Is Old Greenwich the Best Place to Live?

November Market Continues to Be Busy

Our market continues to be hot. As of the middle of November we have 729 sales compared to 490 sales at the end of November last year. Our market should continue strong through the end of the year with 174 contracts waiting to close compared to only 65 last year. So far in the first half of November we’ve had 51 sales compared to 40 sales for the entire month of November 2019. Our inventory is also down with only 415 listings compared to 520 listings at the end of November last year.

When you look at our weekly transaction index we were up nicely the last two weeks. Two factors seem to be influencing this increase; one is the election is over and that uncertainty has been removed and two is unfortunately we are seeing a revival in Covid cases. The result is people are more comfortable buying with less political uncertainty, sending the stock market up, and the impetus to look for literally greener pastures is actually getting stronger.

                Why do people always want to live in Old Greenwich

As usual, Old Greenwich is a neighborhood that has done well this year, just as it did last year; a year when Riverside and Cos did not do well. What is it about Old Greenwich that people find so attractive over the decades. I grew up in Old Greenwich at the corner of Lockwood and Tomac and it has always been a little bit Norman Rockwell, a little international and usually just fun.

Old Greenwich & Riverside Zones

Every August when I was in junior high, I would take over an Old Greenwich paper route from one of the hardworking Haggerty boys and get to see lots of interesting parts of OG. (The Haggerty’s were smart. They went to camp in August while I rode my bike in 90 degree heat, hoping that I’d find Good Humor truck still parked on Shore Road.) From the grandmother who always had cookies for me on Friday, collection day, to the house with the empty liquor bottles in foyer where a well know rock band was spending to the summer, it was, and still is a great place to grow up.

                Where and What is Old Greenwich?

At the south end of Old Greenwich, you have Greenwich’s premier park, Greenwich Point. In the middle you have a village that Planning and Zoning and many town planners everywhere would like to emulate. Next you have, Binney Park, a generous gift to the town and then the Post Road, I-95 and Metro-North to get you a lot of places quickly.  Next you have Havemeyer Park (aka Have-a-baby Park still living up to it’s name and lastly Hillcrest Park where my debutante ball date lived, before she started going out with Michael Bloomberg.

Old Greenwich has 4 different zones going from the R-7 zone of 7,500 s.f. lot up to an RA-1 zone of 1 acre or 43,560. In the main though Old Greenwich is composed of an R-12 zone south of the Metro-North railroad tracks and an R-7 zone from there up to Palmer Hill. These two zones comprise 91% of the sales in Old Greenwich.

At the south end of Old Greenwich, where Lucas Point is there is a small R-20 zone that represents 4.5% of the sales in Old Greenwich. At the north end of Old Greenwich is Hillcrest Park where there is the RA-1 zone which is 4.1% of sales. Interestingly, the average sales price of the half-acre, R-20,  lot is about 50% higher than average price for the one-acre, RA-1 lot. This is because most of the R-20 sales in Lucas Point are direct waterfront properties on Long Island Sound and get a premium.

                                Inventory

For all the attention that Old Greenwich gets it does not have a lot of listings. It is even worse in 2020, we are down this year in inventory with only 36 listings in Old Greenwich.  Given its desirability the lowest priced listing at present is $749,9000, though we did have one sale at $608,000. Also, because Old Greenwich doesn’t’ have a large zone on the water, the highest priced sale so far this year is $6,195,000. Still the difference between the lowest house sale and the highest sales price is a factor of 10, so in some ways Old Greenwich is a microcosm of Greenwich itself.

As of 10/31/2020InventoryContractsLast Mo. SoldsLast Mo Solds+ Contracts YTD Solds YTD+ ContractsMos SupplyMos w/ ContractsLast Mo. Annlzd
< $600K000000 – – –
$600-$800K21012310.07.7 –
$800K-$1M03037100.00.0 –
$1-$1.5M281923310.90.72.0
$1.5-$2M853823283.53.32.7
$2-$3M933624273.83.83.0
$3-$4M634715184.03.81.5
$4-$5M4123676.76.62.0
$5-6.5M2202465.03.8 –
$6.5-$10M310101 –34.5 –
> $10M000000 – – –
          
TOTAL362713401041313.53.22.8
          

                Sales

In 2020, we have had 104 sales through the end of October and have another 27 contracts. The market continues hot with 13 sales in October, at a time where we’d normally be looking at only a handful of sales. Where you really see how hot this market is when you look at the months of supply. Most people consider less than 6 months of supply to be a seller’s market. How about 0.9 months of supply, that’s what we have from $1.0 – 1.5 million with only 2 listings and 23 sales and 8 contracts.

At the high end from $5 – 6.5 million we have 3 listings, no sales and 1 contract so months with contracts is almost 3 years of supply, but one more sale makes a big difference in this thin a market. For the market as a whole, we have 3.5 months of supply and this is what we mostly have from $1.5 million up to $4 million.

                Marketing

I have a listing at 343 Sound Beach Ave, an extensively renovated classic shore colonial, where we just lowered the price by $100,000 to $2,095,000 and we are getting regular showings. Of course, being vacant and ready for immediate occupancy helps as many of the buyers in the market are highly motivated.

This does illustrate another issue. You would think that in this market that listings would be flying off the shelf, and for many properties that is true. Of our 104 sales, 26 went to a non-contingent contract in less than a month and 35 sold for full list price or over list.

At the same time in one of the hottest markets and hottest neighborhoods, we had 22 listings expire unsold. And, it’s not just at the high-end. Half of the listings that expired were under $2.3 million, one even at $615,000. We still have value buyers, as we have had all post-recession. People don’t want to be seen as over-paying. In addition, now we have Covid buyers that just want out of the high-density. NYC and they are not wed to any one town.

                The Future

So what to do in Old Greenwich in the Covid era? For most Realtors the answer is to list your house now. Then again, there are a lot of Realtors who say that anytime, but this time we really mean it. The weekly index of transactions is high, inventory is low particularly in Old Greenwich inventory. If the vaccines roll out faster, our multi-trillion dollar deficits squeeze out private borrowers and drive interest rate higher, then the market could cool quickly, better to take advantage of a hot reality, when facing the reality of cool future.

Having been a lawyer for 19 years, I’ll also argue the other side. The coronavirus has caused a paradigm shift and the glow is off the Park Avenue and Brooklyn roses. For at least the next couple of years, people’s psyche are going to drive them to buy more land. With 8.3 million people and only 62,000 in Greenwich we can expect to see demand stay high till 2023 and beyond. In addition, we have to run out of people that have been waiting for years to move. Once these mainly downsizers move, inventory will stay low and demand high and we will start seeing some real price increases. So some are waiting for the price increases to come.

Which is it? Probably a little of both, so stay tuned …

October 2020 Greenwich Neighborhood Report – Mid-Country the New Sales Sweet Spot

              Mid November Update

First some good news, Greenwich we passed 700 sales for the year to date early this week and finished with 719 sales YTD as of Friday. This is the first time we have done that since 2013 when we had 724 sales for the entire year. Prior to that, you have to go back to 2007 to see sales exceed 700 houses for the year. But the news gets even better, in those two earlier years, we didn’t have 174 contracts waiting to close. With most of the election uncertainty behind us, closings should pick up in November and are likely to exceed October 2020’s 92 sales. Our 10-year average of single-family home sales in November house sales is 39 sales and as of 11/13/20 we already have 41 sales.

              October 2020 Neighborhood Report

As of the end of October, we are up 109% on contracts over last year, while our sales are up “only” 49%, since we had to make up for a slow first half. In that slow first half, we were down 11% in sales compared to our ten-year average. Year over year, we were up 17% compared to our anemic 2019. The second half surge in sales and contract is however, not a townwide phenomenon

Total Sales, Contracts & Inventory by Neighborhood

(10/30/20 GMLS)

SectionInventorySoldsContracts
Banksville232
Byram12132
Cos Cob376320
Glenville18278
North Mianus474
North Parkway857824
Old Greenwich3410424
Pemberwick572
Riverside4910822
South of Post Rd706225
South Parkway14419849
Grand Total460671182

              Mid-Country Greenwich – The New Sweet Spot for Sales

Our new sweet spot in town is mid-country so let’s take a detailed look at this area, that is bigger than backcountry, but doesn’t get nearly the attention that backcountry does. For the GMLS there is no backcountry. It’s kind of like the rules of golf not mentioning the rough that you find on every golf course. The GMLS has a huge section of the town called South of the Parkway. This area goes all the way from the southside of the Merritt Parkway to the north side of the Post Road. It starts in the west at the New York border and continues all the way to the Stamford border in the east except where it bumps up against Cos Cob.

We also call much of this area mid-country, but the southern end of this area isn’t. Students in the South of the Parkway section go to four different elementary schools; Parkway, North Street, Glenville and Julian Curtis. The houses South of the Parkway are located in 5 different P&Z zones. The smallest is the R-7 zone with 7,500 s.f. minimum lot size lots located on lower Lake Avenue near the hospital. The largest zone is the RA-2 zone with 87,120 s.f. lots south of the Merritt Parkway.

The highest sales price South of the Parkway in 2020 is 13,412 s.f. in Deer Park that sold for $10,750,000. The square footage of this house is almost double the lot size in the R-7 zone. The least expensive house South of the Parkway was actually in the R-12 zone and sold for $850,000 near Central Middle School. To draw overall statistical conclusions from such a diverse set of prices and lot size is problematic, but it’s what we have.

When you look at the numbers for South of the Parkway, they are almost twice any other section of the town. Part of that is that as mentioned, it is by far the largest section of Greenwich, but it’s also has had the biggest gains in sales this year. Last year, South of the Parkway had 115 sales out of 449 sales or 25.6% of all sales. This year South of the Parkway, we have had 198 sales out of 671 sales or 29.5%. So, more sales and a bigger share of these increased sales as people are buying up the 1- and 2-acre zones in this section. Match the increase in sales with a drop of 31% in listings and you better bring you A-game and a good Realtor if you want the house.

Change in Inventory Sales and Contracts 10/2020 vs 10/2019

SectionInventorySoldsContracts
Banksville102
Byram310
Cos Cob-172313
Glenville-1190
North Mianus2-64
North Parkway-113213
Old Greenwich-19247
Pemberwick0-30
Riverside-164012
South of Post Rd71817
South Parkway-648327
Grand Total-12722295

              Riverside, Cos Cob & Backcountry

The three other areas where we saw big jumps in the number of sales were Riverside, Cos Cob and Backcountry. For Riverside and Cos Cob, 2019 was not a good year, so when they came back this year, they got a bigger increase year over year. Backcountry actually started its recovery, pre-Covid as by 2019 prices there had gotten much cheaper than in Old Greenwich. In the Covid era, people want land and there are still good deals to be had in backcountry which resulted in 32 more sales this year. The question is for how much longer.

Backcountry sales are up 70% over last year and contracts are up 118%, while inventory is down 11%, which is less than other sections. This small drop in inventory probably indicates that there were a bunch of people in backcountry who had been waiting for better times to list. (I’ve been talking to several about listing now or later.)

Cos Cob has seen major percentage increases as they have recovered from a poor 2019. Last year at this time, there were only 7 contracts on Cos Cob listings, this year we have 20 contracts for a 186% increase. Sales after a slow start for the year, are up 58%, better than townwide average of 49%.

Chart, waterfall chart

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              Old Greenwich

Old Greenwich is not in recovery.  It has been on a multi-year run without the ups and downs we have seen in other areas of town. In my old neighborhood, south of the village that used to be junior executives and their families, inventory is down 38% to only 34 listings. Sales are up 30% and contracts are up 41%, but both these increases are below our townwide average.  It’s nice to start from a high base, but the percentage increases are not as great.

              South of the Post Road

South of the Post Road has done even better with a 213% increase going from 8 contracts last year to 25 contracts this year. On the other side of the ledger, sales in North Mianus are down 50% going from 13 sales last year to only 7 sales this year. A lot of this is Brownian motion as it works out to less than 1 sale a month.

              Summary

What we are not seeing is a significant increase in sales prices in any neighborhood. This is because the above analysis is not for price increases. This year Greenwich is competing not only against Darien and New Canaan, but also Wilton and Bedford, and Ridgefield and Weston. Covid buyers who can’t find what they want in Greenwich are moving up the line. Most of them haven’t been in their office for months and if you are going into your office once a week, what’s an extra 30 minutes in your commute a few times a month.

Coming up a new president, new Covid vaccines, vaccine deniers, another multi-trillion dollar stimulus package and stuff no one has predicted.  Stay tuned….

Greenwich Home Sales Fall to New Highs in Oct. 2020

Are You the Doughnut or the Hole?

Greenwich single family home sales dropped 21% in October compared to September 2020. Some people will see this as the beginning of a return to our typical winter doldrums for sales. But, that’s not very likely to happen, since we have 182 contracts waiting to close. What you want to focus on in October sales is the doughnut and not the hole.

                October Sales are the Doughnut with Extra Sprinkles

Our 92 sales in October is spectacular. Our ten-year average for October is 41 sales, we more than doubled that number this year.  Our 92 October sales is actually higher than our average for our best sales month, June, which only averages 86 sales. So good sales, but a significant drop over last month, but very good contracts.

A significant part of the drop in sales in October compared to September is likely the uncertainty of the election. Whenever there is a rise in uncertainty, we see a slowing in sales. I’ve always found this curious, as closing dates are set weeks and months before the event, but as the event draws nearer, closing dates get pushed beyond the uncertainty created by the event.

                Contracts Continue to be Way Up

With 182 contracts we actually have a good shot at November being over 100 single family home sales, which would be a rebound from October. The one thing that the drop in October likely means is that we won’t make 900 sale this year, but over 800 sales is likely as we have 853 sales and contracts total YTD. This compares to 526 sale for all of 2019.

Now 2019 was our worst year since the crash of 2009. Our 671 sales in 10 months is greater than our 10-year average of 621 sales per year, and we have two months to go. Our market has been like those movies, Chariots of Fire, The Black Stallion, Herbie the Love Bug, et al where the competitor stumbles and then comes roaring back. February to April were all below average months so to have already exceeded our 10-year average shows just how strong the second half sales surge has been.

                Months of Supply are Way Down

When it comes to parsing the numbers this month it’s actually kind of boring. Our inventory is down 127 house or 22% from last year in every price category, but one. The one exception is over $10 million where we are up 6 houses from 29 to 35 listings. At the same time, we are up 100% in sales at the ultra-high end from 6 sales last year to 12 sales this year and half of those sales are over $16 million. This brings up our average for the year to $2.67 million up 12.5% from last year. Our median sales price is also up 12.8% to $2.11 million.

October saw our sales price per square foot increase by 4.7% compared to all of 2019. This is a much better indicator as to whether house prices are rising as it is less influenced by whether sales are in up in any particular price category. At the same time, our sales price to assessment ratio is only up 1.7% for the first 10 months of the year. When you look at just October sales, those sales prices to assessment ratios are up 4.1% over last year. These are real price increases in Greenwich house prices regardless of how you look at it. You just need to pick your number depending on whether you are talking to someone from Darien or the Tax Assessor.

What is really remarkable across the board is our drop in months of supply, which is the amount of time it would take to sell our present inventory based on the rate of sales so far.  With inventory down 22% and sales up 49%, months of supply for the whole market is down from 13.1  MoS to 6.9 MoS. This a big drop and means for most price categories we are clearly in a seller’s market.

Over $10 million, we are down from 48.3 months of supply to 29.2 MoS, a drop of 19.1 MoS. The next biggest price category MoS drop is somewhat surprising. From $3 – 4 million, we are down from 23.3 MoS last year to 7.0 months of supply this year, a drop of 16.3 MoS. (If anyone is looking in that price range, I have a good backcountry opportunity for you.)

When you look at the bar chart of inventory, sales, last months sales and contracts a few things jump out at you. Our $2 – 4 million market is doing particularly well for sales. It’s also where we have the most inventory, so it is not supplied constrained like our under $1 million market. The hot area for contracts is $1 million to $4 million and we saw the same thing for sales last month.

                                Should I Stay or Should I Re-Lo?

In every other post-recession year, when a client would ask me if they should list their house in November, it was a nuanced investigation to look at inventory, sales, style of house, age and condition. I don’t like to put on houses when inventory is high and demand is low, to have them sit accumulating days on market. Often my recommendation was to wait until late February of the following year. In 2020 this analysis is not necessary. The analysis is not what month and year you should put your house on, but how soon you can put it on this year. The buyers are there, and many are looking for fresh inventory. Speed is probably to your advantage unless you want to roll the dice for the potential of a little more appreciation versus the potential for a bigger depreciation.

For buyers you should be ready to move quickly when you find the right house. If you don’t there is a good chance that someone else will.

And…. then there is the whole question of what this election will mean for Greenwich real estate.

How Not to Buy a House in Greenwich, CT

               We have 842 sales and contracts so far, but every week buyers, some experienced, most not, crash and burn in their efforts to buy a house, so lets look at how these folks fail to get the house they want.

Low Balling the Opening Bid – Some people are sure that if they make enough low ball bids that eventually somebody will be desperate enough to actually accept their bid. The problem with low ball bidding is that in Greenwich, the seller, the majority of the time, won’t even respond to the bid. This leaves the buyer with two bad choices; he can bid against himself and raise his bid or walk away from a house that had he opened with a more reasonable bid he had a good chance of buying.

The average list price to sales price ratio and Greenwich is around 93% and has stayed fairly constant. Making a bid that is only 75% of list price is a waste of time. The one exception is high-end and particularly, the ultra-high end. In those rarefied airs the 93% ratio of sales price to original list price gets much lower.

Focusing on Foreclosures – Foreclosures are another popular way not to buy a house in Greenwich. Some people have to have the best bargain (read lowest price possible) and see a foreclosure as being the answer. The problem in Greenwich is that there are very few foreclosures that are actually foreclosed. Connecticut is one of the most homeowner-friendly states when it comes to foreclosing on a property. The process often takes two years or more. In those two plus years you are likely to multiple foreclosure auction notices appear in the newspaper. In Greenwich, like most of the rest of Greenwich, they are usually canceled and most of the properties never actually go to foreclosure.

This year it was even tougher for the foreclosure seeker as the courts were closed for months and foreclosure proceedings were stayed due to Covid.

Even if an auction actually happens, the buyer needs to realize that he or she is bidding against professionals who know all the ins and outs. Now if you are looking to meet an interesting group of people you will find them at a foreclosures. If you are really looking to buy an investment property via foreclosure, you’re going to have a lot more success where foreclosures happen more often, in the larger cities of Connecticut.

Lower-Priced, Brand New Houses – Another unsuccessful strategy is to focus only on brand-new houses. Of our 663 single-family home sales this year only 12 were built this year. Of those 12 new spec houses, only one was under $2 million. It’s very unlikely you’re going to find a new house for under $2M in Greenwich.  If you do want new for less than $2M, then consider buying a teardown and building.

Taking a Vacation – Another surprising way that buyers end up not buying a house in Greenwich is by taking a vacation in the middle of negotiation. This is happening less this year, but people still want to get away.

You would think if someone was going to be spending a lot of money on a house and they’re in serious negotiations that that’s not the ideal time to go camping. Almost every year however I get involved in a situation where we end up waiting for a client to get to somewhere in the wilderness where they can get a cell signal. I’ve emailed documents to cruise ships, remote tropical islands, and countries you have to google to find where they are.

Being out of town isn’t the deal killer that it was even five years ago but if you’re in a competitive bidding situation being unavailable during an entire afternoon visiting your recluse uncle or golfing at a club that doesn’t allow cell phones or expecting uninterrupted sleep  in a time zone 12 hours ahead of Greenwich means there’s a good chance that you’ll lose the deal.

No Money Down – There is a book out there about how to buy real estate with no money down and even to get the bank or the homeowner to pay for the improvements. You don’t see buyer trying this very often in Greenwich and I have never seen it work. The one time you can do this is if you are veteran who qualifies for the VA’s 100% mortgage.

In Your Face Negotiating – We get buyers from all over the world and all types of businesses. Some are used to a rough-and-tumble style, usually fails in Greenwich. Unless the seller is also part of that world the odds are that the seller will just take a pass on negotiating. (I did once see two NYC building contractors screaming at each other on a conference call even to the point of threatening to have each other’s building permits for NYC projects cancelled. They ultimately decided not to do the deal but did go out to dinner together with their wives, all of whom were friends.)

Insulting the Seller – Nine out of 10 times insulting the seller is the kiss of death. I have seen sellers take substantially less just so they can keep that “jerk” from getting the house.  And, it doesn’t have to be a direct insult, showing up late at meetings, not doing what you say you are going to do, inappropriate jokes, or even mispronouncing the owner’s name can hurt or kill a deal.

In Zillow We Trust – Another way that a buyer can kill a deal before it’s even started is by trusting some of the estimates that the big real estate websites such as Zillow generate. Greenwich has very few tract houses and a variety of housing styles, topography, ages, and floorplans. In addition, our square footage may or may not include the basement or attic space so the “size” of the house can vary a great deal even if the houses have the same floorplan. Trying to estimate price in Greenwich via a computer model leads to some really bad price estimates.

The problem is that some buyers believe these estimates and let them control their house hunting and bidding. Some buyers won’t go see a house where the Zestimate says the house is “over-priced” even though it is in their price range. Sometimes they don’t even tell their agent that’s why they rejected a house. Zestimates can also screw up bidding, as buyers refuse to bid over the Zestimate. It’s no way to buy a house.

How to Buy a House in Greenwich – In reality all of these things come down to doing your own research, being prepared, focusing on areas with good prospects, and acting respectfully to the seller. Alternatively, you can have a good agent who will tell you what is likely to work and will definitely not work. Also, there are times to break these rules. Sometimes sellers just won’t budge and stepping back from negotiations can get them to step forward. Just make sure you have cell service where you are going when you decide to break the rules.