How the Coronavirus is Reshaping the Real Estate Market

Everything Old is New Again in Greenwich

How is the Covid virus reshaping the Greenwich real estate market? The short answer is in many ways. We are seeing significant rises in sales of houses on larger lots reversing the trend that we saw post-Great Recession. It looks like everything old is new again and larger houses with amenities on larger lots are back in fashion. Also, rentals may be returning to something more like the early 20th Century.

                Rentals & Condos

For condos, apartment style units with shared hallways and elevators whether for sale or rent are down while townhouse style condos sales and house rentals are up. I just had a condo get an accepted offer in five days.

Where we see the most dramatic change in Greenwich real estate is in high-end rentals. Last year at this time we had leased out 25 rentals over $15,000, this year we have 92 rentals or an increase of 268%. If you go even higher, last year we had 11 rentals for over $25,000/mo, this year we have 34 rentals.

  2020 Rentals Over $15,000/mo – 1/1 – 6/17/20

At the very top of the rental market, we had a summer rental for $38,000/mo last year. This year we had a summer rental go for $80,000/mo in 10 days and it rented for $5,000 over list price. We had 24 rentals this year for over $30,000/mo and all but 6 were rented in less than 30 days. Of those same 24 high-end rentals all but 4 went for list price or better. One house was put on for $32,000 per month on January 1st this year. It sat around for 73 days until the virus hit when all of a sudden it got multiple offers and rented for $50,000/mo, or 156% of the original list price.

 2019 Rentals Over $15,000/mo – 1/1 – 6/17/19

When you map the rentals, you can see that these high-end rentals are all over town. You have them in backcountry, the old golden triangle in mid-country around Clapboard Ridge, the post-recession golden triangle around lower Lake Ave and North Maple and what really stands out is the demand for waterfront rentals.

Now some people would have argued that the owners of these high-end home rentals being fairly well-to-do themselves would be unlikely to rent out their homes to strangers, but for at least 67 additional families in Greenwich the never-renters would be wrong. For these owners, the prospect of taking a long summer vacation, renting out their house, and coming back to $45,000 to $150,000 of additional money, is too enticing to pass up.

Summering in Greenwich?

It will be interesting to see what happens in 2021. In the early 20th Century Greenwich was a place where a lot of New Yorkers would summer. There used to be a trolley line down Sound Beach Ave in a village that was then called Sound Beach. They would bring people from the train out to a group inns in and around the intersection of Sound Beach Avenue and Shore Road in what is now Old Greenwich.

In the 60’s I used to deliver newspapers to the last of those two inns. Chris Franco did a wonderful job of renovating one of these inns into several beautiful condos through the use of a historic overlay. Another former inn is on the market just around the corner at 5 Holman Lane for $1,890,000. You can still see the reception area and the wide porches where rockers use to be set up for the guests. It will make a nice home someone.

House Sales

Sales of single family homes are also seeing the Covid effect. Last year as of 6/13 we had sold 41 houses on 2 acres or more, this year we have sold 53 houses or an increase of 29% over last year for larger lots. These large lot sales accelerated in May. We are also seeing more buyers coming into the market each week. Below is my Greenwich transaction index chart, which continues to go up in a jagged pattern, but the trend is clear. This sort of increase in a pandemic shows a lot of motivation by buyers.

Fortunately, for us, the number of infections and hospital admittances is going down, so I expect to see even more buyers going forward. The falling number of Covid cases also means that we are finally seeing more inventory come on the market as people are more willing to have their houses shown. We are up to 570 house listings, but last year at the end of June we had 729 single family home listings. We are still down quite a bit, but at least we are seeing net additions coming on faster than the sales are going off the market in our delayed 2020 “spring” market.

As to those going off the market, larger lots in backcountry are doing better this year than last year. The must have amenity for many is a nice, inground pool. (Check out my new seven bedroom listing at 1076 Lake Avenue that has everything including the heated pool.) The two-acre zone in mid-country, where buyers get a fair amount of space and are still relatively close to town is also very popular with folks fleeing the high-density of New York City. (I’ll have a listing in that area to talk about next week.)

While I’m continuing to get inquiries from Greenwich people looking to list their homes, I’m also getting inquiries from Greenwich residents that are looking to buy within Greenwich. Many our local residents that had been waiting to move up have decided that now is the time to do so when prices are still at pre-pandemic levels. This window won’t last much longer as lower inventory and higher demand from both Gothamites and Greenwich residents are only pointing in one direction.

The rest of this month promises to be a busy time in Greenwich real estate.

CONDOS & CO-OPS: A KEY PART OF THE 2020 GREENWICH REAL ESTATE MARKET

Condos have been quietly playing a bigger and bigger role in Greenwich. In 2012, condos were only 22% of our market, by 2017 they had soared to over 36% of our residential market. Since 2012, they have continued each year to be over 30% of sales compared to single family home sales. Condos this year have done about the same as last year. However, the mix of what is selling has changed. In this Covid era, we are seeing more sales of townhouses and fewer sales of apartment style condominiums.

As of 5/31/2020 Inventory Contracts Last Mo. Solds Last Mo Solds+ Contracts  YTD Solds  YTD+ Contracts Mos Supply Mos w/ Contracts Last Mo. Annlzd
< $600K 31 7 6 13 29 36 4.3 4.7 5.2
$600-$800K 25 8 4 12 12 20 8.3 6.9 6.3
$800K-$1M 14 1 1 2 7 8 8.0 9.6 14.0
$1-$1.5M 17 6 0 6 6 12 11.3 7.8
$1.5-$2M 14 0 0 0 1 1 56.0 77.0
$2-$3M 16 3 0 3 5 8 12.8 11.0
$3-$4M 10 7 0 7 2 9 20.0 6.1
$4-$5M 2 0 0 0 0 0
 
TOTAL 129 32 11 43 62 94 8.3 7.5 11.7

So far this year we have 62 sales of condominiums and co-ops. (All condo references and numbers in this report include co-ops as they trade almost like condos.) As is true of most years, these sales are concentrated under $600,000. For many people condominiums are an affordable way to get into the Greenwich housing market and for downsizers are a way to stay in the Greenwich that they love. The other thing we’ve seen in the last few years is the growth in new higher end condominiums, those priced above $2,000,000.

As of the end of May, we had 129 condominiums on the market. Our median list price was $985,000 while our medium sales price was $612,500. We had listings from $75,000 all the way up to $5 million. (OK the $75,000 listing was actually a boat slip but it’s legally a condo, though we don’t have the housing boats in Greenwich as you see in places like Sausalito, California. Our lowest real condo listing is priced at $199,750.) On the sales side our lowest sales price so far this year is $248,000 while our highest sale so far is $3.2 million.

Like houses we have a certain seasonality to condo purchases. Over the last 10 years, condo sales tend to peak in June, however they do not drop off as much in the fourth quarter. The first quarter also does  have rising condo sales, but it is not as steep as we see for single family homes. The result is that condo sales are spread throughout the year. Also, given the smaller number of sales the graph tends to jump around month to month much more in condo sales.

Condos as you would expect sale for a little less per square foot than houses , but not that much last. Our house dollar per square foot is around $500 per square foot whereas the median price for condos is $450 per square foot. This is even more remarkable when you consider that the price per square foot for a single-family home obviously includes the land cost too. The reason that we’re seeing such high prices is that condos are often sit on some of our most valuable land. They are located usually within a half a mile of the Post Rd where land prices or higher and are often in downtown areas where prices are even higher.

You see a concentration of condos as you would expect in downtown Greenwich, but we also have a fair number in Pemberwick and in Old Greenwich. What many people may miss is that Chickahominy just west of downtown Greenwich has a bunch of relatively new condos at the end of streets off of Hamilton Ave.

8 View St. #5, listed 6/11/20, $1,199,000

I’m listing one of these condos this week at 8 View Street , the street across from the Two Door restaurant and Bella Cucina. This is a 3300 square foot unit with a two-car garage and even its own  small yard which is unusual for a condominium. It has a large balcony with winter water views of Long Island Sound. This 3 bedroom, 2 1/2 bath condo is listed for $1,199,0000.

That condo is on the larger size for Greenwich. Condo sizes vary from studios at 585 square feet to large town houses at close to 5000 square feet. Our median condo size is around 1,500 s.f.  On average, our condos stay on the market for 141 days and we have about a 7.5 months of supply of condos. The lower the price, the lower the months of supply we have.

In 2011 we only sold 128 condos in Greenwich however by 2015 the market had recovered strongly, and we sold 210 condominiums. Since then we’ve been roughly around 200 condominium sales a year. Last year, in 2019, was a slower year for both houses and condominiums, as we only had 159 condo sales and only 526 house sales. Last year was the year that the Tax Cut and Job Act with its limitation on mortgage and property tax deductibility really cut into the Greenwich real estate market.

This year the condo market, like houses, started off the year doing well. The last two months things have slowed down with the Covid virus. We are seeing good interest from buyers looking to get out of New York City, particularly in those condo units that don’t share common elements, such as elevators and hallways, with the other units. Townhouse style condos are very popular.

When you look at months of supply, we have a competitive market all the way up to $1.5 million. We have a big jump in months of supply from $1.5 to 2 million as we have a bunch of new condos coming on in that price range. At the very high end, over $2 million for condos, we have a bunch of new condos whose prices are challenging previous highs particularly when you look at the price per square foot. These units are going to contract, many are waiting for C.O’s before closing.

Overall, our condo market is an important element in the diversity of Greenwich. Many of the smaller towns in Fairfield County have only a very small percentage of condominiums. One of the great things about having the number of condos that we have is that people who want to downsize to a more maintenance-free lifestyle don’t have to leave town to do so. We also see many of these downsizers become snowbirds and spend winters at houses in Florida and other places and come back for summers in Greenwich.

As we recover from the Covid virus, condo sales should rebound. We have 32 contracts waiting to close or more than half of the sales we have seen so far this year. We are also seeing a fair number of people from New York looking at condos in Greenwich. For many of these New Yorkers, the question may be a condo in Greenwich or a small house in Stamford or Norwalk.

Families tend to go for the smaller houses, though you actually see a surprising number of children at certain condo complexes, whose parents prefer the Greenwich schools. Couples tend to like the condos over houses and also like being closer to their jobs in New York City. As in the past few years, condo sales will likely be around a third of our market this year.

Condos are one of the things that make Greenwich Greenwich and maintain its vitality and they are an important part of our real estate market.

GREENWICH REAL ESTATE MARKET STAYS BUSY IN MAY 2020

Greenwich Owners Buying in Greenwich Adds to Covid Buyers

May was a good month for sales in a pandemic. All the late reporting sales are in, and we had 54 sales in May compared with 56 sales for May 2019. The good news is that we have exactly the same 108 contracts this year as last year at this time.

As of 5/30/2020 Inventory Contracts Last Mo. Solds Last Mo Solds+ Contracts  YTD Solds  YTD+ Contracts Mos Supply Mos w/ Contracts Last Mo. Annlzd
< $600K 5 2 2 4 6 8 4.2 4.1 2.5
$600-$800K 18 5 3 8 14 19 6.4 6.2 6.0
$800K-$1M 28 6 2 8 13 19 10.8 9.6 14.0
$1-$1.5M 57 14 14 28 47 61 6.1 6.1 4.1
$1.5-$2M 73 23 8 31 28 51 13.0 9.3 9.1
$2-$3M 122 26 15 41 47 73 13.0 10.9 8.1
$3-$4M 95 19 7 26 22 41 21.6 15.1 13.6
$4-$5M 46 4 1 5 7 11 32.9 27.2 46.0
$5-6.5M 45 4 1 5 6 10 37.5 29.3 45.0
$6.5-$10M 48 3 0 3 0 3 104.0
> $10M 32 2 1 3 1 3 160.0 69.3 32.0
 
TOTAL 569 108 54 162 191 299 14.9 12.4 10.5

These contracts show that the market from $1.5 – 4 million is doing particularly well. What had been the hot market, and still is when you look at how little inventory we have, is the $1 – 1.5 million market. In that market we only have 57 listings down 17 listing from last year. At the same we have sold or have under contract 61 houses in only 5 months. This equates to 6.1 months of supply. Generally, under 6 months’ supply is considered a seller’s market. Also, generally our lowest months of supply are at our lowest price range, but right now that 6.1 months of supply from $1 – 1.5 million is actually is even less than the 6.4 months of supply that we have from $600,000 – $800,000.

May 2020 vs. May 2019

 

What’s hot

Overall, we have had 186 sales of single family homes this year up 21 sales from 2019 when we had only 165 sales. Our sales are up, or about the same as last year, all the way up to $6.5 million. As noted above sales from $1 – 1.5 million have done particularly well with an increase of 12 sales or a gain of 36% over last year. The other two price ranges that have shown nice gains in sales is the $600 – 800K range where sales are up 56% from 8 sales to 13 sales and also the $5 – 6.5 million price range where sales are up 100% from 3 sales YTD in May 2019 to 6 sales this year.

                What’s not

Anytime you see a big gain in one particular price range you should take a look at the price ranges just above and just below. If all of them are up, you have a strong price trend and you can be reasonably sure that you are seeing a real change in the market year over year. Unfortunately, this is not the case for the $5 – 6.5 million price range. Sales from $4 – 5 million are down 22% from last year from 8 sales to 6 sales.

If you then go the other way and go up in price range, sales from $6.5 to $10 million dollars are down 100% which sounds a lot more dramatic than it is. Down 100% means no sales this year compared to 4 sales last year.  We do have 3 contracts waiting to close from $6.5 to 10 million. (BTW: Another issue when numbers are small is just what price ranges are picked and the exact beginning and end of the “month”. I use $6.5 million as a dividing line, because roughly half of our listings between $5 and 10 million are below $6.5 million (45 listings) and half are above $6.5 million (48 listings)).

So, is the high-end weak or is it just market segmentation? Unfortunately, the market above $6.5 million is weak as we only have 1 sale so far this year above $6.5 million. The good news is that it is a $17 million sale. We also have a total of 6 contracts above $6.5 million while inventory is down 10% above $6.5 million, Even when you throw in lower inventory and add contracts you are looking at over 8 years of supply from $6.5 million to $10 million and almost 7 year of supply over $10 million. My law of small number does say that a couple of sales and additional contracts will mean a drop of years in the months of supply, but we will need more than a handful of sales for this market segment to start looking healthy.

               

             Why is the high-end weak?

The question is why is the high-end is looking weak when we have good activity in the rest of the market. The short answer is no one can say for sure, but I was talking with a couple of other brokers and all three of us kind of felt the same thing. At the high-end people already have a couple of houses and are not seeing the same pressure to “get out of Dodge” as the New York Times called it. The potential high-end buyers already have a nice place outside of Dodge.

The thought among these agents that high-end owners are more able to take a wait and see approach. While the stock market says it’s unlikely to happen, there is some concern about a major depression next year, so low-yield government bonds look better than real estate so high-end buyers are keeping their powder dry.

                Are Greenwich buyers getting out ahead of the surge?

Overall sales are up 12.7% for the year with most of that increase happening pre-Covid. Post Covid sales are bumpy week by week. The common wisdom is that most of the buyers are families from NYC and we are seeing a lot of that. (I had three buyers referred to me this weekend.) What is interesting though is that I had 5 transaction in May, two sales, two contracts and a rental. In the case of the buyers, all four of them were from Greenwich and all were up-sizers. A couple of other brokers said they were seeing the same thing with Greenwich buyers being a bigger factor in the market in mid-country and backcountry.

Many folks in Greenwich watch the real estate market very closely. Some of our smart, and hopefully prescient, local citizens see this as a window of opportunities for buyers. Mid-country and backcountry have seen declines the last couple of years, but there is a good chance that is turning around this year. For mid-country and backcountry, buyers are getting these houses at last year’s prices and making some good deals. For sellers that are worried about a second great depression, they are flexible on pricing and doing deals now rather than waiting. The result is good sales in a pandemic.

The Greenwich buyers that are out there know what they want and can move quickly when they find it. My listing at 7 Dempsey sold in 11 days from showing to closing on Friday, 5/29, breaking my personal best from the previous week of 12 days from showing to closing.

                How Covid is changing the housing market

We are seeing the trend of buyers looking for more land and social distancing continuing. The other trend that we are seeing are people wanting more on-site amenities. Pools are big, wine cellars are of interest and game rooms are also popular. This might even bring back interest in home theaters, often the least used room in a house.

                Condo sales up and down

On the condo side, sales look flat, but it’s because two types of condos are balancing each other out. Sales of townhouse style condos, without shared hallways, are up, while apartment style condos with elevators are down. Covid giveth and Covid taketh when it comes to real estate.

               The coming surge: More buyers and More inventory, hopefully

It looks like we will be getting our spring market in June and given the large number of folks from NYC looking the market may continue into what is a traditionally a slow August. If many traditional vacation sites are shut down or quarantining, we may see more stay-cations and more buyers house hunting in what would be a slow month. If you are thinking of selling please call me or another agent, we still need more listings, since we are down 23% from last year.