Greenwich Real Estate Market Report – First Half 2022

A Fast Car with Expensive Gas on a Stormy Night

by Mark Pruner

Real estate in Greenwich set a couple of records in first half of 2022.  We had both the highest average price and highest median price at the end of 1st half. Our average sales price for a single-family home in Greenwich is now $3,089,555, this is up 24% over the $2.54 million average price that we had four years ago in June of 2018.

            Record Median Sales Price

Amazingly, our median price appreciated 32% over the same period from $1.87 million to $2.53 million. What this indicates is that demand in price ranges under the median price are going up faster than our high-end houses. Not to worry if your house is over $3.1 million, every price range is up.

Record Low Inventory

All of this is driven by another record; the lowest inventory we have ever seen. Back in the middle of March, we actually got down to 136 single family home listings. Since then, we have “strongly” recovered to 207 listings. This is 71 new listing in inventory and an increase of 52%. However, we are still down 39% from where we were at the end of June last year.  We are also down 72% from the 729 listings that we had at the end of H1 2019.

That inventory number was in itself a remarkably low number. Go back two more years to 2019 and had 729 listings at the end of the June. This 52% increase in inventory in the last couple of months is actually a decrease of 72%. Some our car has never had much gas in the tank, but it was replenished regularly just not as much as last year.

            Low Inventory Limits Sales

In the first half we had 331 sales down from the 511 blockbuster sales that we had last year. While we didn’t have the Bugatti Chiron of sales that we had last year, we still had a pretty peppy Audi TT driving sales (my favorite car, I’ve every owned:). Given the record low inventory we had every week this year, those 331 sales are remarkable. If we’d had more inventory, we would have a lot more sales.

                        What about those sky-high interest rates?

You would think reading many of the news reports that sales have stopped due to sky-high interest rates. Sales haven’t stopped, and by just about any measure interest rates are not sky high. We had 69 sales in June this year, which is below our 10-year average of 91 sales, but it’s only 24% down, when our inventory is down 72%.

Interest rates were reported over 6%, but I don’t know that anyone in Greenwich saw that rate. All of the mortgage bankers that I work with have been sending me with their weekly emails with 30-year jumbo rates in the low to mid 5%’s. ARM’s are often under 5% and at least one bank will offer you a mortgage under 4% if you are willing to move your banking relationship over to them.

In Greenwich, thought most buyers aren’t using mortgage contingencies. Normally, we are about 50:50 in contracts, with half of our sales contracts having mortgage contingencies and half, being non-contingent deals.

For the month of June, it was more like a 25:75 ratio. It was a competitive market and removing the mortgage contingency would get the buyer a better price and moved to the front of the line in multiple offer situations.

The 75% of buyers without mortgage contingencies, may well be financing their house purchase. Smart buyers in this market are underwritten pre-approved and are willing to take the small risk, that the house might not appraise out and they will need to come up with more money.

Other buyers are eschewing the typical mortgage, especially now that federal interest deduction only applies the first $750,000. Buyers are using long term margin loans, art loans, and a wide variety of non-standard financing. Still, lots of those 75% of buyers without a mortgage contingency are all-cash buyers, reallocating funds from a risky asset into the relative security of a Greenwich real estate investment where supply still can’t meet demand.

            Months of Supply also at Record Lows

You can see just how much excess demand we have for our limited inventory by looking at the months of supply numbers. This number tells you how long it would take to sell the present inventory based on how fast houses have sold year to date. The problem with this one number for months of supply is that if you have a hot first quarter and a slower June, months of supply may not accurately reflect the market right now.

Two things you can do to get a better feel for the market is to add in the contracts that are signed but haven’t closed yet and assume they will close, on average, in a month and a half. A second method is to take what closed this month and annualize that one month’s sales to see how hot the market is now. If months of supply with contracts is a lower number than months of supply only using closed sales and annualizing the current month of sales is even lower, you have an accelerating market.

When you do that in this market you see accelerating markets in several price ranges. For example, from $1.5 – $2.0 million, months of supply is a low 3.3 months, throw in the 19 contracts waiting to close and you are down to 2.9 months and annualize June sales and MoS is only 2.5 months of supply. If you are looking in that price range you presently have a choice of 25 listings, but 46 have already sold this year and 19 are under contract. It is not a soft market.

This accelerating market is seen in 4 of 11 price ranges. The other price categories are best characterized as flat with now clear signs of accelerating or decelerating. Having said that, they are already at ridiculously low levels all the way up $5 million. The only real pro-buyer market we have is over $10 million, where we have 29 listings and only 7 sales and contracts, but that was also true last year. If you are selling a house in that price range, you need to price it competitively and do a good staging job.

          An Example of Today’s inventory

Russ and I put on 562 North Street on Tuesday last week at $3.395,000. It’s an architect-designed house sitting on 2 acres with a pond in mid-country. There is a large deck that overlooks the pond and plenty of room for a pool. It also comes with two downstairs bedrooms with a full bath. One of the first-floor bedrooms has a separate entrance. This gives the owner the option of two offices, a staff suite, mother-in-law apartment, or a two-bedroom guest suite.

We had the realtor open house that Tuesday, 7/5, and had several appointments for showings right after the realtor open house. Showings have gone well and the market for that house in that location is good. It’s also good, for most other Greenwich properties, which are newly listed at market prices.

It is not the market that we had in March. Today, listing too high is much more of a problem now than it was then. Today, there is a fair amount of uncertainty, and most buyers need a reason to move when such uncertainty is present. Smart buyers see this as an opportunity.

Greenwich School Districts & Real Estate

If you had some spare cash in the year 2000, one of the better places you could have invested it was in a house in the New Lebanon school district. In 2000, you could have bought the median-priced house in this southwest section of town for $395,000.  Your “average” house would have been 2,095 s.f. and would have been on the market for 110 days. In 2021, your average size house sold that year was the same size, but up 120% to $870,000.

Equally remarkable, 2000 wasn’t a bad year in Greenwich sales. That year, we  had 785 sales which was the highest number of sales prior to the Covid years of 2020 and 2021. Demand was high in 2000, but even higher in 2021, In the New Lebanon school district sales barely grew from 2000 to 2021. We went up 2 houses from 23 houses in 2000 to 25 houses in the New Lebanon school district last year. People like this area and tend to stay. Also, most of the properties already had a house, which was close to the FAR.

Townwide, in the last 22 years we have had roughly 14,600 sales of single-family homes. Of those 14,600 sales only 393 were in the New Lebanon school district or 2.7% of all sales. Limited supplies and good prices make for good appreciation over the years.

In total, we have 11 school districts. The school districts tend to be compact with similar sized houses and zones. Analyzing sales by school district is actually a good way to compare houses in the various areas in town.  The best example is comparing the GMLS’ South of the Parkway area to Glenville and North Street school districts. In the GMLS stats, South of the Parkway has a variety of different neighborhoods and zones. The two school districts divide up the South of the Parkway area in to eastern and western halves. The northern portion, the traditional Golden Triangle, is included in the Parkway school district. This groups some of our more expensive 2-acres homes with the four-acre zone north of the Parkway.

No delineation of neighborhoods is perfect. Many of the RTM districts are pretty heterogeneous and the 63 neighborhoods that the Tax Assessor uses for detailed analysis have too few sales in each district for our realtor community to compare houses for our clients that are buying and selling.

When you do look at the school districts you can see why, in many ways, Greenwich is a small city rather than a more homogenous town. In 2021, our median sales price ranged from $3.2 million in the Julian Curtis district which includes downtown, Belle Haven, Mead Point and Indian Harbor to $716,675 in the Hamilton Avenue school district.

While our schools vary in the size of the districts, with Parkway School being by far the largest; they also vary in enrollment. Per the Connecticut state Edsight (https://public-edsight.ct.gov/, which by the way has a lot of useful information) the 2021-2022 enrollments of Greenwich public elementary schools are:

North Mianus is the largest elementary school with 498 students according to the state, while Parkway which has the largest district area wise has the smallest enrollment with 217 students. That 4-acre zone and the northern part of the 2-acre zone really spaces out students. Then again Parkway represents 1 out of 11 elementary schools, but the district paid 1 out of every 4 dollars that the town received in conveyance taxes too. The Parkway district had $8.3 billion of the $34.1 billion dollars of total sales from 2000 to 2022.

Greenwich is also known for its excellent private schools and their enrollment also appears on EdSight. Our largest private school in Greenwich is Country Day, that recently absorbed the Stanwich School. It’s enrollment in all grades totals 1,302. The second largest private school is Brunswick with 1,045 students. In total, EdSite says there are 4,853 private school students. This adds another 50% to our total student population. Many of these schools have good-sized waiting lists, but if you want to send your children to private schools, you’ll find more choice in Greenwich, than just about any place outside of New York City.

Not all students in Greenwich go to Greenwich schools, public or private. Covid has resulted in a nice influx of families with school age kids from New York City. A bunch of these families are continuing to drive their children to the New York City schools where their friends are. I know of three families that carpool to Horace Mann in NYC. We also have a lot of students that attend boarding schools elsewhere in Connecticut and around the U.S. and the world.

When looking at these numbers, you’ll notice some anomalies, such as we only had 8 home sales in the Hamilton Avenue school district last year, while the school has 324 students. A major reason for that is much of Chickahominy is in an R-6, two-family zone, so these duplexes and condo sales, as well as rentals don’t get counted in these single-family home sales numbers.

Overall, the number of home sales is up in every elementary school district with North Street being the big gainer going from 145 sales in 2000 to 208 sales in 2021 or a gain of 43%. That district is one where we saw a lot of new construction in this century.

If you look at total sales dollars, the biggest increase was the International School at Dundee. This increase is a little deceptive in that Dundee is a magnet school and many of the students get in by lottery from all over town. However, when they redistricted, the Old Greenwich elementary school district, more than 20 years ago, the properties on the north side of the old OG school district were redistricted to Dundee. These students got into the very popular international baccalaureate program at ISD by right.

Our excellent schools, both public and private, have been a major draw for home buyers. The number of choices also is very attractive to homebuyers. Greenwich is a good place to be educated.