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.

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