Greenwich, CT Home Sales Up for all 2018 – Government Shutdown Slows Contracts in December

 

Greenwich single family home sales were up by 26 homes in 2018 compared to 2017. This a 4.4% rise in sales, which most years would not be that remarkable, but in the new tax environment it is quite remarkable. The early reports are that sales have dropped in New York City, Westchester County and other parts of Fairfield County so even a small increase in sale stands outs.

Two price ranges are driving this increase in sales with one price range being really remarkable. Sales from $800,000 to $1,000,000 are up 59% from last year, and this was driven by what in most years would be considered bad news, an increase in inventory. The Tax Cut and Jobs Act passed by the U.S Congress at the end of 2017 eliminated the deductibility of state and local taxes over $10,000.

The result was that many people who had been thinking about moving to a warmer client in the next couple of years decided to take their appreciation accumulated over decades and move in 2018. The great thing about this for Greenwich sales is that for once there was plenty of inventory from $800 – $1,000,000 and buyers bought, snapping up 73 homes in increase of 27 houses from 2017.

The other price range that saw a jump in sales was from $2 – 4 million where sales were up 16 houses to 171 houses. This price range seems to have benefitted from early downsizers who were still employed and hence tied to the NYC metro area, deciding to relocate to Greenwich where property taxes are often a third of what they are in some Westchester towns. The Town of Greenwich also contributed by freezing the property tax rate in 2018 at the already low 2017 rates.

The no property tax increase in Greenwich however was not enough to entice buyers in the $5 – 10 million dollar range where sales dropped by 13 houses to 39 houses. Curiously, at the ultra-high-end sales over $10 million went up by 25% from 8 houses to 10 houses in 2018. We also have 3 contracts on listings over $10 million, two from last year and one that went to pending contract this week. Overall, the tax changes seem to have been a plus for Greenwich.

In many ways, the more things change, the more they stay the same. As usual December sales did better than November with 50 sales up from 44 November sales. Also, as happens nearly every year, inventory took a big drop on January 1st as over 80 single family home listings expired on the last day of 2018. The result of that is that months of supply took a big move to the seller’s side. The exemplar for this is the price range from $6.5 – 10 million where we went from 56 months of supply at the beginning of December 2018 to 35 months of supply on January 4, 2019 (when I ran the inventory numbers).

1/4/19 Inventory Contracts Last Mo. Solds Tot. Solds+ Contracts  YTD Solds  YTD+ Contracts Mos Supply Mos w/ Contracts Last Mo. Annlzd
< $600K 2 1 2 3 15 16 1.6 1.7 1.0
$600-$800K 12 3 1 4 44 47 3.3 3.4 12.0
$800K-$1M 15 4 8 12 73 77 2.5 2.6 1.9
$1-$1.5M 40 7 17 24 115 122 4.2 4.4 2.4
$1.5-$2M 59 6 3 9 95 101 7.5 7.9 19.7
$2-$3M 97 15 6 21 106 121 11.0 10.8 16.2
$3-$4M 68 8 4 12 65 73 12.6 12.6 17.0
$4-$5M 51 0 3 3 31 31 19.7 22.2 17.0
$5-6.5M 49 4 1 5 27 31 21.8 21.3 49.0
$6.5-$10M 35 1 3 4 12 13 35.0 36.3 11.7
> $10M 27 2 2 4 10 12 32.4 30.4 13.5
                   
TOTAL 455 51 50 101 593 644 9.2 9.5 9.1

The good news for the 35 listings still on the market in the $5 – 6.5 million is that we had 3 sales in December compared to only 9 sales in the first 11 months of 2018. So, more sales in December and less listings make for an almost 2 year drop in months of supply in this price range in only one month. All this means that you should always take January month of supply numbers with a large grain of salt as the sudden one-day drop in inventory from 12/31/18 to 1/1/19 means that December MoS will almost always be significantly lower than November MoS in most of the price ranges.

Overall, our inventory is about the same as last year with 455 listings as of the beginning of the year up only 4 listings from last year. Contracts however are down noticeably in most price ranges going from a total of 69 contracts last year to only 51 contracts at the end of 2018.

There is nothing like a government shutdown to make people take a step back and wait before signing on the dotted line. When will Washington realize that their lack of ability to work together is a major impediment to having a better economy?

 

As to the macro numbers, our average sales price in 2018 was $2,396,448 compared to $2,583,951 in 2017. This $188,000 drop in the average sales price in Greenwich is mathematically accurate, but it doesn’t mean that your house fell in value. This price drop can mostly be attributed to the increase in sales under $1,000,000 and the decrease in sales from $5 – 10 million. The median sales price which minimizes changes in our very high-end sales went from $1,800,000 for all of 2017 to $1,765,000 in 2018 or a drop of only $35,000. Overall, most houses in Greenwich went up a smidgen in value, but this is hidden by change in what prices ranges are selling.

If Washington gets its act together, given low unemployment and finally a rise in real wages, 2019 could be pretty good year with actual increases in average prices.

How Excel Spreadsheets are Hurting Real Estate

One of the problems with being a real estate agent in Greenwich is that we have too many financial people. Now I love people in the financial industry, most of my seller and buyers are involved with it in one way or another. The problem is that they often turn to a spreadsheet to solve their problems. I personally love spreadsheets. There is a saying, however, that that hard numbers drive out soft qualities and there are few things more qualitative than buying your home. So, this week I thought I’d like at some of the non-financial reasons to own your own home.

Your Home

There is something deeply comforting about owning your own home. It’s yours; it’s a place of refuge from all of the stress and trouble of daily life. It’s the place where your life is truly yours and your family’s. Now a long-term rental can start to feel like that, but it comes with much less control of your home.

                Your community

If you own your own home, you are literally more invested in the community. You need to care about what’s going on in your community, its schools, parks and government. The flip side for some people is that homeownership can make them feel stuck and tied to the community. Overall, though being part of a community is a plus for individuals, families and for the community and you see that every day here in Greenwich. We have thousands of people who volunteer their time to make this a better place to live. Of course, renters can do the same thing and lots of them want to do so, but homeowners really need to do this.

Your life

Owning your own home also gives you more flexibility. Whenever I rented, I rented what I needed for the term of the lease. Homeowners tend to buy houses with extra bedrooms that can accommodate expanding families, or a home office for a new business and that have guests over that actually stay in the guest bedrooms, be they related or friends. We do have starter homes that get too small for expanding families and people can rent a single-family home rather than buying it, but folks who buy tend to move less and they can always expand.

                Your house

One of the great things about owning is that you can do what you want. If you want to paint the ceiling black and have light up constellations no problem. If you want a pool, just do it. You can take out the garden in one area and move it to another area. It’s your house. Feel free to add on a wing for that expanding family. (Expansion is not free, and you’ll need a bunch of permits, but hundreds of folks are doing that right now.)

Your athletics, cars and parties

You can add a basketball goal, pitchers mound or even a tennis court, it’s your house. You also have your own garage rather than a shared garage or no garage. Of course, some houses don’t have garages or enough garage space, but that’s a decision you can make when you buy. You also have more space to entertain both in the house and in the backyard.

And, you can do it your way. One of the cooler features, I’ve seen was a high-end house that had a room off of the living room just for storing tables. The family had lots of folks over for the holidays and never needed to drag the extra tables out of the basement.

Your spaces

Houses come with extra spaces for hobbies, workbenches and storage. You can keep a lifetime of memories in them and you don’t have to move them when the lease expires. Friends of mine are great photographers and they built a custom-designed room for editing, printing and framing. Do you have a bunch of fishing trophies or lots of sports trophies feel free to display them proudly.  (This doesn’t actually work in my family, but that’s a different issue.)

Your pets

One thing we do agree on in our family is that we like dogs that you don’t have to bend over to pet. We’ve had a variety of Bernese Mountain Dogs, Scottish Deerhounds, Newfoundlands and Golden Retrievers. These aren’t exactly apartment dogs.

Pets are a big part of people’s lives and lots of landlords don’t allow pets at all or restrict tenants to one small dog. I have a rental listing at 181 E. Putnam Ave, next to where the crocuses bloom in the spring at the intersection of the Post Road and Maple Ave. By allowing pets, the number of potential tenants expands greatly, because there aren’t a lot of pet friendly rental. (BTW: Thank you to the wonderful town garden clubs that plant the flowers on Crocus Hill. They are my favorite sign of spring each year in Greenwich.)

Bottomline, if you want to figure out if you can afford the house use a spreadsheet, but if you want to know if you will be happy there use your heart.

by Mark Pruner

GreenwichStreets.com

mark@bhhsne.com

December 12, 2018