Real estate appreciations statistics can be dangerously deceptive leading both buyers and sellers to make expensive decisions that in hindsight they wouldn’t have done. Here’s a guide to some of the bigger red flags to watch for.

       How are average price appreciation numbers deceptive?

When you see a figure like average house prices have increased by 5.803% you need to ask a bunch of questions for that number to mean anything and even then, for most sellers and buyers, that number is of only marginal usefulness. Often this appreciation is stated as Y-O-Y or year over year, but are they looking at all sales in the first half of 2018 compared to all sales in the first half of 2017 or is it just June 2018 versus June 2017 sales.

      How many sales?

If you are talking just the monthly sales, then the appreciation number is less reliable as it contains fewer sales. Even worse, if we are talking appreciation on a monthly basis for a small subset of houses, say just sales in Cos Cob, the appreciation number is practically worthless since purely by luck you might have 5 predominantly higher sales this year compared to 8 predominantly lower-end sales last year. This is no way to determine if houses in Cos Cob are appreciating.  So, look at the time period and the number of sales that are compared in year over sales.

     The end price ranges works a little, the middle doesn’t

Some people look at appreciation within a price range. The problem with this approach is that houses appreciate out of the price range, so a house that was $989,000 and appreciates to $1,044,000, an appreciation of 5.6% i,s not counted in the under $1 million dollar range and may actually be bringing down statistics, like $/s.f., for the over $1 million price range.

For the middle price ranges this effect applies at both the top and bottom of the range and rarely does what’s moving up into the price range balance out what is moving out of the price range. So looking just at the price appreciation from say $1 million to $1.5 million doesn’t tell you anything. Prices could be going up, but if 6 houses move out of the high-end of the price range and 3 move in at the bottom due to significant market appreciation, the average price for that range could actually show a drop in average price.

For the very top and bottom ranges, this effect is a little ameliorated as houses can only move into the bracket one way. If house prices are going up at the high-end for all houses over $10 million or down at the low end you for all houses under $600,0000 you can be sure that is a real price change, but the same can not be said for the reverse.

             Luxury is not a percentage

Another variation of this is defining the luxury market as the top x% of the market, say 10%. The problem here is that sales vary from month to month so sometimes the top 10% in Greenwich might be at $5.5 million and other times it might be at $4 million. The result is that the average price for “luxury” sales in the 10% has very little meaning.

This luxurry by percentage also doesn’t work for more homogeneous communities, where the top 10% is similar in price to the top quarter. Lastly, I don’t want to be the one telling someone with a gorgeous multi-million dollar house that it is not a luxury house because it’s not in the top 10% of a high-end community.

                 Is seasonality a factor?

Another number that you see for appreciation is quarter-to-quarter sales price appreciation. This is another number that I personally ignore. The problem is that residential real estate has a major seasonality effect as you can see in the 10 year average line below. What is mostly selling in the first quarter are the leftovers from last year which tend to sell at a discount; whereas in the second quarter you have a lot of new listings selling with much shorter days on market and at closer to original list price. Each quarter has a different mix that problem so what appears to be a price appreciation/depreciation from one quarter to another is often just the seasonality of the sales.

                Differences in what price ranges are selling

But, by far, the biggest issue is a change in the mix of what is selling. Let’s say house prices are flat, heck let’s even say some high-end house prices are drifting downward, but if we have fewer low-end sales and more high-end sales than in the prior period the average is going to go up even though the value of individual houses is going down. This is just what happened this year. Our sales below $1.5 million are down while our sales over $10 million are up 350% from 2 sales to 7 sales. The result is that our average sale went from $2,402,151 to $2,541,557 this year an increase of 5.8%, but house values haven’t gone up nearly 6% in one year.

               Median helps, but still has a mix problem

What some people say is don’t use the arithmetic average a/k/a the mean, use the median. (Instead of adding all the numbers up and dividing by the number of sales. Let’s line all the sale prices up and take the one in the middle.) In 2017 our first half median was $1,817,500 and the median for the first half of 2018 was $1,865,000 or an increase of 2.6% in the median price Y-O-Y or less than half of the Y-O-Y appreciation in the mean.

The median has the advantage in places like Greenwich where the high prices are so high of having lower volatility, so seven more high end sales only move the median the same as seven fewer sales below the median. The problem is still that if you have fewer sales below the “middle” number and more sales above that number the median is still going to go up even if all the values of the houses are drifting downward.

            The better way: sales price to assessment ratio

Now the ratio that I like to use is the sales price to assessment ratio. This compares what the tax assessor thought the value was at the last revaluation (10/1/2015) to what is sold for this year. Now some folks think that the Tax Assessor wants a high value for houses, but that isn’t so. What she really wants is for the relative value of all the houses to be correct so each house pays it’s fair share of the total budget as approved by the RTM. If the relative value of every house was increased equally, you’d still end up paying the same tax, so she has no incentive to inflate house prices.

            Problems with SP/Assmt ratio

The mandated assessment ratio is 70% so if a house sells for 1.42 times the assessment, (the reciprocal of 0.7) then there has been no appreciation. Now you would think that you can simply compare this year’s SP/Assmt ratio to last year’s ratio and get a better estimate of actual house appreciation in Greenwich and you’d be right, but it’s not quite that easy.

The problem is two part; changing properties and garbage data. The SP/Assmt ratio number are usually pretty tightly grouped between 1.35 and 1.70, so if you throw in a larger number say a ratio of 4 or 5 it moves the average a lot. This happens when a property is sold for land value and then a big house is built on it. It’s great appreciation, but most of the additional value comes from the beautiful new house.

The other issue is just bad data, agents miss a decimal point or two and the assessment ratio comes out to be 1,301 rather than 1.301 as happened on one listing this year. That single number totally destroys the average, so a couple of times a year I calculate the SP/Assmt ratio after taking out the top 10% and the bottom 10%.

Does knowing the sales appreciation percentage help in ?

Now you would think that is a pretty good number, new construction is removed (as well as a few demolitions), most human errors are removed and seasonality is not a major factor, but just what good is that number? If you are a buyer or seller trying to negotiate a sale does it really tell you what the value of that particular house has done. It’s of some help, but you really need to look at what houses of similar style, price range, condition and age have done in that particular neighborhood. When you do this in Greenwich you will find that there aren’t enough sales to be statistically significant. So the tow wide appreciation percentage may be the best hard number you can get as to what the overall market is doing, but it’s not going to tell you whether your particular house has gone and by how much. And, it definitely won’t help to figure out what it’s value is likely to be over the next couple of years.

In the end the best thing to do is consult an experienced Realtor when it comes to making those decisions and take all those numbers out there with a grain of salt.






Six Thoughts on How to Make Greenwich Better

Greenwich is a great place to live. One of its greatest assets is the people that volunteer to serve on a wide variety of boards and in elected offices. These people bring a wealth of talents, education and prior experience to these positions and in the main come up with useful, cost effective solutions to problems.

Having said that one of the things that the Town could be do better is adopting more innovative solutions, more quickly. Some things I’d love to see are:


  1. A “Greenwich Card”

Right now, you have to have a beach card, a library card, a golf card, a parking card and several other forms of licenses to enjoy many of the benefits in Greenwich. The question is why do we need a different card for every activity. This system penalizes the occasional user. If you only play tennis once a year a $35 annual fee is excessive, particularly for a resident whose taxes help build and maintain these facilities.

Let’s have one card, that you only have to apply for one time, that lets you use the beach, the library, the golf course and can even be used to pay parking fees. One card would save both residents and government time and its basic cost could be rolled into our taxes. If you wanted to go the beach once a year, no problem and no standing in line for a beach card whether one time or annual. (Let’s also throw in 10 hours of metered parking.)


  1. Simplify and Make More Certain Land Use Decisions

At the present time, lots of simple land use decisions require lots of time, lots of money and lots of professionals. The usual procedure is you need to file an extensive formal application and will likely need to hire an attorney, a surveyor, a soil scientist and possible others. You and your hired professionals may also may have to appear before three or four land use agencies and wait hours for your application to be called. At the end of the day most of the applications end up getting approved.

But, that’s for the people that apply for permits. What we as Realtors see every week, are the number of people that got someone to do the work without the permits and are now having problems selling their homes. We see this kind of “illegal” work on properties in Byram on 0.1 acre and in the backcountry large lots and everywhere in between. We need an intermediate system where proposals that are likely to be approved, can be reviewed, tweaked as necessary and permitted quicker and for less money.

Now I’m not suggesting this procedure for big projects, but things like variances to setbacks for a deck where there are no neighbors shouldn’t need a full review. Either staff could approve the change or where a state statute requires the approval of the Commission these items could go on the consent calendar as the RTM does with motions. Any item needing a full review could be pulled off of the consent calendar with a majority vote.

As part of this the staff in each agency should be given more authority. Right now, the staff can’t say yes. They can say maybe or it’s possible, but woe be it if they say the full commission would allow something no matter how certain. At present lots of small things require full hearings. These commission hearings can go on for hours and even into the next day, before the application is heard. Once heard it may have to come back, for review of even smaller tweaks and then the homeowner may have to go to another commission who may not meet for another month(s). A lot of these decisions could be made at the staff level. If so we’d have shorter hearings, less expense for applicants and more compliance with the regulations.


  1. Making More Use of Under-Utilized Schools

Today, we have several elementary schools that are operating at full, or more than full capacity, and other elementary schools with empty classrooms. The geographic lines are very strictly drawn about where you have to go to school. I have a client whose son goes to Parkway, which does an excellent job, and they’d like to keep their son there with his friends. They are reluctant to move, because if he moves even a short distance out of the district he’ll have to go to a different elementary school unless he can get special permission.

Why not let students anywhere in town select any of the under-utilized schools? We relieve pressure on one school and better use the facilities at another school. It might actually help with some of our redistricting issues. If the parents bear the cost of transportation, it’s worth a trial.


  1. More Vacation Homes in Greenwich

For over a century Greenwich was known as a great place to have a summer house. We need to bring that back. Much of the pressure on sellers in the 2 and 4 acres zone is due to the loss of demand for summer and weekend homes. When I moved to the backcountry 20 years ago, half of the houses on our street were owned by people who lived out of town.

The real estate agencies here in town need to do a better job of bringing this market back. If you are a homeowner who has a house that would be a great weekend house, ask your agent what their firm is doing to reach out to the weekender and vacation home market. If you live here, tell your friends from out of town what a great place this is for weekenders and summer people. And if you are in town government there could always be a summer version of the Greenwich Card.


  1. Publicize our lower taxes to encourage buyers

When you got your tax bill for this fiscal year it was the same as last year or may even have gone down. Not many people outside of Greenwich know that. If you do a news search on Google for Greenwich lower property taxes 2018, very little comes up. My article from last week’s Greenwich Sentinel is there, but not much else. We have a great story to tell, but it isn’t getting much coverage.

Our sales over $10 million are up 350% from last year and our contracts are up 25% (now sales overall are down 5% for the year, but that’s mostly due to the $1.0 – $1.5 million range which seems to be a problem throughout the area). If you a reporter, you should tell your assignments editor there’s a story here and it’s likely to get better as those 120 contracts close.

  1. Support the Greenwich Sentinel

One of the great things about Greenwich is we have an excellent weekly paper covering a wide variety of people and stories and it deserves your support. It helps build the sense of community here in Greenwich and gives local vendors a way to reach people here in Greenwich. If you’ve been getting it free you should take out a paid subscription and support hometown news.



For the first half of 2018, we had 273 sales of single family homes. This is down 13 sales from the first half of 2017 or 5%, but the good news is that we have 120 contracts waiting to close which is up 25 contracts from last year. When you add the contracts to the sales we have 393 houses that have gone off the market or an increase of 3%. So, you could say that the first half of 2018 was much like the first half of 2017 and you would be partially right, but we do have several significant differences.

Most of these changes can be attributed to Greenwich’s low property taxes and the BET’s remarkable ability to keep our already low taxes flat for this year. Our mill rate for sewered properties continues to be 11.871. If you leave outside of the area with town sewers (mainly the 2 and 4 acres zones) your Greenwich property taxes actually went down for the July 2018 – June 2019 fiscal tax year to 11.369. These folks are only paying $7,958 per million dollars of valuation.

As of 7/1/18 Inventory Contracts Last Mo. Solds Last Mo. Solds+ Contracts  YTD Solds  YTD+ Contracts Mos Supply Mos w/ Contracts Last Mo. Annlzd
< $600K 5 0 1 1 8 8 3.8 4.7 5.0
$600-$800K 13 8 3 11 23 31 3.4 3.1 4.3
$800K-$1M 33 10 7 17 29 39 6.8 6.3 4.7
$1-$1.5M 76 22 11 33 44 66 10.4 8.6 6.9
$1.5-$2M 91 21 11 32 45 66 12.1 10.3 8.3
$2-$3M 143 27 13 40 48 75 17.9 14.3 11.0
$3-$4M 105 16 11 27 34 50 18.5 15.8 9.5
$4-$5M 54 5 2 7 15 20 21.6 20.3 27.0
$5-6.5M 62 6 5 11 16 22 23.3 21.1 12.4
$6.5-$10M 53 5 0 5 4 9 79.5 44.2
> $10M 35 0 2 2 7 7 30.0 37.5 17.5
TOTAL 670 120 66 186 273 393 14.7 12.8 10.2

Under $800,000 sales are down, in fact under $600,000 our transactions (sales + contracts) are down 33%. This dramatic drop in sales does not mean that all of a sudden entry-level buyers and downsizers moving to more modest homes are suddenly fleeing the Greenwich market. What it means is that we have fewer houses to buy.

That 33% drop in transactions under $600,000 is only 4 fewer transaction in 2018 than in 2017, down from 12 transactions to 8 transactions. If we had more inventory under $800K, we would have more sales. What is encouraging is that the reason for less inventory is not fewer listings. We actually have more listings under $2 million, but the houses that were under $800K, and particularly under $600K, have appreciated nicely over the last couple of years, so our low end has gotten higher valued.

Overall, if you take what used to be called the Klein index (sales price/assessment), when Stanley Klein’s numbers were the bible with what was going on in Greenwich real estate, you get 7.8% appreciation for all the sales since the Tax Assessor’s last revaluation as of 10/1/15. If you do the same calculation for the 8 sales under $600K that we have had in 2018, you get 13.7% appreciation or 75% more appreciation that the rest of the market saw on average. So, if you are looking to buy in Byram, Pemberwick or the R-7 zone north of the Post Road in Old Greenwich and Riverside, you had best be prepared to move quickly.

As stated above, we are down 13 sales in the first half of this year compared to last year and if you want you can blame nearly all of it on June’s lackluster sales which were down 12 sales compared to last June. If you want to get really specific you can blame all of that June loss in sales on the price range from $1.0 – $2.0 million where sales were down 10 houses compared to last June.

Fortunately, there is no need to panic as this same segment was also strong for contracts with 43 contracts waiting to close up 9 contracts from last year. This increase in contracts is very promising as the tax changes seemed to hit this price segment particularly hard earlier in the year We saw more inventory and lower sales. We still have significantly more inventory from $800K to $4 million than last year with 41 more listings, but that’s also the exact same price range where contracts are up 28 over last year. Bottom line you should see a strengthening mid-market in the next couple of months.

At the high-end the market has cooled a little, but we are still doing better than last year, particularly over $10 million. In the first half of 2018 we 7 sales over $10 million compared to only 2 sales in the first half of 2017. These high-end sales have a disproportionate impact on sales volume.

Through the end of June $693,845,087 worth of houses sold in Greenwich, CT, a town of 62,000. This gave us an average sale of $2,541,557 and a median sale of $1,865,000. There are a few other towns that have higher averages, but not many of towns of our size can match our sales volume.


The one area in the high-end that has seen a significant June retreat is the $6.5 – 10 million price range. While inventory is down 9 listings from last year to 53 houses in this price range our June sales were down from 5 sales last year to no sales this month. We do have 5 contracts in this price range which is up 1 from last year. The result is that month of supply for the $6.5 – 10 million price range jumped from about 4 years of supply to 6.7 years of supply (literally off the chart.)

This is at the same time that we had only 2.5 years of supply of houses over $10 million or down an amazing 7 years reduction in months of supply from last year. At the high-end, a half dozen sales or more inventory can make these numbers jump around, but before June 2018 all the high-end was looking good.

We could still do with more buyers and with a little less uncertainty from Washington, we might get some. Still we are chugging along, with nearly every price range having something that is good news.