- Best February sales in years
- Sales and contracts from $1 – 3M are top sellers
- Market under $1M has low sales due to limited inventory
- Market over $5M has few buyers in record cold
A Record February – Mostly From a Tight Price Range
February 2015 was not only a record cold and snowy month, it was also a record month for Greenwich real estate. We had 41 single family home sales in Greenwich in what is traditionally the slowest month of the year. These 41 sales are more than we’ve ever had in February in last decade. They are also almost 50% more than January’s 28 sales.
The curious thing about the sales is how concentrated they are. Two-thirds of the sales are between $1 million and $3 million even though it only covers one-third of our inventory. Outside of this price range sales have been slow so far this year.
|As of 3/5/15||Inventory||Contracts||Last Mo. Solds||Tot. Solds+ Contracts||YTD Solds||YTD+ Contracts||Mos Supply||Mos w/ Contracts|
Sales Slower Under $1 Million – Little Inventory, Even Less New Inventory
Greenwich is a great place to live and as a result we never have enough inventory under $1 million. Usually we see 3 – 5 months of supply in this price range. Now we have 3 – 13 months of supply even though we only have 31 houses listed under a million. Most of the listings we do have were put on last year or even before and are selling slowly. In this price range days on market are normally measured in days and weeks not months.
Clearly our cold, snowy winter is keeping owners from putting their houses on the market. Normally, listings start coming on after Super Bowl, but this year owners have held off waiting for better weather.
The problem with this price segment as I wrote in the 2014 annual report is that low inflation and single digit house appreciation is slowing the equity build-up needed for the move-up market. Sales under $1 million dropped last year despite strong demand from buyers due to the lack of sellers.
Families are not only staying in their start homes longer waiting to build up enough equity to make a down payment on their next home, they are also renovating and expanding. Both actions are reducing market inventory and this trend continues all the way up to $2 million in Greenwich.
The High End Market – Harsh Winter, Slow Sales, Contracts Starting to Perk Up
Last year was a good year for high-end sales in Greenwich, in fact the best year since the recession. With Wall Street up, good 2014 bonuses and prior years of deferred bonuses vesting, we should be looking at good sales in 2015. So far this year we have had only 7 sales of houses on the GMLS over $4 million plus we have had 2 private high-end sales over $10 million. We still have a ways to go with an inventory of 199 houses over $4 million.
On the good news side 24 of the 80 contracts are for over $4 million so months of supply will be dropping as the red bars show in the chart above. Sales in the $5 – 10M price range and $3 – 4M will perk up over the next couple of months as the 20 contracts in these price ranges close.
Inventory, Sales and Contracts
The hard winter has effected inventory at all levels. We only have 438 listing when we should be closer to 500. Clearly, there is a shortage under $1 million and the market is tightening rapidly all the way up to $2 million.
Sales have really only been strong in a narrow range of $1 – 3 million, but there they have been very strong, when compared to prior years. Start with the light blue bars (sales) and stack the red bars (contracts) on top and compare the height to the dark blue bar (inventory) and you can see how fast inventory is disappearing in only two months.
The distribution of the red bars, contracts, are the most interesting with only 7 contracts under $1 million. We’ve got 13 contracts between $4 and $7.5 million and none above. Three-quarters or 60 of our 80 contracts are between $1 million and $4 million.
Percentages & Pie Charts
Another way to look at the market is the size of the pie pieces. In 2015 they look much different than in prior years. If you look at the YTD Solds pie you can see how big the $1 – $3 million market is compared to the inventory. You can also see from the contract pie that it will continue strong. The contract pie chart also shows that the $3 – 10 million market will also be getting better.
It’s early in the year and this market is not indicative of what we are likely to see once the snow melts. Sales over $5 million should pick up nicely as the year goes on. I’d expect a sudden surge of new listings when the snow melts as pent-up listings are put on the market.
Hopefully, 2015 is the year that we see the end of the skittish, post-recession market of two good months followed by a poor month. Our biggest market risk continues to be a dysfunctional Washington. We have had major sales dips when Congress has reached major impasses. The fall of the Euro is a concern, but at the same time it makes the U.S. and particularly Greenwich real estate look like a good place to invest.
Mid-country should stay strong this year and backcountry’s recovery should accelerate. Old Greenwich and Riverside, and particularly SoTra (south of the tracks) will command an even greater premium price. This means that Cos Cob and Glenville will also continue to appreciate as the best combination of square footage, acreage, schools and price for many families priced out of or not willing to pay the SoTra premium.
Builders are going to be much more active both for teardowns and custom built houses and for spec houses. In fact with financing for spec houses finally coming back the builders could see major growth this year.
Now if we can just get this snow to go away, we can a have an excellent 2015.