Good Sales & Good Contracts at Year-end
December 2016 was a good month for sales and contracts in Greenwich. Part of this increase in sales was the shifting of closings away from the uncertainty of November’s presidential election. Another part of the increase in sales is also attributable to motivated buyers trying to avoid further increases in their mortgage payments from expected increases in mortgage rates.
We had 50 sales of single family homes in December 2016 up 2 from December 2015 and also up 2 from our 10-year average. Month over month the increase was even more dramatic when the 50 sales in December are compared to the paltry 29 closings in November. A third factor in December’s sales increase was the number of contracts signed in November a few of which closed in December further boosting sales.
Contracts are also looking good. In 2015 at year end we had 70 contracts outstanding and this year we are up 8 contracts to 78 contracts even after the 50 sales in December. There is nothing like the likelihood of increased monthly payments to motivate buyers.
The 50 listings sold in December are not all of the story. The true picture will only be known once all of December’s private sales are tallied later this month. At the present time, we have 610 MLS and private sales in Greenwich, and with say 10 more private sales, we’ll be at 620 total sales down only 2% from 2015’s 631 home sales.
All of these December sales and contracts have depleted our inventory to only 450 house listings in Greenwich. While this is up 6% from December 2015 when we had 425 houses on the market, that’s still a tight inventory in a busy market.
|As of 12/31/16||Inventory||Contracts||Dec. Solds||Dec. Solds+ Contracts||YTD Solds||YTD+ Contracts||Mos Supply||Mos w/ Contracts||Last Mo. Annlzd|
Market by Price Range
Below $1 million we are supplied constrained, particularly on the east side of town. Under $1 million we only have 24 listings. If we had more inventory, we would have more sales. We also have seen lower sales under $600,000 as most of the houses that were under $600K have now appreciated above that price further shrinking inventory. Despite all this we had 117 single family home sales in Greenwich under a million dollars.
$1 – 3M: The price range from $1 – 2 million was busiest part of the Greenwich market in 2015 with 236 sales and another 32 contracts waiting to close. This price range is popular with both young families moving from NYC and downsizers moving from Westchester County our two-major group of buyers. The market from $2 – 3 million had a slow start, but picked up steam as the year went on. We ended up with 104 sales and another 14 contracts in the $2 – 3 million price range.
$3 – 5M: This price range seems to be the new sweet spot for high end buyers, particularly as the year went on. Both contracts and December sales were up in this price range by 13. For the year, we had 83 sales and have 15 contracts between $3 and $5 million waiting to close. The year started slow however and the 83 sales is down 14 sales from 2015 when we had a total of 97 sales.
$5 – 10M: The market that has changed the most since 2015 is the $5 – 10 million market, where we only had 28 sales in 2016 compared to 48 sales in 2015. Sales won’t be getting much better in January as we only have 2 contracts in a price range that spans five million dollars. The low sales is not due to lack of inventory as we have 106 beautiful houses on the market now in this price range. We also have a bunch more houses in hibernation resetting their days on market and waiting for warmer weather to go back on the market.
The good news is that 10 of these 28 listings went to contract in less than 40 days. Of these 10, four of them were on the Sound and there were two in mid-country and two in backcountry. Also, four of the houses were built between 1918 and 1961, but all four of these houses had been renovated in this century. So, if you have what the buyer wants you can get a relatively quick sale even in this price range.
Over $10 million things are looking up in the fourth quarter. We have had the same number of sales this year as last year with 5 mansions sold and 2 contracts pending. If you annualize December’s sales over $10 million dollars we are down to 38 months of supply from 98 months of supply for the whole year. This is a dramatic drop, but it is really just fun with numbers as annualizing the one sale we had in December results in more sales than for whole year.
|Dec ’16 vs Dec ‘15||Inventory||Contracts||Mo. Solds||Mo. Solds+ Contracts||YTD Solds||YTD+ Contracts||Mos Supply||Mos w/ Contracts||Mo. Annlzd|
2016 vs 2015:
Ups & Downs: When you look at what’s up and what’s down compared to the prior year, inventory is up 25 listings, while sales for the whole year are down 28 sales (with a few private sales yet to be reported). On the good news side, from $600,000 to $2,000,000 sales are up by 19 houses. From $1M to $5M the contract news was also good as we had 22 more contracts than we saw in December 2015.
On the needs improvements side, the $5 – 10M price range has sales down 20 houses from 2015 and contracts down by 7 houses from last year. Over $10M sales also need a lot of more improvement as we have 91 months of supply. Now a few sales will cut that down by several years, but it’s not clear when this segment will turn around.
Sales Volume: When you look at the overall market, our 573 GMLS sales in 2016 is a total sales volume of $1,261,572,386 a number that in any other town our size would enviable, but it is down $186 million from 2015.
Average & Median Prices: Our median price was $1,700,000 down $146,000 from 2015. Our average price went down from $2,426,320 in 2015 to $2,201,697.
The Sales Mix is Lowering the Averages: So we had a 13% drop in sales volume and a 9% drop in both the median and the average prices. All of this reduction is due to a fall in the number of sales between $2 million and $10 million where we are down 39 sales and more than half of that drop is in the $5 – 10 million dollar range. Below $2 million the market is very competitive and so is the pricing. Now the uninformed will say that individual house prices are down 9% in Greenwich, but that is not the case, what is down 9% is the average of all houses.
When there are fewer sales at the high-end, averages will drop. In fact, every house in Greenwich could have gone up in value, but if there are fewer sales at the high-end the average sales price will still drop. (While that’s mathematically true, where the number of sales drop, prices tend to also drop.) The point is that your house is most likely not down 9% in FMV in fact the odds are that it is up in value in 2016 compared to 2015.
Months of Supply: When you look at months of supply our market under $1.5M is very competitive with 4 months or less of supply. We also saw decent sales from $3 – 5M particularly in the fourth quarter. We had 8 houses sold between $3 and $5 million just in December. We also have 15 contracts between $3 and $5 million waiting to close so that price segment will be looking up in January and probably February also.
So, what will 2017 bring? The answer is that more so than in any other post-recession, you can’t say. For every potential plus there seems to be a potential minus:
- The stock market is reaching record highs, but we have not seen a major correction in the market in years.
- Interest rates are still very low historically speaking and a slight bump up in interest rates has seemed to spur sales, but a major rise in interest rates could hurt sales
- The Trump presidency promises to be, possibly the most unique in American history. Business is anticipating a very pro-business policy from a president that has never served as an elected official
- Citizens of countries that have been major purchasers of Greenwich houses are seeing problems in their home countries from Brazil to Russia to China to Great Britain
- National unemployment is relatively and is pushing wages higher, but that has little impact on the Greenwich real estate market
Now if I had to guess I’d say we are looking at a good year in Greenwich real estate with a more positive attitude and people who have been saving for years and have surprising amounts of liquid assets for substantial down payments driving a good market. Even if the year play outs this way, I’m can be pretty sure this will be one of the most interesting years in a long time.