A Great Month for High End Sales
by Mark Pruner
June was a good month for sales in Greenwich with 79 sales up 2 sales from last year. While June was a good month for sales overall, it was a great month for high-end sales. We had 9 sales over $5 million in June. To add to the good news, 5 Meadow Place listed for $7,195,000 just went to non-contingent contract which means that we now have 11 contracts waiting to close with list prices over $5,000,000. So, we have 20 houses over $5,000,000 sold in June or under contract which compares to only 18 total high-end sales for the first five months of the year. June was a good month.
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Inventory: We also saw a major drop in inventory compared to last year with only 649 single family home listings on the market down 48 listings from last June. We also saw lower inventory at the high-end as over $5 we were down 21 listings. The drop in inventory combined with better sales resulted in a huge drop in months of supply in this price range. From $5 – 6.5 million months of supply dropped 2.7 years to only 21 months of supply; one of the lowest numbers we have seen in quite a while.
A Shot to the Heart: So, for all price ranges, sales are up 21 houses and inventory is down 48 houses. Not all price ranges however, saw lower inventory and increased sales. From $1.5 to $3 million inventory is up 29 listings and contracts are down 27 from this time last year. Slower sales are letting inventory accumulate on the market. This higher inventory and lower sales resulted in a jump in months of supply for this price range from 9.8 months to 11.9 months of supply. In the price range from $1.5 – 3 million we are up 29 listings and we are down 29 sales and contracts from last year.
|’17 vs ’16||Inventory||Contracts||Mo. Solds||Tot. Solds+ Contracts||YTD Solds||YTD+ Contracts||Mos Supply||Mos w/ Contracts||Mo. Annlzd|
As mentioned, our inventory continues to be surprisingly high from $2 – 3 million with 149 listings. This is even higher than the combined two ranges between $1 and 2M, which is usually substantially higher than the $2 -3 million dollar price range. Were it not for this hole in the heart of our market from $1.5 to $3 million we would be up 6 contracts from last year instead we are down 29 contracts. The result is that July should be a good month for high-end sales and a so-so month for our middle market. The market under $1 million continues to be tight.
The sales always go up this time of year. June is the month for peak sales, but we have seen an especially sharp jump this year from our poor April sales to good June sales. Having said that we are still slightly below our five year average of 84 sales for June, however year to date good sales in January and March put us 23 sales over first half of 2016.
We have now had two consecutive strong months of sales increases breaking the monthly see-sawing sales we saw in the first four months of sales. Unfortunately, we are likely to return to the see-saw in July as we are down aforesaid 29 contracts from this time last year.
Low Interest Rates Slowing Sales: Now an economist will tell you that increasing interest rates increase monthly mortgage payments and result in lower home sales. A Realtor will tell you that the perception of increasing rates will encourage buyers that have been sitting on the sidelines to make their purchases now rather than later so rising interest rates increase sales in the short term in Greenwich.
Despite the Federal Reserve’s increase in the fed funds rate, mortgage rates have gone back down below 4%. My weekly email from Wells Fargo show their 30 year fixed jumbo mortgage rate is 3.75%, a rate that does not encourage a horde of buyers to get off the dime and buy houses in Greenwich, but does keep sales moving.
Months of Supply: When you look at months of supply, two things stand out: The very low months of supply under $800,000 and the relatively low months of supply from $5 – 6.5 million, even lower than the months of supply from $4 – 5 million. As I said last month, this is the new sweet spot for high-end buyers, however, the news is also pretty positive for $6.5 – 10 million. (BTW: I divide the $5 to 10 million range at $6.5 million rather the mid-point $7.5 million, because that is roughly the mid-point for the inventory from $5 – 10 million.)
Last month we had nearly 9 years of supply from $6.5 – 10 million. At the end of the first half of the year we are down to less than 4 years of supply. You don’t often see such dramatic drops often. So for once, we are starting to feel some urgency in our high-end market. Stay tuned to see what happens next.