New Construction in Greenwich, CT 2018

If you think there is a lot of new construction in Greenwich you are right. In areas like central Greenwich, Cos Cob, Old Greenwich and Riverside it seems there is house under construction on every block. At the present time we have 66 houses on the market that have been constructed in July 2016 or later. In that same period we have sold 82 new houses and have 4 presently under contract.

New Construction post 1/1/16– Green Active, Blue Sold, Yellow Under Contract

Now 82 new homes may sound like a lot, but since July 2016, when I last looked at new construction we have sold 1,668 single family homes so the new construction market represents only 4.9% of our sales.

These are spec homes built by contractors rather than teardowns bought by individuals who then built a new home in most cases. (You do get the occasionally get privately built homes back on the market in a year or two if the individual is transferred or getting a divorce.)

These spec homes are also at the upper end of the market. Of the 82 sales of new homes, the median price was $3.4 million while the median for all home sales in 2018 has been around $1.85M. A fifth of the new construction sold for $5M or more with the highest priced spec home being 11 French Road which sold for $12,075,000 in January of this year. The highest priced currently listed new construction is 66 Glenwood Drive which is listed at $15.75M which is down from its original list price of $17.95M. The average sales price per square foot over the last 2.5 years has been $610/s.f. compared to $569/s.f. for sales so far in 2018.

New construction gets a premium and most builders push for as much premium that they can. As a result, even though there is a huge demand for new construction, the average new construction listing sits on the market for 284 days compared to 197 days for all sales in 2016.

Now part of this is that many builders list the property early in the construction process, sometimes even before ground has been broken. Houses are hard to sell when they are just big open spaces with plywood floors and a lattice work of 2×4’s. For most builders though holding out for that premium is worthwhile since the average sale price to original list price ratio is 89.7%, nearly identical to the 91.1% for all house sales in 2018.

During the Great Recession spec building nearly dried up. We only had 5 new houses sold in 2010 as builders found it nearly impossible to get bank financing. Only a few well financed and larger developers were able to start projects then. In 2014 we tripled 2010 sales with 16 sales of new houses. This doubled in 2015 to 32 sales. In 2016 we have had nearly same new house sales with 31 and the same number in 2017. New construction expanded in 2108 and we have had 41 sale so far this year with 4 new houses under contract.

One thing the Town of Greenwich should work on is encouraging more lower-priced, new construction. For me that would be construction under $1.5M. Of the 82 sales since July 2016 years only 4 of them sold for less than $1.5M. We actually had even fewer affordable sales  from 2014 to July 2016.

What we are getting is smaller houses being torn down and replaced by larger more expensive homes and that is continuing to change the character of Greenwich. It also means that with less price diversity, the town is less resilient to market problems as housing becomes more homogenous.

It’s hard to find incentives for developers to build smaller and make less money. One thing that might work is to allow greater density for lower cost houses. Now that is anathema to traditional zoning, but that is exactly what Connecticut statute 8-30g does. For towns without at least 10% affordable housing, developers can appeal projects that have been denied by P&Z to the Superior Court. There, the judge can ignore all of the zoning laws and allow the development of high density projects. Most of these project however, are apartment style condominiums.

One proposal that might work is to provide a presumption of entitlement for a second unit on a conforming lot where the original house is a historic pre-1940 house and is preserved. At the present time the uncertainty of getting a historic overlay is discouraging more applications that would preserve historic houses. If we combine that good intent with affordable housing, we might have a powerful tool to promote historic houses and affordable houses.

Greenwich Sales up 26% in the Third Quarter of 2018

by Mark Pruner

mark@bhhsne.com  –  203-969-7900

Third Quarter Sales

With the end of September comes the end of the third quarter and it turns out to be good news for Greenwich. Our 183 third quarter sales represent a 26% increase over the 3rd quarter of 2017. If you go back another year in history, that 26% increase in third quarter sales can look a little deceptive, in 2016 we had 207 third quarter sales. Go back ten years, however, and the third quarter average is 185 sales.

Now that 10-year average of 185 third quarter sales is actually really good news. Our 2018 third quarter with 183 sales was an average third quarter, when the pundits were sure our sales would be down because of the federal tax law changes.

As of 9/29/18 Inventory Contracts Last Mo. Solds Tot. Solds+ Contracts  YTD Solds  YTD+ Contracts Mos Supply Mos w/ Contracts Last Mo. Annlzd
< $600K 3 3 1 4 10 13 2.7 2.4 3.0
$600-$800K 16 2 2 4 37 39 3.9 4.3 8.0
$800K-$1M 36 9 7 16 48 57 6.8 6.6 5.1
$1-$1.5M 70 9 11 20 83 92 7.6 8.0 6.4
$1.5-$2M 80 13 8 21 78 91 9.2 9.2 10.0
$2-$3M 136 9 8 17 86 95 14.2 15.0 17.0
$3-$4M 98 11 5 16 53 64 16.6 16.1 19.6
$4-$5M 61 0 2 2 24 24 22.9 26.7 30.5
$5-6.5M 58 1 1 2 23 24 22.7 25.4 58.0
$6.5-$10M 50 2 1 3 8 10 56.3 52.5 50.0
> $10M 35 1 0 1 8 9 39.4 40.8    –
TOTAL 643 60 46 106 458 518 12.6 13.0 14.0

The latest numbers from New York City give some credence to that idea. Depending on which agency is doing the reporting 3rd quarter sales in Manhattan were down from 11% to 14%. (One of the problems of not having a multiple listing service.) Regardless, the difference is pretty dramatic, NYC down 13%, Greenwich up 26%.

What we have is a decent, though not a robust market, but as always, the devil is in the details. Various pockets look good. Our over $10 million market has twice the sales of last year with 8 sales versus 4 sales and we have an additional contract waiting to close. Drop down to the $6.5 – 10 million range and things don’t look so promising. We have only 8 sales so far this year compared to 16 sales last year or twice the sales last year. The problem with slow sales is likely to continue as we only have 2 contracts compared to 4 contracts at this time in 2017.

Overall sales and contracts are up from $800,000 to $4 million with the notable exception of $1.0 – $1.5 which has had slower sales for most of the year. The tax law and the increase in interest rates has not helped this segment. Hopefully, this is turning around since we finally saw sales in this price range exceed the sales in September 2017.

September Sales

Part of our 26% increase in third quarter sales was due to good September 2018 sales compared to September 2017 sales. All in all, September was good, average month. Good, because we did significantly better than September 2017 in total sales, 46 sales this year compared to 34 sales in September 2017, but average, because these sales were right at our 10-year average, but this year average is good.

Inventory

Overall, our inventory is up by 29 listings or 5% from this time last year. Curiously, this increase is mostly attributable to only two price ranges. The price range from $800K – 1M is up 20 listings to 36 or more than double last year’s 16 listings. This is normally a pro-seller buyer range, for example last year we only had 4.2 months of supply. This year with much more inventory, we are looking at 6.8 months of supply even though sales are up 40% from last year. The increased inventory is leading to increased sales, but the inventory increased even faster.

The other price range with a big jump in inventory is the $3 – 4 million price range where inventory is up 12 listings or 14%. The nice thing for folks with houses in that price range is that sales are up 13% leaving months of supply essentially unchanged at 16.6 months. Not a great number for months of supply but moving.

A third price range where we see inventory up is the $6.5 – 10 million price range where have 5 more listings or an 11% increase. As mentioned above sales are down in this price range and with inventory up, the months of supply are measured in years, in this case 4.7 years of supply.

The Micro and L.E.O. Views

So, what does this all mean when you go micro and look just at Greenwich. Sales YTD are up from last year. The high-end started out well, but has returned to the slowerness of last year. Our ultra-high end is doing better than we have seen in a while. The heart of our market from $600,000 to $4 million is doing better than last year and seems to be strengthening.

If you pull back and look at the Greenwich market from the low earth orbit of the Space Shuttle, Greenwich is looking pretty good. It’s a bright spot in a region with few of those. It’s a nice time to live in Greenwich, but it is most of the time.

 

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