So How is Greenwich’s High-End Real Estate Market Doing?


The demise of Greenwich’s high-end market has been greatly exaggerated. So far this year 59 properties over $4,000,000 have been sold in Greenwich. If you annualize these sales you get 81 sales at the high-end and that number is likely to be even higher by the time we get to year end.

Year $4-5M $5-6.5 $6.5-10M $10M+ Totals
2003 32 29 15 3 79
2004 48 37 24 14 123
2005 53 36 32 19 140
2006 50 45 31 14 140
2007 52 51 47 22 172
2008 26 21 20 14 81
2009 21 21 10 15 67
2010 34 14 16 14 78
2011 37 30 14 9 90
2012 26 36 19 16 97
2013 30 27 17 11 85
2014 35 40 18 16 109
2015 38 32 21 11 102
2016 Anlzd 34 23 15 8 81
2016 YTD 25 17 11 6 59
Inventory 58 67 60 48 233

Sales will most likely be higher because of a shift of high end sales to later in the year so simply annualizing the prior 2016 sales results in a lower estimate. Both 2014 and 2015 were good years for sales over all and our best years for high end sales since 2007. This year is likely to look more like 2013 when we had 85 high-end sales.


So sales are down, but they haven’t fallen off a cliff as some might have us believe. So why all the concern. Several factors are combining this year to make 2016 a particularly challenging year for high-end sales. Probably, the biggest factoring making the slow sales seem even worse is the increase in inventory at this end of the market. We have 233 listings on the market above $4M. At the beginning of September we were up 40 listings over the same time last year.


The result of sales slipping and inventory increasing is a big jump in months of supply. Months of supply for the over $10 million price range is literally off the chart with 128 months of supply. This number and other numbers for months of supply is deceptive, because a single sale will bring it down by more than a year of supply.


Also all high-end numbers are misleading because traditionally about 25% of our high-end house sales are private sales and never appear on the GMLS as a public listing. This compares to about 13% for most other price ranges. For example the biggest sale last year escaped most people’s attention, because it was a private sale that occurred during the holiday season.

There is, however, no denying that sales are down and inventory is up. These two factors are in some ways the flip side of the same coin. If houses don’t sell then inventory accumulates. At the same time the Connecticut legislature is not helping high-end sales. Instead of nurturing our highest taxpayers they have passed multiple taxes changes that have actually resulted in lower tax revenue.

The best, or worst, example of this is increasing the marginal tax rate by 0.2% on incomes over $500,000. I’m sure some intern multiplied the prior year’s tax receipts by 0.2% and came up with a nice revenue bump.

But things don’t work that way in real life as homeowners in these price brackets usually have multiple homes. All the taxpayer has to do is arrange to stay out of the state for more than 6 months each year. Some people have done this very vocally. Another example is the special tax on expensive shoes. It creates minimal revenue and is just another slap in the face to high income taxpayers already paying very big bucks to the state.

Curiously, the increase in inventory can also be attributable to house prices doing better as people now have more equity to move up or out. This effect is, however, seen primarily in the lower half of our market.

But what of the buy side? Under $2M, and even under $3M, the market is chugging along just fine and even up somewhat from last year. Our market would be the envy of most towns where a $2M sale is big news.

The high-end market is down across the country; New York City, the Hamptons, south Florida, Aspen and L.A. So what is causing this? Each market has its own quirks, but when you have a national trend the most likely cause is a national issue and we have three of them; a strong dollar, an uncertain election and weak foreign investor demand.

The strong dollar is making every property in America more expensive for foreigners to buy. Also discretionary high-end buyers hesitate making house buying decisions when there is uncertainty and the Hilary/Donald choice is making for one of the more uncertain investment climates.

We also for the first time in the post-recession environment have uniformly weak foreign demand. No country’s high end investors are increasing their buyer interest in U.S. residential real estate. In addition to the strong dollar and the uncertainty of the presidential election a new IRS regulation has caused concern for many foreign investors.

The IRS enacted a requirement that the principals behind US purchases of residential real estate in NYC and Miami be disclosed. They liked this rule so much they expanded it to Texas. The law was aimed at drug dealers and kleptocrats, but for business people in countries with a moderate to low rule of law, this disclosure can be dangerous to their money and their freedom if there is a regime change. Europeans also are much more concerned about keeping personal matter private as several US Internet companies have found out.

Just how much of a factor these regs are is unknowable, but I know several foreign investors that are concerned. One place where the effect of these regs may be seen is the EB-5/10 visa program for investments of $500K or a $1M by foreigners in the US. The Wall Street Journal reported that this program is down substantially this year with thousands of fewer visa application. There is concern that these IRS regs will go nationwide. It’s another national factor that we are seeing in the high-end nationwide.

Now personally, I think 2017 will be a good year for real estate with low interest rate, the election uncertainy resolved and low oil prices leaving billions of dollars in our collective pockets. We already saw this in the huge jump in personal income in 2015 and it is likely to be even better in 2016, once the numbers are in. So the future could be bright.

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