BACKCOUNTRY GREENWICH, CT SALES UP 29% IN 2019

Average Price/SF & SP/Assessment Ratio Up

By Mark Pruner

November 19, 2019

Last year 45 homes sold in backcountry Greenwich. This year it looks like we will end the year with around 58 sales. We already have 49 sales so far this year. With 9 contracts waiting to close including one with a list price of $12 million dollars the last month and half of 2019 should be a good. All 9 contracts might not close by year end, but for each one that doesn’t close we may well get an all-cash deal that isn’t presently under contract that will close before year end.

2017 2018 2019+Contr % change 17-18 % change 18-19
Sales 45 45 58 0% 29%
Average  $ 3,769,350  $   3,441,086  $   3,223,806 -9% -6%
Median  $ 2,680,000  $   2,675,000  $   2,327,000 0% -13%
Avg. $/sf  $           509  $             509  $            553 0% 9%
Med. $/sf  $           431  $             459  $            453 6% -1%
Med. OLP/SP 80.0% 89.0% 86.0% 11% -3%
Med. SP/Assmt                  1.110                    1.260 1.285 14% 2%
Med. SF                  6,097                    5,495                     5,713 -10% 4%
SP/Assmt % of ’15                    0.78                       0.89                       0.90

For the people that actually like good news, our average price per square foot is up 9% in backcountry. Our sales price to assessment ratio is also up 2% compared to last year’s ratio. None of this get’s reported in the Wall Street Journal, the National Review or even in the Greenwich Time’s front page article entitled “Sales still slumping for backcountry homes”. All three stories came about because Regis Philbin bought a beautiful home in 2008 for $7.2 million dollars and he has recently listed it for $4.595 million. This one property has come to define the market to readers outside of Greenwich, but anecdotes don’t make a market.

 

Had these reporters really wanted to bash Greenwich, they could have used the drop in the average sales price over the last two year, which is down 14.5% from $3.8 million to $3.2 million. Our median sales price is down 13.2% from $2.68 million to $2.33 million, both of these numbers are indicators, but not good indicators of what prices are doing in backcountry Greenwich.

The reason they are not good indicators is that higher sales in backcountry have brought average prices down, since the increased sales are mostly from $1 – 3 million. The result is that increased sales of below average homes are bringing down both the average and the median sales price in backcountry. (These houses are not otherwise below average houses, but more about that later.)

So, prices are down, and sales are up, which is basic supply and demand. Prices have reached the point where people are seeing good bargains in backcountry and they are buying. I’ve sold three houses in backcountry this year compared to none last year. Among the three houses there were 8 offers in total. None of the sales were easy and several times I was glad I’d been a real estate lawyer for 14 years before becoming a real estate agent. Buyers are driving hard bargains and you have to know when to push back. On the other side, I had two buyers walk away from accepted offers, when the inspection showed more work than they had planned for when they visited the house. If buyers are going to buy in backcountry, they really like the house to be in good shape.

Half of all the high-end houses in Greenwich are in backcountry, many of which are owned by well know people. These are the ones that get the attention in the national press. The oft repeated shibboleth is that we have a mismatch between what today’s buyers want compared to what was built in the go-go digits decade of this century. There is some truth to that, living large in a big English manor house or Georgian is not as popular as it was before the recession. Having said that, these houses sell better than old high-end houses. In the last three years we have had 22 houses sell for more than $5 million in backcountry of those 22 houses, 12 or 54% were built in this century with only 5 being built after the recession.

Backcountry Sales 2018

We actually have more of a problem selling 20th century houses that need work than we do selling, 21st century houses don’t have today’s homier, open floor plan. Now having said that they are still a tough sell. High-end houses, with lots of square footage, that need work, or don’t have today’s style in the backcountry are difficult to sell and are selling at a big discount to what they were sold for at the peek of market prices in 2009. For the old timers who have lived here for many years, they are seeing sales prices that are multiples of what they paid for their house originally.

Backcountry sales and contracts as of 11/19/19

You also can’t paint backcountry with a broad-brush. Even in backcountry houses over $5 million only represent 28% of the inventory. Under $1 million we have only one house, which means that 71% of our market is between $1 and 5 million. Much of that market is seeing good buyer activity at today’s lower prices. (Parkway school had to add another kindergarten class recently.)

As mentioned before these houses are not below average. What you can get for $1.8 million in backcountry compared to $1.8 million in downtown or Old Greenwich is amazing. Many people who grew up on larger properties really appreciate having more room for their activities and family. These houses are such values that they compare very well to building from scratch. Having said that people who really want their own home are building exactly what they want in backcountry where issues like siting, amenities and guest houses are much easier to get through town departments.

Right now, backcountry is going through major changes, which are often wrenching changes for those that bought in the late digits. Buyers however are finding great bargains and interestingly some of the most distant houses along the New York borders are attracting people due to the resurgent night-life in Armonk and an excellent community theater in Bedford. In a couple of years some folks will be kicking themselves that they didn’t buy when they could.

 

The Greenwich October Real Estate Market Report – Another Good, Average Month

October was our fourth month in a row that was “average”. In fact, compared to last October’s 37 sales, this October’s 40 sales are up a little, and is only one sale below our ten-year average of 41 sales. From July to October, the four “good” months, we have sold 223 single family homes compared to 222 last year and a ten-year average of 225 sales. The problem with 2019 has been the first six months. In those first six months, we only sold 226 houses, down from 275 houses last year, which was down from our 10-year average of 287 houses.

October2019.2017-2019.111219

For the entire year, we are down 9% in sales from 492 sales last year to 449 sales this year. And, the problem with our last four average months is that so far, we are not making up much of that first half shortfall in sales. On the good news side, inventory is down by 22 houses to 587 single family homes and our 40 October sales were up from last October.

As of 11/08/2019 Inventory Contracts Last Mo. Solds Last Mo Solds+ Contracts  YTD Solds  YTD+ Contracts Mos Supply Mos w/ Contracts Last Mo. Annlzd
< $600K 3 3 2 5 17 20 1.8 1.7 1.5
$600-$800K 28 7 3 10 29 36 9.7 8.9 9.3
$800K-$1M 22 7 1 8 38 45 5.8 5.6 22.0
$1-$1.5M 71 13 11 24 91 104 7.8 7.9 6.5
$1.5-$2M 74 17 7 24 73 90 10.1 9.5 10.6
$2-$3M 120 14 11 25 101 115 11.9 12.0 10.9
$3-$4M 98 15 2 17 42 57 23.3 19.8 49.0
$4-$5M 56 4 2 6 22 26 25.5 24.8 28.0
$5-6.5M 38 3 0 3 15 18 25.3 24.3   –
$6.5-$10M 48 3 1 4 15 18 32.0 30.7 48.0
> $10M 29 1 0 1 6 7 48.3 47.6   –
TOTAL 587 87 40 127 449 536 13.1 12.6 14.7

A couple of areas stand out; from $2 – 3 million our inventory is down 10% and sales for year are up 12%. The other stand-out area is from $5 – 6.5 million where inventory is down 32% and sale are up 40% from only 8 sales last year to 15 sales this year. The problem with this jump in high-end sales can be seen when you compare the sales price to the Tax Assessors 2015 assessment. Last year that ratio was 1.52 this year it is 1.41 or a drop of 8%. When you look at the $/s.f. that has slipped from $994/sf last year to $822/sf this year or a drop of 17%. The sales price to original list price is also down and the days on market is up.

Oct2019vs2018.Spreadsheet.mp.110819

For the glass half-empty and falling pundits this shows a weak and declining market. To me what is shows is a market adjustment that is likely near its bottom. Prices have dropped significantly in just one year, but sales are also up significantly. Three of the houses that sold between $6.5 and 10 million were on for an average of 1,265 days or 3.5 years. These three houses sold at 67% of their original list price, but they sold for a total of $24.2 million and an average price of $8 million. Buyers are swooping in to pick up these bargains as our 40% jump in sales show.

The Wall Street Journal has continued their Greenwich bashing with an article last week headlined, Television Host Regis Philbin Lists Greenwich Home for a Big Loss. The reporter sites her own previous article, Wealthy Greenwich Home Sellers Give In to Market Realities for support. This is her third Greenwich bashing article and is in contrast to her article on our neighbor Bedford, NY which is entitled, The Small Westchester Town That Draws Hollywood A-Listers and Billionaires. As I wrote above sales are down and prices are also down and I think that should be reported, but the reporting needs to be balanced to give an accurate picture of the market. The Wall Street Journal with her article President Trump’s Onetime Greenwich Estate Relists for 29% Less gives a one-sided and slanted view as I wrote in my article about today’s day-glo journalism.

One of the aspects of day-glo journalism is that other writers take a sensational article and further sensationalize it, often with a loss accuracy. We saw this with this week’s National Review article, Who Wants to be a Millionaire in Greenwich. That article opens with the inaccurate statement that Regis Philbin just sold his house, rather than just listed it. The article goes on to say that “sellers routinely have been taking losses of $1 million or more” Given that our median sale price is $1,900,000 this isn’t very likely. It is true of many high-end houses that were bought in the backcountry bubble from 2006 – 2010, but generally not true for folks who bought more traditional homes outside of north Greenwich.

Oct2019.MoS.110919

So, what have prices done this year? Well our median price is up 4.6% from $1,816,250 last year to $1,900,000. This is due not to a shift in values in Greenwich, but is due to a slight increase in the percentage of sales above the median price. A better indicator of what prices are doing is the sales price per square foot where prices are down 2.5%. The sales price to assessment ratio is also down 5.3% Clearly, the change in federal tax deductibility of state and local taxes have affected Greenwich prices just as they have done in NYC and the northeast.

On the good news side, sales in backcountry are up 48% from last year with 49 sales so far this year. (I’ve had 3 of those sales.) Sales are up, because prices are a bargain. There a couple of listings that I think are just amazing. If you are looking there give me a call. Most folks are now adjusting their price expectations to the new reality and people are buying in backcountry. Our least expensive house in backcountry went for $600,000; an 1829 house on 0.64 acres located on Riversville Road and our most expensive house went for $14.87 million; a 2011 house on 5.7 acres on John Street with 12,368 square feet.

Oct2019.Sales.Inv.Cur.Ks.110919

Overall our market is better, but still challenging. Correct pricing is crucial and houses that need work are tough sells. This has become such an issue with today’s picky buyers that I’m actually talking with builders and owners about renovating their properties before the sale and splitting the increase in value.

Our 87 contracts show a tilt to the higher end. This is a trend we are seeing post-recession with more sales above the median happening later in the year. As a result, our median sales price at year end may be even higher than it is now and thus even higher than last year.

Our market tends to change three times a year, so we are due for one more change before year-end. In Greenwich, average never lasts for long.

Oct2019.4Pie.110819

 

 

 

Sleazy practices in real estate offers, bad square footage numbers & wetland soil types

Over four decades as an attorney, business owner and Realtor, I’ve learned some hard lessons about negotiations and who you can trust in negotiations. In the Greenwich real estate market, we have over 1000 members of the Greenwich Association of Realtors, but there are probably only about 200 that do the very large majority of all the deals each year. We all know each other, or at worst know somebody who knows the other agent’s reputation for honesty and fair negotiating.

The Greenwich real estate community’s reputation for fair dealing is self-reinforcing in that the Realtors that are known to be sharp dealers are actually at a disadvantage as other Realtors don’t take what they say at face value. This means that even when they are actually being truthful, the other agent still has her doubts. As a result, deals that could be done if there were more trust between the parties don’t get done.

Let’s look at some of the tactics and situations to be aware of when negotiating a deal.

I.        The Phantom Second Bidder

Buyers tend to make higher offers and quicker counter offers when they are competing against another buyer. No one likes to get beat out for the house that they want and our surfeit of Type A personalities in town just hate “losing” period. If it’s a hot house in a hot market, multiple offers are to be expected. Unfortunately, the other bidder is not always real, or their level of interest may not be as high as represented. This is when having a good broker can be very helpful, to help determine just how worried a buyer should be about the other buyer.

II.      The Off-Market Buyer

Some buyers want particular neighborhoods or a particular type of house. In such cases, agents may contact owners whose properties aren’t listed inquiring whether they might want to sell their house. Every year several houses are sold this way. The problem comes when an agent purports to have a buyer for a property as a tactic to get a listing. One easy way around this for homeowners is to sign a listing agreement with the agent, but limit it to that one showing.

III.    Simultaneous or Concurrent bidding

Buyers sometimes make offers on two or even more houses at once, trying to play one homeowner against another or just to hedge their bets. It’s a risky strategy as one seller or both may decide they don’t want to get involved in such a negotiation and decide to pull-out. If the agent reveals that there are simultaneous bid, then everyone is on a level playing field.

Where this is a problem is when there are multiple offers on one house and the simultaneous bidder doesn’t want their offer tainted by the fact that they are bidding on another house. The simultaneous bidder can win the bidding war on house “A” and then turn around and accept an offer on house “B”.  The owner of house “A” can then find that the other bidder for their house has moved on. One way to fight this is to simply have your agent ask by email if the other party is making simultaneous offers. Very few agents, will want to misrepresent something in writing.

IV.    Basements, Attics & Square Footage

In Greenwich we can only use the house square footage from an architect, builder, or most commonly the square footage of the house on the tax card. The problem here is that this square footage may or may not include the basement depending on whether the basement is a walkout basement or is underground (and it’s even a little more complicated than that.) Lots of our financial types like to look at cost/square foot to figure out whether the house is fairly priced or not.

Our median price per square foot so far this year is $521/s.f. It’s a lousy number to use as it does not take into account; the size of the lot, the presence of wetlands, or whether the basement is included. If you do want to use that number, always ask if the basement and/or “attic” is included in the square feet. Even better go see the house and decide whether what is there works for you. Houses with identical square footages can feel spacious or cramped depending oh how they are laid out.

V.      Soil Types, Wetlands and Maps

Wetlands serve a vital purpose in protecting our natural resources and controlling flooding. State law mandates their protection and we have a town agency with a hardworking staff and well-educated board members to hear matters involving wetlands. We also have a town GIS department that puts out very useful maps showing where wetlands are located. Wetlands however are defined by soil types which can only be determined by a licensed professional. As a result, the wetlands shown on the Town GIS maps don’t always coincide with what a soil scientist would map out.

The presence of wetlands can greatly affect what you can do on a property. Also, the wetlands don’t have to be on your property to affect what you can do there. The presence of wetlands on the property in the area can prevent or cause modifications in what someone can do with a property. As a result. the FMV will be different depending on where and how extensive the wetlands are.

Both wetlands and the allowed above ground square footage (FAR) change the value of a property and some agents may not make this info readily available so if you are thinking of buying a property that might be affected by wetlands or if you want to expand a house that is already near it’s FAR limit, you want to do your own homework on this matter. The people at the at the Tax Assessor’s office and the IWWA can be very helpful.