Good Sales, Better Contracts

by Mark Pruner

We had 63 single family homes sales in August 2019 in Greenwich. This is 2 more sales than we had last year and just 1 less than our ten-year average. We also have 83 contracts waiting to close which is 22 or a third more than we had last year at this time. Both are indicative of our strengthening market. Earlier in the year sales and contracts were not good and there was some real worry about whether Greenwich real estate was going through a paradigm shift that meant we were just going to have a slower market in the new federal tax regime with non-deductible state and local taxes.

As of 9/2/2019 Inventory Contracts Last Mo. Solds Last Mo Solds+ Contracts  YTD Solds  YTD+ Contracts Mos Supply Mos w/ Contracts Last Mo. Annlzd
< $600K 2 6 1 7 10 16 1.6 1.2 2.0
$600-$800K 26 6 6 12 22 28 9.5 8.8 4.3
$800K-$1M 19 8 3 11 32 40 4.8 4.5 6.3
$1-$1.5M 59 17 13 30 70 87 6.7 6.4 4.5
$1.5-$2M 88 14 11 25 57 71 12.4 11.8 8.0
$2-$3M 120 16 17 33 84 100 11.4 11.4 7.1
$3-$4M 93 6 4 10 38 44 19.6 20.1 23.3
$4-$5M 54 6 3 9 16 22 27.0 23.3 18.0
$5-6.5M 43 0 4 4 14 14 24.6 29.2 10.8
$6.5-$10M 48 2 1 3 11 13 34.9 35.1 48.0
> $10M 33 2 0 2 5 7 52.8 44.8 #DIV/0!
TOTAL 585 83 63 146 359 442 13.0 12.6 9.3

It may be possible that we are seeing a sales slowdown, but the last two months we have started to pick up ground on last year and on our historical averages. Just as in this month, our contracts were up in July pointing to the better sales month that we had in August. With a higher number of contracts, we are very likely to see a better month in September 2019 than we saw in September last year. However, it’s not like the last two months were stellar, they were just average. Average looks pretty good compared to bad and we’ve had two months of average, so things are looking up.

It’s not only sales that are back to average, but also inventory. Above $2 million we are basically the same as last year, except for $5 -6.5 million where we are down from 51 listings to 43 listings this year. Below $2 million we have a mixed bag. We have more inventory from $600K – 800K and from $1.5M – 2.0M, but less inventory from $800K – $1.5M. These changes in both directions are not small. From $1.5M – 2.0 million we are up 19 listings and from $800K – $1.5M we down the same 19 listings. When you add it all up, our inventory at 585 listings is only 3 more than last year or not even 1% different.

That’s the market overall, but for any one house, you really need to look at the competition on a house by house basis. Buyers are going to compare your house to handful of others and pick one. That’s when good marketing and staging can make a real difference.

Under $600K, you have less to worry about, since you don’t have even a handful of competitors; you only have one other house listed. In this price range your competition is not the other houses in Greenwich, but Stamford, Norwalk and Westchester. I wouldn’t be too worried though as we’ve sold 10 houses under $600K so far this year and have 3 others under contract. This makes for an amazing 1.6 months of supply. As always folks are very interested in getting into Greenwich at that price.

Just above that price from $600K – 800K a lot more people are interested in getting out of Greenwich. Right now, buyers in that price range have 26 options compared to only 13 listings last year. Year-to-date sales are down 13 in that price range, but contracts are up 5 from last year, so we should start eating into that inventory as demand for this price range has grown the later we get in the year.

In fact, that increased demand is true all the way up to $3 million. Just above that price range, $3 – 4 million has fewer contracts and fewer August sales than last year. The result is that months of supply for $3 – 4 million is up to 19.6 months of supply compared to 15.5 months last year.

Above $4 million the market is also improving slightly with a few more sales and about the same inventory, but this masks some really dramatic price drops, that sellers have made to bring their houses in line with today’s market. It’s clear that the 2017 tax law limiting the deductibility of our state income tax and our local property tax has made owning a home in Greenwich more expensive.

As a result of houses being more expensive to own, we are seeing in Greenwich what we have always seen in Westchester County. In Westchester, homebuyers are facing the highest property taxes in the country and as a result home prices are lower than they are in Greenwich on a dollars per square foot basis. Here in Greenwich it’s more expensive to own a house now than it was in 2017. The result is that we are seeing lower prices particularly above $4 million where the state income tax and the non-deductible property taxes make homeownership more expensive. (Alright you can deduct the first $10,000 of SALT, but that doesn’t go far when you have $50,000 of Greenwich property taxes and $100,000 of state income taxes to pay.)

The other tax law change that is having an impact is the lowering of the mortgage deductibility from $1.1 million to $750,000. This has been offset by falling interest rates as people continue to demand U.S. Treasury debt as a safe haven in a turbulent world. This may explain some of the slow down in our market just above $1.375 million ($1.1 million divided by an 80% mortgage.) At the same time, we had significant tax rate deductions, but the NY metro area with its high income and property taxes, seems to be one of the areas where lots of people are paying more federal income taxes even with the new, lower federal tax rates.

The Fall Market

So, what do we have to look forward to in the fall market? Well the easy part to say is that we will have good sales in September. We have the aforesaid 83 contracts waiting to close and our average September sales are 47 houses.

The rest of the market is harder to predict. Inventory will rise in September as it always does, but by a lot or a little is the question. Also, what areas are going to do well. Carline Martin and I are putting on some land in a new development near the Chieftains in western Greenwich, which is an area that has seen more activity as people move from Westchester, but want to stay close to their old friends in Westchester who can’t sell their houses.

Backcountry and Old Greenwich will also probably continue to do well but will the shift in sales to later in the year continue. If so, will there be enough additional sales to make up lost ground from the first half of the year? We are still down 53 sales from last year or 13%. However, if you throw in contracts, we are only down 7% from last year. Stay tuned it will be an interesting fall m

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