August 2021 is the inflection point when the fuel that drives the market, listings was finally choked off. At the beginning of the week, we hit an all-time low of 259 single family homes on the market. In the first couple of days of September, the beginning of the fall market, we have not gotten a burst of new listings, hopefully that will come next week when we get back to a 5 business day week.
The concern is that most people who wanted to sell have done so, but never underestimate supply and demand. The demand is definitely there, it’s driving up prices which should elicit more supply. It’s just we had over 1,100 sales in the 12 months from July 2020 to June 2021. July 2021 was the all-time sales month with 143 sales, while we “dropped” back to 96 sales in August 2021, still 43% above her 10 year average.
So here are 10 bullet points about what is going on in our market comparing pre-Covid 2019 to a Covid and WOOFH (Work Often or Occasionally From Home) driven market.
(Click on any table for a larger version)
Inventory is way down from 585 listings at the beginning of September 2019 to 267 listing in 2021 or a drop of 54%
Solds are up over 100% from 393 in 2019 to 752 in 2021
As a result, months of supply have fallen off a cliff from 13 months of supply in 2019 to less than 3 months of supply in 2021
Total Sales volume is up by $1.37 billion in town of 63,000 people
Days on market have gone from an average of 235 DOM to 129 DOM or a drop of 45%
Old Greenwich has had 117 sales in 2021 vs 55 sales by August 2019, an increase of 89%
Cos Cob (157%), Glenville (129%), South of the Parkway (122%), Pemberwick (120%), Riverside (105%), South of the Post Road (103%) and North of the Parkway (100%) have all seen sales double or more from 2019 to 2020
South of the Parkway (down to the Post Road) saw sales volume go from $295 million to $836 million an increase of 184%
Riverside saw the average sold price per s.f. increase by 23% in 2 years from $540/s.f. to $666/s.f. in 2021
Cos Cob saw the average sales price to assessment ratio increase by 19% from August 2019 to August 2021
It’s been amazing, if we get more listings, it will continue to be that way.
Greenwich sales of single-family homes were up 63% on a year over year basis. This means that sales YTD through the end of August have increased from 461 home last year to 752 home sales this year. For all of 2018, our last “normal” year we had 593 sales so even if we did not sell another house this year, we would have a great year in Greenwich real estate.
But we also have a market that is bouncing around like crazy. Our sales are down 33% from last month when we set an all-time monthly record for sales of 143 homes. Instead of last month, if you compare last August sales to this August’s sales, we are down 11% compared from 108 sales last August to 96 sales this August. This is the first month that 2020 sales exceeded 2021 sales, but it is also the first month that we saw a big jump in in 2020 sales, which continued for the rest of last year.
In fact, for the rest of the year, you need to watch year over year comparisons very closely. The last 5 months of 2021 were not normal months. So, comparisons to last year are likely to show a down market, when it could very likely actually be a hot market, just not as hot as last year.
10-year average comparisons, the better measure in a volatile market
They better comparison is probably how this year has done compared to our 10-year average. On average, we sell 67 houses in August, this year it was 96 houses, so we are 43% above average. For the year, we have sold the aforementioned 752 houses which is 71% higher than our 10-year average. While sales are down from an all-time record last month they are still well above average for just about any other August.
Whither our 2021 inventory
When you compare our sales so far this year to last year, this year blows away last year in just about every category, at least if you are a seller. All year we have had lower than normal inventory, but we are getting to unheard of low numbers. As of the end of August, we only had 267 listings. I’ve never seen inventory this low. We briefly got up to 342 listings, but inventory has been in steady decline since the middle of June. Our inventory is 47% below the 505 listings we had at the end of August last year.
Our year-to-date sales are up 63%, but it looks like our lack of inventory is finally costing us sales. All year, we have had extraordinarily low inventory, but total 2021 listings put on the market were actually much higher than we saw in the first eight months of 2020. You don’t get 63% higher sales without having more listings, it’s just that these “extra” listings went to contract almost as fast as they came, so inventory barely rose during the course of the year and inventory has been drifting down for 2.5 months.
Check out contracts to see what is happening now
To see where our market is going look at contracts. Our 136 contracts are lower by 30% compared to last year’s 196 contracts at the end of August 2020. If, however, you go back to August 2019, you’ll see that we had only 83 contracts, which means that our 136 contracts are looking very good.
This week and next week are going to be crucial for the rest of the year. This is the beginning of our fall market. We need 50 -70 listings, and we could really use 150 to 200 listings which we definitely won’t get.
Market drivers, Covid, WOOFH, Shadow inventory and babies
Our market continues to be hot. It’s just no longer frenzied. So, what is likely to happen for the rest of the year. The right answer is that no one knows. The big question is whether we’ve blown through all the people who want to sell. The short answer is that as long as people get married, have kids, retire, and pass away, people will list their houses. This is the natural rate inventory.
For the last 13 months we’ve seen a lot more than this. Much of it was the so-called shadow inventory, people who had been waiting years for prices to go up, before they were willing to list their houses. Hundreds of these people have listed their house and we probably don’t have enough left to make a real difference in the market.
What we have seen a lot of this year, and will probably continue to see, are upsizers. The Work Occasionally or Often From Home life/work change will likely continue for several years. Senior managers now need bigger home offices, we are even starting to see a few home office suites, with an office, assistant’s room, file room and supply closet.
The great thing about these Greenwich people upsizing is that their buying a new house is a zero-sum game. Yes, they buy a house and take it off the market, but they also put their former house on the market. Lots of the explosion in new listings this year were these upsizers, buying and freeing up their present house for another buyer, who might also be freeing up a third house.
Hindsight is 20:20, and it will be a while before these trends become clear, what is very likely is that September 2021 sales will be lower than the stellar September 2020 sales. Having said that, our September 2021 will likely be above our 10-year average of 48 September sales.
Stay tuned, these next two weeks may well set the tone for the rest of the year.
In August sales from $1-4 million made up 3/4 of our monthly sales, but are a smaller percentage of our contracts. We have a supply constrained market.
We have a sellers market all the way up to $6.5 million.
Contracts and annualized August sales indicate that should continue.
Our sales are concentrated between $1 and $4 million, where much of the inventory is.
I was going to write this great article about what price segments were hot in Greenwich’s hottest year ever, but the numbers don’t support that kind of analysis. It doesn’t support it, because all the segments are hot, if you define hotness as the percent of listings in each price range that sell at or above their original list price. When you look at the pie charts of what price ranges have the most over list, it looks eerily similar to the pie chart of all sales by price ranges.
So far, we have had 733 sales for the year through this week. Of those sales, 131 went for full list price and a similar number, 161 houses, went for over original list price for a total of 292. That’s 40% of our sales going for full list price or over list. Let’s take a look at the very hot $1 – 1.5 million price range. That price range makes up 16% of all sales so far this year and that price range makes up 15% of the at or over list price sales.
Percent of Greenwich Home Sales by Price at List or Over List for 2021 YTD
Percent of all Greenwich Home Sales by Price YTD 2021
That’s what we see all the way from $600,000 to $6.5 million with one exception. The only price range that has a more than average list and over list sales is from $1.5 – 2.0 million. That price range makes up only 12% of our 733 sales so far, but it makes up 16% of our list and over list sales.
On the less than very hot side you have to go all the way up $6.5 – 10 million before you see a drop off in hot sales. Above $6.5 million the hot sales are only 3.4% of all sales while that segment represents 5.7% of our sales.
If you compare the hot sales within a price category to all sales in that price category the $1.5 – 2.0 million price range stands out even more. Of the 77 total sales in that price category, 46 or 60% went for list or over list. For the entire market, as noted above, 40% of all of sales went for list or over list. Looked at this way the other very hot price range is $4 – 5 million where 51 of sales, 23 of 45 sales went for list or over list.
Map of Sales of Homes at List or Over List YTD (8/25/21)
Map of All Home Sales of Homes in Greenwich
The over $6.5 million price ranges stand out on the lower end of over list bidders. There only 24% of the 45 sales are going for list or over list but think about that. You come to Greenwich wanting to buy a house for around $8 million. The odds are 1 in 4 that you are going to have pay full list price or over list for that $8 million house. This is in a market segment that only a few years ago was seeing the over $5 million market going for an average 76% of original list price.
BTW: When looking at other people’s stats be very careful as to whether they are using the sales price to original list price (SP/OLP) or the most recent list price (SP/LP). Markets can be made to look hotter if you use SP/LP. This means that if a listing started at $4 million and was grossly over-priced and then over 2 years , the list price was lowered to $2.5 million dollars and then sold for $2.6 million it would be counted as a hot property, when it was really just a badly price property that took 2 years to sell.
2021 Highest Sale Over List by Percent
We have 18% of our sales going for full original list price, but we have 22% going for over list price, but how much over list price? Reporters like going for the records, the most extreme we have is 32 Wesskum Wood. It was listed on April Fool’s Day (my brother’s Russ’ birthday by the way) at $1.6 million and 8 days later it was under contract for $2,200,000 or an amazing 38% over list. A few years back, I sold a property for 22% over list, a record that stood for several years, but this year we have another listing that sold for 29% over list. We have a total of 4 houses that sold for 20% or more over list, but this is out of 161 sales that went for over list price.
Hot $ ranges
% of over list
% of all sales
When you look a little closer, these over list price bidding wars are not quite as intense as you might think. The median amount over list for those 161 sales was 5% over list. If you are looking at buying a house with multiple offers that is listed at $1,000,000, the numbers say you have a pretty good chance of getting the house at $1,050,000. At the other of over list sales 25% went for 3% or less over list.
How Much to You have to Bid Over List to Get Your Dream House
It always amazes me that some buyers just refuse to get in a bidding war, it’s just not for them. The point is that you don’t have to go much over list even in 2021 to win the house in many situations. Five years ago, when bidding wars were much less common, my client’s house was in the sweet spot of the moment, and we had 7 bidders. We went to highest and best, one very distinguished gentleman who had initially bid over list refused to participate in the highest and best competition. He wouldn’t even put in his original bid. He should have; he would have gotten the house for no more money than he was willing to pay before the highest and best competition.
Multiple offer competitions are not to be feared. If you lose you are in the same situation you were before, you don’t have a house. This isn’t poker, where if you come in second best you lose everything in the pot.
Also, the best offer is not always about money. I’ve seen lower bidders get the house because the buyer was willing to wait 3 months while the owner found a place to move. This year, I’ve heard of multiple winning bidders who pulled out of the deal while contracts were being drafted. This is why, I always suggest my seller agree to notify not only the winning bidder, but a second and third back-up. There is a much better chance that those folks will have a good taste in their mouth when you go back to them asking if they will honor their original offer now that the winning bidder has withdrawn.
So bid away, you’ve nothing to lose, and you’ll have great stories for the future, win or lose.
Sales Likely to Fall in August as Low Inventory Limits Sales
The numbers for July are pretty amazing. We just had our biggest sales month ever with 142 sales and $448M in sales volume in one month. That’s more sales than we had in the entire first four months of 2020. This sales number broke also last month’s record of 135 sales and last year’s monthly record of 118 sales in September 2020.
Pre-pandemic you have to go all the way back to June 2011 to find the previous record of 114 sales which was a one-month blip caused by an increased sales conveyance tax increase. The last record for market-driven demand was 109 sales in August 2001.
Prices are up about 18-20% in nearly all price levels. Backcountry and mid-country are seeing the biggest rebounds since these areas are the furthest from town and suffered the most in the post-Great Recession years.
So far in August demand continues to be high, though not as frenzied as in the second quarter of 2021. Contracts are down about 17% from July 2020 when we were seeing a major acceleration in sales as Covid restrictions loosened. Sales peaked two months later in September 2020.
The drop in contracts is partially due to summer vacation with lots more buyers travelling, often for the first time in over a year. Contracts traditionally fall in July, but what is really driving the drop in sales this year is our shrinking inventory. As of Wednesday, we are down to 290 listings, when were at 555 listings at this time last year.
While we have had low inventory all year, our total number of listings are up 60% for the year. Listings have just gone to contract as fast as they have come on, which has hidden this jump in total listings numbers. We have even more listings than that as many listings never hit the market. One internal email of a coming listing and a fellow agent contacted the listing agent and said he had a buyer. (That happened twice to me, once on the sell side and once on the buy side.)
When you look at where the changes are year over year, the drop in inventory is a very consistent story. We have lower inventory at every price range from under $600K to over $10 million. Our inventory number are not just down by a little the smallest drop is 30% from $6.5 – 10 million from 53 listings in 2020 to only 37 listings as of the end of July this year. Under $600K we are down 75% from 4 listings to 1 listing and most of the year we have had nothing to sell under $600K.
Among major price categories, the biggest percentage drop is from $1 – 1.5 million, where we are down from 68 to 30 listings or a 56% drop in the number of listings. A couple of weeks ago, I put on a house in this price range. We had 6 offers in the next four days, the majority over list. While most price ranges are tough, our entry level houses are particularly tough. We only have 2 months of supply from $1 – 1.5 million and an amazing 1.6 months of supply from $600 – 800K.
Overall inventory is down 46% and months of supply is down 71%. (The months of supply is how many months it would take to sale our present inventory based on the demand rate so far this year). At 3.2 months, we are at ridiculous levels. This ridiculous level continues all the way up to $6.5 million dollars. While low months of supply are not uncommon under $1 million to see months of supply under 4 months of supply for prices over $3 million is just unheard of.
From $6.5 – 10 million, we only have 7 months of supply. Compared to our other price categories that might seem like a lot, but in June of 2019 we had 42 months of supply. We’ve dropped 83% in months of supply in two years, and this is after a long period where months of supply in this price category were measured in multiple years of supply not months.
On a percentage drop basis, the story is almost as good above $10 million. We went from almost 6 years of supply last July or 70 months, to only 20.1 months of supply this year. This is a drop of 70% and the market is getting better. If you take the sales in July over $10 million and annualize them, you come up with 11.5 months of supply.
This last analysis is a bit of fun with numbers as we only had 2 ultra-high-end sales in July, but we only have 23 listings on the market today down from 37 listings in July 2020. And, most of our high-end sales post-recession now happen after August.
What we are seeing is a drop in the number of high-end and ultra-high-end homeowners that are looking to move out of Greenwich. To my mind, our first selectman, Fred Camillo, and our governor, Ned Lamont (also a Greenwich resident) have done a good job navigating the Covid crisis, while many other states have not handled Covid, and particularly, the Delta variant well.
Stay tuned, August will tell us a good deal about where the market is going …
Looking at the first 20 days of July YTD, we have 604 sales for the year, which means we’ve already sold 15% more houses in 2021 than in all of 2019 when we only had 526 sales. Of those 604 sales, 93 of them happened in the first 20 days of July, which is already 20 sales above our 10-year average for all of July.
The fly in the ointment is contracts. We have 191 contracts waiting to close in mid-July compared to 208 contracts at the end of July last year. Now 17 contracts is not a lot and sales from week to week are a roller coaster ride. We may still see contracts exceed last year’s numbers, but the trend is not in that direction. Our weekly contract signings peaked in the first week of May at 57 contracts and has been mostly down since then. Last week we were down to only 26 contract signings. The chicken littles may actually think the sky is falling, but this drop in contracts actually, but it probably just shows a return to some level of normalcy, though at a higher level than normal. Our sales nearly always peak in June, or occassionally in July. This means that contract signing are seeds that are planted in April or May, so that closings can bloom in June and July. This drop in contracts, may not be a fly in the ointment, but only a stray flake of pepper.
But since, we are looking for straws in the wind, another shiver down your back can be seen in our inventory numbers. If you look at the inventory numbers they look like a fraternity tug of war between the Betas and the Deltas. The Betas (contract signings) moved the flag slightly down for the first two month of the year to a low of only 273 listing at the end of February. For the first two months, we had more buyers than we had inventory, but only by a smidgen.
Then the Super Bowl came along, the official start of the spring market, and the brothes from Delta (new listings) started moving the flag back as more listings came on than went to contract. Our inventory was like Lindbergh trying to gain altitude on his take-off from Roosevelt Field. We were climbing, but not real fast. By May we were still climbing but we were still flying nape of the earth. Our altitude should have been in the 600’s and even the 700’s listing number, but the best we could do was to peak at 342 listings in the first week of June. Since then we have been on a gentle decline to 310 listings this week. At this rate, Lindberg never would have made it off of Long Island.
For the Greenwich market, this drop in inventory when our contracts are also dropping, means that a bunch of the Betas and Deltas have headed for the bar and of the ones that are left the the Betas are winning. (Beth also hates when you mix metaphors. 😉 This drop in inventory happens nearly every year, but not from such a low altitudes
Where are sales headed the year? If you use a pencil and a ruler to make predictions, then you can take our first half sales of 511 and double them and expect to see our first calendar year with more than 1,000 sales. July sales would say that we are well on their way of hitting that number, but our contracts, and more importantly, our sliding inventory make it look like we won’t break the millineum.
Another sign of slowing market from frenzied to how is the number of expired listings. In the first half of the year with sales up 93% and inventory down 45% making for an incredibly pro-seller market we still had 78 listings expire unsold. These expired listings were across the board in pricing from $749K to $32M. We have some very well informed buyers and pushing the envelope on pricing too far just pops the bubble.
That’s the story townwide, but how are our neighborhoods doing? The short answer is mostly they are doing very well to great and the areas that look like they aren’t doing doing well are mostly victims of the law of the small numbers. For example, the days on market in Banksville is up 90%, but that’s because one of the five sales this year in Banksville had been on the market for 650 days.
Sales in Banksville, Byram, Glenville and South of the Post Road were all up more than 150%. The average price north of the Parkway was up 85%, but that was due to more high-end houses selling. When you look at the average of the sold price/sf that was up 41% and the sales price to assessment ratio was up 27%. Backcountry is definitely back.
Every neighborhood, but Byram, saw the average sales price to the assessment ratio go up by double digits from 12% south of the Parkway to 27% north of the Parkway. Days on market dropped by 44% and the average sales price to original list price was up 9% to 95.6% with several neighborhoods being above 98%. Buyers are not getting much of discount off of list price.
In the first half of the 2021 we sold $1.54 billion of single family homes up 133% from last year’s first half. This number all of the numbers should be taken with a grain of salt as the record breaking months didn’t start until August of 2020. So we are comparing the best half year sales ever in Greenwich to what was actually a slow first half as the Covid lock down slowed everything.
Stay tuned, this rest of the year won’t all be smooth sailing, but it looks like another America’s cup win for the town.
and so is June and so is the second quarter and so is the last 12 months
First the superlatives; June 2021, Q2 ’21, H1 ‘21 and the last 12 months were all time records in Greenwich and in most cases by a significant margin. For the month of June, we had 134 sales which blew away our prior record of 118 sales in September of last year. Prior to that we had had 114 sales in June 2011, which happened because the Connecticut legislature raised the real estate conveyance tax by a quarter of one-percent. (Greenwich sellers are very tax sensitive.) The to get a pure market demand record you have to go back to July 2003 when we sold 108 houses.
For the first half of this year, we had 511 sales, easily beating the prior first half record of 403 sales in the first half of 2007, which was the height of the go-go era of home sales in Greenwich. In the first half of 2021, four of the six months were all time record months and the other two months, January and March only saw higher sales in 2007 and 2006 respectively.
The even more remarkable sales numbers come when you look at the last twelve months from July 2020 to June 2021. For that period, we had an incredible 1,104 single family home sales. (In a normal year, we average about 650 sales a year.) The best we could do for any prior 12 month period was the 835 sales from the second half of 1999 to the first half of 2000, which is as far back as the Greenwich MLS online data goes.
As you might expect lots of us Realtors were pretty busy with all this activity. I was swamped last week and didn’t write have a chance to write an article, but did send in my charts. The Greenwich Sentinel publisher, Beth Barhydt, put in 3 charts, that I thought told a pretty compelling graphical story.
It turns out I was miserably wrong. Over the weekend, I was talking to two retired execs who looked at this kind of data every day during their career. Their comment about the graphs in the paper, “We saw them, but what the heck do they mean?” So, let’s take a look at just what information you can glean from these charts (and also what you can’t.)
The chart that Beth runs the most frequently, is monthly single family home sales for the last two years, plus the prior 10-year average. She and I likes it, because it’s what most people talk about; “How are sales doing.” To get a good feel of that start with the faint grey line, the 10-year home sales average. If the current and most recent month’s sales are above the grey line, we are doing well and if they sales line is way above the 10-year average we are doing very well.
However, if you look at the 2021 monthly sales, you will see that May 2021 had only 88 sales down from April’s 89 sales. That should not happen in a normal market. As the 10-year average shows our sales normally rise rapidly from their low in February to their annual high in June, so why did they move sideways in May. The short answer is that you can’t know. We can ask a bunch of agents, mortgage bankers and real estate attorneys and make an informed guess, but that’s all it is. (My guess based on a bunch of conversations is that’s of people took their first vacations in over a year in May as vaccinations became popular.)
May’s sideways move, means that June’s big jump is exaggerated. If you move 20 delayed sales from June to May then we get a more normal curve, albeit at a high level. The other thing that we don’t get, if you move these sales, is an all-time record as September 2020’s 118 sales would beat this month. We all like to see good records sets and writers like to lead with them, but look past these records and see if their might be a reason for them not directly related to market demand.
Another thing to note in the June sales is just how steep the line up is. If you look at the other two years of sales, even the huge second half of 2020’s sales, we don’t see any lines that steep. This usually means that the next month will not spike up as much.
The chart that is more complicated is the inventory, sales, contracts and current months sales bar-chart. It has over 40 bars by price range. Some price ranges have a hump in the middle and some decline from left to right. In addition, sales year-to-date only go one way up, so the November chart looks nothing like the February chart even though both months are traditionally slow months for sales.
One thing you can tell by looking at this chart is where the inventory is. If you look just at the dark blue bars, you can see the most inventory is between $2 and 3 million dollars, and that would be wrong. The most inventory is between $1 and 2 million, but this price range is split into two price ranges. The reason for that, is that these are roughly the price ranges that buyers will look in. Rarely, will someone look at both $1.2 million houses and $1.9 million houses, but most buyers that are looking at $5.2 million homes will also look at $5.9 million homes. So, be careful comparing the heights of the bars if the width of the price ranges are not equal. For me the price ranges under $1 million are $200K wide and from $2 – 5 million are $1 million wide.
Another thing to look at is how sales, contracts and current months sales are doing within each price range. If contracts are higher than th current months sales, you can expect sales to go up in subsequent months, a sign of a strong market. If contracts and the current months sales are about equal that’s a sign of a slowing market.
Also looking for missing bars. In June we had no sales over $10 million. At the top end, we are seeing our only weak price range with 25 months of supply over $10 million and 25 listings. But, another thing to realize is that all things are relative. In June 2019, we had 70 months of supply over $10 million. Another thing to note that you can’t see from a static bar-chart is most sales in the over $10 million market has changed from the first quarter, when folks used to get big bonuses to the late third and fourth quarter in today’s market.
These first two graphs are like looking in the Hubbel telescope, the light you are are seeing is coming from the past. Last year when the market started to change rapidly from month to month and even week to week, I created the MP index, which while partially egotistical is shorter than saying., ‘the sum of all weekly sales, contingent contracts, pending contracts and contingent contracts becoming pending”. (In the old days we simply called a pending contract, a non-contingent contract.)
The first thing you’ll see when you look at the index is it jumps around from week to week, so you want to take a longer view. Clearly though when we have string of weeks when the index trend is up, the market is getting better. This almost always happen in the spring, but that didn’t happen last spring when weekly transactions in March and April were essentially sideways as Covid took hold.
In 2021, we started off with a busy January, pulled back a little and then climbed through the first week in May, followed by a sharp drop off in May. In June and so far in July our activity is looking like it is going to be more like the busy period in the second half of 2012. Now, that last statement is not to be trusted. Graphs aren’t an accurate predictor of the future.
Graphs can show you where you’ve been, they can even give you a decent sense of where we are, but we have way to many exogenous events, black swans and viri to expect that present trends will continue without change. They are useful for determining what you are facing, whether a buyer or a seller. I find them a lot more useful than a series of anecdotes and chance encounters with people. Sometimes you get a representative sample, but you could also meet the most depressed Realtors and the most estatic buyers and get the wrong impression of the market.
The best thing you can do, is to keep up a general knowledge of the market, so you can see when things are changing in your market, and hire a real estate agent who tracks all of this on a daily basis.
May 2021 was a Dickensian month. It started out as the best of times and while it didn’t quite end as the worst of times, we won’t from possibly the best week ever in Greenwich with 85 transactions to 45 transactions by the end of the month. Having 45 transactions (sales and new contracts) in one week actually isn’t a bad week, it just that by the end of May it looked the Greenwich real estate boom might be over.
Well, the short answer is that June transactions show it’s not, though it’s not quite as good as it looks. The first two weeks of June, we had 57 and 55 transactions and then last week we jumped up to 72 transactions. That exceeds the highest number of transactions that we had in our best weeks in 2020, which itself was a record year.
The 72 transactions we had last week is 6% over the best week of 2020, but the details show it’s a maturing market. When we set the record of 85 transaction in the first week of May, we had 57 contracts and 28 sales or 2:1 ratio of contracts to sales. Our 72 transactions last week were in a 1:1 ratio of sales to contracts with 36 contracts and 36 sales. That ratio is actually fairly normal as June is typically our month with the most sales and contracts start to fall these deals close.
What we actually may be seeing is normal on steroids with more sales each month, but a more typical annual sales curve. In the first 20 days of June, we’ve had 82 sales which is very impressive given that our 10-year average for June sales in 86 single family home sales. If you gross up those 82 sales for the whole month, you’d be looking at new all-time June record of 120 single family home sales.
I wouldn’t hold my breath, but it’s a definite possibility that June 2021 could be third all-time, consecutive record sales month after April and May 2021 (and February 2021 also). Having said that the general consensus among agents is that market is going from frenzied to just hot, and you can see that when you look at total contracts. In the third week of May we peeked at 267 contracts waiting to close. We are now down to 250 contracts, which is still very good, but we have had 4 weeks of a flat to slightly down trend. This is what happens every year, just not at these levels, as the spring contracts mature into summer sales.
So where are all the sales? The answer is everywhere. If you look at a map of our sales in Greenwich it looks like a we have blue measles with major concentrations in Old Greenwich, Riverside, central Greenwich, Glenville and Pemberwick, and not so much in north Greenwich, but what the map doesn’t show is zoning. All of our “busiest” areas are also the areas that are mostly half-acre and smaller zones. In an R-7 zone (7,500 s.f.) you get 6 sales per acre or 24 sales per 4 acres.
Sold YTD Mid-June 2021
So north of the Merritt Parkway take the dots and multiple by 24 times in the four-acre zone and 8 times in the two-acre zone south of the Merritt Parkway. If you do that, backcountry, and particularly mid-country, are doing better than the hot front country, but will that continue?
Contracts mid-June 2021
The best indicator of how each area will do over the next couple of months is the number of contracts and there Old Greenwich and Riverside stand out as they have 85 of the 250 contracts waiting to close. The other thing you see is the grouping of contracts along our western border with New York. It’s not only Covid buyers from New York City, but also a fair number of buyers from Rye and other Westchester town that want a short drive to their relatives and former neighbors.
The other factor that’s having a big impact on sales this year is inventory. We have 3.5 months of supply and if you throw in those 250 contracts that are waiting to close, we have a super tight 2.8 months of supply. It looks like inventory is going to limit sales in Old Greenwich, and particularly in Riverside where we only have 26 listings with only 10 of those south of the Post Road. The other thing we are seeing is some pushback on prices as we saw in 2018, when we saw sales spurt in Cos Cob and Glenville as prices per s.f. in Old Greenwich and Riverside appreciated too rapidly for many prospective buyers.
This year has been an amazing year for Greenwich real estate. Our sales are up nearly 100% from 191 sales through the end of May 2020, to 376 sales this year. Our average sold price is up $932,951 to $3,062,441 from $2,129,489. This is a jump of 44%, but that doesn’t mean that your house went up 44% in the last year.
The huge jump in the average price is more of a mathematical curiosity, than a useful number when it comes to buying a house or refinancing. It is a real number and can be used when talking to your father in NYC or your brother in Silicon Valley or your sister in south Florida, since they are probably reading about average price changes in their states.
Four things are driving the average price change. First people want bigger houses. The median size of a Greenwich house sold in 2021 so far is 4,242 this is 573 square feet bigger than the median size for 2019. Arguably, 16% percent of the 44% average price increase is due to larger houses.
Second, we are seeing some inflation as the Washington continues to pour money into the economy and keep interest rates artificially low. Estimates put Y-o-Y inflation at over 4% through April. Third, are our base comparison issues. All these year over year numbers are comparing a very robust first 5 months in 2021 to two and half months of recovery in early 2020 and 2 and a half months of lockdown after the mid-March 2020 lockdown. Lastly, we are seeing real appreciation driven by increased demand for houses while at the same time we have decreased supply. Sales are up 97% while inventory is down 45%.
A better way to look at this price appreciation is by comparing either the sales price per square foot or the ratio of sales price to the tax assessor’s assessment. When you look at the sales price per square foot, we are up 26% townwide. If you look at the sales price to assessment ratio, we are up 16% year over year.
So how much have properties appreciated in Greenwich in the last year. Well, it’s kind of like the old lawyer joke. When the retiring CEO was interviewing for a successor, he asked his general counsel what is two plus two. The GC’s response, “What do you want it to be?” Our appreciation is like that. All of these numbers are mathematically accurate, they just measure price appreciation in different manners. One thing you can be sure of is, is that when all three factors are up, we are looking at real appreciation.
Greenwich Neighborhoods Booming and Boomlets
If the CEO were to ask his COO/property manager what is 2+2 is response might be, “Well where are we talking about.” While our townwide average SP/Assmt ratio is up 16% Y-o-Y, in Glenville and Cos Cob, we are looking at 26% and 21% increases respectively. These are the areas that didn’t do well in 2019 as the SALT tax deduction limitations impacted Greenwich and their recovery looks bigger as it’s off a smaller base.
The other major area with above average appreciation this year is Backcountry where the SP/Assmt ratio is up 18% Y-o-Y. Backcountry was a major beneficiary of the Covid driven lifestyle. If a buyer wanted the much desired mini-country club with pool, tennis court and basketball court/enlarged parking area; it’s a lot easier to do that on 4 acres rather than two acres.
Our Neighborhoods Leaders
Greatest Y-O-Y Appreciation ($/sf) – Backcountry
Backcountry posted a 51% gain on price per s.f. This astounding number is a lot of real appreciation along with some big sales at a premium price per square foot. In second place was South of the Post Road, where we are some big waterfront sales and some real volatility in the high-end market. We have a bunch of folks putting their house on the market and bunch of people buying them almost as fast as they come on.
Greatest 6-year appreciation (SP/Assmt) – Byram
Byram has some of our most affordable housing. It got hammered in the recession, but since the assessment it has come back strongly up 39% since our last assessment date of October 1, 2015. In fact, so strongly, that it’s up only 4% this year as there are good deals in other parts of town. (North Mianus actually did better but with only 5 sales and the same with Pemberwick.) Old Greenwich continues to do well as it does year in and year out. Since 10/1/05, OG has racked up 30% appreciation.
Biggest percentage increase in sales
Byram once again does very well here as does Banksville. In the larger neighborhoods South of the Post Road saw a 187% jump in sales in the first five months of the year. Backcountry was up 124%. (Backcountry is back.)
Biggest Sales Volume Increase
South of the Parkway our biggest GMLS neighborhood saw sales jump by $234 million from $156 million to $390 million in sales. Coming in second was South of the Post Road where all the move-outs allowed a lot of move-ins resulting in an increase of $142 million in sales.
Overall, it’s a hot year and we are staying at a very busy level.
High Demand for High-End, Little Inventory for the Lower-end
Last year was an amazing year for rentals in Greenwich. Our overall rentals were only up 25% for the year compared to our 10-year average, but rentals over $12,000 per month were up 233% from 60 rentals to 200 rentals. Above $20,000 per month, our rentals were up 468% from 14 rentals in a normal year to 79 rentals in 2020, and, those numbers are certainly an undercount. The rental market was so hot, that many listings never made it to a public listing in 2020. If you had a rental listing with a pool last year and let your fellow agents in your office know, three other agents would announce they had someone that wanted to rent it.
This year we are seeing the number of rentals return to more normal numbers, but the mix is different. Rentals below $8,000 are down in 2021, while rentals above $10,000 have doubled. This seemed curious, so I talked to our rental guru here at Berkshire Hathaway, Roberta Jurik, who said that people don’t seem to be moving around as much this year compared to prior years. The uncertainty of people’s office situation means they are often staying in place.
10 Yr Avg
2020 vs 10 yr Avg
2021 Annlzd vs. 2020
2021 vs 10-yr avg
The pandemic increased sales about as much as we saw in the depths of the Great Recession. In the recession, sellers, particularly developers couldn’t sell their houses, so they decided to rent. Also, many people who could buy decided not to do so not wanting to buy a declining asset. By 2012, we were back to a “normal” rental market of 780 to 860 rentals per year. In the post-recession years from 2012 to 2019, our rental market was fairly steady within those bounds. Our rental market was also fairly tight with most properties renting in weeks or a couple of months as our rental market is always tight below $6,000/month where the majority of rentals is.
In 2020, demand for homes took off as people wanted to get out of NYC. This increase in demand resulted in increased prices and this led to a big jump in inventory, which led to more home rentals. People who never would have considered renting their houses were happy to do so if they could $30,000 or $50,000 or more per month. Below $2,000, the number of rentals actually dropped as people who wanted to get out of apartments in NYC were not jumping to move into an apartment in Greenwich that also had shared hallways and elevators. Also price appreciation was pushing up the asking price for rentals above $2,000. This is particularly true with single family homes where they was big demand and significant price appreciation.
Once the pandemic hit in 2020, people did not wait around. Our rentals took a huge jump in March of 2020 and stayed high all the way to October when rentals started to return to normal. In 2021 with an estimated 811 rentals if you an annualize our first 5 months of rentals, it looks like we have dropped back to an average year, but that conceals major changes in demand by price range.
In 2020, our rentals under $2,000 were down by 45%. Annualized rentals our first five months of rentals under $2,000 are down an almost identical 46%. Part of this is a continuing reluctance to rent apartment style units, but much of it is just that we have have fewer units under $2,000 per month as prices have been pushed higher. Also as noted by Roberta Jurik, we are seeing fewer rentals come to market as people are waiting in place. Above $4,000, our rentals were up at all price ranges over the 10-year average, but particularly above $10,000/mo.
Above $10,000 our 10-year average of rentals is only 89 houses, but in 2020 that jumped 181% to 250 high-end rentals. If you annualize the first 5 months of rentals in 2021 we are on a pace to rent 202 houses above $10,000 a drop of 19%, but still 127% above our 10-year average. Above $20,000 per month, rentals jumped from the 10-year average of 14 to 79 rentals or 464%. At the present pace we will see about the same number of high-end rentals in 2021. Part of the increase in high-end rentals may be driven by the millionaire tax in New York encouraging high-income families to spend less than 6 months in NY and NYC.
We have more rentals each year in Greenwich on the Greenwich Multiple Listing Service than we have house sales, but this is not all the rentals in Greenwich. Under $2,000 the majority of listings are done privately; either listed in the newspaper or put on Craigslist. Under this price we have between 100 and 150 rentals per year on the GMLS. The units available under $2,000 include everything from a one-room-garage apartments to smaller condos throughout town. If a place is livable in Greenwich and listed for under $2,000/mo. it goes pretty quickly.
Also as noted above, our high-end rentals often didn’t make it to the market for a public listing as they got rented quickly in the hot, high-end market of 2020. So take these numbers with a grain of salt. The actual numbers are higher.
Inventory or lack thereof
As anyone knows who has been looking for a rental our rental market is very tight. At the present time we only have 91 rentals of any type listed on the GMLS. If you are looking between $10,000 and $12,000 you have a choice of two houses. If you are looking in Riverside from $7,000 to $12,000 you have a choice of three rentals. The low inventory in the rental market makes the sales market look easy and it’s not.
As mentioned at the lower price points most of our inventory consists of a variety of apartments, condos, garage apartments and the occasional small carriage house. From $4,000 to $6,000 we are about evenly split between single family houses and all other types of rentals. Above $10,000 per month nearly all of our rentals are single family homes. Overall, we normally are about evenly split between single family homes and all other types of rentals. This year 60% of our rentals are single family homes. If you are not looking for a house to rent, then you only have 37 listings to choose from. The result, says Roberta Jurik, is that we are seeing a lot more multiple offers in lower price ranges in 2021.
Even though Greenwich is considered a high-end town, when it comes to rentals 77% of our single-family home rentals in 2021 are below $10,000 and with lots of competition. Our high-end rentals are way up, but we also see 60% of our single family listings in that category. The result is that our overall days on market is down. We normally average around 74 days on market, but 2020 that dropped to 64 days and so far in 2021 we are down to an amazing 33 days on market.
Last week was a busy week for talking to reporters about Greenwich real estate.
You can check out In Greenwich, luxury rentals might be hotter than sales in the Real Deal by Suzannah Cavanaugh. Rentals have been particularly tight this year. For houses our inventory is down, but that hides a 60% increase in listings for 2021. It’s just those sales listings have been going off the market as fast as they are coming on. In the rental market, we haven’t seen a big increase in listing, but demand is up so the rental market is even tougher than the housing market.
In the Greenwich Time and the CT Post check out From Greenwich to Lyme, which CT towns are leading the real estate boom?, This is a really interesting article analyzing all of the municipalities in Connecticut. Greenwich was the big winner in most categories. One of the advantages of Greenwich is that it is the first town in Connecticut making for shorter commutes to NYC and for New Yorkers, they can hop across the border and still see their old friends knowing they are paying a fraction of the property taxes their New York friends are.
Home prices continue to surge in Connecticut, where real estate is already red-hot by Alex Soule – We are seeing real, and significant price increases in Connecticut. In previous years, what was characterized as a property increase in reality was often mostly just a desire for bigger houses. In 2021, we are seeing a clear drive to bigger houses in Greenwich and all Connecticut, but size independent price stats such as sales price per square foot and the sales price to assessment ratio are seeing double digit year over year gains. No matter how look at house prices are up.
May is Another Record, but is This the Inflection Point?
May 2021 was an interesting month in Greenwich. We had the same sales in May as we had in April at 88 sales. Our 10-year average for April sales is 47 sales and for May it is 61 sales, so both month’s sales are well above average. In fact, April and May are all time records for their respective months going back to 1999 when the GMLS records start. Townwide we are still at a ridiculously low 3.5 months of supply down 11.4 months from last May when we were in the heart of the pandemic shutdown. However, when you look at the details, our market seems to be going from very hot to hot.
When you look at weekly transactions our high this year was the first week of May with 85 transactions, (sales and contracts). By the last week of May we were down to 45 transactions in that week, which looks like a big drop until you look at contracts. Our contracts are at their highest level all year with 267 contracts up from 242 contracts at the beginning of May and only 136 contracts at the beginning of 2021. The number of contracts is like a bucket with a hole in it. For the level of contracts to go up, you have to fill the bucket with new contracts faster than the number of sales is draining away contracts.
Personally, I think part of what we are seeing is people breaking out of their Covid induced home confinement. In May, my wife and I went on a 4-day vacation, the first time we’d been on a plane in 15 months, we went to an indoor wedding (with an outdoor dinner), had my brother’s family over sans mask and I just went to a friend’s funeral indoors at the Hyatt. Things are getting back to normal.
The result has been a market that slow down a little in May, but even at the end of the month it was still well above average. We are very likely to see sales go up in June as the number of contracts waiting to close says May was probably a pause for people to celebrate the beginning of the transition to normalcy.
If you go back to May of 2018, our last year with somewhat normal sales, we are
Inventory is down 361 listings or 53%
Contracts are up 133 or an increase of 101%
YTD sales are up 170 or 83%, and
May 2021 sales are 35 sales greater than May 2018 or 66%
We barely saw a rise in inventory in March and April; months when the spring market listings normally cause big jumps in inventory. In May our inventory has been flat. We started the month with only 328 listings, and we finished the month with 326 listings. On the contract side we started with 242 at the beginning of May and by the end of the month we were up to 267 contracts. Both of these numbers are “holey bucket” numbers that are pushed up by one factor, new listings and contract signings and pulled down by another factor, contracts and closings.
When listings are rising, we are seeing more houses come on the market than are going to contract. In years past, we also had a fair number of listings expiring unsold pulling down the number of listings. We are not seeing as much of that this year. Last year in the first 5 months of the year we had 92 listings expire. This year we have had 69 listings expire or a drop of 25%. This proves that even in the hottest market you can still overprice a house.
What’s amazing is how contract signings this year have been matched by the number of new listings coming on the market, and that continued in May. We are actually up 60% in listings this year, but our increased pace of contract signings and closings have kept our inventory from rising. With the number of weekly transactions falling May, I would expect that we will start seeing our inventory rising.
Of course, we could see listings fall, to balance out the reduced transactions, but there is no inherent reason why listings should match contracts, in fact the reverse is true. Our market has a major seasonal factor with listings rising in March and April, contracts being signed in April and May and sales peaking in June and July. None of that happened last year. In 2020, the whole market froze, both listings and contracts from the middle of March to the middle of May. We then started climbing through the middle of July.
Most of those first half sales were our family market. We didn’t start seeing significant increases in our high-end market until July, when the unrest in New York City spurred people to look for a second home. We continued at a high sales rate through October, when we saw some seasonal drop in activity, but we were still well above what we normally saw in the months of November and December.
This year we started off at high level in January. We had an excellent February and transactions accelerated in March and April. May has been busy, but our transactions dropped back though the month, but still at well above average levels. June will tell whether May was an inflection point or whether it’s just indicative of our volatile market.
I expect that our sales will continue high as WOOFH (Working Occasionally or Often From Home) continues to be a major factor shaping our housing market. It is clear that the U.S. is not going back to doing business the way it was done pre-pandemic. Companies have seen that they don’t need their employees altogether every day from 9 – 5 pm. As a result, space needs are declining in the office market and increasing in the home market. Until we reach a new equilibrium between office and home space our sales will continue to be elevated, but the question is just how much.