Greenwich had a much better 1st quarter for home sales this year than we had in the 1st quarter of last year.
Sales & Contracts Up
|As of 3/31/2020||Inventory||Contracts||Last Mo. Solds||Last Mo Solds+ Contracts||YTD Solds||YTD+ Contracts||Mos Supply||Mos w/ Contracts||Last Mo. Annlzd|
Our sales were up 36.5% in the 1st quarter from 74 sales last year to 101 sales this year. The coronavirus caused a slight dip in transaction in the third week of March, but transactions came back last week. For the month, we had 33 sales up from 27 sales in March 2019. This an increase of 22.2% despite the coronavirus and contracts are also up. We ended the quarter with 94 contracts waiting to close compared to 67 contracts at the end the first quarter in 2019 for a Y-o-Y increase of 40.3%.
One area that clearly has been affected by the coronavirus is inventory. Last year at the end of the quarter we had a 608 single family homes in inventory and this year we only had 508 homes available as of the beginning of April. Many homeowners are keeping their houses off the market. Many owners just don’t want people in their houses right now. Also, without public or realtor open houses traffic is down, but the buyers that are out there are serious buyers.
Our inventory is down by 100 listings and that is pretty much across the board all the way from $800,000 up to $10 million inventory is down as fear has no price range. On the sales side, our sales are up by 27 houses for the quarter and that is also nearly across the board. Sales are up from $600,000 all the way up to $6.5 million. Above $6.5 million we did not see a sale so far this year compared to 3 sales last year. We do have 4 contracts at the high-end and this compares to only 3 contracts last year.
High-End Sales Shifted to 4th Quarter
For the glass half-empty types, this shortage of high-end sales in the first quarter is seen as a sign of a weak market, and there a little truth in that. What it is more indicative of is the way Wall Street awards bonuses and the timing of purchase. Before the recession, Wall Street firms and Greenwich hedge funds used to give out large cash bonuses early in the year. The result was a spike in high-end sales in February and March giving Greenwich a nice glow for the rest of the of year.
Now bonuses are given out later in the year and often in restricted stock that vests over several years. The post-recession result is that the peak for high-end sales has shifted to the September to November period. I wouldn’t start worrying about a “weak” high-end market in the first quarter, when it’s just as likely a typical post-recession temporal shift.
Showing Houses Carefully
Realtors that are willing to show houses are taking precautions with everyone wearing gloves. Some agents will make the house ready for showing and stay outside while the buyers and their agent go through the house. Social distancing is very much the rule.
Rentals Up, Particularly Short Term Rentals
We are also seeing an explosion of rentals, which are up 44% over last year. Rentals went from 68 in the first quarter last year to 98 rentals this year. We normally only have a handful of short-term rentals, but with the coronavirus short-term rentals are way up, particularly at the high-end. Snowbirds are staying in Florida and people with second homes are heading out to those places. A bunch of these folks have made their houses available for folks that want to get out of NYC and it’s not just in Greenwich. This week, I’m putting on a 12,900 s.f. house in Westport for a 2 month rental at $25,000 per month. We already have two showings scheduled, before we can even get it listed.
Comparing 2020 to a “Normal” 2018
If you’ve read this far you might think things are pretty rosy in Greenwich real estate and in many ways they are. The issue is the year over year comparisons. Last year was not a good year for Greenwich real estate with sales down 11.3% in 2019 compared to 2018. In Greenwich, unlike in the Westchester County, our sales drop due to the $10,000 cap on SALT taxes was delayed by a year. Westchester cratered in 2018 as our sales went up 4% that year. This unusual 2018 sales increase was partially due to the BET freezing tax rates in 2018 at 2017 levels. By 2018, the impact of the Tax Cut and Jobs Act income and income and sale tax deduction limitation caught up with us.
If you compare first quarter of 2018, when our sales went up, to the first quarter of 2020 you see the same sales 101 in the first quarter of 2020 compared to 102 in the first quarter of 2018. March sales were about the same with 33 sales in 2020 and 35 sales in the first quarter of 2018. As you might expect inventory was higher in 2018, a time when most people outside of Greenwich Hospital had never heard of a coronavirus.
Bottomline, the coronavirus effect has essentially balanced out sales to a normal year. Fewer people are looking, but a larger percentage are buying. With inventory down and sales up our months of supply is also down from $600,000 to $6.5 million and the same when you add in contracts. While not a tight market it is a competitive market.
May You Live in Interesting Times
What will happen going forward is anyone’s guess. No one alive today has ever experienced this type of global pandemic and we don’t have medieval real estate records for the Black Plague. The last time something like this happened in the U.S. we were in World War I. If the virus peaks in April and declines, we may well see an even better rebound in the second half of the year. If it hangs on, we could be up, we could be down. Stay tuned.