We have hit the inflection point for Coronavirus infections in the U.S. and can expect that we are going to see rapidly rising infection counts and unfortunately more deaths. At the same time COVID-19 on a world-wide basis, and particularly in the U.S., has not been a leading cause of deaths. Globally, we have seen 207,000 infections and 8,300 deaths this compares to 56 million deaths a year from all causes according to the World Health Organization. In the U.S we have had 7,600 cases and 117 deaths from COVID-19 as of Wednesday, March 18th This compares with 2.8 million deaths in the U.S. each year from all causes according to the CDC. In Connecticut, we only have 68 case, with 6 of them in Greenwich and no deaths in Connecticut yet. (Of course, by the time you read this these numbers will have changed.)
As I said, these numbers are only heading up and at an accelerating rate. Our biggest problem is we don’t know how far and for how long. COVID-19 has already exceeded the other two prior coronaviruses; MERS and SARS. It is also something that each of us can influence by our actions and help to reduce the total deaths. For me, it’s something that hits home at my house as my wife and I are doing what we can to protect my 98-year-old mother-in-law (sorry for giving away your age).
What is clear is that this coronavirus is causing severe economic disruption in the economy, and in the stock market, and in our lives and in the real estate market. While COVID-19 is clearly causing changes in the Greenwich real estate market; these changes are not always in the ways that you might think.
What Do We Know About Houses
As of March 18, 2020, we have sold 89 single family homes in Greenwich and have 86 contracts waiting to close for a total of 175 houses off the market so far this year. As of March 31, 2019, last year we only had 74 sales and 67 contracts or a total of 141 transactions. So, with two weeks still to go in the first quarter, we are doing better than we did last year. The tax changes made by 2017 tax act had a greater impact on Greenwich in than did C-19.
Now as we know 2019 was not a good year for Greenwich real estate. If you look at our 10-year average for the first quarter, you come up with 102 sales. If you gross up our 21 sales so far in March, you get 37 sales for a first quarter total of 126 sales so 2020 is likely to be better than our 10-year average.
The question is, will this actually happen? The short answer is no one knows, but if you look at 2020 transactions week by week you get an interesting graph.
Low interest rates not seen for 50 years and pent up demand from last year’s slow market continue to push transactions, the total of sales and contracts up. This happens every year as we get further into the spring market, but the continued market demand in the face of all the bad news is heartening.
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We also have another factor driving sales and this is C-19 itself. It seems that many families that were thinking about moving out of New York City have decided to accelerate their plans and move earlier.
Where we really see that acceleration is in the rental market. From January 1 to March 18th we had 48 rentals of all types in 2018 and 52 rentals in 2019. This year we have had 72 rentals or an increase of 39%. Most of those rentals were long-term rentals for a year or more. Short-term rentals for houses are very limited and usually are rented pretty quickly. Last year out of 864 rentals of all types done through the GMLS only 8 were listed as short-term rentals with an additional 17 were listed as summer rentals. (We also had 1 winter rental.)
What Can You Do?
For buyers this is an amazing time. Interest rates are at record lows and there are significant uncertainties on the sellers’ side making many sellers more negotiable on price. Casual shopping around is harder. The Greenwich MLS has banned public open houses for this week, so any showings have to be made through the listing agent. The policy is likely to continue until the situation improves. For buyers having a good agent and mortgage banker is crucial.
For sellers, the market is much more problematic. Do you sell now, before things get worse, pull your house off the market to avoid infected buyers or just wait to list. Uncertainty tends to freeze folks including sellers. Right now, we have 530 single family home listings on the market with more coming on every day in the spring market. We had 567 listings at the end of March 2018 and 608 listings at the end of March 2019.
Anecdotally, the market under $2 million, where most properties are bought with mortgages seems to be active. (It certainly has been for me.) Over $4 million the market is slower. Why that is, when you would think that the people with money might be more interested in alternatives, is not clear. Then again maybe they already have their alternatives bought years ago.
For landlords, the situation has opportunities and problems, especially if they would like to do a short term rental deal. In the normal year, we don’t get many short term rentals and the higher you go in price the fewer there are. The one exception being summer rentals and even there we only had 17 summer rentals out of 864 rentals last year. There are more short-term rentals, but most of them are done through the paper, Craigslist, Airbnb, or by word of mouth.
One of opportunity landlords have, if they have a rural/remote vacation house is to move and do a short-term rental of their Greenwich house. The tenants are there. (I’m checking with all of my clients to see if they might want to do this.)
At the same time, you have a bunch of issues with a C-19 issue. What can you do if the two month tenant wants to stay? What happens if a tenant tests positive for C-19? (Luckily, it appears that C-19 doesn’t last long on most surfaces.) What’s the appropriate procedure for cleaning the house after the family leaves? Each person has their risk/reward calculation.
D. COVID-19 Tenants
Many prospective tenants are looking to get out of the city and wanting to put 4 acres of social distance between themselves and their neighbors rather than on 12 inches of apartment wall. As noted above, finding a short term rental in Greenwich is tough. Multiple agents I’ve talked to are getting lots of requests from NYC families for nice houses with a yard that they can move into immediately. What is available tends to go quickly.
C-19 is making big changes to life in Greenwich. For the moment it actually seems to be increasing sales and is certainly increasing short-term rentals. Our inventory is down as sellers wait to see what will happen. Listing when there are fewer sellers and more buyers is usually a good idea.
If you would like to help out a family stuck in New York who is looking for short term rental, and the house is move in ready, you can probably get a tenant in days not months.
Only time will tell what will happen and for the next few weeks the coronavirus will only get worse. However, the result maybe that Greenwich and other towns will be seen as safer havens and places that homeowners want a second-family home they can retreat to when things are not going well. We lost many of weekenders after the recession, this situation may bring them back and result in a longer lasting perception change about the Greenwich market.