We have 217 listings on the market which is a record low for this week. We only have one listing under $700,000 which is 0.5% of the market. Under $1 million we only have 10 listings, and only 1 of those 10 listings has been on less than 45 days. Listings that have been on for 45 days in this market are feeling pretty middle-aged. We actually have more listings over $25,000,000 than we have under $1,000,000; 12 ultra-high-end listings versus the 10 sub-$1M listings.
So far, we have sold 33 single family homes, which if you monthlyize (which at least one other website says really a word), we might expect 43 sales by the end of September. This is a 64% drop from September 2021, when we had 118 sales, the highest sales month in 2020. Last year, we dropped to “only” 81 sales in August 2022.
Grossing up our 33 sales to 43 looks pretty poor against the Covid years. Those 43 sales are also lower than our 10-year pre-Covid average of 48 sales. However, it’s more the knock-on effects of the Fed’s dramatically raising interest rates, than the higher rates themselves that is causing the slow down in sales. Higher rates are leading to fewer contingent contracts, but the stock market drop is having a bigger effect at the high-end than higher interest rates which are mainly affecting sales under $1 million.
The increase in interest rates causes bond prices to drop and while at the same time encouraging investors to move money out of the stock market towards those higher interest rates causing the stock market to drop also. As a result, what’s really dropped is the wealth of high-end buyers with lower bond, stock and crypto prices. (It always amazes me the number of people in Greenwich who have some or a lot of money in crypto-currencies or crypto related companies.)
Along with this drop in wealth has come an increase in uncertainty. Nothing slows a housing market like uncertainty. A lot of the growth wealth we saw in the Covid years was on paper and many people are still up a good amount of where they were pre-Covid. Any crypto investors who bought in a while ago, are still seeing triple digit appreciation, but are these people going out to buy a $10 million house? But, are any of these wealthy folks more likely to invest in a house, when their wealth is dropping. Most people won’t, but the really smart money is considering doing just that as I found out this week from calls from two investors looking. They are looking for an inflation hedge with limited downside risk and a house to live in. That last factor is something that other types of investments can’t provide.
Also, since the Great Recession, we’ve seen many of our high-end sales happen from September to December. We do have 18 contracts for properties listed over $5M, this compares to 3 contracts over $5M in August 2018. We will see an upturn in sales over our 10-year average, for the $5 – 10 market with 78 sales so far compared to 31 sales in 2018. Does that make for 47 more smart buyers in 2022 or more than double. It remains to be seen, but they all have a nice house and a nice town to live in.
The one place that inventory is not tight is our over $10 million particularly least compared to the market under $5 million where months of supply is measured in a few months not a couple of years. This year we have had 8 sales over $10 million, but then that’s only 2 less than we had in the hot market of 2021.
This year , we’ve had no sales over $18 million and we have 18 listings above that amount. While the over $5 – 10 million have done well so far. That’s not the case once you get over $15 million. Don’t expect this number to go soon as we have no contracts over $10 million, though we do have 2 contracts on houses listed over $9.7 million. Not all of the lower ultra-high-end market is due to a weak buyer demand. Sellers are also keeping sales down with some aspirational pricing. In Greenwich, you never want to price your house off of national news stories regardless of the price.
The other thing that we are seeing are more price reductions. We have less than two months left in the fall market, so now is the time to take a price reduction. The property at 562 North Street just got relisted at $2,995,000 a price drop of $400,000 and that’s resulted in a lot more showings. If you have to reduce a listing, you want to only do it once, so make it big enough that that will get it sold.
Overall, our inventory is ticking up slightly, but contracts are falling as they do each year, but without more inventory, we are going to see the days on market continue to rise. The buyers that need a mortgage are feeling squeezed with the number of these buyers offers down, but so far, we’ve got plenty of cash buyers, or at least buyers that don’t need a mortgage contingency in their purchase contracts. Of our 78 contracts only have 15 have contingencies.
Stay tuned and hope that the month that came in like a lamb goes out like a lion . . .
Right now, there is a great information war going on on the Internet over real estate info and some of the sites are creating “alternative” information though often without the agendas that we see in the political arena. If you go out looking for information about your home or a home that you are interested in, you need to be careful that the “facts” you are getting are actually facts. The biggest offender of this inaccurate information is the biggest real estate website Zillow. Zillow has the lion share of searches, particularly when you include Trulia which they purchased a couple of years ago.
Only the FTC is keeping Trulia alive. As part of getting the FTC’s acquiescence for Zillow to buy Trulia, Zillow had to agree not to close down Trulia. Instead, what Zillow has done is to let Trulia, which used to be a pretty good site with several unique features, become a distant also-ran with outdated features and the same house price estimates as Zillow. Zillow has announced four new features just in the last two months. For Trulia nothing in awhile other than an imported Zillow feature.
The battle of the big three real estate websites is now down to the big two and unfortunately the number 2, Realtor.com has become a distant number 2. Like Avis, Realtor.com is trying harder, but they are constrained by reduced cash flow. I recently talked to one of the senior officers, and he said they have big plans to gain market share, but that’s yet to be seen. However, it’s still my go to website for public real estate information.
The interesting competition to Zillow is likely to be coming from CoStar, which owns the largest commercial real estate listing site, LoopNet.com and also Apartments.com. CoStar has announced a Zillow competitor in the residential information website, but it’s taking them a while to roll out that new site.
Zillow vs. Realtor.com
Realtor.com used to having a timing advantage over Zillow. Historically, new listing information from the GMLS goes directly to Realtor.com since it started out as the website of the National Association of Realtors. (The NAR then became the only trade association that I’m aware of that sold their own website to a private organization. Part of this is the way that Realtor.com was funded, from some of the brokerage firms, but not all.)
Zillow used to get their listing information from ListHub.com, which like Realtor.com, is a News Corp. company. This resulted in Zillow’s listings being hours out-of-date, which in a hot market can make a difference as to which buyers gets to see the house first. At the same time, most brokerage firms got their listing information directly from the MLS that they belonged to, just as Realtor.com does, getting it faster than Zillow did. For Zillow, this delay was bad news.
Zillow figuring if you can’t beat them, join them, did just that. Zillow is now a licensed broker in ever state, though they rarely do anything that looks like a traditional brokerage. Their brokers mostly just get the listing feeds form the various MLS’s and forward it immediately to Zillow.
Zillow, the brokers, are also looking to co-broke listings with agents so that instead of Zillow getting paid a few hundred dollars for advertising fees to produce leads, they are now going to take thousands of dollars, as a percentage of the local broker’s commission. Given Zillow’s market dominance this tying has major antitrust issues, but it’s working for them so far.
Some Zillow Data to be Beware of
I wrote an article last year, entitled Why Zillow Hates Greenwich, pointing out that Zillow’s estimated monthly payment is often thousands of dollars higher in Greenwich than the real carrying cost as they don’t use the actual Greenwich tax amount, but a countywide average tax rate to calculate taxes. Since Greenwich has the lowest tax rate in Fairfield County and Connecticut, Zillow constantly overstates the monthly carrying costs. I regularly point this out to my buyers so they know they can afford more house that Zillow says.
Zillow also has as an automated valuation model to determine the value of your house, their so-called Zestimate; and it’s often wrong. To their credit they do give a Zestimate range, but then come up with one number for their estimated sales price in a much bigger font. If you look at their chart of past Zestimates it bounces all around.
It looks like they give way too much weight to recent sales so that every time a house in that neighborhood either above or below there old valuation, the Zestimate jumps. It looks dramatic but is no way to try to figure out the value of house. You’ll notice that once a property is publicly listed the Zestimate becomes the same as the list price. I guess they figure the owner and their agent know more than they do. (They do.)
Lastly, Zillow is really bad about correcting bad information. I’ve had listings where for some reason, the acreage was wrong, multiple emails and weeks later they might get around to fixing it. Then a week later, that number reverts to the old number and you have to start all over again. If a number is important, you should have your agent check it out or you can check it out in one of the sources below.
Realtor.com has multiple AVM’s
One nice feature at Realtor.com is that it has multiple sources for their estimate of your property’s value. Banks have used two major AVM’s for years; CoreLogic and Collateral Analytics and both are available at Realtor.com. In fact, Realtor.com uses CoreLogic’s estimate for their top line estimate. These traditional AVMS have recently been joined by a new kid, Quantarium, which sometimes, though not usually, may be more accurate. At least you have 3 choices. Often, the closer all three are the better the estimate. To find these AVM’s on Realtor.com just input the property address and then scroll down to the Home Value tab.
The Greenwich Assessor’s FMV
Since you are in Greenwich, you are likely to get a much better estimate of value from the Town Assessor’s estimate of the fair market value of your property. Unlike the “numbers only” AVM, the Assessor adjusts for lot size, wetlands, highway traffic and over a dozen other factors that affect property value in Greenwich. To get your copy of a property’s field card stop by the Assessor’s office on the first floor of Town Hall or you can email them for a “property record card” at email@example.com, their more accurate model will cost you a buck.
The Greenwich Town Clerk’s Office Land Records
The Assessor’s field card is a wealth of information. One thing you will find in the upper right corner is the date of the last sale and the book and page where the deed for that sale is filed in the Town Clerk’s records.
The great thing is that our prior and present Town Clerk’s, Carmella Budkins and Jackie Budkins, have done a great job putting this information on the Internet via Town Fusion. Head over to GreenwichCt.org. Go to the Town Clerk’s page and click on the Digital Land Records link. You’ll need to set up an account, but it’s free. Find the book and page number search fields and put in those numbers from Assessor’s field card. Up will come the relevant deed even if it was filed in 70 years ago.
The deed will show the official names of the buyers, the present owners. Go back to search and search each name and you’ll find mortgages, easements, liens, lawsuits and a variety of other things that can affect the value of the property.
If you are really ambitious, or a lawyer, or title examiner, check out Exhibit “B” of the deed to find the book and page of prior encumbrances and the map number from when the lot was created. These are online too. Check these out if you wondering just what the neighbor or some utility company has a right to do on that property.
GIS, the Best Thing in the Basement of Town Hall
If you are looking for property info, head down to the basement of Town Hall. At the bottom of the main stairs is the Geographical Information Systems office. Bring your field card with it’s address and Tax ID number and Kerry will help you get a printout of dozens of layers of information from thetopography, to stone walls, ponds and streams, wetlands, driveways, bridges and lots of useful information. Alternatively, like the land records, you can use the GIS online order form. In addition, to the GIS map you can get an aerial map, both will cost you five bucks.
One note on wetlands, those are estimated from aerial images. To really determine the boundaries of any wetlands on your property you need to check with Inland Wetlands and Watercourse Agency on the second floor of Town Hall and hope that someone has filed a previous application and had a soil scientist map the wetlands.
The Sentinel and GreenwichStreets.com
The Sentinel archives lots of my and other authors real estate articles with information on various town neighborhoods, market reports and market segments. Just go to greenwichsentinel.com and click on “Real Estate” in the top navigation. You can also find these at GreenwichStreets.com which will have a major redo next week with some cool videos and also with an archive of my articles back to 2018. (Back to be added 2013 to be added.) We also have podcasts of our Monday morning show on WGCH.
Brokerage Websites Market Reports
All of the major firms produce very good market reports usually on a monthly basis. These reports usually have year-to-date information as well as the current months information broken down by neighborhood. Check in with your favorite agent and they will gladly arrange to put you on a mailing list. (I send out about 220 of these each week along with my open house list.)
One thing to note is that in Greenwich, these reports can be affected by the law of small numbers. This law says that when you slice a data set several different ways, the remaining small set of data numbers will jump around a lot from period to period. For example, the inventory in Banksville saw a 50% increase this year over last year. This is impressive especially when you note that at the same time, the town wide inventory went down 24%. The real story, the 50% jump in Banksville is because last year we had two listings in Banksville and this year we have three listings.
We have many other sources for real estate info, but you really should make your Realtor get the info for you. 🙂
In nearly every neighborhood in Greenwich, the real estate market is worse this year than last year. Overall, our total sales volume is down $750 million dollars or 33%. The hardest hit neighborhoods are Byram and the South of the Post Road neighborhood that includes Belle Haven, Indian Harbor and Mead Point. Our most affordable neighborhood and some of our priciest neighborhoods are the ones seeing the biggest drop in sales volume. Not only are our total sales volume down, but so are the number of houses sold through the end of August.
Last year at this time, we had sold 752 houses year to date. This year we are looking at a drop of 36% down to 479 houses. Once again Byram got crushed with a drop of 61% drop in the number of sales, but coming in second and third were two of our most popular neighborhoods; Old Greenwich is down 49% in sales and Riverside is down 45% in sales. The total dollar volumes in both neighborhoods took about a 45% drop. These are recession type numbers. In the Great Recession we saw a year over year drop of 47% in unit sales from 726 sales in 2007 to 460 sales in 2008. Our fall in number of houses sold and total volume sold is deep and widespread.
But wait, just last week you didn’t I write that it wasn’t all gloom and doom in Greenwich and that we were doing much better than the rest of the country. And, that’s true too. So, what is it? To see how our market can be both hot and cold at the same time, all you need to do is look at a color-coded map of the changes in our market from last year. The pink, “pro-buyer’s numbers” are in the number sold and the sum of sold dollars columns where sales numbers and total dollars went down. The second part shouldn’t be surprising, when the number of sales fall by 36% you’d expect the total sales volume to drop by a similar amount, which it did dropping 33%, even with some home price increasing. In many cities across the country that had the biggest run-ups, we are seeing the largest drops, that however is not what is happening in Greenwich.
All of the above apparently contradictory statements can be explained by one word, “inventory” or more accurately, lack of inventory. Last year at this time, we had 267 listings as our inventory took a steep drop from the prior June 2021 peak of 342 listings. If you go back to our last pre-Covid year, we had 585 listings at the end of August 2019.
Sometimes these numbers seem like an abstraction, but imagine you grew up in Riverside and want to bring your kids back home to be close to their grandparents. In 2019, you had a choice of 61 houses; in 2022 you only have a choice of 13 houses. Under $1 million you have a choice of one house. From $1 – 2 million you have a choice of two houses. On the flip side, if you are looking to buy your dream house, you have a choice of only two houses over $3.7 million: one at $4.8 million and another at $25 million. Be happy if you are looking from $2 – 3.7 million, at least you have 9 choices.
It’s a tight market for buyers, but it does vary from neighborhood to neighborhood. For example, our two highest months of supply are 7.6 months of supply North of the Parkway and 5.5 months of supply South of the Post Road. That also happens to be where we have the highest percentage of house over $5 million and over $10 million, which are our two weakest segments. That doesn’t mean if you are looking to buy a house for $2 or 3 million in those areas that you are going find a pro-buyer’s market. Houses under $5 million are tight everywhere.
Both backcountry and South of the Post Road are the only two areas that have a price drop from last year. But, they really haven’t. Once again that is due to the drop in high-end sales, and particularly, the very high-end town wide. So, the average price is down in backcountry is down 11%, but the sold price per square foot is up 6% over last year.
Prices are continuing to go up, because inventory continues to drift down. As I write this, we only have 194 listings down from 202 at the end of August only a week ago. As yet, we have not seen anything that you might characterize as the beginning of the fall market. In our office meeting, several properties were announced as soon to be listed, but it’s still not a lot.
In some ways for some groups, the sky is falling, or maybe better said, the skies have gotten gloomy. For example, if you are the town or state collecting conveyance taxes or if you are a real estate brokerage firm having to pay the same overhead you are seeing fewer dollars. Furniture companies and landscapers are likely to see down turns in new business as the number of sales have dropped. For buyers and sellers though they are still in a pretty tight pas de deux.
Stay tuned the fall market inventory has to arrive soon …
Greenwich real estate is doing much better than much of the U.S. real estate market. In fact, by most measures our market has gotten tighter in the last few months. To be fair the rate of increase in prices has slowed, but prices are still going up and months of supply remains very low.
Greenwich Prices are up both Y-o-Y and since April when the Fed started raising rates
Our average sales price for a single-family home in Greenwich year-to-date is $3,132,680. Sales prices are up 4.7% from April 2022, when the Fed started their big rate hikes, to August 2022. It’s not just the average price that is up, our median price is up 4.6% to $2,550,000. Think about that, half of the Greenwich homes sold in 2022 have sold for more than $2.5 million. Back in August 2018, the median price was $1.95 million, so we have seen an increase of 30.8%, since 2018, our last good pre-Covid year.
When talking about prices, particularly in Greenwich, you have to take the average sales price changes with a grain of salt as much of the change is due not to overall price rises, but to the change in the mix of what is selling. Our high-end can be very high and it doesn’t take many big sales to move the average sales price. Last year we sold 3 houses over $27 million, so far this year, we’ve sold none. Our highest reported sales price is $17.6 million. (Congratulations to Brian Milton and Yashmin Lloyds here at Compass).
To further see how the mix of high-end sales, and a decrease in sales under $1.5 million affected prices compare the median sales price to the sales price per s.f. Since April, our median price is up 4.6%, while our sales price per square foot is up 6.0%. The price per s.f. is less affected by the mix of what is selling, so it can be a better indicator. The bottom line is that all three price averages are up on a year-over-year basis. These indices are up for the last four months even as the Fed has jacked up the fed funds rate by 225 basis points this year.
Months of Supply stays tight and days on market continue to slide
Another indicator of a tightening market is a decrease in days on market of properties that are selling.
Our days on market have gone from 114 days in August 2018 to around 60 days in August last year and April this year. Since then, the market has got even tighter to only 32 days on market for sales in August 2022. At the same time our months of supply has stayed in the super-seller’s market of 3.4 months of supply up slightly from 2.8 months of supply in August 2021.
It may seem that the slowdown in the economy and the increase in interest rates has not affected Greenwich, but what we are really seeing are two countervailing trends. Sales have slowed from last year going from 751 sales last year by the end of August to only 477 sales at the end of August 2022. Had inventory stayed the same, our months of supply would have jumped this year, but right now our inventory is down 24% from last August. What’s really amazing about this, is that last August’s 267 listings were a record low for August. One most people didn’t expect to go lower, but we have dropped a lot lower.
Inventory peaked last year at a very low 342 listings and then continue to drop for 6 months to only 152 listings at year end. For the first quarter of 2022, we stayed at these unheard of lows. We actually set a new all-time low of 140 listing on March 21, 2022. From there we had a “strong” recovery to 222 listings by the middle of July. Since then, we seen inventory drift down to today’s 202 listings. All these numbers are still way below the 500 – 600 listings we’d expect this time of year. Combine decreasing sales and decreasing inventory and we’ve had a dynamic balance that has kept our market in the super-seller range, even as overall sales drop.
Sales climb back above average
In August we have had 74 sales compared to our 10-year, pre-Covid average of 67 sales. Our August sales were the same as our July sales, when usually August sales are much lower.
Sales below $1.5 million “fall”
As you might expect with rising interest rates sales at the lower end, which are more sensitive to mortgage cost increases have declined. A couple of clarifications though; first in Greenwich, we really don’t have a low-end. Every house in Greenwich has sold above the national average of $430,000. Secondly, sales are down in every price, except for $4 – 5 million where they are up only 8%. When you compare this August’s sales to August 2018, our last good pre-Covid year, sales below $1.5 million are down 47 sales, while sales above $1.5 million are up 52 houses this year.
What is even more revealing is that that this August we only have 15 contingent contracts out of 87 total contracts or 17%. In August 2018, 31% of 61 contracts were contingent, or almost double the percent contingent contracts in 2018. People needing a mortgage are being squeezed by both higher rates and also the tight market that disadvantages contingent offers. If you are looking to buy under $1.5 million in Greenwich, it really helps to bring cash or an underwritten pre-approval to the bidding process.
The market is slowing, but above $1.5 million, it’s actually doing fairly well, given how little inventory we have. The one exception is the over $10 million market which remains slow. Since the Great Recession sales at the high-end have moved later in the year as most financial people no longer get a big cash bonus at the beginning of the year. In August our market from $5 – 6.5 million did particularly well with 22 sales and contracts compared to only 26 sales for the entire prior part of the year.
If you want to be the prevailing buyer in this market, get a good Realtor, attorney and inspector. It’s still tough out there. At the same time if you are a seller, it’s a declining market and not the time to try an aspirational price.