June 2nd last year we had 206. If we add in 10 more sales for the remainder of May we will be at 155 which would be down 51 sales or 25% from last year’s sales.

April 2019 Greenwich Neighborhoods Report

So where are the sales differences by neighborhood for the months we have completed so far. First the good news, Old Greenwich seems to be humming along. We are up 4 sales over last year with 23 sales for a total value of $58 million and an average of 160 days on market. Usually, Old Greenwich and Riverside track pretty closely, for much of the post-recession years, Old Greenwich, particularly south of the village was the hottest area, then the last couple of years Riverside’s numbers have been a little better, but not this year.

Section

Inventory Sum of List Prices  DOM Number sold Mos of Supply Sum of Sold Prices DOM
Byram 12 $34,425,400    250 3      16.0 $1,789,000      77
Pemberwick 6 $5,582,000    163 0  –
Glenville 26 $45,167,000    196 5      20.8 $4,681,000    264
North Mianus 5 $7,437,999    114 2      10.0 $1,655,000      53
North Parkway 109 $554,608,882    387 11      39.6 $50,037,350    211
South Parkway 240 $1,040,994,821    269 28      34.3 $78,595,038    305
So. of Post Rd 69 $413,459,000    177 14      19.7 $39,087,600    294
Old Greenwich 86 $221,475,500    173 23      15.0 $58,061,160    160
Cos Cob 53 $84,635,999    158 11      19.3 $16,124,850    211
Riverside 83 $246,944,090    189 11      30.2 $22,687,822    186
Grand Total 693 $2,660,963,691    243 108      25.7 $272,718,820    228

Inventory in Riverside is up a little from 78 listings last year to 83 listings this year. At the same time sales are down from 24 sales YTD in 2018 to 11 sales this year. The result is that we were looking at 30 months of supply in Riverside, a surprising number for what has been our hottest market the last couple of years.

This is where the law of small numbers kicks in, which says if you have a small number of data items, it doesn’t take many more data points to make your calculations take a big jump. So if you are a Riverside resident who gets this article emailed to him by an Old Greenwich resident enjoying a little schadenfreude at your expense, you can reply that Riverside has had 8 more sales so far in May and the month isn’t over yet, while Old Greenwich has only had 5 sales so far in May.

Besides Riverside, most of our increase in inventory so far this year is in the central area of Greenwich. South of the Parkway is up 29 listings to 240 houses. Just south of that, South of the Post Road is up 15 listings to 69 listings. Sandwiched between those two areas and Riverside, Cos Cob is up 11 listings to 53 sales.

Section Min of Sold Price Max of Sold Price Average of Sold Price Average of List Price/SF Average of Sold Price/SF Average of SP/ASMT Average of SP/OLP
Byram $535,000 $699,000 $596,333 $409 $408 2.053 98.67%
Pemberwick
Glenville $750,000 $1,180,000 $936,200 $446 $397 1.392 80.80%
North Mianus $580,000 $1,075,000 $827,500 $381 $379 1.390 100.00%
North Parkway $1,345,350 $14,875,000 $4,548,850 $676 $634 1.435 88.18%
South Parkway $550,000 $6,850,000 $2,806,966 $551 $519 1.567 86.21%
So. of Post Rd $550,000 $9,400,000 $2,791,971 $740 $704 2.081 90.64%
Old Greenwich $830,000 $11,000,000 $2,524,398 $658 $615 1.585 89.30%
Cos Cob $790,000 $3,400,000 $1,465,895 $453 $416 1.597 84.36%
Riverside $900,000 $3,900,000 $2,062,529 $566 $549 1.745 89.45%
Grand Total $535,000 $14,875,000 $2,525,174 $590 $555 1.640 88.14%

Folks in backcountry have actually seen listings drop this year as they have 109 listings down 4 from last year. To make things even a little better for us folks north of the Parkway, we have 11 sales compared to 10 last year. Part of this is that our listings over $6.5 million, half of which are in backcountry, are actually a little down from last year. The result of this is that backcountry is looking at 39.6 months of supply, still the most in Greenwich, south of the parkway is second at 34.3 month, and Riverside, which traditionally has one of our lowest months of supply,  comes in at third at 30.2 months of supply.

Purely anecdotally, I had two open houses in backcountry last week with 10 groups at one and 7 at the other, while I only had two groups at an open house I did in Riverside. I’m not worried about Riverside, but it’s an interesting turn around from last year for the moment.

Overall, we are also seeing a drop in the sales price/square foot in most areas, which you would expect to see with somewhat more inventory and reduced sales. Our sales price to original list price ratio is also down with Glenville and Cos Cob seeing the biggest drop in this indicator of supply and demand.

These market changes have now been going on for three months, it is not just a curious blip, it’s a matter for concern as it is affecting most areas of the town and most price points. This is at a time where the economy, the stock market and employment are doing well. Some of this change is probably due to the change in the SALT tax deductible at the federal level. However, the SALT deduction benefitted us last year as our sales were up as New Yorkers with high property taxes elected to relocate to Greenwich.

Sales are slow in Westchester, but why are sales slow in Greenwich? This seems to be a Connecticut problem and it needs to be solved by our legislators in Hartford, doing so would strengthen our housing market and would be good for everyone.

 

 

APRIL 2019 GREENWICH MARKET REPORT – $40M Sale Second Highest Ever

by Mark Pruner

This month is time for some slanted reporting, but it’s only fair to balance some of the Greenwich bashing reporting. In April,  we had 34 sales that totaled $102,340,772. Based on a population of 62,000 people this works out to be amazing $1,650 sales for every man, woman and child in Greenwich in just one month.

4/30/19 Inventory Contracts Last Mo. Solds Last Mo Solds+ Contracts  YTD Solds  YTD+ Contracts Mos Supply Mos w/ Contracts Last Mo. Annlzd
< $600K 7 1 2 3 5 6 5.6 6.4 3.5
$600-$800K 14 5 0 5 4 9 14.0 8.6
$800K-$1M 33 8 1 9 9 17 14.7 10.7 33.0
$1-$1.5M 68 15 3 18 22 37 12.4 10.1 22.7
$1.5-$2M 102 19 8 27 18 37 22.7 15.2 12.8
$2-$3M 148 32 11 43 25 57 23.7 14.3 13.5
$3-$4M 104 13 3 16 12 25 34.7 22.9 34.7
$4-$5M 74 3 3 6 5 8 59.2 50.9 24.7
$5-6.5M 59 2 0 2 2 4 118.0 81.1
$6.5-$10M 52 3 2 5 3 6 69.3 47.7 26.0
> $10M 32 0 1 1 3 3 42.7 58.7 32.0
                   
TOTAL 693 101 34 135 108 209 25.7 18.2 20.4

Our average sales price in April was $3,010,023. This is up a huge 25.6% from our average sales price for all of 2018 which was $2,396,448. In 2018 median price, the price where half of the sales were above and half were below, was an enviable $1,765,000. In April of 2019, our median sales price was up even more to $2,302,000. This is a 30.4% increase in the median sales price in only 4 months.

We also had three sales over $5 million in April. The highest sales price was 33 John Street selling for $14,875,000. This property was purchased in July of 2010 for $2,875,00. The sales price represents a 517% increase in the value of the property in less than 9 years of ownership.

It also shows that value of the land purchased was only 19% of the ultimate sales price, much less than the rule of thumb of land price being a third of the sales price for new development; thus, illustrating the amazing bargains to be had in backcountry land purchases.

Of the other two sales, 24 Windrose Way sold for $9,400,000 in a private sale, a clear sign of a hot market where property are being sold even before they can be listed. The other sale over $5 million was 35 Winding Lane, which sold for $6,850,000 after being bought for $6,000,000 less than 3 years ago or an increase of 14.2% in only 35 months.

Our 34 sales in April are up 36%  from the 25 sales that we had in March of this year. May sales are expected to continue to climb as we have over 100 contracts waiting to close. The market segment from $2 – 3 million dollars is doing particularly well with 25 sales so far this year with 11 of those sales being just in April an increase of 3 sales from April 2018. In addition, we have an amazing 32 contracts pending in that price range up 10 contracts from last year.

Looking back at 2019 so far in the ultra-high end, over $10 million, we have the same sales as last year, but one sale this year wasn’t reported on the GMLS. In February 110 Field Point Circle sold for $48 million also in a private sale. Were this reported on the GMLS it would be the second highest sale ever. The $48 million sale of Victor Borge’s old estate, is even more impressive, when you realize the purchase price was $17.5 million in 2009 in the heart of the Great Recession. Buying when everyone else is selling and waiting can be an excellent strategy. Taking a great property and making it even better also can lead to excellent returns. This is one of the premier properties in the U.S. and the buyer agreed.

****

So that’s the slanted version and everything I wrote above is accurate, but it actually makes me a little queasy to write it, because it’s not a fair representation of today’s market.

For the whole market, April was better than March, but still not that good. (April is almost always better than March as we get into the heart of the spring sales market.) Our inventory was up 61 units or 10% to 693 single family home listings at the end of the month and is now 707 listings.

Our sales YTD are 108 or down 29% from last year. On the getting better side contracts are 101 contracts which is down only 13% compared to being down 37% at the end of March.

Our years of supply is still high at 26 months, which is up 10 months from the end of April 2018. When you factor in the contracts outstanding, we are 18.2 months of supply, still higher than last year, but by only 5.7 months.

As to changes in the average and median prices, we are seeing a greater drop in sales from $600,000 to $2 million. So, when sales are down below our average price the average goes up and sometimes, as in April, both the average and median go up a lot. Unfortunately, the sales above $3 million are also down just not as much as in the higher price ranges. The one exception to this is the $6.5 – 10 million price range where we had 2 sales in April compared to none in April 2018. For the year, however we have 3 sales in this high-end category, the same as last year.

Overall, it’s a buyer’s market, but things are headed in the right direction, at least for the month of April, I just wish they’d get there a lot faster.

The Devolution of News and the Bashing of Greenwich

My column in this week’s Greenwich Sentinel was about the media’s need to sensationalize bad news about the Greenwich real estate market and the selective fact selection the authors use to support their premise. You can read the article below with links to the Wall Street Journal and ZeroHedge articles mentioned. The Sentinel posted it on their website here. They also wrote an excellent editorial on what I called day-glo journalism and the history of yellow journalism

If you want to hear what is really going on in the Greenwich real estate market, Carolyn Anderson, Paul Pugliese and I are talking about the north Greenwich market at the Round Hill Association annual meeting on Wednesday May 1st starting at 6:30 for the reception and probably around 7:00 for the presentation.

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[Article as it appeared in the Greenwich Sentinel plus links]

The Devolution of News and the Bashing of Greenwich

Last week the Wall Street Journal ran a story entitled: Wealthy Greenwich Home Sellers Give In to Market Realities. It had a lot of inflammatory comments and “facts” all woven together to leave the impression, as one financial website dubbed their paraphrase of the article, that The Greenwich Housing Market Is Imploding.

Let’s take a look at exactly how yellow journalism’s modern incantation, what I call “day-glo” journalism, works. 

The idea behind day-glo journalism is to take an overstated idea (such as, in the case of the WSJ article: a single real estate auction is an indication of the “never-ending slump” in Greenwich real estate) and create a story from it that will get a lot of clicks and shares and re-tweets, which are the new standards for a career advancing  article.

Day-glo journalism hijacks this story right from the opening sentence: “After four years on the market, and three price cuts, a stately Colonial-style home on Greenwich, Conn.’s tony Round Hill Road is being sold in a way that was once unthinkable in one of the country’s most affluent communities: It is getting auctioned off.”

To day-glo the news in an article you need to normalize the extreme, so it begins by making four years seem like the norm. Four years on the market is a long time; it’s 1,460 days. Nowhere in the article does it indicate that this number of days on market would mean it was the 8th longest house listing on the GMLS out of 669 listings. Our median days on market is only 172. 

Next, the article says auctions were once unthinkable in one of the country’s most affluent suburbs, but that idea is not attributed to anyone. What has happened in Greenwich is that a number of companies have tried to get into the business of auctioning houses, but in general, these auctions have not resulted in money in the owner’s pockets and there have only been a handful of them attempted. 

It is not that they are unthinkable but rather that they are simply ineffective. To my way of thinking, we don’t see more auctions here because they don’t work well in Greenwich, since bidders don’t tend to show up. We did have one “successful” auction where a house listed for $7.25 million sold for $4.48 million, but that hasn’t encouraged many sellers to try auctions.

In day-glo journalism unsubstantiated statements are taken as fact, such as this one, “Many wealthy New Yorkers are opting to live in the city, rather than in the suburbs.” Really? How many is “many” and from what source are they getting this information? How do they know that? The simple answer is they don’t know. 

In a clever sleight of hand, the article throws in: “The seemingly never-ending slump is leading some sellers to accept less—sometimes a lot less. Owners who paid top dollar for their homes in the Fairfield County town in the mid- to late-2000s are routinely selling for less than they paid.”

There was a bubble that peaked around 2007, but to refer what has happened since as a “never-ending slump” is simply inaccurate. Many houses on the waterfront and in other areas are actually up in value, particularly those bought in 2009, but that sort of distinction would slow the narrative and ruin the day-glo. Also, our sales were up in 2018 over 2017, but that is also not mentioned in the story. 

In day-glo journalism, many inconvenient numbers that don’t support the more salacious narrative of a “never-ending slump” won’t appear in the article. This happens in part because most reporters in today’s 24-hour news cycle and shrinking print circulation are under immense pressure to get the story and move on to the next story. When I have called reporters about articles (although I have not had a chance to talk to the reporter of this particular story), they often say they weren’t aware of the other numbers. Once I called a Vanity Fair writer who had grossly overstated the unsold inventory in Greenwich and her defense was that the “gist” of the story was correct. Unfortunately, the advent of high-pressure “online journalism” allows for just about anything to be posted and for contradictory information (information that doesn’t support the narrative) to just get ignored.

Another favorite ploy is reporting statistical changes without context. For example, “The median price for a home in Greenwich dropped by 16.7% last year to $1.5 million in the fourth quarter of 2018, according to a recent report by brokerage Douglas Elliman.” 

While this statistic is mathematically correct, these changes in the median price are often used to demonstrate that all houses in Greenwich dropped in value, and that’s not accurate. A more thorough investigation of the numbers shows clearly that the change in the median price was due to 1) a big jump in sales of lower priced home sales combined with 2) a small decline in higher priced home sales. Sales of homes from $800,000 to $1,000,000 jumped 60% while sales from $5 – 10 million saw a small decline. Therefore, higher sales below the median price and lower sales above the median caused the median to decrease, but not because there was a general drop in Greenwich house values. 

But why Greenwich? You don’t see Darien or New Canaan getting this kind of attention. Greenwich is well known and articles about Greenwich get lots of clicks. Several years ago, I put up a blog post about a drop in high-end sales, which got picked up by the WSJ real estate blog, then by a Bloomberg reporter and then by Bloomberg TV. The Bloomberg reporter told me that the print story was the number two story world-wide on the Bloomberg terminals that month. The only other story that got more attention, according to her, was a story about a Berlin hedge fund that gave their top people a weekend at a German brothel (where prostitution is legal).

I was told this over a very nice lunch at L’Escale, paid for by Bloomberg. The reporter said her editor would welcome more stories about Greenwich. The negative stories got attention, while the good news stories were mostly concentrated on who were the purchasers and sellers of $10M+ houses in Greenwich. 

People just can’t seem to get enough stories about wealthy people getting their comeuppance. Writers who want to move up in this world of blogs and instantly measured click-throughs have a much easier job of it if they write a negative article, keep the narrative simple, and are willing to ignore contradictory facts. 

When a major publication does this, lots of folks want to jump on the bandwagon. Other bloggers will paraphrase the story and often amplify the negative aspects of the article. This is what happened on the popular ZeroHedge website, where the post about the Wall Street Journal article was made even more negative and was retitled, The Greenwich Housing Market Is Imploding As Prices Tumble As Much As 25%. 

The title, while dramatic, comes from a relatively common situation when selling very high-end houses, which are often listed at 25% more than their final sales price. High-end houses are unique, hard to price, and often come with the high-end owner’s overconfidence. As a result, the original list price is frequently much higher than the sales price. Reporters and bloggers love to talk about the huge discounts that sellers must take to sell their houses, as if this is a sign of major market weakness. While having to take big reductions in price ranges under $5 million is a sign of market weakness, it’s not so much in the high-end market where the sales price (SP) to original list price (OLP) ratio will always be lower. In 2018, our overall SP/OLP percentage was 92%, but over $10 million it was 81.5% and over $15 million the two houses sold at 56% of the original list price. Is this a sign of market weakness or simply owners who select brokers willing to list a house at the highest initial price, regardless of whether the price comports with today’s market?

The short answer is, you really can’t tell.  But we do know that reporters love to quote this price drop as a major sign of high-end market weakness. The other thing that happens with these follow-on articles is their narrative is often more strident and less carefully worded. 

The lead paragraph of the Wall Street Journal’s article reads: Once asking $3.795 million, the four-bedroom property will be sold May 18 with Paramount Realty USA for a reserve price of just $1.8 million.

The ZeroHedge post reads: It’s price tag used to be $3.795 million, but now the four-bedroom property will be sold for its reserve price of just $1.8 million, according to the Wall Street Journal.

So, the story goes from an article about an auction with a low reserve to a story about a house that had a $3.8 million list price and now “will be sold” for its $1.8 million reserve price. 

I could go on, but I’m already well over my word limit, so suffice it to say there are lots more examples of articles bashing Greenwich real estate in a biased manner. The problem is that enough of these articles have accumulated that they are doing real damage to our real estate market. Having a paper like this one, which is more interested in accuracy than in day-glo stories, is essential to presenting a more factual picture of what’s actually going on in the market. 

I am not pushing for rosy stories about the Greenwich market. I am advocating for balanced reporting that takes in the ups as well as the downs. We had a poor first quarter in 2019, which came after a 2018 that had more sales than the previous year. We need both reported. 

Mark Pruner is an award-winning real estate agent with Berkshire Hathaway. He can be reached at 203-969-7900 and mark@bhhsne.com.

GREENWICH, CT REAL ESTATE – 1ST QUARTER MARKET REPORT – A Bumpy Ride

March was a good month for deals from $2 – 3 million where we have 24 contracts waiting to close. This is up 9 contracts from last year. In addition, another 14 houses have closed in that price range. For folks in the backcountry 5 of those sales have been north of the Merritt.

We also saw sales increase in March from $3 – 4 million with 5 sales this March compared to only 2 sales in that price range in March 2018.  For sellers, the market from $1 – 2 million is looking better with only 134 listings, which is down 16 listings from last year. In addition, inventory is down from $5 – 6.5 million and over $10 million by 5 houses in each case.

As of 3/31/19 Inventory Contracts Last Mo. Solds Tot. Solds+ Contracts  YTD Solds  YTD+ Contracts Mos Supply Mos w/ Contracts Last Mo. Annlzd
< $600K 6 1 2 3 3 4 6.0 6.8 3.0
$600-$800K 15 2 1 3 4 6 11.3 11.3 15.0
$800K-$1M 29 1 3 4 8 9 10.9 14.5 9.7
$1-$1.5M 57 9 8 17 19 28 9.0 9.2 7.1
$1.5-$2M 77 12 3 15 10 22 23.1 15.8 25.7
$2-$3M 137 24 3 27 14 38 29.4 16.2 45.7
$3-$4M 96 10 5 15 9 19 32.0 22.7 19.2
$4-$5M 66 4 0 4 2 6 99.0 49.5  –
$5-6.5M 50 1 2 3 2 3 75.0 75.0 25.0
$6.5-$10M 50 2 0 2 1 3 150.0 75.0  –
> $10M 25 1 0 1 2 3 37.5 37.5  –
TOTAL 608 67 27 94 74 141 24.6 19.4 22.5

Now that was the good news, unfortunately, there is more not-so-good news than good news in March and the first quarter of 2019. Overall, our inventory is up 41 houses, our sales are down 28 and based on our contracts being down 39, we aren’t likely to see a significant improvement in April. When you add up the contracts and sales, we are down in every price range, excepted for the aforementioned $2 – 3 million price range.

When you look at each month in the first quarter, January 2019 sales were only down 2 sales from our 10-year average, while February sales were down 10 houses and March sales were down 11 houses from our ten-year average. As a result, our total of 74 sales for the first quarter of 2019 is down from 102 sales in the first quarter of 2018.

This is a drop in overall market sales of 27% from 2018. With a 37% drop in contracts as of the end March, sales for April don’t look good at this point. The result of increased inventory and lower sales has resulted in some dramatic increases in months of supply.

For example, last year at this time we had less inventory and more sales from $4 – 5 million. As a result, we now have 99 months of supply compared to only 21 months of supply at the end of the first quarter 2018. For the entire market we have gone from 16.7 months of supply to 24.6 months of supply or from less than a year and a half to more than 2 years of supply.

When you look at the solds and contracts, the majority of our market activity is concentrated between $1 and $4 million dollars where we have 70% of our sales our 82% of our contracts. Together, we have 107 sales and contract in this mid-market range. The problem is that we have 367 listings between $1 and 4 million.

Under $1 million where our market supply is often well under the 6 months of supply level that marks the line between a buyer’s and a seller’s market, this year we are looking at a buyer’s market. Now part of that is this is the spring market with lots of new inventory coming on the market, but last year we only had 1.5 months of supply in our under $600K market and this year we have 6 months of supply in what is normally always a seller’s market.

We do have a good number of contracts between $1 and 4 million dollars and those months of supply will be coming down barring a really big surge in supply. That surge however can not be ruled out, at least between $2 and 4 million, as we already have seen 19 more listings this compared to last year in this price range.

As I said last month, it’s a good time to be a buyer, but that shouldn’t last. Interest rates are down, the stock market is up, and unemployment is low. Eventually, Hartford will defeat a whole slew of bad bills that overhang our market, and the ones they do pass will at least bring certainty to the market and let people move on with their lives. However, as Bette Davis said in “All About Eve”, “fasten your seatbelts, it’s going to be a bumpy ride” at least for one more month.

 

 

The State of Greenwich Real Estate – 3/27/19 Presentation to the Retired Men’s Association

I did a presentation to the Greenwich Retired Men’s Association that was well attended and got nice write-ups in the Greenwich Free Press and the Greenwich Time.

You can