Price Increases Increase for Greenwich Real Estate

Greenwich had an amazing year last year in sales, and 2021 has been even better. Our median price went from $1,866,666 for all on 2019 to $2,080,000 at the end of 2020 or an increase of 11.4%. Our average price went from $2,376,978 in 2019 to $2,677,179 or an increase of 12.7%.

 In 2021, this price increase has continued to grow. Our median price for single family homes through the middle of February is $2,342,000 or an increase of 25.5% over 2019 and a very surprising 12.6% median price increase in a month and half. This is more of a price increase than we saw in all of 2020.  

So why is this happening and if we are getting 12.6% price increase in 48 days can we expect to get a 100.8% increase for the entire year? (OK that last part was just checking to see if you were actually looking at the numbers.) But why are we seeing 12.6% growth in our median price only 6 weeks of the new year. The reason is that our inventory is down and pretty much the lower you go in price the less we have to sell. For example, we still have yet to have a new listing under $600,000.

 As of February 17th, we have already sold 115 houses as compared to 68 houses in 2020 for the first two months. In the first 17 days of February 2021, we have had 49 sales compared to 30 sales for all of February 2020. We started the year at an all time low of 287 single family homes, when we should have been in the 400s for listings. We saw a slight climb of inventory in mid-January, but then sales started to outpace inventory additions and inventory shrank.

NumbersMo to Mo % Change
MonthSales Average of Sold Price/SqFtAverage of SP/ASMTAverage of SP/OLPSales % % SP/SF% SP/Assmt
Jan38$       5371.51387.1%
Feb30$       5031.49785.3%-21%-6%-1%
Mar35$       5101.44890.1%17%1%-3%
Apr34$       4621.42688.6%-3%-9%-2%
May54$       4961.34088.1%59%7%-6%
Jun77$       5651.41787.5%43%14%6%
Jul85$       5351.50094.1%10%-5%6%
Aug108$       6161.55593.6%27%15%4%
Sep118$       5611.60393.8%9%-9%3%
Oct100$       5771.55093.1%-15%3%-3%
Nov92$       5421.55892.0%-8%-6%1%
Dec91$       6061.65692.6%-1%12%6%
Jan66$       6061.60294.3%-27%0%-3%
Feb49$       5971.57495.1%-26%-1%-2%

As of now, our 280 house listings make for a new all time low. As of March 2nd, last year we had 513 listing, as the spring market started hit its stride last year. We won’t be getting close to 513 listings this year.

As a result, we are seeing upward pressure on prices. In December, January and February, we continued to see the sales price per square foot around $600/square foot. This is all the more remarkable when you realize that at the beginning of the pandemic, we actually slid to a low of $462/s.f. in April of 2020. This meant we saw a 31% increase in real prices from April to December.

If you take our 49 sales so far in February and annualize them (monthlyize them(?), There has to be a word for that) you come up with 80 sales for the present month if the second of February see sales at the same rate as the first two weeks. If we keep getting inventory, we just might make it, because demand has not slackened.

When you look at transactions, sales and contracts, we took a slight pause for two weeks at the beginning of the year and then transactions took off. Last week we had 22 sales and 36 new contracts making for 58 transactions compared to 13 transactions for the same week last year. No wonder inventory is going down.

Curiously, the roll out of vaccines may actually have slowed some people from listing their properties. Their thinking is why risk my family when in a month or two they are likely to be vaccinated. Another factor which hasn’t gotten much discussion, but is blatantly obvious, to anyone who has a window is that we are having a classic New England winter with frequent snowstorms. It’s not the most conducive to holding Realtor or public open houses.

The result is market that was tight in December, stayed tight in January and then got downright constrictive in February. The result is that our sales price to assessment is well over 1.42. Since our assessment ratio, the percentage of the assessor FMV that is actually taxed is 70%, anything about the reciprocal of 1.42 indicates that houses are selling above their October 1, 2015 assessed value. That date 10/1/15 is the last time that all of the property in Greenwich was reassessed.

Given that property values in backcountry and mid-country have fallen since then and are only started recovering starting in 2020, means a broad spectrum of properties are seeing price increases. December’s 91 saw a median sales price to assessment ratio of 1.656 or 16.6% higher than in October 2015. Our sales price to original list price is also up to very pro-seller amount of 95.1% and has been high for months.

Unless we see a flood of inventory or a major drop in demand, you can expect some significant price appreciation this year. Interest rates are still very low, the stock market is at record highs, we burned through lots of stale and shadow inventory, leaving a small relief valve of reserve inventory. It’s a good time to be a seller (if we only had more.)

Why Zillow Hates Greenwich

and, Why Most Realtors Wish There Was a Zillow Alternative

Every day Zillow is putting Greenwich homeowners at a significant disadvantage, by falsely raising the monthly payments they claim are due on houses in Greenwich.  This inaccurate amount appears in the header of every Zillow listing and stays on the page even when you scroll the data column. The estimated monthly payment is a key determinate as whether someone will buy, or even look at house in Greenwich. (I’d love to know if this is a nationwide issue.)

Zillow grossly inflates the taxes due on a house in Greenwich, thus increasing the monthly cost by thousands of dollars. The actual amount of the Greenwich property taxes appears in the Zillow listing, but Zillow don’t use the actual tax number in calculating the crucial monthly payment amount.

For example, 22 Byfield Lane in Greenwich pays $13,623 in annual property taxes to Greenwich. Zillow, however, estimates this property’s taxes at $42,665 or more than $29,042 higher than the actual taxes. This is 213% of the actual taxes and increases Zillow’s estimate of monthly expenses by $2,420. Cheryl MacCluskey, my co-columnist at the Greenwich Sentinel estimates that a buyer would have to have an additional $70,000 income to pay these fake taxes. The result is that many people think that they can’t afford to live in Greenwich and look elsewhere.

Even if they can afford that house in Greenwich, houses in other towns look more attractive. If you compare 22 Byfield Lane in Greenwich to 25 Common Mile Road in Easton they are both at about $2.5 million. Zillow says that you would have to able pay about $12,580 in monthly expenses to buy either home. Zillow is wrong on both accounts. The taxes they calculate for the Easton house are high by $9,733/year or $811/mo. In Greenwich, the taxes are high by the aforesaid $29,042/year or $2,420/mo.

This overestimating of taxes gets worse the lower the tax rate. For Greenwich with the lowest tax rate in Connecticut, the over estimation of monthly taxes is high by 100%, 200% and even more.  

              So why are Zillow tax calculations so bad?

You would think all Zillow needs to do to calculate the tax portion of a monthly payment is take the actual taxes paid for the house as entered by the listing agent on the Greenwich MLS listing and divide by 12 months. The correct tax number is on Zillow and that number is usually accurate.

That’s not how Zillow does it. They take the list price of the house and multiple it by 1.71% and divide by 12 months. They make not one, but three basic mistakes in calculating the monthly taxes. First, the mill rate in Greenwich is 11.59 for houses not in the sewer service area (think of it as 1.159%) not Zillow’s 1.71%. Second, the mill rate is not applied to today’s list price as Zillow does, but to the assessed value on October 1, 2015. Third, the assessed tax value is 70% of what the Assessor thinks the fair market value was on October 1, 2015. So, taxes on a $2,500,000 house whose value hasn’t changed since 10/1/15 are only $20,282.50 ($2.5M assessment x 1.159% mill rate x 70% assessment ratio) not the $42,750 that Zillow reports.

              Why Realtors Don’t Like Working with Zillow

Long time Greenwich agent, Denise Rosato, pointed out this bad monthly payment issue to me at an open house recently. She had been trying to fix this problem for her client by contacting Zillow. As any agent who has had to work with Zillow knows it’s a nightmare trying to get Zillow to change anything. It can take days and weeks for them to even get back to you with anything, but an automated reply. Agents know that gong through regular Zillow channels for an individual agent is a lesson in frustration.

To add insult to injury, once you do get Zillow to change something, it’s very likely that when they refresh their database in a couple of days that it will revert back to old erroneous data and you have to start all over again. I’ve had to correct the same error as many as three times.

You can take “ownership” of a listing and make certain manual changes, but once you do that, you become a slave to Zillow. All updates for open houses, price changes, status updates and anything else will now have to be entered manually by the agent forever. Lots of wrong data stays on Zillow, because it’s just too much work to fix it.  

Denise sent multiple emails she had sent to Zillow trying to correct the bad tax information. She eventually got back an email from a real person at the “Zillow Help Center” that Zillow uses a county-wide blended tax rate of 1.73% times the Zestimate. (They actually use 1.71% times the list price not the Zestimate as you can see when you click the down arrow next to Property Taxes in the Monthly Cost box on any listing.)  

The result of all this is Greenwich loses buyers to other towns with higher tax rates, because the Zillow data is wrong. It is wrong everywhere in Fairfield County, it is just more wrong in Greenwich.

              Other Zillow Issues with Real Estate Agents in Greenwich

Zillow has been on quite a run this week, but they have not treated agents very well. Even I was shocked at the visceral hate that many agents have Zillow. Were it not for Zillow Group’s market power, they would work with another company.

For example, Zillow has the notorious Zestimate which is their estimate of what your house will sell for in Greenwich. These estimates can be wrong by millions of dollars both high and low. Several years ago, a brave Zillow salesperson came to one of our weekly office meetings. Several agents complained about how far off the Zestimates could be, (they were even worse then). He finally said, “We know they are off, but they are a great way to start a conversation with a prospective client.” It wasn’t a great selling point for us to recommend Zillow. At least with Realtor.com you get a choice of multiple valuations.

 Another major problem with the Zestimates is if you look at the history, they jump around by huge percentages often for no apparent reason. I listed a property for $4.3 million and the Zestimate went from $2.6M to $4.2 million literally overnight. (I don’t know why. Maybe they thought I knew something they didn’t.)

In some ways, I feel for sorry for Zillow and the Zestimate, as Greenwich doesn’t have hundreds of identical tract homes. Even when we do have two identical floorplans, one may have a third more square footage on the tax card, because one has a walkout basement and the other house’s basement is  partially buried and not part of the square footage on the tax card.

The problem is that buyers rely on these numbers. They make decisions on what to go see and how much they should offer based on the Zestimates. House don’t sell, because of Zillow’s misinformation and the difficulty of correcting this information.

Besides the monthly estimates, all of which seem to be wrong, lots of other Zillow “data” have problems. A friend of mine listed a house this week and Zillow showed it had been on the market for 75 days, not a good way to get buyers to your house in a hot market. A third agent got challenged at open house, because the list price was so much lower than the Zestimate. The house was right next to i-95, while Zillow was pricing it off of waterfront houses that weren’t near I-95. A fourth agent had an issue where the dual listing on the SmartMLS was predominating over the Greenwich MLS listing and Zillow was showing that the seller was still taking backup offers when they were not.

Bottomline, Zillow is not built for a small market, with lots of housing types, of different ages, and vastly different values and they mistreat agents and can make homes more difficult to sell.

              None of this really matters to Zillow

Zillow has now become a digital monopoly like Facebook, Amazon, Google, or Microsoft. Digital network effects have kicked in strongly. In 2021 homeowners and agents have work with the Zillow Group. The FTC made a major mistake, when they allowed Zillow to acquire Trulia, which Zillow is putting minimal market effort behind. At this point, Zillow is buy up competitors to consolidate their market power and their zooming stock price expand into affiliated areas.

Not only is Zillow looking to control the horizontal real estate information space, they are also moving quickly to control the vertical space. Zillow now has a statewide brokerage license out of East Berlin, CT (which is a somewhat ironic location) and is a licensed broker in every other state. They have finance and closing divisions. They own Dotloop, a leading digital documents company. They are buying tract homes at bargain prices in Atlanta, Las Vegas, Phoenix, Denver and other cities and reselling them with their own agents.

The Zillow Group now has about 2/3rds of all Internet searches and is growing rapidly. Their stock has gone from $25 to an intra-day high of $200 in 11 months as analysts see them squeezing out the competition and leveraging their market power. They have become the 16,000-pound killer whale.

They are so large and growing so fast that issues like really bad data don’t matter to them. Right now, if you want to get your data corrected on a timely basis you need to sign-up as a Zillow Premier Agent for which you will have to pay thousands of dollars. To be a premier Zillow agent, you don’t have to have ever sold a house just pay them lots of money under long term contracts just to get your face on their site. They also have grown so large that they now have to grow even faster on a dollar basis to keep up their compound percentage growth. They just started to charge for apartment listings and if that works agents can expect fees for house listings that are likely still to have bad data.

Lots of their money comes from payments by agents to Zillow, they really should treat us better.

2020 an Amazing Year for Greenwich Real Estate – Chairman’s Circle Gold Award for Mark Pruner

Greenwich had amazing year in 2020 for real estate and it is continuing in 2021. It was a lot of late nights and early mornings for me, but it paid off with my first Chairman’s Circle Gold Award. If you want to see what I was up to just click the video below.

Thank you to my clients everyone that was a part of that amazing year.

The Future of Greenwich Real Estate in 2021 – Takeoff or Gridlock?

The January 2020 Greenwich Market Report

January 2021 was another hot month for sales in Greenwich, but it didn’t start out that way. For the first three weeks our transactions, closed sales and new contracts, slowly fell from 32 transactions to 31 transaction to only 27 transactions in the third week. Then came the fourth week of the year and transactions nearly doubled from 27 transactions to 50 transactions. Of those 50 transactions, 32 were new contracts which give us 134 contracts, so our sales will continue to be busy for at least the next couple of months.

We sold 64 single family homes in January 2021 up 68% from January 2019, but down 30% from a record December 2020 with 91 sales. The year-end holidays slowed down showings and contracts leading to lower sales January, but what really hurt January sales was the lack of inventory. At the beginning of the year, we had a new record low inventory of 287 listing easily breaking the prior low inventory record of 299 listings.

As of 2/2/21InventoryContractsLast Mo. SoldsLast Mo Solds+ Contracts YTD Solds YTD+ ContractsMos SupplyMos w/ ContractsLast Mo. Annlzd
< $600K050505.0.0.
$600-$800K1474114113.53.23.5
$800K-$1M6729293.01.73.0
$1-$1.5M2820163616361.81.91.8
$1.5-$2M2413102310232.42.62.4
$2-$3M5132124412444.32.94.3
$3-$4M4022113311333.63.03.6
$4-$5M2873103109.37.09.3
$5-6.5M337181833.010.333.0
$6.5-$10M421041441410.57.510.5
> $10M234151523.011.523.0
          
TOTAL28913464198641984.53.64.5

Last year we started January with 432 listings and added a net 21 listings by the end of the month. This year we started with 287 listings and only managed to add a net 2 listings. We went from our inventory being down 34% at the beginning of year to being down 37% at the beginning of February. Inventory is the gas that keeps the sales engine going and the gas gauge is dropping toward empty when it should be rising.

Our inventory is down by 164 listings from last year and we are seeing big drops in inventory all the way up to $5 million. I had a listing on Lake Ave in back, backcountry. I held an open house in December, and no one came. It was a cold, cloudy day before Christmas and I wasn’t the only one to have slow day. In January, I held another open house there and 14 groups came to see a $3.2 million dollar that had been on for over 6 months. The next day one of the open house attendees made an offer and we are under contract now. I’m also working with another one of the attendees that wants to move into a newer house with room for a tennis court and there is practically nothing under $4 million.

Of course, if you want to see a really tight market, take a look at our listings under $600,000. Actually, you can’t because there aren’t any. The market isn’t tight it’s non-existent. We never have a lot of listings under $600,000, but last January we had five listings and over the course of 2020 we sold 17 houses under $600K.  This year we have 5 contracts and no listings.

Traditionally, the spring market starts after the Superbowl, which luckily is this weekend. I’m hoping the sluice gates will be opened and we will be flooded with over 100 listings, but I’ve only got two coming on and I was talking to three top agents at an open house and combined we only had 6 new listings coming on. In a normal year, that number would be double or triple that.

Contracts are eating up our inventory. The 134 contracts we have now up 74 contracts over last year’s 60 contracts and contracts are up in every price category. Our lowest listing under contract is at $450,000 and we have three houses listed for $11.99 million under contract. From $6.5 to $10 million, we have 10 contracts up from zero last year. Each of the five price ranges above $2 million are up by more than 100% in contracts.

The result of low inventory and high sales in January is months of supply so low I had to change the scale of the chart. It was not that long ago we measured supply at the upper end in years of supply not months. In January 2020, everything over $2 million had more than one year of supply. Last year above $6.5 million, we had 63 listings, no sales and only 1 contract. This year if you look at months of supply and include contracts all price ranges, even over $10 million is under year of supply. This year, there are 18 transactions above $6.5 million compared to the 1 transaction last year. From $3 – 4 million months of supply is down 75% from 12.1 months to 3 months of supply. (Please list your house.)

We are also clearing out a lot of stale inventory. Of our 134 contracts, 40 of them had been on for more than 6 months and were on when each month set a record for sales. Fourteen listings had been on for more than a year and one had been listed for 1,342 days.

Takeoff or Gridlock

Are we going to see market take off in 2021 or is gridlock going to cause 2021 sales to fall.? On the demand side we have lots of things pushing Greenwich toward more record sales this year.  Interest rates are very low, Covid unfortunately is still widespread in NYC and crime is up there. Greenwich has also been redefined in the marketplace as possibly the best alternative to NYC living. It’s close to the city, has plenty of land, and lots of amenities. We also have an excellent school system that is large enough to accommodate additional enrollment and a top hospital. These last two items you don’t find in high-end, but isolated vacation areas. With enough inventory we should take off this year.

But will we have enough inventory to meet demand? Right now, I have a client that is gridlocked. They can’t list their house until there they have a place to move too. (They need a high-end condo in central Greenwich.  (if anyone knows of something not on the market, please let me know.) I get emails every day from agents whose clients can’t find what they want in the little inventory we have.

The market is so hot that many listings never make it to the market. It’s a common practice in most brokerages to send an email alert when you have a listing coming on. In 2019, that intra-office email usually proved fruitless, now days, there is a good chance that another agent does have a buyer for that property. The fastest deal I ever did took 11 days from my announcing it at a Monday office meeting to closing the following Thursday.  

It also looks like shadow inventory may be a shadow of its former self. Last year we had 404 more houses sold or under contract than we did in 2019. Lots of those houses were people who had been waiting for years to sell. A really big question is how many more of them are still out there. I’ll be very surprised if there are another 400 homeowners that are still waiting.

We may actually be seeing a peek at the other side of the shadow inventory coin; people waiting for waiting for house prices to go up. Last year our influx of shadow inventory kept our price/sf price appreciation to around 4%, I’ll be surprised if it is not higher this year, but does mean you should wait for the price to go up? Waiting for a few percent more is a dangerous game. I’ve met lots of people who turned down offers in the digit’s decade for much more than they can sell their house now. It doesn’t take much imagination to see factors that could lead to a recession this year. Striking now, when you know we have a hot market, may be a better option than waiting another year.

 Stay tuned, what happens in February may define the rest of the year.