by Mark Pruner
On October 23rd, 2021, we matched our sales for the full year 2020, even as single-family home sales in Greenwich dropped 46% compared to September. So far this year we have had 875 sales which makes for a new all-time record, already exceeding last year’s 861 total sales with two months to go in this year.
The Holy Grail in Greenwich real estate is breaking 1,000 sales in a year. We have already done that for the last twelve consecutive months from November 2020 to October 2021. For those 12 months we have had 1,058 sales compared to our 10-year average calendar year sales of 620 home. The question is can we do what Novak Djokovic couldn’t do in tennis and have a calendar year Grand Slam with over 1,000 sales in one calendar year.
The answer is that it is going to be close. As of the end of October we have 122 contracts waiting to close. If you add that to our 875 sales, you get 997 sales and contracts for 2021. Not all of those 122 contracts will close in the next two months, but a bunch of selling homeowners that are not yet under contract want to close before yearend. (I have two clients, that have told me to do just that.)
The problem with getting to this Holy Grail is that our monthly sales have dropped from July’s all-time record of 143 sales to only 43 sales in October. Our October 2021 sales, for the first time since June of 2020 were a smidge below our 10-year, pre-Covid, average of 46 sales in October. You don’t have to look far to see why this is so.
Demand remains high
Our drop in sales is not due to a lack of demand. Of our 43 sales in October 63% had been on for less than 2 months or more than 6 months. Most people wouldn’t think of sales that have been on for more than 6 months as a sign of a hot market, but it often is. What’s happening is that houses that have been passed over for half year or more finally sale, because seller overlook the objections that prior buyers had shown previously. Of course, a price reduction, or two, often helps this sale along.
Little to Sell Leads to Dropping Sales
What is causing sales to drop is lack of new inventory. Our inventory, as of the end of October, set another new record low with only 229 single family homes listed for the entire town. In Old Greenwich, arguably our hottest market, we have only 10 listings on the market. Of these 10 listings, only 1 is under $1 million. Of the other 9 listings only 1 came on the market in October. Six of the ten OG listings, 6 had been on the market for than 5 months with 2 of them on the market for a year or more. The majority of what is available in OG are hard sales.
For the month of October, we had a total of 57 listings with 15 of those 57 October listings already under contract and 3 new October listings are already sold. To be honest, those 3 October listings marked as sold never appeared on the Greenwich MLS. They were off market sales.
Many of these off-market sales are at the upper end of our market. Of the three off-market sales that were reported, I represented the buyers in a sale at $4.9 million and another sale, in OG, closed at $7.4 million. Most off-market sales, are not reported, so were you to add in these sales, we would be well over 1,000 sales for the year.
When you look at a table of inventory, you’ll see that none of our price ranges have over 40 listings. Two years ago, every price range from $1 million to $10 million had 40 or more listings. (OK, from $5 – 6.5 million we had 38 listings, but absolute statements always look more dramatic and 38 is very close to 40.)
In 2019, we had 120 listings from $2 – 3 million, now we have only 37 listings. Lower inventory and higher sales bring months of supply way down. From $2 – 3 million we only have 1.7 months of supply, while only two years ago, this price range had 11.9 months of supply. Said another way, we went from almost a year of supply to less than 2 months of supply in the last two years.
Buyers Want Larger Houses
All of this is part of the Great Upsizing. Our median house size sold was 3,669 s.f. in 2019. In 2021 our median house size sold is 4,000 s.f. That is an increase of 331 square feet or 9%. This might not seem like that much, but the square root of 331 is just over 18 so you are looking at people adding a nice size bedroom or two offices. As an example, the master bedroom at 15 Laub Pond Road, a 7,400 s.f. house, is 18’7” x 18’4” (open house this Sunday ;).
As people are spending more time at home due to Covid and the rise of WOOFH, Working Occasionally or Often From Home, people need more space. Our median sales price is up from $1.87 million in 2019 to $2.3 million in 2021 or an increase of 23.2%. Greenwich homes are appreciating nicely, but we are also seeing an increase in the size of houses that people want. When you look at just the increase in price per s.f., which factors out the increase in house size, we are up 17.6%
Will Housing Inventory, and sales, continue to fall?
Connecticut has done an excellent job with 71% of our residents vaccinated. This bodes well for not seeing a repeat of last winter’s jump in infections and will certainly result in fewer deaths this winter. So, the Covid pressure to move is shrinking.
WOOFH is here to stay
The majority of the working populace really like WOOFH. The Jamie Dimon CEO’s that want everyone back in the office on 9 – 5, five days a week are seeing major pushback and employees voting with their feet. WOOFH means that people are spending less time commuting so buyers that used to want a 30-minute commute are looking at towns with 45 minutes to an hour commute. Also, technology for telecommuting is now ubiquitous and free or low cost. (Zoom really deserves a medal for providing connectivity for billions of free video conferences.)
What’s going to happen next year? Have most people who have wanted to move already moved. Will we reach the Holy Grail of 1,000 sales? The big factor pushing us there is the Great Upsizing’s surge in intra-Greenwich moves. For an intra-Greenwich move our sales increase by two, while our inventory remains unchanged as the buyer of the bigger house also sells their smaller house.
Will our inventory fall to zero?
Is our inventory down, because most of the people that have wanted to move have moved? Realize that even with 1,000 sales, we are only looking at around 5% of our housing stock. The other 95% of homeowners are still in the same house. We will always get life cycle inventory as families get bigger, couples divorce, kids leave home, people retire, and homeowners pass away. Inventory will never go to zero.
The result of all this is that unlike any other year, November is a great time to list your house.
Stay tuned, this quarter is going to be like nothing we have ever seen before.
Mark Pruner is a sales executive with Compass at 200 Greenwich Ave. He can be reached at email@example.com or 203-969-7900. He would also like to thank everyone who voted for him and his fellow candidates on the Board of Assessment Appeals.