The 2022 Greenwich Rental Market

High Demand and Low Inventory at All Price Ranges

Two years ago, at this time, the fear of Covid was palpable. Covid was everywhere and we knew little about it. Everyone was wearing masks, and lots of people were wearing gloves, and, if you wanted to show a property, everyone wore booties. Despite this, our overall rentals in 2020 were up only 21% over the pre-Covid year of 2019. 

We went from 863 rentals in 2019 to 1,041 rentals in 2020. High-end rentals were a different story; over $12,000 per month rentals were up 233% from 60 rentals to 200 rentals. Above $20,000 per month, our rentals were up 468% from 14 rentals in a normal year to 79 rentals in 2020; and those numbers were certainly an undercount.

As the irrational fear of Covid abated, rentals actually dropped in 2021 to 784 rentals down 25% from 2020 and even 5% below our 10-year pre-Covid average. Our rental market however was a tale of two markets. Below $8,000 rentals were down by 14%. Above that price, rentals were above our 10-year average and often far above that.

Our 10-year average of rentals less than $8,000 per month is 654 rentals, while in 2021, we only rented 561 rentals a drop of 14%. Above $8,000 our 10-year average for rentals is only 142 houses.

April 2022 – Rentals last 12 months

This year we are seeing the number of rentals continue to sink. In the first quarter we had 148 rentals. It seems that many people are hanging on to their rentals and there are fewer people willing to lease their houses. The uncertainty of people’s office situation means they are often staying in place. Having said that over the last 12 months we continue to see rentals throughout the town. They are mostly concentrated in our half acre and smaller zones, but mid-country and backcountry see a fair number of rentals, though not so much this year.

Our inventory has dropped to unheard levels. This week we have only 42 rental listings on the GMLS. At this time last year, we had 91 listings, so we are down by 54%. Go back to a pre-Covid period and we are down even more. Between $6,000 per month and $16,000 per month we only have 6 listings. If you’d like a nice rental in Riverside, you have two choices: one at $14,000/mo and one at $20,000/mo.

April 2022 – Active rentals (green) and expired rentals in prior 12 months

We actually have had more rental listings expire in the last 12 months, 45 listings, than we have in inventory now. Even in this market, it is possible to over price a listing. At least 45 folks thought the market would bear more than it would or were willing to rent at their price and not below.

The pandemic increased sales more than the Great Recession, but only a little bit more. In the recession, sellers, particularly developers couldn’t sell their houses, so they decided to rent. Also, many people who could buy decided not to do so not wanting to buy a declining asset. In 2009, when we hit our low for single family home sales of only 370 houses. That same year, we had 959 rentals.

By 2012, we were back to a “normal” rental market of 780 to 860 rentals per year. In the post-recession years from 2012 to 2019, our rental market was fairly steady within those bounds. Our rental market was also fairly tight with most properties renting in weeks or a couple of months. Our rental market is always tight below $6,000/month where the majority of our rentals are.

In 2020, demand for homes took off as people wanted to get out of NYC. This increase in demand resulted in increased prices, which led to a big jump in inventory, which led to more home rental deals. People who never would have considered renting their houses were happy to do so if they could rent for $30,000 or $50,000. Below $2,000, the number of rentals actually dropped as people who wanted to get out of apartments in NYC were not jumping to move into an apartment in Greenwich.  

As inventory started to drop in the second half of 2021, our days on market took a similar drop. New rental listings that came to market were snatched up quickly. Lower inventory resulted in fewer rentals in 2021. The good news is that so far in 2022 our days on market has lengthened a little bit from an amazing 31 days in 2021 in 2021 to 42 days in the first quarter of this year.

Non-listed rentals

We have more rentals each year in Greenwich on the Greenwich Multiple Listing Service than we have house sales, with the exception of last year, when we had more house sales, 1,006, than rentals only 784.

 These are not all the rentals in Greenwich. Under $2,000 the majority of listings are done privately; either listed in the newspaper or put on Craigslist. Under this price we have between 100 and 150 rentals per year on the GMLS in a normal year. The units available under $2,000 include everything from a one-room-garage apartments to smaller condos throughout town. If a place is livable in Greenwich and listed for under $2,000/mo. it goes pretty quickly.

Also as noted above, our high-end rentals often didn’t make it to the market for a public listing as they were rented quickly in the hot, high-end market of 2020. So, take all these numbers with a grain of salt. The actual numbers are higher.

              What Do You Get?

As mentioned at the lower price points most of our inventory consists of a variety of apartments, condos, garage apartments and the occasional small carriage house. From $4,000 to $6,000 we are about evenly split between single family houses and all other types of rentals. Above $10,000 per month nearly all of our rentals are single family homes. Overall, we normally are about evenly split between single family homes and all other types of rentals. This year 60% of our rentals are single family homes.

 It’s a good time to be a landlord and if are a tenant, a good time to have a well-connected Realtor.

How Back is Backcountry Greenwich?

Q1 2022 Report

by Mark Pruner, Compass – Greenwich – mark.pruner@compass.com

Real estate sales in backcountry Greenwich continued strong in the first quarter of 2021. So far this year, we have sold 24 houses north of the Merritt compared to 22 last year. Both Q1 ‘21 and Q1 ‘22 are more than double the 11 sales in the first quarter of 2020. Inventory has done just the opposite. It has contracted from 83 listings in 2020 year to 55 listings in 2021, to a really small 36 listings in backcountry this year. Inventory has gone down 57% in two years and 35% just since last year. It’s a tight market, and buyers are moving fast and keeping us Realtors very busy. The one fly in the ointment is that we only have 7 contracts in backcountry compared to 23 contracts in 2021.

Under $2 million, we have 3 listings so the backcountry bargains that we used to have are gone. In 2017, we had 129 listings in backcountry and 25 of them were under $2 million. Back then you had a 4,232 s.f. house on 4 acres listed for $1,575,000. Now it was built in 1953 and needed work, but it was a hell of a deal for the person that bought it. Today, the best you can do is 2,894 s.f. on 4.2 acres for $1,875,000 or 1,338 s.f. less for $300,000 more.

To get some perspective on this market, let’s go back 23 years and look at how we got here. Our previous high for sales in backcountry was 90 sales in 2000. For much of what people think of as the heyday of backcountry, sales actually fell from 90 sales in 2000 to 62 sales in the peak year of 2007. That year we sold $306 million worth of houses in backcountry with an average sales price of $4.93 million. If you look at graph of the period, you see a big rise in total sales dollars (volume), while the number of sales was actually dropping. That’s a pretty good definition of a bubble.

In 2008, the bubble started to burst with the number of sales dropping from 62 in 2007 to 34 in 2008 and sales hit their nadir in 2009 with only 27 sales. Sales volume dropped from $306 million to $163 million in 2009. We actually had a pretty good recovery going from 2010 to 2015 when sales grew from 45 to 61 houses.

At the same time, our sales volume and median sales price bounced around. We reached our post-recession low price point in 2012 as our backcountry median sales price dropped to $2,012,000 only to all most match that number three years later in 2015 with a median of $2,043,000.

We didn’t start to see a real recovery until the 3rd quarter of 2019. At that point, prices in backcountry started to look pretty good compared to what you could get in Old Greenwich or downtown Greenwich. In 2019, backcountry sales were up 31% while they were down 11% for the town overall and Riverside saw a drop of 23% as the $10,000 SALT limitation on local tax deductions finally hit Greenwich hard. All this was pre-Covid.

In 2019, our days on market dropped from its post-recession high of 475 days on market in 2017 to only 220 DOM in 2019. In 2020, after a slow first half of the year DOM dropped steeply to 145 days on market. In 2021 our median days on market was 142 and we have ticked up slightly to 151 days on market in the first quarter of 2022.

It’s easy to over analyze this market. There is a lot of Brownian motion in the numbers as the law of small numbers means that one sale like Tommy Hilfiger’s house selling for $45 million in 2021 throws off the averages. Take out that sale and the backcountry average sales price drops from $4.94 million to $3.03 million, which is still a pretty good average.

What is clearly remarkable is the number of sales we had in backcountry last year. Our 102 sales in 2020 is 13% better than our previous high of 90 sales all the way back in 2000 and several multiples of the 29 sales in 2009.

If you really want to make a “gee-whiz” graph, you can annualize our first quarter sales on a weighted basis. Most years the first quarter represents only 18.2% of our sales for the year, so, if you take our 24 sales so far this year and divide by 18.2% you get an expected 132 sale this year.

I’m betting that projection is really just fun with numbers as don’t forget the paltry 7 contracts that we presently have compared to 23 contracts at this time last year. Also, our inventory is much tighter than it was last year, and we are already seeing sales being supply constrained.

Backcountry has always been synonymous with larger houses, and we are seeing an uptick in our median size house sold. Our median house size peaked in 2009 at 8,300 s.f. From 2018 to 2020, our median house size has averaged around 5,600 s.f. In 2021 our median house size went up to 6,144 s.f. or more than 500 s.f. larger. So far in 2022, our median size is up again to 6,327 s.f., while our median house size for the town over all is 4,150 s.f. or almost 2,000 s.f. smaller.

This doesn’t mean that houses suddenly got bigger in backcountry. What it is indicative of is that the smaller houses have been snapped up and we do have supply is at the higher end.

One major issue in backcountry is that sales are distinctly slower when you hit $6.5 million. Over that price we have 2 sales and 16 listings in inventory. That might seem like a big discrepancy, and it is, but last year at this time, we had 29 houses listed in backcountry for over $6.5 million. Also, the majority of high-end sales have shifted to the 4th quarter, so high-end sales in the first quarter have limited meaning.

It’s likely to be a good year for backcountry; inventory will determine just how good, particularly, inventory under $2 million. Stay tuned …

Greenwich Q1 2022 Sales Down by a Quarter and Up by a Third

Greenwich Q1 2022 Sales Down by a Quarter and Up by a Third

You are going to see a bunch of pundits say sales in the first quarter of 2022 are down 27.2%, and while true that percentage is very deceptive. The first quarter of 2022 was an above average quarter even with record low inventory. In the first quarter of 2022, we sold 142 single family homes compared to a record-setting 200 homes in the first quarter of 2021. Go back one more year to the first quarter of 2020, our last pre-Covid quarter, and our sales are up 37.8% not down.

Go back two more years to 2019 and we are up 92% from the anemic 74 sales in Q1 2019. We often are so focused on our stellar sales and year over year focus that we don’t look back even just a couple of years. In March of 2019, we had 608 single family home listings on the market and only 67 contracts compared to this quarter’s 136 listings and 131 contracts.

In April 2019, the Wall Street Journal let a newly arrived Daily News transferee write an article the editor entitled, “Wealthy Greenwich Home Sellers Give In to Market Realities” with quotes such as, “The seemingly never-ending slump is leading some sellers to accept less—sometimes a lot less.” That was one of 6 articles in major publications that were bashing the Greenwich market in 2019. We had a piling on of reporters who were twisting numbers to make a slow market look like a disaster. They looked at their click counts and realized that their reader’s schadenfreude in reading articles bashing Greenwich’s real estate market, was good for their careers.

Three years later we have market where for the first time ever we may soon have more houses under contract than we have houses to sell. In the last couple of years of superlatives, I’m sure that no  one would have guessed that we could possibly have such an upside-down market.

              In 2022, flat inventory is good inventory

For the first two months of 2022 our market was looking up as inventory was flat, i.e., matching early season demand. This was a welcome hiatus after 7 months of falling inventory in the last part of 2021. Unfortunately, our winter burst of new inventory was more likely a slight pause in the buyer frenzy. Our inventory started falling in early March and has continued for the rest of the month. This is the time when inventory should be rising strongly in our spring market.

At the same time, we have contracts on a 6-week spurt. At the moment, we have 131 contracts and 137 houses in inventory. Theoretically, this could actually continue with contracts continuing to rise and inventory dropping to near zero, that’s if every over-priced, fixer-upper and teardown went to contract and what did come on the market went to contract in days, so that most of these new listings never showed up in monthly inventory numbers as they had gone to contract by end of the month, when we do the inventory numbers.

The under $1 million market

My brother, Russ, and I have both have very nice young couples that are looking for their first house for under $1 million in Greenwich. As of this week, they have a choice of 6 houses: 2 in each of Greenwich, Cos Cob, and Old Greenwich. There is nothing listed for under $1 million in Riverside, Glenville, Pemberwick or central Greenwich. These are all areas with R-6 and R-7 lots, where a conforming lot can be as small as 0.17 acres and we regularly see sales under $1 million. Contrast this to March 2019, when we had 608 total listings and 50 of them were under $1 million.

With all that inventory in 2019, we only had 15 sales of houses under $1 million. In 2022, we have the exact same number of sales in the first quarter of 2022, 15 house sales, as we had in the first quarter of 2019, but our inventory is down 78%. We don’t need a lot of inventory to have sales, provided we get new listings. The end result, 275% more sales under $1 million in 2022 compared to 2019. (We are putting on a house for under $1 million next week. I’ll report back on how it goes.)

              Why you should worry about low inventory

Does this mean that we shouldn’t be worried about low inventory? Absolutely not, if you are buyer, you should be very worried and even if you are seller, it’s no time to be complacent. Low inventory means that at any point in time, you as buyer have a small number of houses that fit your criteria.

The result is that motivated buyers, and we have a lot of those, have to broaden their criteria. Buyers have to be willing to go for a smaller house, or if they have the money, a larger house than they want. They may need to do more work fixing up an older house or have to be willing to buy a difficult lot with steep slopes, swamps, rock outcroppings or in a flood plain.

              Why buyers need an immediate alert

Low inventory also puts a big premium on being able to move quickly as well as being flexible. If you are looking now, and your price range is under $5 million you shouldn’t have a daily alert, but an instant alert that will email you as soon as the listing comes on. You don’t want to wait until the end of the day to get your alert. By then our 200 active agents have seen it along with 1,000 active buyers in the NY metro area and 10 people that are being transferred from the UK to NYC this week. They have all checked it out, and for a hot house, 10 buyers have alreadymade an appointment to see it. If you are a couple looking, the one working from home (where you are out of sight of your boss) should check each new listing as it comes on the market. You can even have one of your kids screen the houses if you can’t look when the houses come on.

You then need to get over to the house and see it. Don’t wait for the open house. In Greenwich, lots of our listings’ come on Mondays and Wednesdays. This is because our Realtor open house days are Tuesday for listings west of North St and Thursday for east of North St. If you can see the house before even the Realtor open house, you have a leg up on your competition. However, be ready to hear it’s SAOH, which means “show after open house”. If the new listing is SAOH, try to schedule your showing right after the Realtor open house ends. If the agents are walking out of the open house, while you, and your agent, are walking in, you are in a much better tactical position.

If you are working in NYC, and can’t get out during the week, have your agent give you a Facetime tour. These virtual tours can’t tell you whether this is the ideal house for you, but they are very useful in ruling out the houses that aren’t for you.

              Bad pricing strategies for sellers

If you are a seller, there is literally has never been a better time to put your house on the market. There is much less competition from other sellers and there are lots of buyers that are looking for houses like yours, but don’t screw it up.

Our median price is up from $1.87 million in 2019 to $2.60 million as of the end of the first quarter or an increase of 39 percent. But, just how long will this last? Interest rates are rising, inflation is sucking up money that people might otherwise spend on a new home and there is even more uncertainty about where the world is going. The result of all this is that we’ve got a very good chance of a buyer slowdown as the year goes on.

Also, even in this market, over pricing your house is a bad idea. If I had a nickel for every time a seller told me that let’s put my house at an above market price to “test” the market or let’s list it higher, so we have more room to negotiate down, I’d have two bucks, which is what these strategies are worth. The more people that come see your house, the more offers, the more offers, the higher the price. You want to go low, to end up high and the reverse is also true.

Of our 137 listings, on the market in the most pro-seller market we have ever had, 28 listing have been on for more than 1 year, 61 have been on for more than 6 months and 55% have been on for more than 3 months. In this market well priced listings can go in weeks and often in days. Pre-Covid, some agents would wait three months before proposing a price reduction. In this market, if you don’t have offers in 45 days, you need to have a long conversation with your agent, who has probably been waiting for your call.

We’re having an above average year and with more inventory, it could be another great year. Stay tuned …