June 2021 Greenwich Real Estate Neighborhoods Report

Is There a Fly in the Ointment?

by Mark Pruner

Looking at the first 20 days of July YTD, we have 604 sales for the year, which means we’ve already sold 15% more houses in 2021 than in all of 2019 when we only had 526 sales. Of those 604 sales, 93 of them happened in the first 20 days of July, which is already 20 sales above our 10-year average for all of July.

The fly in the ointment is contracts. We have 191 contracts waiting to close in mid-July compared to 208 contracts at the end of July last year. Now 17 contracts is not a lot and sales from week to week are a roller coaster ride. We may still see contracts exceed last year’s numbers, but the trend is not in that direction. Our weekly contract signings peaked in the first week of May at 57 contracts and has been mostly down since then. Last week we were down to only 26 contract signings. The chicken littles may actually think the sky is falling, but this drop in contracts actually, but it probably just shows a return to some level of normalcy, though at a higher level than normal. Our sales nearly always peak in June, or occassionally in July. This means that contract signing are seeds that are planted in April or May, so that closings can bloom in June and July. This drop in contracts, may not be a fly in the ointment, but only a stray flake of pepper.

But since, we are looking for straws in the wind, another shiver down your back can be seen in our inventory numbers. If you look at the inventory numbers they look like a fraternity tug of war between the Betas and the Deltas. The Betas (contract signings) moved the flag slightly down for the first two month of the year to a low of only 273 listing at the end of February. For the first two months, we had more buyers than we had inventory, but only by a smidgen.

Then the Super Bowl came along, the official start of the spring market, and the brothes from Delta (new listings) started moving the flag back as more listings came on than went to contract. Our inventory was like Lindbergh trying to gain altitude on his take-off from Roosevelt Field. We were climbing, but not real fast. By May we were still climbing but we were still flying nape of the earth. Our altitude should have been in the 600’s and even the 700’s listing number, but the best we could do was to peak at 342 listings in the first week of June. Since then we have been on a gentle decline to 310 listings this week. At this rate, Lindberg never would have made it off of Long Island.

For the Greenwich market, this drop in inventory when our contracts are also dropping, means that a bunch of the Betas and Deltas have headed for the bar and of the ones that are left the the Betas are winning. (Beth also hates when you mix metaphors. 😉  This drop in inventory happens nearly every year, but not from such a low altitudes

Where are sales headed the year? If you use a pencil and a ruler to make predictions, then you can take our first half sales of 511 and double them and expect to see our first calendar year with more than 1,000 sales. July sales would say that we are well on their way of hitting that number, but our contracts, and more importantly, our sliding inventory make it look like we won’t break the millineum.

Another sign of slowing market from frenzied to how is the number of expired listings. In the first half of the year with sales up 93% and inventory down 45% making for an incredibly pro-seller market we still had 78 listings expire unsold. These expired listings were across the board in pricing from $749K to $32M. We have some very well informed buyers and pushing the envelope on pricing too far just pops the bubble.

That’s the story townwide, but how are our neighborhoods doing? The short answer is mostly they are doing very well to great and the areas that look like they aren’t doing doing well are mostly victims of the law of the small numbers. For example, the days on market in Banksville is up 90%, but that’s because one of the five sales this year in Banksville had been on the market for 650 days.

Sales in Banksville, Byram, Glenville and South of the Post Road were all up more than 150%. The average price north of the Parkway was up 85%, but that was due to more high-end houses selling. When you look at the average of the sold price/sf that was up 41% and the sales price to assessment ratio was up 27%. Backcountry is definitely back.

Every neighborhood, but Byram, saw the average sales price to the assessment ratio go up by double digits from 12% south of the Parkway to 27% north of the Parkway. Days on market dropped by 44% and the average sales price to original list price was up 9% to 95.6% with several neighborhoods being above 98%. Buyers are not getting much of discount off of list price.

In the first half of the 2021 we sold $1.54 billion of single family homes up 133% from last year’s first half. This number all of the numbers should be taken with a grain of salt as the record breaking months didn’t start until August of 2020. So we are comparing the best half year sales ever in Greenwich to what was actually a slow first half as the Covid lock down slowed everything.

 Stay tuned, this rest of the year won’t all be smooth sailing, but it looks like another America’s cup win for the town.

1st Half 2021 Greenwich Real Estate is All Time Record

and so is June and so is the second quarter and so is the last 12 months

First the superlatives; June 2021, Q2 ’21, H1 ‘21 and the last 12 months were all time records in Greenwich and in most cases by a significant margin. For the month of June, we had 134 sales which blew away our prior record of 118 sales in September of last year. Prior to that we had had 114 sales in June 2011, which happened because the Connecticut legislature raised the real estate conveyance tax by a quarter of one-percent. (Greenwich sellers are very tax sensitive.) The to get a pure market demand record you have to go back to July 2003 when we sold 108 houses.  

For the first half of this year, we had 511 sales, easily beating the prior first half record of 403 sales in the first half of 2007, which was the height of the go-go era of home sales in Greenwich. In the first half of 2021, four of the six months were all time record months and the other two months, January and March only saw higher sales in 2007 and 2006 respectively.

The even more remarkable sales numbers come when you look at the last twelve months from July 2020 to June 2021. For that period, we had an incredible 1,104 single family home sales. (In a normal year, we average about 650 sales a year.) The best we could do for any prior 12 month period was the 835 sales from the second half of 1999 to the first half of 2000, which is as far back as the Greenwich MLS online data goes.

As you might expect lots of us Realtors were pretty busy with all this activity. I was swamped last week and didn’t write have a chance to write an article, but did send in my charts. The Greenwich Sentinel publisher, Beth Barhydt, put in 3 charts, that I thought told a pretty compelling graphical story.

It turns out I was miserably wrong. Over the weekend, I was talking to two retired execs who looked at this kind of data every day during their career. Their comment about the graphs in the paper, “We saw them, but what the heck do they mean?” So, let’s take a look at just what information you can glean from these charts (and also what you can’t.)

The chart that Beth runs the most frequently, is monthly single family home sales for the last two years, plus the prior 10-year average. She and I likes it, because it’s what most people talk about; “How are sales doing.” To get a good feel of that start with the faint grey line, the 10-year home sales average. If the current and most recent month’s sales are above the grey line, we are doing well and if they sales line is way above the 10-year average we are doing very well.

However, if you look at the 2021 monthly sales, you will see that May 2021 had only 88 sales down from April’s 89 sales. That should not happen in a normal market. As the 10-year average shows our sales normally rise rapidly from their low in February to their annual high in June, so why did they move sideways in May. The short answer is that you can’t know. We can ask a bunch of agents, mortgage bankers and real estate attorneys and make an informed guess, but that’s all it is. (My guess based on a bunch of conversations is that’s of people took their first vacations in over a year in May as vaccinations became popular.)

May’s sideways move, means that June’s big jump is exaggerated. If you move 20 delayed sales from June to May then we get a more normal curve, albeit at a high level. The other thing that we don’t get, if you move these sales, is an all-time record as September 2020’s 118 sales would beat this month. We all like to see good records sets and writers like to lead with them, but look past these records and see if their might be a reason for them not directly related to market demand.

Another thing to note in the June sales is just how steep the line up is. If you look at the other two years of sales, even the huge second half of 2020’s sales, we don’t see any lines that steep. This usually means that the next month will not spike up as much.

The chart that is more complicated is the inventory, sales, contracts and current months sales bar-chart. It has over 40 bars by price range. Some price ranges have a hump in the middle and some decline from left to right. In addition, sales year-to-date only go one way up, so the November chart looks nothing like the February chart even though both months are traditionally slow months for sales.

One thing you can tell by looking at this chart is where the inventory is. If you look just at the dark blue bars, you can see the most inventory is between $2 and 3 million dollars, and that would be wrong. The most inventory is between $1 and 2 million, but this price range is split into two price ranges. The reason for that, is that these are roughly the price ranges that buyers will look in. Rarely, will someone look at both $1.2 million houses and $1.9 million houses, but most buyers that are looking at $5.2 million homes will also look at $5.9 million homes. So, be careful comparing the heights of the bars if the width of the price ranges are not equal. For me the price ranges under $1 million are $200K wide and from $2 – 5 million are $1 million wide.

Another thing to look at is how sales, contracts and current months sales are doing within each price range. If contracts are higher than th current months sales, you can expect sales to go up in subsequent months, a sign of a strong market. If contracts and the current months sales are about equal that’s a sign of a slowing market.

Also looking for missing bars. In June we had no sales over $10 million. At the top end, we are seeing our only weak price range with 25 months of supply over $10 million and 25 listings. But, another thing to realize is that all things are relative. In June 2019, we had 70 months of supply over $10 million. Another thing to note that you can’t see from a static bar-chart is most sales in the over $10 million market has changed from the first quarter, when folks used to get big bonuses to the late third and fourth quarter in today’s market.

These first two graphs are like looking in the Hubbel telescope, the light you are are seeing is coming from the past. Last year when the market started to change rapidly from month to month and even week to week, I created the MP index, which while partially egotistical is shorter than saying., ‘the sum of all weekly sales, contingent contracts, pending contracts and contingent contracts becoming pending”. (In the old days we simply called a pending contract, a non-contingent contract.)

The first thing you’ll see when you look at the index is it jumps around from week to week, so you want to take a longer view. Clearly though when we have string of weeks when the index trend is up, the market is getting better. This almost always happen in the spring, but that didn’t happen last spring when weekly transactions in March and April were essentially sideways as Covid took hold.

In 2021, we started off with a busy January, pulled back a little and then climbed through the first week in May, followed by a sharp drop off in May. In June and so far in July our activity is looking like it is going to be more like the busy period in the second half of 2012. Now, that last statement is not to be trusted. Graphs aren’t an accurate predictor of the future.

Graphs can show you where you’ve been, they can even give you a decent sense of where we are, but we have way to many exogenous events, black swans and viri to expect that present trends will continue without change. They are useful for determining what you are facing, whether a buyer or a seller. I find them a lot more useful than a series of anecdotes and chance encounters with people. Sometimes you get a representative sample, but you could also meet the most depressed Realtors and the most estatic buyers and get the wrong impression of the market.

 The best thing you can do, is to keep up a general knowledge of the market, so you can see when things are changing in your market, and hire a real estate agent who tracks all of this on a daily basis.