Is It Time to Rent, Renovate or Relocate

This being Valentine’s Day week, I was thinking of things that people love and figure that most people love their homes. The memories made there are often some of the best of their lives; family holidays, baby’s first steps, some great parties, just sitting down to dinner with family night after night makes for a wonderful bond with your home. But what do you do when the house is too small, or too large, or just too expensive?

                When is the Best Time to Sell Your House?

If you are thinking about a move more than a year out, you have some time to do some planning to maximize the return on your house. Right now, we are at the beginning of the spring market and as well as love, many people’s hearts turn to relocation in the Spring. So, is the spring market always, the best time to put your house on the market? For many people the answer is yes as that is when we see the largest number of deals made, but that’s not always the case.

We do have a good, albeit smaller, fall market that starts right after Labor Day. However, what you want to ideally do is put your house on the market when demand is greater than supply and that can happen at anytime of the year, that’s just a matter of having your Realtor look at the numbers. If your house is one of the few that is coming on the market and dealings being done are above average, even December can be a good time to put your house on the market.

Planning Ahead

Thinking in advance also gives you time to fix up the house, declutter the inside and stage it, either with mostly your own stuff or with furniture that the stager brings in. Painting the exterior and interior can really help a house look more presentable and well cared for. While most houses sell better when they have furniture in them, houses that are very cluttered or whose interior doesn’t match today’s buyer for that house may sell better when lightly staged or even empty. Another nice feature of moving first and selling second is that you don’t have to keep your home ready to be shown at a moment’s notice.

Should You Renovate Your House?

In general, you don’t want to do major renovations to make the house more saleable. I one time had a prospective seller proudly show me before and after pictures of a just renovated upstairs guest bathroom as a key selling point. The problem was the kitchen and the other bathrooms were badly dated, so the money might have been better spent on redoing the floors and brightening what was a dark house.

If you are planning on staying in your house for several more years, but are considering doing renovations, consider how they will add to the value of the house and to its future salability. Taking a traditional floorplan and opening it up and putting in the new kitchen that you have always wanted, makes you happy and also makes the house easier to sell. The one caveat is not to go to far in customization. I had a client who had customized bathroom tiles made in Italy for the boys’ bathroom. They had frogs, snakes and undersea creatures in full relief; cute, but they creeped out some people.

Can You Afford to Sell Your House?

In the pre-recession days, people nearly always sold their house for a nice gain and had plenty of money to go around to pay costs and have a nice downpayment for their next place. In today’s world, and particularly for those people that bought at the height of the market in 2004 – 2008 that may not be the case. For sellers, you need to be able to payoff the mortgage, pay your attorney and broker and pay two taxes that many sellers don’t think about.

CT Conveyance Taxes

Connecticut imposes a conveyance tax on sellers of homes. The tax is 0.75% under $800,000 and 1.25% over that amount plus a 0.25% town tax or a total of 1% below $800K and 1.5% over $800K. On our median $1.8 million dollar sale that comes to $23,000. Starting in July of this year the state will impose an additional 2.25% tax on the sale amount over $2.5 million. If you stay in the state after you sell your house, you will get back the additional tax starting in 2023. What we will clearly see this year is bump up on in June sales and a drop in July sales just as we saw in 2011, when the state conveyance tax was increased by 0.25%.

U.S. Capital Gains Taxes

The other tax that most people don’t pay on the sale of their home is the federal capital gains tax. This is because of the $250,000 tax exemption for each person and $500,000 for a couple. For anyone who bought in the Greenwich in the 1980s or before they almost certainly have this much gain even for our lowest priced houses. For our higher priced houses sellers may find that that in addition to the 20% capital gains tax they are also paying the additional 3.8% Obamacare surcharge. Now as my mom used to tell my dad, not everything is about taxes and even in worse case situation you still keep over 75% of the gain above the $500,000 exemption.

One thing that sometimes surprises people is that you don’t get to deduct the mortgage payoff in calculation your gain. So if you bought a house a long time ago for $100,000 and you sell it this year for $1,100,000 and you refinanced several times up to say an $800,000 mortgage, you still have to pay taxes on a $1,000,000 gain even though you are only netting $300,000 after the mortgage is paid off.

If however you used the money from the refinancings to do $500,000 of improvements over the years, you would owe no capital gains taxes. This is because your basis is $600,000; your $100,000 purchase price plus your $500,000 of capital improvements. Just make sure you have your invoices for capital improvements in case the IRS wants to see them.

Delaying Capital Gains Taxes

One additional option that you know have to delay paying the capital gains on your house is to take the taxable portion of the proceeds and reinvest them in an opportunity zone fund. We really should have a one time unlimited exemption for the gain on sale of your primary residence when you retire. For many people, their house was their primary way of savings for their retirement.

How to Make Money While Downsizing

Now if you are downsizing many people think of their new home as the last home that they will ever own. This has led to tennis buddies of mine in their 70s who are highly mobile on the tennis court insisting that they only want me to show them downsized houses with a first floor master, because eventually they aren’t going to be able to do stairs. The $500,000 capital gains tax exemption does lead to a good opportunity for retirement planning. Simply, buy a house that needs work, fix it up and live in it for a couple of years, or more, and get up to $500,000 of capital gains tax free, then you can retire to Edgehill or Florida with a better nest egg.

Should I Rent or Sell My House?

The biggest owners of multi-family duplexes and triplexes in Greenwich are Greenwich residents. Lots of doctors, lawyers and financial people like having a steady source of income and income-producing real estate in their portfolios. What about renting your home? It can be a good source income and you can shelter some of the income with tax depreciation.

On the flip side, you have all the responsibilities of a landlord. You will also lose the personal residence $500,000 exemption after three years since you won’t have lived in the house for 2 of the last 5 years.

Can I deduct a Long Term Capital Loss if I Convert to a Rental Property?

One thing that you might think works, but doesn’t, is converting your house to a rental in order to take a long term capital loss on the house. Normally, losses on your personal residence are not deductible as they are treated as a personal losses. If you convert it to a rental property, your basis in the rental property becomes the fair market value on the date it became a rental. If the value were to continue to drop after that date you could take that loss, however, you must first recapture any excess depreciation, which may reduce your tax loss.

As a rental, your house can be a reliable source of income for years, but don’t forget that depreciation is not just a tax concept. When it come times to sell or re-rent a rental property, you will have some fix-up costs if you want to get the best value.

 

When deciding between renting, selling or renovating, I always tell my clients to decide what is going to make you the happiest. What’s the use of having more money, if it makes you more unhappy, because you are stuck in the wrong house or the wrong state. If a new house will make you happier and you have the funds, why wait for years to do something that will make your life better now?

 

January 2020 Greenwich Real Estate Market Report – What a Difference a Decade Makes

When we last left you at the end of the decade in December 2019, sales were down 11% for the year and were down 26% in the month of December. But all was not lost our contracts at year-end were up 41%, which boded well for the beginning of the new decade.

As of 2/2/2019 Inventory Contracts Last Mo. Solds Last Mo Solds+ Contracts  YTD Solds  YTD+ Contracts Mos Supply Mos w/ Contracts Last Mo. Annlzd
< $600K 5 3 1 4 1 4 5.0 3.1 5.0
$600-$800K 20 4 1 5 1 5 20.0 10.0 20.0
$800K-$1M 23 2 2 4 2 4 11.5 14.4 11.5
$1-$1.5M 52 17 10 27 10 27 5.2 4.8 5.2
$1.5-$2M 53 8 8 16 8 16 6.6 8.3 6.6
$2-$3M 97 12 6 18 6 18 16.2 13.5 16.2
$3-$4M 68 9 5 14 5 14 13.6 12.1 13.6
$4-$5M 39 3 3 6 3 6 13.0 16.3 13.0
$5-6.5M 33 1 2 3 2 3 16.5 27.5 16.5
$6.5-$10M 38 0 0 0 0 0 x x x
> $10M 25 1 0 1 0 1 x 62.5 x
 
TOTAL 453 60 38 98 38 98 11.9 11.6 11.9

The increased contracts from December did not disappoint us resulting in 38 single family home sales in January 2020 sales an increase of 41% from January 2019’s 29 sales. These 38 sales also beat our 10 average of 32 sales. You expect to see increased sales in a month that begins with increased contracts, but January had more good news for sellers.

Jan2020.2018-2020.020420

You would think with all those contracts maturing into sales, that contracts would have fallen by the end of January, and they did a little, but the buyers were out there signing more contracts and buoying the market. We entered January with 72 contracts and left the month with 60 contracts. This is normal behavior for the beginning of year as many people wait until the new year to close deals. (We also have people who rush to close before year-end, an effect that we did not see in December 2019. If someone could explain why we didn’t see our normal number of year-end deals in 2019, I’d be appreciative.)

What we did see by the end of January 2020 was the 38 contracts going to sold status, but we also 18 more contracts than we saw at the end of January 2019. So, more sales and more contracts at the same time means buyers and sellers were busy in January signing new contracts. Sales and contracts were up 27 in total in January. This increase in both sales and contracts resulted in our inventory dropping to 453 listings down 31 houses from January 2019 when we had 484 listings.

Jan2020vs2019.Spreadsheet.mp.020420

One exception to the lower inventory was a continued increase in inventory from $600K to $1.5 million. In earlier times, that is before 2018, we had buyers snapping up these homes as getting into Greenwich for under $1.5 million was very desirable and we had a “normal” number of people retiring and moving south or into a condo. In 2019 and extending into January 2020, ore folks in this price range are retiring and heading south or moving into a condo or even returning to NYC as empty nesters.

In 2018, this increase in retiree driven inventory was more than counterbalanced by a surge in sales from Westchesterites fleeing the highest property taxes in the country. Our sales from $800,000 to $1 million were up 59% in 2018 to 73 sales. That increase wasn’t sustainable and in 2019 our sales were back down to 47 sales almost identical to our 46 sales in that price range in 2017. At the same time, we had more “retirees as we saw in 2018. The result was more inventory and normal level of sales.

Jan2020.Sales.Inv.Cur.Ks.020420

Above $1.5 million, our inventory was down or flat in every price range with 56 fewer higher-end listings or a drop of 14%. This brings months of supply down in the higher end. We are about to see months of supply go up as now that the Super Bowl has come and gone (sorry about that S.F.) the spring market has begun. The increase in months of supply will be muted from $1 million to $4 million as 46 of our 60 contracts or 77% are between $1 and $4 million.

Jan20.4Pie.020420

With the exception of the aforesaid inventory from $600,000 to $1.5 million just about every indicator is showing a market that moved towards the sellers in January. Overall inventory is down, 6%, January sales were up 31% and contracts were up 43%; a very nice start to the year. With less inventory and more sales and contract, overall months of supply was also down.

What to do in our 2020 spring market

Every broker is different, but I advise my sellers to go where the action is. Right now, the action is in the $1 – 4 million dollar price range. We are seeing lower inventory, good sales and good contracts (actually only contracts matter when taking the pulse of the market at any given time). If the market is demand is there, I like to list earlier rather than waiting. You want to be in the market when the buyers are active, and you have fewer competing sellers. Of course, this also varies by neighborhood the house is in and other factors, so it is part art and part math/science. I put 21 Tomney Road on the market last week at $2.779,000. It is a beautiful house in immaculate, move-in condition and inventory is down and contracts are up.  We had 71 agents show up for a realtors’ open house, double the average number for a first open house. It can be nice to be early when things are busy.

What if your price range/neighborhood is not a hot spot? Then, I advise my clients to wait until later in the spring market to go public. If the buyers are not there, you may only be accumulating days on market. In a month or two other newer listings are going to be coming on when the house that rushed to market already has 30 or 60 of days on the market.

Buyers can also use this information. Knowing the same supply and demand information let’s buyers make better deals. Right now, 70% of our single-family home listings have been on the market for more than 4 months and 43% have been on for more than 9 months. Some of these sellers just aren’t motivated as represented by the 30 listing that have been on for more than two years. But, many of these sellers are looking for an offer. If you like the house make an offer, it doesn’t cost anything to make an offer in Greenwich unlike some other towns. Early in the year is an especially good time to make an all cash-offer, with either a quick close in the house is empty or a delayed close if the sellers have to arrange a move. Just match the offer to the seller’s desires.

January is only a blip on the market, but it was good blip. February is also looking good so far. Several blips in a row make a trend.

Jan20.MoS.020420

RISMedia Names Mark Pruner a 2020 Newsmaker and Thought Leader

RIS Media 2020 Newsmakers - Thought LeadersRISMedia has been reporting on the real estate industry for 40 years and each year they put out an annual list of Real Estate Newsmakers. The list is broken down in to several categories and this year I got named a 2020 Newsmaker in the Influencer – Thought Leadears category which was quite an honor.

I love living in Greenwich and to be named a Thought Leader was very cool. All I was trying to do is make Greenwich a better place to live and get an accurate story out about what is going on in Greenwich real estate.

My thought this week is how to how to make neighborhoods friendlier by expanding the small neighborhood centers that we already have, which you can read below. I’ve heard some of out town leaders are interested in the idea.

You can read the write up about me here and see RISMedia’s complete list here. It will also be in the February issue of Real Estate magazine.

Thank you very much RIS.

Mark Pruner

 

Building Better Greenwich Communities

Improving Our Town by Expanding Neighborhood Centers

 

Greenwich changed last year, and if the trends we saw in 2019 continue we could see some major shake ups in housing values. Three areas that had done well the last several years, did not do well last year. In Glenville, Riverside and particularly Cos Cob, we saw a drop in sales and prices. At the same time, we saw sales and prices in Old Greenwich continue to rise and a jump in sales in backcountry Greenwich.

Backcountry

Backcountry was the surprise on the plus side, where we have three factors driving sales; one not so good and two that are. The not so good factor is that backcountry properties are tremendous bargains after multiple years of falling prices.

The good factors can be seen in the increase in sales along the western and northern borders. The western border sales can be attributed to the expansion of Brunswick School. Parents buying in that area are just minutes from Brunswick and from Sacred Heart. Along the northern border increased sales can be attributed to the renaissance of the Village of Armonk with five restaurants serving Italian food, three Asian restaurants, two Mexican restaurants, two high-end restaurants, an Indian restaurant, a micro-brew bar and an excellent supermarket. (More about Armonk later.)

Cos Cob, Riverside & Glenville

In Cos Cob and Glenville, a significant portion of the drop in demand can be attributed to the loss of the SALT (State And Local Taxes) tax deduction over $10,000 making homeownership more expensive. A less discussed deduction reduction is the elimination of mortgage deductibility over $750,000. Prior to the 2017 year-end Tax Cut and Jobs Act homeowners could deduct mortgage payments up to $1,000,000 and also deduct interest on a home equity line up to $100,000. Combined these two reductions in deductibility had a major impact on sales below our average sales price of $2.38 million.

Sales of single-family homes in Greenwich decreased in all price ranges from $600,000 to $2 million. Glenville with an average sales price of $1.19 million and Cos Cob with an average sales price of $1.20 million fit right in the middle of this sour spot. Riverside was also affected as while its average sale was $1.99 million, its median sale was $1.71 million also in the sour spot.

What’s working in Old Greenwich

So, the change in Glenville, Riverside and Cos Cob is understandable; tax laws have made those property more expensive on an after-tax dollar basis. The same thing however didn’t happen in Old Greenwich. There the average sales price is $2.34 million, not that much higher than Riverside’s $1.99 million average.

What is it about Old Greenwich that allows it to shrug-off the TJCA’s tax changes? Part of it is certainly having two beautiful parks in Greenwich Point and Binney Park, but from what I’m hearing from my fellow Realtors, the main thing is the Village of Old Greenwich. It’s a very important factor in building a sense of place and increasing desirability of this neighborhood. (Just as the improvement in the Village of Armonk has helped backcountry sales.)

If you live in Old Greenwich you can get your morning coffee and a good pastry at Sweet Peas, pick up some cash at any of several banks, get your hardware supplies at Feinsods, play tennis at the Old Greenwich Tennis Academy and then have lunch and dinner at your choice of nice restaurants all on foot.

Many Old Greenwichites can walk to town or if the drive they can accomplish all of the above without having to move their car. You will also likely run in to several of your friends and neighbors while you are doing all this. Old Greenwich is a very walkable town and walkability matters more after the recession.

Post-recession, people were looking for more of a sense of community, they wanted to live on smaller lots, closer to their neighbors, with activity going on around them and be able to walk to things. House sales in 2019 show that the desire to be able to walk to stores and be part of a community has only grown more desirable this year.

Riverside, Cos Cob and Glenville downtowns

Riverside and Cos Cob both have shopping areas, but both are on the Post Road. Cars whizzing by do not make for the most congenial conversation area. Also, in Cos Cob’s case the cozy shopping area on Strickland Road is separated by a long wait for pedestrians as the lights are timed to facilitate the quickest movement of traffic on the Post Road not for pedestrians crossing the road. The new proposal for the M&T Bank area could help bring more of a village feel to Cos Cob, particularly with some good landscaping.

In Riverside, the Thruway shopping center is set up as strip shopping center with an unattractive parking lot in front and little greenery. The area to the west of the shopping center is not conducive to walking, say for example from the UPS store to Balducci’s. In Glenville, you have what could be a very walkable downtown with a park and a nice river, but it is broken up by the very the busy Glenville Avenue and Riversville Road intersection.

Creating more Neighborhood Centers

If the demand is there for more livable and walkable small community areas wouldn’t it be cool to create some more Neighborhood Centers. We actually have remnants of small commercial and non-residential areas throughout the town in areas that most people think of as residential. In Riverside, we have Ada’s, the train station and two schools all in a two-block area. On the north end of Riverside around the Palmer Hill bridge and spanning the Mianus River into Cos Cob, we have another non-residential area with a deli, liquor store and Bridges School. In Cos Cob, we have Rinaldis, the commercial area around Louie’s/St. Lawrence Club/Lupinacci’s area and Scarpelli’s Sausage and Bible Street Park. Backcountry has the Round Hill Store/Land Trust/Round Hill Fire Station area and also the Griff/Harvest Church/nursery area. Pemberwick has the Xchange and Castle View Delis.

One thing you will note in most of these areas is that there is a deli present. Having a good place to go for lunch is crucial to the success of any neighborhood area, but what else can we add. Having some place for neighborhood residents to meet is helpful. A multi-purpose area for kids to play, groups to meet and for special events and parties to be held would make a neighborhood more desirable. Having a community facility that neighbors could use would strengthen a sense of community.

Daycare and babysitting facilities would also be ways to bring people together. Drop off points for laundry could be useful as well as professional offices on the second floors. Back in the 60’s when I first moved here, many lawyers and doctors worked out of their homes. (My present doctor in Riverside is one of the few that still does.) People can get healthcare locally and pick up lunch at the same time.

Apartments for the store staff, daycare providers and activity center manager would be helpful for the stores but would also fight over-development. At the present time, developers that put in a minority of affordable units can override local zoning under the state’s affordable housing statute C.G.S. 8-30g and create high-density developments, but if we increase our affordable housing enough, that law is inapplicable.

Parking & Neighbor Impact

Two key issues are parking and neighborhood impact. One way to address parking is make use of the parking that is already there when it is not being used. The Riverside train station is mostly empty in the evenings and on weekends as are the school parking lots. Store employees not housed locally could use more remote parking that they could get to by jitney or a town subsidized taxi or Uber.

The other issue is neighborhood impact and NIMBY’s, a term I’ve always hated. Homeowner’s have legitimate concerns about changes that may serve a greater area but have a disproportionately negative impact on their own property. With expanded neighborhood centers, everyone has the potential to benefit. House values directly in the neighborhood centers should go up as properties with multiple uses are worth more. The houses immediately adjacent to these areas, if properly screened should also go up in value as their walkability is improved. Right now, houses around downtown Greenwich, that are easy walking distance to Greenwich Avenue and Metro-North are worth more than the same house in mid-country. This could be a win-win with everyone’s values increasing.

Now some people will say that Amazon is destroying retail so why build more. Retail is changing, but Amazon doesn’t build communities, it hurts communities as we know them. A former period of high vacancies on Greenwich Avenue is now waning as stores adapt to the online threat from national dot coms. What we do need to change locally is what is allowed in our “retail” areas. Banksville is a classic example of that. It has the potential to be an even better neighborhood center, but we need a lot more flexibility as to what types of businesses can be located there. Businesses that did want to locate there have been turned down.

Thriving in our 20’s

I’ve lived here since 1967 and seen Greenwich go through several iterations as neighborhoods and the town itself have changed. When we moved into Old Greenwich it was mainly a bedroom community for commuters into Manhattan and many residents who worked in local businesses. In the 80’s, New York City went through some very rough times and we saw a big movement of corporations to Greenwich and the rest of Fairfield County. By the 90’s and the digits we saw Greenwich become a major financial center with lots of hedge funds, including some of the world’s largest headquartered in this area. We’ve been through a lot of changes in last 50 years, but for most of that period Greenwich thrived.

In the 2020’s it’s time for some more changes so that we meet the needs of an evolving citizenry and a changing world. Personally, I’d love to see the neighborhood associations help lead these changes. They know their areas best and what can and can’t be done. I’m often pleasantly surprised by what can be accomplished in Greenwich with a little consensus building.

Mark Pruner is a real estate agent with Berkshire Hathaway and member of its President Circle. He can be reached at 203-969-7900 or by email at mark@bhhsne.com.

THE 2019 GREENWICH NEIGHBORHOOD REPORT – Greenwich Real Estate Turned Upside Down

When you look at the individual neighborhoods in Greenwich in 2019, what was traditionally down was up and several neighborhoods that have done well did poorly. Much of this was driven by a fall in buyer interest in houses between $600,000 and $2,000,000 in Greenwich. A significant factor in the drop in sales is due to the aberration wrought by 2017 tax act’s effect on the Greenwich market in 2018. The Tax Cut and Jobs Act of 2017 spurred sales in 2018 as buyers fled the higher taxes of Westchester County and for once we had enough inventory under $1 million to satisfy demand as many retired Greenwichites decided to accelerate their move to Florida . In 2019, the Westchester effect was diminished and the TCJA directly impacted Greenwich sales and prices.

 

Greenwich Totals Total Sales 2019 vs 2018
Sales 526 -11.3%
Sum of Sales  $      1,249,417,255 -12.1%
Average of CDOM                             236 17.0%
 Min of Sold Price  $                 450,000  
 Max of Sold Price  $           18,600,000  
 Average of Sold Price  $             2,375,318 -0.9%
 Average of List Price/SqFt  $                        585 -2.5%
 Average of Sold Price/SqFt  $                        546 -3.2%
Average of SP/ASMT 1.512 -6.1%
Average of SP/OLP 87.7% -3.4%

 

For the year, the number of sales of single-family homes was down 11.3% in Greenwich. The average sold price dropped 1%. Lower sales combined with slightly lower prices meant that the total volume of sales in Greenwich dropped from $1.42 billion in 2018 to $1.25 billion in 2019 or a drop of 12%. Curiously, the median price went up from $1.77 million to $1.87 million. This happened because of the greater drop in sales under $2 million compared to a lesser drop in sales over that price. As a result, you had to go higher in the number of sales to get to our median in 2019.

All of the other indicators also showed an overall weak real estate market. Our days on market were up, and sold price/s.f., sales price to original list price and sales price to assessment ratio, were down. In 2019 the ratio of  sales price to the 2015 assessment value was 1.512. Assessments are based on 70% of the Assessor’s fair market valuation so a Sales Price/Assessment ratio of 1.512 indicates prices are up 6.5% from the last reassessment date on October 1, 2015 (1.512÷(1/.7)). That same ratio was 1.61 last year or an appreciation of 13% through the end of 2018.

But not all the news was bad, several neighborhoods did better in 2019 than in 2018, so let’s take a quick look at each neighborhood ranked by their percent increase in number of sales.

Section

North Parkway 2019 vs 2018
Sales 59 31.1%
Sum of Sales  $    193,124,350 24.7%
Average of CDOM                         363 21.2%
 Min of Sold Price  $            590,000  
 Max of Sold Price  $      14,875,000  
 Average of Sold Price  $         3,273,294 -4.9%
 Average of List Price/SqFt  $                     565 2.5%
 Average of Sold Price/SqFt  $                     510 0.3%
Average of SP/ASMT 1.325 -14.6%
Average of SP/OLP 84.6% -3.5%

 

Backcountry Greenwich epitomizes the Greenwich real estate world turned upside down. Ever since the Great Recession, backcountry has been the weak sister of Greenwich sales. Post-recession people wanted to live closer to town, on smaller lots, in more modest houses and with more activity around them. The spaciousness of large homes on 4 acres lots and the attendant privacy and tranquility of backcountry were not valued as much. As a result, prices have dropped fairly steadily in backcountry and that continued in 2019, but last year may be the last year that that happens.

Sales were up from 45 sales in 2018 to 59 sales in 2019 or an increase of 31%, which was the biggest sales jump of any section of town. (Actually, the biggest sales jump was in Banksville where sales went from 1 sale in 2018 to 3 sales in 2019 or a 200% increase, but this report is long enough as it is. Notably Banksville is as far north as you can get in Greenwich.) This jump in backcountry sales was concentrated in the $1 – 3 million range where sales were up 12 houses. Above $3 million sales were flat, which was a driving factor in the continued drop in average prices.

Younger buyers are going where the values are, and in 2019 the best values were in backcountry. Anytime sales are going up, prices will follow, so 2020 may look much better for backcountry. If that is the case now would be a good time to buy in backcountry Greenwich.

Section North Mianus 2019 vs 2018
Sales 13 30.0%
Sum of Sales  $    14,590,000 -11.7%
Average of CDOM                      106 -9.2%
 Min of Sold Price  $          580,000  
 Max of Sold Price  $      1,700,000  
 Average of Sold Price  $      1,122,308 -32.0%
 Average of List Price/SqFt  $                  481 -3.5%
 Average of Sold Price/SqFt  $                  471 -2.3%
Average of SP/ASMT 1.535 -18.4%
Average of SP/OLP 95.2% 3.8%

 

Closer to town, North Mianus continues to be a hot area with sales up from 10 sales last year to 13 sales this year. Four sales under $800,000 and only one new construction sale pushed the average sales price down by 32%, but the average sold price per square foot was only down 2% so values are doing OK. Developers are definitely looking for more properties to redevelop in this busy area.

 

Section Old Greenwich 2019 vs 2018
Sales 96 14.3%
Sum of Sales  $    224,682,160 22.4%
Average of CDOM                         174 -2.3%
 Min of Sold Price  $            480,000  
 Max of Sold Price  $      11,000,000  
 Average of Sold Price  $         2,340,439 7.1%
 Average of List Price/SqFt  $                     677 -2.9%
 Average of Sold Price/SqFt  $                     639 3.5%
Average of SP/ASMT 1.546 -6.3%
Average of SP/OLP 89.6% -2.1%

 

The village of Old Greenwich continues to drive sales in what was a significantly down year for Riverside. Sales increased from 84 houses to 96 houses with the average sales price and average sales price/sf were both up. While cumulative days on market were down it wasn’t all good news for OG with the sales price assessment ratio and the average sales price to original list price also down.

When you see the various price change stats moving in different directions, it means the market is also mixed with some areas and price ranges doing better than others. As you can see from the difference between the minimum sales prices and maximum sales price, Old Greenwich, for a comparatively small area, is a surprisingly heterogeneous place with ultra-high-end sales on the waterfront and modest sales on small lots north of the Post Road.

Old Greenwich and Riverside sales traditionally move together, but not in 2019. Old Greenwich sales were up 22%, while Riverside sales were down 37%. One factor potentially driving this disparity in market demand is the downtown area and its desirability for those who like to walk to shops and meet their neighbors. This desire has been emphasized quantified by the major real estate websites like Zillow that promote “walkability” scores for houses.

 

Section Byram 2019 vs 2018
Sales 14 7.7%
Sum of Sales  $    18,532,000 -39.8%
Average of CDOM                      158 -21.7%
 Min of Sold Price  $          450,000  
 Max of Sold Price  $      6,500,000  
 Average of Sold Price  $      1,323,714 -44.1%
 Average of List Price/SqFt  $                  484 -15.6%
 Average of Sold Price/SqFt  $                  451 -16.9%
Average of SP/ASMT 1.796 2.8%
Average of SP/OLP 87.1% -5.6%

 

Byram sales were also up this year, as we actually saw an increase in sales under $600,000 and Byram has the largest number of houses in that price range. Traditionally, we are supplied constrained under $600,000, but we did see a little bump up in inventory, which led to increased sales. At the same time,  we saw a drop in sales along Byram Shore Road where some of Greenwich’s most expensive houses are. While the number of these sales is small, the tail definitely wags the door here. Last year 207 Byram Shore Road sold for $17 million, this year the highest sale on that road was $6.5 million (but see South of Post Road report below), the result was a drop in average price statistics.

The one exception is to this is the sales price to assessment ratio which went up 2.8%. Since this is a ratio, high-end sales are not as much of a factor. This ratio was up 3% int 2019 and up 26% since October 2015 when the last revaluation was done.

 

Section Pemberwick 2019 vs 2018
Sales 11 0.0%
Sum of Sales  $   8,130,500 5.5%
Average of CDOM                    208 60.4%
 Min of Sold Price  $       475,000  
 Max of Sold Price  $   1,215,000  
 Average of Sold Price  $       739,136 5.5%
 Average of List Price/SqFt  $               417 2.9%
 Average of Sold Price/SqFt  $               400 1.5%
Average of SP/ASMT 1.695 3.6%
Average of SP/OLP 93.3% -1.1%

 

Pemberwick was the dividing line between up and down neighborhoods. Sales were flat in Pemberwick with 11 houses sold, but most other stats showed an improving market. The average sold price was up 5.5% and the SP/Assessment ratio was up 3.6%. It did however take longer for a house to sell and buyers were getting a little more discount this year, but a 93% sales price to original list price ratio is still very good. (NB: In NYC and some other areas, pundits use the sales price to last price ratio and this number is usually in the mid to high 90s. I prefer to use the SP/OLP ratio rather than the SP/LP ratio as to me it’s a better indicator of seller’s price expectations. So, when you see their SP/LP ratio as being much higher than these numbers in Greenwich it’s an apples to oranges comparison.)

Section South of Post Road 2019 vs 2018
Sales 49 -15.5%
Sum of Sales  $            162,507,300 20.7%
Average of CDOM                                 253 16.0%
 Min of Sold Price  $                    550,000  
 Max of Sold Price  $              18,600,000  
 Average of Sold Price  $                 3,316,476 42.8%
 Average of List Price/SqFt  $                             781 9.6%
 Average of Sold Price/SqFt  $                             726 6.3%
Average of SP/ASMT 1.739 -0.9%
Average of SP/OLP 87.9% -4.2%

 

South of the Post Road includes, Chickahominy, downtown Greenwich and Belle Haven so we get a very broad range of prices. For this section sales were down 16% from 58 sales in 2018 to 49 sales in 2019. We did have a major jump in the average price, but this is because some houses on Byram Shore Road, which are technically south of the Post Road, but should be listed in Byram got listed in the GMLS’s South of the Post Road section and one of these sales was for $18,000,000, which definitely helps your averages.

Over the last few years, all the neighborhoods in this area have done well. You literally can’t get any closer to town and the shoreline properties are always in demand. While there was a slight drop in the SP/Assessment ratio it is still up 22% from the October 2015 revaluation.

 

Section South Parkway 2019 vs 2018
Sales 129 -19.9%
Sum of Sales  $    381,048,183 -23.3%
Average of CDOM                         287 28.9%
 Min of Sold Price  $            550,000  
 Max of Sold Price  $         9,300,000  
 Average of Sold Price  $         2,953,862 -4.2%
 Average of List Price/SqFt  $                     575 -5.0%
 Average of Sold Price/SqFt  $                     531 -6.9%
Average of SP/ASMT 1.413 -4.4%
Average of SP/OLP 84.1% -5.6%

 

The biggest decline in house sales was South of the Parkway with sales dropping from 161 in 2018 to 129 in 2019 or a drop of 20%. This is curious, since as we saw, backcountry sales did very well last year. One reason for the difference between backcountry (sales up 31%) and mid-country (sales down 20%) maybe Armonk, NY.

When you look at where the sales are in backcountry in 2019, you’ll see a group of sold homes along the very northern border with New York State. Armonk has gone from a sleepy little town to a place with a lot of restaurants and new shopping venues. East of Armonk, Bedford, NY is still sleepy, but it does have a very cool recently created community playhouse which is very popular. Last year I listed the very last house on Round Hill Road, and it went to contract in 57 days, whereas in 2018 when the extreme northern part of Greenwich was slower it sat on the market for 273 days.

Mid-country shows the impact of the repricing of Greenwich under the TCJA’s limitation on property tax deductions. For lots of buyers the loss of SALT deductions over $10,000 means it’s going to be more expensive to own a house in Greenwich. At the higher priced ranges, this loss of property tax deductions is not as painful, as it is for people in houses under $2 million who are much more conscious of their monthly payment. This effect has hit home in this neighborhood.

 

Section Riverside 2019 vs 2018
Sales 78 -22.8%
Sum of Sales  $    155,759,962 -36.5%
Average of CDOM                         202 11.9%
 Min of Sold Price  $            555,000  
 Max of Sold Price  $         6,400,000  
 Average of Sold Price  $         1,996,923 -17.7%
 Average of List Price/SqFt  $                     581 -8.1%
 Average of Sold Price/SqFt  $                     548 -9.1%
Average of SP/ASMT 1.574 2.4%
Average of SP/OLP 89.8% -1.9%

 

Sales were down in most areas of the town, but in Riverside the sale drop was just downright weird. While many agents have mentioned Old Greenwich’s walkability to town and having Greenwich Point, OG has always had these benefits so what happened in 2019? The better question going forward for Riverside, is whether 2019 is just an anomaly or will this be the beginning of a trend with OG out pacing Riverside.

In 2019 the Riverside market was a real challenge. A house I listed in Riverside, that I thought would fly off the market didn’t, and the listing was cancelled. Developers are still active however and I did get a teardown in Riverside under contract to a developer. In 2020 sellers in Riverside will need to be aggressive on their pricing to stand out in this slow market.

One thing, that Riverside, and others of town should definitely look at is creating some small neighborhood commercial areas. If you look at the area from Riverside Elementary, past Eastern Middle School to Ada’s and around to the train station, there is a lot of non-residential property. If you created zoning for retail, daycare, play areas, etc. along that arc, we could have a win-win situation. The House eligible for commercial/non-profit activities would go up. With better walkability and more community meeting places, demand for houses and hence prices would go up in this newly walkable area – just a thought.

 

Section Glenville 2019 vs 2018
Sales 26 -23.5%
Sum of Sales  $                  31,038,000 -17.4%
Average of CDOM                                     227 18.3%
 Min of Sold Price  $                        565,000  
 Max of Sold Price  $                    2,250,000  
 Average of Sold Price  $                    1,193,769 8.0%
 Average of List Price/SqFt  $                                423 -1.1%
 Average of Sold Price/SqFt  $                                395 -3.0%
Average of SP/ASMT 1.511 -13.3%
Average of SP/OLP 87.7% -2.6%

 

Glenville had been one of our areas that had appreciated the most as people were priced out of Old Greenwich, Riverside and downtown Greenwich. The new Glenville Elementary and an award-winning principal at Western Middle School were making a big impact on the Glenville area. This year the TCJA got to Glenville with sales down by almost a quarter and most stats trending towards a buyer’s market.

The $10,000 limit on tax deductions applies to state and local taxes. While our local property tax hits $10,000 around $1.2 million, most homeowners are also paying state income tax. If you have a $600,000 house and you have a joint taxable income of $110,000, (which you’ll need to buy the $600,000 house) you will have $10,000 of SALT deductions, which means just about all Greenwich homeowners are impacted by SALT limitation. For many people Glenville is a great to place to buy their first home, but those are same people that are usually watching every penny when it comes to their monthly house payment.

The good news is that while fewer people bought in Glenville, both the average and the median prices went up this year. Unfortunately, both the sales price/sf and sales price to assessment ratio went down. So how was the average price up, but price square foot down? The answer is that people were buying the pricier houses, but getting more house for the same money in the upper end of the price range.

 

Section Cos Cob 2019 vs 2018
Sales 48 -36.0%
Sum of Sales  $    57,441,800 -49.2%
Average of CDOM                      178 6.1%
 Min of Sold Price  $          525,000  
 Max of Sold Price  $      3,400,000  
 Average of Sold Price  $      1,196,704 -20.6%
 Average of List Price/SqFt  $                  461 -9.8%
 Average of Sold Price/SqFt  $                  436 -11.1%
Average of SP/ASMT 1.491 -14.7%
Average of SP/OLP 90.1% -2.7%

 

Cos Cob was ground zero for all the problems with the market discussed above. Sales dropped from 75 houses to 48 houses or down 36%. What was selling was in the lower price ranges and buyers were paying less per square foot. Combining these two factors resulted in a price drop of 21% in the average sold price. A large portion of this price drop in average sales price was a real price drop, not just a change in the mix of what was selling; as indicated by the 15% drop in the sales price to assessment ratio.

Values in Cos Cob are up 4.4% since October 2015 based on the sales price to assessment ratio. It’s just that the average sales price was up 22% in 2018. The people who did sell in Cos Cob this year were particularly motivated and were willing to sell at lower prices. Given that Cos Cob had been trending higher as OG and Riverside got so expensive, we could see a good rebound this year due to greater demand.

 

                2020

We are seeing good demand so far this year, so hopefully, we can look back on 2019 as a transitional year when the TJCA tax increases for property ownership worked their way through the system. With a strong stock market, lessening trade tensions with China, historically low interest rates, a strong economy and nearly full employment 2020 is looking better already.

 

 

 

 

 

 

 

© Mark Pruner 2020 ∙ mark@bhhsne.com ∙  203-969-7900

Top Ten Residential and Commercial Sales in Greenwich, CT for 2019

Greenwich TimeKen Borsuk has a good article in today’s Greenwich Time that discusses the 10 biggest commercial and residential sales. On the residential side the biggest sale was huge, the second biggest sale ever in Greenwich of 110 Field Point Circle for $48 million. For 2019, the second biggest sale in town was 215 Byram Shore Road.

The sale of 110 Field Point Circle didn’t get a lot of press coverage as it was a private sale. We also had two other private top ten residential sale at 64 Oneida Drive which sold for $13 million and at 6 Smith Road which sold for 11.25 million.

These three sales make the over $10 million market look much better as it raises the number of over $10 million from 7 to 10, the same as last year.

Ken was nice enough to quote me a couple of times in the article about the SALT limitation effects on the high-end market and also the weaker, but still seller’s market under $1 million in Greenwich.

2019 GREENWICH REAL ESTATE MARKET YEAR-END REPORT

A poor beginning with a better ending

In Greenwich, 2019 was the Janus year. Like the two-faced Roman god who looked backwards and forwards, his head should be perched right at mid-year. If you look backward from there, we had 226 sales in the first half of the year down from 275 single family home sales in the first half of 2018. Looking forward from there you had 263 sales in the next five months compared to 268 sales in the July to November period of 2018 or almost the same number.

But this is the year-end report, so what happened in December, and that’s a really good question. In December 2019 we had only 37 sales compared to 50 sales in December 2018 and our ten-year average of 55 December sales. So, it looked like we ended the year on a down note and we did for the short sighted. However, when you add sales and contracts as of the end of December for both years we are looking at 109 transactions in 2019 compared to compared to 101 sales and contracts in December 2018 or an increase of 8%. And, that’s what we are seeing in the market place. I just had 3 showings over the weekend for 108 Pecksland, a house at a very good price, but that needs significant amounts of work, an issue that eliminates a large part of the buyers that are looking for new or near new appearance. This house hadn’t been getting a lot of showings and then come 2020 buyers were much more interested. People that had been waiting seem to be out looking in the dead of winter, albeit a mostly snowless winter so far.

As of 1/1/2019 Inventory Contracts Last Mo. Solds Last Mo Solds+ Contracts  YTD Solds  YTD+ Contracts Mos Supply Mos w/ Contracts Last Mo. Annlzd
< $600K 6 1 0 1 21 22 3.4 3.7 #DIV/0!
$600-$800K 20 5 4 9 35 40 6.9 6.8 5.0
$800K-$1M 17 4 3 7 47 51 4.3 4.5 5.7
$1-$1.5M 47 18 9 27 109 127 5.2 5.0 5.2
$1.5-$2M 48 14 4 18 83 97 6.9 6.7 12.0
$2-$3M 89 12 7 19 113 125 9.5 9.6 12.7
$3-$4M 69 11 7 18 53 64 15.6 14.6 9.9
$4-$5M 41 3 2 5 25 28 19.7 19.8 20.5
$5-6.5M 32 3 0 3 18 21 21.3 20.6 #DIV/0!
$6.5-$10M 39 0 0 0 16 16 29.3 32.9 #DIV/0!
> $10M 24 1 1 2 7 8 41.1 40.5 24.0
  0 0 0 0 0 0 0.0 0.0 0.0
TOTAL 432 72 37 109 527 599 9.8 9.7 11.7

Overall, the numbers for 2019 are down with only 527 sales for the year down 11.1% for the year, which is the lowest number of sales since the recession year of 2009 when we only had 370 sales. Our inventory as of 1/1/20 is also down to only 432 houses or 5.1% below last year. As mentioned, we ended the year with 72 contracts which is up 41.2% over last year so January should be a good month when those contracts close. Our months of supply for the overall market is about the same as last year with 9.8 months of supply.

 Interestingly, the median price is up for the year from $1,765,000 to $1,866,666 or an increase of 5.8%. This is a number that won’t get reported by the national press that likes to bash Greenwich, but for once that’s OK, since the increase in median price is mostly due to a decrease in sales. In 2018 we had a major run-up in sales as for once we got a good amount on inventory under $1 million dollars due to the $10,000 cap on SALT deductions. This year things went back to normal and we had 29 fewer sales under $1 million. The result was a shift in sales to the higher end so our median price went up. Our average price stayed about the same at  $2,376,978.

As often happens the devil is in the details. Even in a down market sales from $2 – 3 million were up as were sales from $6.5 – 10 million. The higher range’s increase in sales was due to people picking up some real bargains as high priced houses particularly in the backcountry were sold at real bargain price. Here you can look at the doughnut or the hole. If you focus on the doughnut rather than the hole, the good new is that 41 buyers thought that Greenwich is worth spending $5 million or more to live here. You could argue that equal number of people wanted to move, many of whom were moving out of state. That numbers seems to be shrinking however as our high-end inventory, over $5 million, is down by 16 houses or 14.4%.

Our biggest sale in 2019 was also our most under-reported story as a house on Field Point Circle sold for $48 million, the second highest sale ever after the Cooper Beach Farm sale for $120 million in 2014. Since this a private sale those numbers are not included in the numbers here. Had this sale been included it would have raised the average sales price for the year by almost $100,000.

Our months of supply are looking better in December, but that is normally the case at year end, when sales continue, but not many houses are listed in the last two months of the year. Having said that, we are down 44 listings from $1.5 million all the way up to the very high-end as of year-end 2019. Our months of supply from $5 – 6.5 million is under 2 years and from $6.5 – 10 million increased sales and lower inventory means that months of supply have dropped almost 6 months to 29.3 months of supply.

We are seeing increased months of supply under $1.5 million as a combination of increased inventory and lower sales makes this market more of a buyer’s market. It is still below 6 months of supply, so sellers are happy, just not as happy as normal. Going into 2020 our contracts are mostly concentrated between $1 million and $4 million so we will see this segment do better in January as these contracts close.

The rest of the year promises to be interesting. The stock market is up, interest rates continue to stay low and concerns about a recession have mostly faded. At the moment buyers are busy, let’s hope it continues for the rest of the year.