Volume Up Over $200 Million
In 2017, $1.47 billion worth of single family homes were sold in Greenwich. This is up $204 million from 2016 or a 14% increase in the total value of homes sold in Greenwich. The biggest contributor to this increase was the major rebound in sales we saw this year over $3 million dollars where sales were up by 34 houses.
Looked at another way, our biggest GMLS sale in 2016 was $16,250,000. In 2017 we had 5 sales that were greater than $16.25 million. These five sales represented more than half of our $204 million in increased sales volume in 2017. Four of these five sales over $20 million which was twice the number we had in any previous year.
We also finished the year strong with sales increasing in each month of the fourth quarter. In December 2107 we had 51 sales which is up from our 10-year average of 49 December house sales. The stronger finish in the fourth quarter, however, did not make up for slower sales in most of the rest of the year for our under $3 million price range, where sales were down 40 sales from 2016. Over half of this sales drop, or 22 houses, was in the $1.5 – 2.0 million price range, generally one our strongest price ranges.
We still sold 94 houses in that price, it’s just that in 2016 we sold 116 houses between $1.5 million and $2.0 million. In the price range just below this, $1.0 – 1.5 million sales were actually up 3 sales to 123 houses. Part of the reduction in sales was due low inventory under $1 million.
Low inventory of our most affordable housing has been a problem that Greenwich shares with the rest of the nation. Under $1 million we only had 34 houses to choose from at the end of 2017. With inventory this low buyer’s options can get very small. Once a buyer picks a neighborhood and eliminates the styles they didn’t like they may have only have a handful of houses to pick from in Greenwich.
Overall, our inventory is nearly the same as last year with 450 houses on the market, however, once again there are significant differences in our lower price ranges versus our highest price ranges. From $800 thousand to $3 million inventory is up 40 houses, while over $5 million inventory is down 35 houses.
|As of 12/31/17||Inventory||Contracts||Last Mo. Solds||Tot. Solds+ Contracts||YTD Solds||YTD+ Contracts||Mos Supply||Mos w/ Contracts||Last Mo. Annlzd|
Contracts were down from 78 at the end of 2016 to 69 at the end of 2017. A significant part of this reduction is probably due to the uncertainty with the new federal tax law. Contracts over $5 million and under $1 million are up while the reduction in contracts is between $1 and $5 million where we are down 23 contracts compared to the end of 2016. Almost half of that, or 11 contracts, is between $1.0 and $1.5 million. This is the price range that would be most affected by the new tax law’s reduction in the mortgage deduction from $1 million to $750 thousand.
When you look at the 2017 chart of sales the price range that really stands out is this same $1.0 – $1.5 million price range. There we had 123 sales with only 47 houses in inventory. We also have 10 contracts waiting to close as of the beginning of the year in this price range, however, we had 21 contracts at the beginning of 2107.
Months of Supply
At the high-end the result of lower inventory and increased sales is a dramatic drop in months of supply. Over $6.5 million we are down three and a half years of supply. The other remarkable thing is that months of supply is generally a relatively smooth curve from under $600 thousand where we have we have less than two months of supply to over $10 million where we have had as much as 10 years of supply, but not now.
We have about the same demand/months of supply all the way from $4 million to $10 million. When you add in the contracts in this price range this demand is likely to hold steady during the beginning of 2018.
Now the high end is doing much better than in 2016 and the lower half of the market is a little slower, but you don’t want to lose the forest for the trees:
- We have 47% of our inventory over $3M, while only 30% of our sales are over that price.
- At the other end 9% of our inventory is under $1M, while 19% of our sales are under $1M
- The large bulk of our sales, 56%, are between $1M and $3M. These sales come from only of 42% inventory.
- The $1 – 3M segment was even more popular in December with 61% of our sales.
One thing you can be sure of is that 2018 will not be like 2017. The new federal tax law is going to shift real estate markets across the nation, but particularly in Greenwich. The accepted wisdom is that we are a high tax state that will see property values drop as people move to low tax states and the loss of deductibility of state taxes and local property taxes will discourage buyers.
The problem with this scenario is that New York State has higher income taxes and Westchester County towns pay much higher property taxes. Also, the new tax law has lower tax rates and higher brackets. Even with the loss of SALT and property taxes deductibility over $10,000 many folks will see their federal income taxes go down.
So how much motivation is there to move if your taxes are lower, and how many people will move from Westchester to Greenwich, and how much will a higher stock market continue to drive high-end sales and how much will inventory fall as people are concerned about buying a new house with lower mortgage deductibility?
Stay tuned 2018 is going to be an interesting year.