by Mark Pruner
As reported last week September was a great month for sales compared to the last two years and compared to our nine average for September. September and October so far has also been a great month for new inventory with 152 single family homes coming on the market since September 1st. That’s a lot of inventory and brings us up to 623 listings.
|As of 10/4/15||Inventory||Contracts||Last Mo. Solds||Tot. Solds+ Contracts||YTD Solds||YTD+ Contracts||Mos Supply||Mos w/ Contracts||Last Mo. Annlzd|
As always in Greenwich the lower part of the market, under $2 million (which would be the upper part of the market just about every town outside the Big 4 (Greenwich, Darien, Fairfield and New Canaan)) is doing very well. We’ve already had 7 of these new listings go to contract; all but one are in this lower part of the market under $2 million.
When you look at the months of supply chart you can see just how tight the $800K – $1.5M market is. We only have 4.3 months of supply from $800K to $1M and this is after the good influx of new inventory. From a $1M to $1.5 million we only have 5.7 months of supply after even more inventory came on the market.
Our market supply and demand really breaks down into four parts.
- Under $2M demand is very good and good house disappears pretty quickly
- $2 – $4M is where demand has been good and the new inventory is much appreciated
- $4 – $7.5M supply is more than adequate and demand has been picking up in the second half of the year
- Over $7.5 million we’ve got plenty of supply and we are seeing more interest later in the year, but we could do with a lot more buyers.
The overall market continues to move along with an even dozen sales so far in October. We have 62 properties under contracts and 9 of those contracts are over $5M so that price segment should continue to improve its months of supply since a few sales can drop the price ranges with high months of supply a lot.
When you look at year to date sales you can see just how busy the $1 – 1.5M segment has been with 98 sales and only 57 houses in inventory. This segment is driven not only by young couples, but this year by a flood of downsizers looking for relief from high property taxes in Westchester.
From this high point sales drop steadily as you go higher in price range. Our inventory peaks at a higher price range $2-3M where we have 129 houses on the market. You could make an argument that we actually have the most inventory from $1 – 2M where we have 139 total listing. These price ranges top and bottom are somewhat traditional and represent buyer segments. Buyers looking around $2.5 million rarely are looking at houses under $2M or over $3M. While buyers centered around $900K are less likely to consider houses over $1M or in the $700K area.
This buyer-centric approach to price ranges does make for strange jumps in the statistics, such as the $5 – 7.5M range. This the first price range that is $2.5M wide. When you look at a bar chart, the increased inventory and sales jumps out at you, but it’s really just an artifact of the way the prices are grouped.
You can see how these price ranges correspond to the buyer grouping by looking at months of supply. The buyer demand is proportional to the supply in each price category with each having about 20 months of supply.
Now all the months of supply are up as we have most of our fall inventory on the market, while we are only starting to see our fall sales. All of this is to say that to look at one number or even one snapshot in time does not tell you the market is that you will be facing as a buyer or a seller.
Knowing the market history and trends becomes doubly critical when you have to make hard decisions in negotiations. As a seller do you walk away from a final offer that is a little lower than you want in hopes of a higher offer. In some price ranges, in some parts of town you can do just that with a good chance you’ll get a higher offer. In other price ranges, in other parts of town, that decision may well mean that you will still be trying to sell your house when the spring market comes around.
When you get a lower offer as a seller, or as a buyer you don’t want make a higher offer, have a talk with your Realtor. In Greenwich most Realtors are in it for the long haul so getting a reputation as an agent that will say anything to make the sale is not a long term income maximizing strategy. The may make that sale, but he or she is not going to ever get a referral from that client and referrals are lifeblood of a good agent.
The fall market ends the week before Thanksgiving so a lot of sellers will be making these hard decisions in the coming weeks. It is a good time to be working with someone you trust.