June 2019 Greenwich Neighborhoods Report – Backcountry looking better

The last couple of months have been good for some neighborhoods in Greenwich and no areas have really gotten worse. Having said that, the overall Greenwich market is still weak with over 19 months of supply. A couple of smaller areas, Pemberwick and North Mianus, both with 7 listings each stand out, but it’s not enough to move the whole market. The two areas that are large and are getting better are in northern Greenwich.

Sections as of 6/30/19 Inventory Sum of List Prices Listing DOM Number sold Mos of Supply Sum of Sold Prices Solds DOM
Byram 11 $39,712,400 244 6 11.0 $3,712,000 71
Cos Cob 61 $92,147,499 167 17 21.5 $23,681,500 160
Glenville 28 $44,618,000 186 8 21.0 $9,061,000 251
North Mianus 7 $9,482,999 129 6 7.0 $7,225,000 99
North Parkway 125 $654,099,286 341 26 28.8 $90,936,350 252
Old Greenwich 83 $202,670,997 186 41 12.1 $96,249,660 158
Pemberwick 7 $5,482,900 147 4 10.5 $3,538,000 361
Riverside 84 $258,539,150 217 34 14.8 $66,033,322 209
South of Post Road 77 $445,364,000 178 21 22.0 $59,448,800 299
South Parkway 239 $1,035,131,393 261 63 22.8 $191,256,267 297
Grand Total 729 $2,797,351,624 239 226 19.4 $551,141,899 231

The area that gets the prize for most improved is North of the Parkway. In backcountry months of supply is down to 29 months of supply from 40 months of supply at the end of April. We have had 26 sales in backcountry YTD and picked up 15 of those 26 sales in just the last two months. Our inventory is also up but should be falling soon as more sales hit the MLS and the number new listings coming on the market slows as sellers and their agents wait for the fall market.

The 26 sales in backcountry total $91 million. This is almost as much as the $96 million of sales in Old Greenwich, where we have seen 41 sales. While backcountry has fewer sales, it has the highest average sales price at $3.5 million dollars, while Old Greenwich’s average sales price is $2.3 million. However, Old Greenwich  has the lowest months of supply for any large area of town at 12 months. This is less than half of the 29 months of supply in backcountry. What we are seeing in backcountry are prices that more nearly reflect today’s value and value-oriented buyers stepping in to buy these houses.

Many of these buyers are also younger families who came of buying age after the Great Recession and have never really seen prices go up, and certainly, not in double digits in one year like they did in several pre-recession years. Today’s buyers are going where the values are and they have a lot of good options in backcountry. As a result of this influx of young families Parkway Elementary School had to add a third kindergarten class this year.

Prices in backcountry are down. Based on the sales price to assessment ratio, prices in backcountry are down 5.1% since the last revaluation in October 2015 or about 1.3%/year. Activity started to turn around in the 4th quarter of last year and is continuing to get better.

Now better here is a relative term. For the sellers that bought in the bubble from 2004 – 2008, they are not getting their money back. You have to go back to the 20th Century to find buyers that consistently seeing a profit, but that is much of backcountry as folks that buy there tend to hold for years and decades. While backcountry is still not a strong market, we are seeing the trends go in the right direction.

Sections as of 6/30/19 Min of Sold Price Max of Sold Price Average of Sold Price Average of List Price/SqFt Average of Sold Price/SqFt Average of SP/ASMT Average of SP/OLP
Byram $535,000 $729,000 $618,667 $415 $408 2.010 96.0%
Cos Cob $749,000 $3,400,000 $1,393,029 $464 $434 1.552 88.0%
Glenville $750,000 $1,800,000 $1,132,625 $488 $449 1.578 82.4%
North Mianus $580,000 $1,690,000 $1,204,167 $497 $488 1.558 97.2%
North Parkway $790,000 $14,875,000 $3,497,552 $582 $536 1.347 86.9%
Old Greenwich $725,000 $11,000,000 $2,347,553 $651 $617 1.612 91.5%
Pemberwick $495,000 $1,215,000 $884,500 $392 $374 1.833 93.3%
Riverside $555,000 $3,900,000 $1,942,157 $541 $517 1.678 90.8%
South of Post Road $550,000 $9,400,000 $2,830,895 $726 $679 2.030 89.8%
South Parkway $550,000 $8,325,000 $3,035,814 $594 $558 1.492 86.6%
Grand Total $495,000 $14,875,000 $2,438,681 $582 $548 1.600 89.0%

Mid-country is also seeing this same trend increase in activity as months of supply dropped from 34 months of supply to 23 months of supply. Once again there are some real bargains to be had, particularly for those people that are willing to do some work. One great way to get a real value is to do what developers do and buy an older house and add today’s buyers’ de rigueur requirements of walk-in closets, spacious bathrooms and quartz-topped, kitchen islands.

The other area where we are seeing significant improvement over the last two months, and to relief of many of its residents, is Riverside. Riverside got off to a very slow start this year, but it is trying to make up for lost time with 23 houses sold in the last two months after only 11 houses were sold in the first 4 months of 2019.

Cos Cob & Glenville are both doing about the same over the last couple of months as they did earlier in the year. The market there can best be described as slow but steady. Cos Cob’s inventory went up by 8 to 61 houses, but at the same time it’s list price to sales price ratio improved to 88.0% from a weak 84.4%.

So Old Greenwich, Riverside, North Mianus, Pemberwick and Byram are the better parts of the market, while north and south of the Parkway are improving.

 

Greenwich, CT First Half 2019 Real Estate Report

We had 60 sales in June 2019 totaling $156 million. Year to date we have had 226 sales totaling $556 million. Our volume of sales would be the envy of many other towns, but it wasn’t a good June for Greenwich. Our 60 sales were down only 6 sales from June 2018, but June 2018 was not a good year for sales either compared to our 10-year average of 84 sales.

6/30/2019 Inventory Contracts Last Mo. Solds Last Mo Solds+ Contracts  YTD Solds  YTD+ Contracts Mos Supply Mos w/ Contracts Last Mo. Annlzd
< $600K 6 2 2 4 8 10 4.5 4.5 3.0
$600-$800K 23 4 5 9 14 18 9.9 9.6 4.6
$800K-$1M 32 14 5 19 18 32 10.7 7.5 6.4
$1-$1.5M 79 13 12 25 45 58 10.5 10.2 6.6
$1.5-$2M 114 16 8 24 35 51 19.5 16.8 14.3
$2-$3M 154 23 10 33 52 75 17.8 15.4 15.4
$3-$4M 107 15 7 22 25 40 25.7 20.1 15.3
$4-$5M 71 5 3 8 12 17 35.5 31.3 23.7
$5-6.5M 52 6 3 9 6 12 52.0 32.5 17.3
$6.5-$10M 56 2 5 7 8 10 42.0 42.0 11.2
> $10M 35 3 0 3 3 6 70.0 43.8 #DIV/0!
TOTAL 729 103 60 163 226 329 19.4 16.6 12.2

We had some bright spots. Sales from $6.5 – 10 million were double last years sales with 8 sales so far and 5 of those sales were in the month of June. We also have seen more sales from $2 – 3 million where we had 52 sales up 4 sales from last year. Unfortunately, in both of these cases, our contracts for those price ranges are down and inventory is up so this may be a short-lived increase.

When you look at the bottom-line numbers our inventory is up, sales are down 17% and our contracts are down 14%. This is after we saw a significant recovery in May sales with 57 sales, which matched our 10 average. Part of this sales spurt in May came from a bunch of contracts closing quickly that month, which resulted in us going into June with a reduced number of contracts. At the end of June, we are down 17 contracts compared to June 2018. Most of this reduction in contracts is because of the weakness from $1 – 3 million, which unfortunately is the heart of our market.

One contract bright spot is the over $10 million market where our 3 contracts are 3 more than we had in June 2018. On July 1, we also saw a dramatic drop in inventory, as we do most years, since many listings expire on June 30 as the first half of the year ends. So, as of now we are looking at 699 listings. This will help our months of supply, which for the overall market is at 19 months of supply up 4.6 months of supply from last June.

New York and New York City are continuing to help out our market as the mansion tax in New York City just dramatically increased on July 1st. In NYC the city “mansion” tax starts at 1% at $1 million and increases to 3.9% for sales over $25 million. This tax is traditionally borne by the buyer, which certainly won’t encourage sales. In NYC, the seller pays a 1.425% transfer tax starting at $500,000. Meanwhile if the buyer actually takes out a mortgage, the buyer gets to pay a 1.925% mortgage tax if the mortgage is over $500,000 and only pays 1.8% for mortgages under $500,000.

This compares to Connecticut’s single conveyance tax that is 1% below $800,000 and 1.5% above that amount. Starting July 2020, we will get our own mansion tax as the conveyance tax will be 2.5% over $2.5 million. Now the new Connecticut law purports to give that increase back if you stay in the state for three years. As I wrote before it’s a silly tax that doesn’t raise much revenue and gives the New Yorkers a chance to claim that we have a mansion tax just like they do. We, however, only have one tax and they have three.

All this is happening at time that Wall Street is setting record highs, unemployment is low, and the economy continues to hum along, so the second half of the year may well look better. Let’s also hope for a repeat of last year where the peak sales month was in July rather than June as it normally is.

I have an Accepted Offer, What Could Go Wrong?

 

by Mark Pruner

As a realtor, my primary job is to get the seller or buyer to an accepted offer and then send that to the attorneys for them to transform the terms of the offer into a contract that can be signed by both parties.

The whole thing starts with the buyer and seller negotiating back and forth to an accepted offer including inclusions and exclusions of personal property and fixtures attached to the property. The parties then send their attorneys the accepted offer. Back in the 90’s when I was a practicing real estate attorney, the attorneys generally drafted a contract at this point with an inspection contingency and a mortgage contingency, if the buyer was using bank financing. This quick contracting had the effect of transferring control of the deal to the buyer. The buyers could decide whether they wanted to exercise the inspection contingency and either walk away, ask for repairs or a price adjustment.

Now days, the seller’s attorney usually wait for the inspection results before drafting the contract. This keeps control with the seller, as the rule in Greenwich is that there is no deal until the contract is signed. As a result, sellers can accept offers from other buyers and if they do the first buyer may find themselves in a bidding war or just be out of luck. If the first buyer had already done their inspection, the polite thing for the seller is pay the first buyer the cost of the inspection, but the seller may or may not do that.

Let’s assume that another buyer doesn’t come in the picture and the buyer does an inspection to verify the house is in good shape. The inspector always finds a bunch of issues, but unless they significantly change the value proposition, the deal often goes forward “as is”. If there are major issues or if the buyer wants to get a better price, they can renegotiate the original deal.

Once the inspection issues are resolved, the seller’s attorney drafts the contract and sends it to the buyer’s attorney. The contract will almost always be the standard Fairfield County Bar Association contract which the attorneys revise from time to time as laws change. (Several year ago, I was on a contract revision committee and one of the great things about Greenwich real estate attorneys was that there really was an effort to be fair to both buyers and sellers, when considering the needed revision.)

Each seller’s real estate attorney has their own tweaks to the FCBA contract, but they are usually more in the way of clarifications or that cover unusual situations that firm encountered in the past. The seller’s attorney then sends the proposed contract incorporating the offer terms to the buyer’s attorney. The buyer’s attorney attaches a rider to the contract with various representations and other pro-buyer provisions. This is when the attorney’s negotiation really begin, but eventually the sales contract is negotiated to a final contract.

The buyers then sign the final contract and attach a downpayment check usually for 10% of the purchase prices. The sellers then sign the contract and there is a binding contract (which may have contingencies). The downpayment check is deposited into the seller’s attorney’s escrow account until closing. At this point any other buyers can only be a backup offer, as the buyer has a contractual right to buy the property.

The “binding” contract may have a mortgage or other contingency. Mortgage contingencies are usually 30 – 45 days while the buyer gets approved for a mortgage. Once approved the mortgage contingency is waived by the buyer. If the buyer is making good progress, but has not gotten final approval by the contingency date, the seller has the option to extend the contingency date, but if there is a higher backup offer, they may decide not to grant an extension of the mortgage contingency. Things can get pretty exciting for all parties when this is about to happen.

Between the contract signing and the closing, the seller is required to continue to maintain the property and fix any appliances that break. The seller has to deliver the premises “broom clean” and empty of all their personal property (i.e. anything movable). Ideally, the seller moves into to their new place in the week before closing, so the seller’s cleaning people have a day to clean the property, before the buyer’s final walk through.

All fixtures, such as chandeliers and wall sconces affixed to the real property stay unless the seller specifically excluded them in the contract. All personal property must be removed unless included in the contract.

Over my many decades as either a real estate attorney or real estate agent, the large majority of disputes at closing have been over inclusions and exclusions. The buyer does the final walkthrough and there is a hole in the dining room ceiling. At closing you hear, “The buyer should have known that the seller was going to take the dining room chandelier.” Alternatively, you hear buyers say, “The seller “should have known that they had to remove all those old paint cans and tiles”, since the buyer didn’t need them for touch-ups. It’s really important to cover each of these items that are exceptions to the rule that fixtures stay and personal property goes in the contract.

In the contract will be a closing date, when title passes to the buyer. At closing the seller’s attorney gives the buyer’s attorney the deed and the seller delivers all the keys, garage door openers, security codes, appliance manuals etc. Buyers are often surprised that the sellers are not at the closing, but the seller’s work is basically to sign the deed and a title affidavit and those are usually signed before and held in escrow by the seller’s attorney.

These days, and particularly, if it is an all-cash deal the buyer may not be at closing either. I always go to closing in case there are last minute issues. I have arrived at the appointed time at the seller’s attorney’s office only to find that the buyer’s attorney arrived 10 minutes early and everything is all done on an all cash deal.

Sometimes the seller will hold over after the closing with the buyer’s permission, because for example their new place isn’t ready yet. There will usually be a separate agreement if the seller holds over with provisions for payments, liability and damages. Conversely, sometimes the buyer will move in before closing and the title actually transfer to the buyer. Most attorneys prefer not to do these agreements as the situations create all sorts of legal difficulties should a problem arise.

At the closing, the buyer’s attorney gets the deed signed by the seller, the seller’s check for the Connecticut and town conveyance taxes, the conveyance tax form and a title affidavit saying that the seller hasn’t recently done and work on the property that would entitle the workmen to a mechanic’s lien on the property. The seller’s attorney gets a certified check for the balance of the purchase or the funds may be wired directly into her account.

Usually, the buyer’s attorney goes to the town clerk’s office from the closing table to verify that there are no new liens on the property and to record the deed and new mortgage if the buyers used bank financing. In the good old days, banks would send the seller’s mortgage release to the seller’s attorney to be held in escrow pending receipt of the money by the seller’s attorney. Now days, banks are a lot less trusting and won’t send out the release of the seller’s mortgage until they get the payoff money. So often the last thing that is done is the recording of the release of the sellers’ mortgage which can be weeks later.

The process can seem complicated, but each step is there for a reason and if you have two good attorneys that know the process in Greenwich, it can be relatively painless, but these days it usually isn’t. Having a good attorney can be a big help, when problems arise.