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 …