Riverside, CT – A Popular Place to Live

22 Years of Riverside Real Estate History in Greenwich

In 1999, the average sales price for a single-family home in Riverside, Connecticut was $956,121. By 2021 the average sales price in Riverside CT was $2,614,485. An increase of $1.66 million or 116%. The Riverside price per square foot did even a little better going from $346 per square foot to $678 per square foot or 119%

Pre COVID, at the end of April 2019, you would have had a choice of 83 different houses in Riverside. As of this week you have your choice of 15 houses a drop of 82%.  Given that 30 houses have sold so far this year in Riverside you’re looking at the lowest months of supply of any neighborhood in Greenwich with only 1.9 months or supply. (OK, the North Mianus area does have 0.8 months of supply but this area only has one listing and is one of our smallest areas of town.)

YearSales Sales Volume Avg Sales Price Avg SP/SF Avg SP/Assmt
1999143 $      136,725,285 $         956,121 $      346          2.35
2000143 $      153,386,712 $      1,072,634 $      376          2.79
2001116 $      128,854,702 $      1,110,816 $      403          3.18
2002114 $      149,634,700 $      1,312,585 $      451          3.00
2003116 $      151,397,619 $      1,305,152 $      468          1.96
2004151 $      314,300,423 $      2,081,460 $      638          2.33
2005120 $      229,981,432 $      1,916,512 $      602          2.50
2006119 $      224,356,629 $      1,885,350 $      606          2.38
200788 $      199,725,000 $      2,269,602 $      631          1.60
200880 $      218,775,565 $      2,734,695 $      683          1.53
200954 $      110,690,161 $      2,049,818 $      574          1.28
201088 $      160,860,811 $      1,827,964 $      542          1.35
2011106 $      196,796,379 $      1,856,570 $      499          1.36
2012122 $      260,516,550 $      2,135,382 $      536          1.54
2013145 $      284,545,237 $      1,962,381 $      547          1.60
201496 $      192,088,300 $      2,000,920 $      599          1.73
2015114 $      259,442,482 $      2,275,811 $      635          1.82
201693 $      197,310,338 $      2,121,617 $      601          1.64
2018107 $      251,834,350 $      2,353,592 $      595          1.54
201986 $      167,284,962 $      1,945,174 $      543          1.56
2020135 $      349,360,029 $      2,587,852 $      619          1.50
2021163 $      426,161,125 $      2,614,485 $      678          1.77
2022 Anlzd93 $      191,949,094 $      2,063,762 $      760          1.96
Grand Total2530 $  4,828,005,424 $     1,908,303 $      555          1.98
New assessment are redone every five years and become effective on July 1 of the following year

Growing up here. I played in a lot of Old Greenwich Riverside Community Center leagues from football to baseball to soccer. If you would have asked me then where the border was between Old Greenwich and Riverside, I couldn’t have told you. I knew the west side was the Mianus River and south side was Long Island, but the other two sides were kind of murky and didn’t matter as the two areas seemed much the same.

As a Realtor, I know the northern border of Riverside is at Palmer Hill Road, with two minor exception/cul-de-sacs in Palmer Circle and Apple Tree Lane. So, Palmer Hill on the north side from west to east borders a little stretch of Cos Cob east of the Mianus River then the two cul-de-sacs of Riverside and Hillcrest Park in Old Greenwich

2022 YTD Riverside Homes Sold2022 Riverside Inventory

The east side of Riverside is a little more complicated. The east side runs up Riverside Ave through the circle at the foot of Summit Road and along the west side of Binney park. The dividing line then turns left and runs up Sound Beach Ave before crossing the Post Rd. You continue briefly on Sound Beach Avenue Ext, then you take right on Bonan Drive to Mary Lane, then right on Amherst Rd, left on MacArthur Drive, a right on Florence Road and then up to Palmer Hill. All in all, not a big area, but zoning wise it is very diverse.

Greenwich Planning & Zoning map of the Riverside section of Greenwich, CT

Riverside 5 zones starting with the R-12 zones in the north (12,000 s.f. or .275 acres), what is often called our quarter-acre zone. These R-12 lots with a floor area ratio of .315 means you can build up to 3,780 s.f. (12,000 s.f. x .315 = 3,780 s.f.). Of course, this FAR limitation doesn’t apply to the basement, if it isn’t a walkout basement, nor to the attic, so you could have over 6,000 s.f. for new construction on four levels.

Below the R-12 zone is an R-7 zone running along the north side of the Post Road. The R-7 zone really should be called the R-7.5 zone since the minimum lot size is 7,500 s.f. or .172 acres, our “sixth” of an acre zone. With a .35 FAR in R-7 zone, you get an allowed square footage of 2,625 s.f.

Continuing south and crossing the Post Road, you are back to an R-12 zone inside the vast loop of Riverside Ave. Outside of Riverside Avenue you have an R-20 zone of 20,000 s.f., 0.46 acres lots; our so called half acre zone.  The .225 FAR in this zone gets you a max house size of 4,500 s.f. (plus the basement and the attic).

Then you get to something that Old Greenwich doesn’t have, an RA-1 zone whose north boundary is about halfway between the Sound and the railroad tracks. The RA-1 zone properties are one acre lots of 43,560 s.f. which with .135 FAR allows houses up to 5,881 s.f. The Riverside one-acre zone has a series of private associations, some of which are gated and guarded, giving the southwest corner the name of Little Belle Haven to some folks. (It looks good in a listing description.) And, that’s it for Riverside zones and house sizes. Well almost, you have a tiny R-6 duplex zone that only has 2 properties, and several conservation and historic overlay zones.

All this gives you a lot of options in a small area. It also means a 10-fold difference in sales prices. In 2021 we had 157 sales in Riverside and the prices varied from our lowest Riverside sales price of $705,000 in the R-7 to a $7,800,000 sale in the RA-1 zone. Patty Ekvall and my sale in Harbor Point came in 6th. At least it does if you look at the sales reported on the GMLS. There was at least one much higher sale, which didn’t get reported (sorry Gideon).

Greenwich April 2022 Sales by Neighborhood. (Click images for larger version.)

With all these high-end sales, Riverside has one of our highest prices per square foot. The sales price per square foot so far in 2022 has been $763/s.f. up from $678/s.f. last year or a jump of 12.5% in only 5 months. A significant part of that is a change in the mix of what is selling. We only have 3 listings in Riverside under $1.6 million and we have the same number over $7 million, so these higher priced properties when they sell will pull the average up a lot.

Riverside and Old Greenwich also have an average sales price to original list price of over 99%, so most listing go very close to list, and many have multiple offers going for full list or over list.

If you look back over the last 22 years, the number of sales jumps all over the place. Last year, we had the highest number of sales in Riverside that we’ve ever had with 163 sales, this beat the other two peaks with 151 sales in 2004 and 145 sales in 2013. The nadir was in in the Recession year of 2009 with only 54 sales. Over the last two decades, we’ve averaged 113 sales per year in Riverside.

The Great Recession also interrupted what had been steady growth in Riverside prices going all the way back to 1976. We had a couple of down turns, for example in the 1987 recession, but Riverside property has been pretty consistent from 1976 to 2008. During this period, the surprises were mainly on the plus side with the average price jumping 54% in 2004 and 20% in both 2007 and 2008. These big jumps were the result of a couple of big sales and that latter two were bubble years that whose over-inflated popped with slump in the Great Recession. Prices dropped in 2009 with the average down to $1.83 million in 2010 but had recovered to $2.14 million by 2012. 

Then we had a slow increase in prices, but it was a bumpy ride. The SALT tax deduction limits made 2019 a bad year for Riverside and then came Covid. In 2021, our average sales price in Riverside was up to $2.61 million, still not up to the bubble year of 2008 with its $2.73 million average sales price but chasing bubbles should be left to kids.

Going forward, our low inventory will still be putting pressure on buyers. We have seen a little slowing in demand due to interest rate increases and the stock market falling, but it hasn’t affected prices yet. At the same time, there are still a couple of years right-sizing caused by the shift to work from home and inflation spurs sales for those with money as they have traditionally been  thought of as inflation hedges. I expect that we’ll see continuing interest in Riverside houses for the rest of the year.

Now, if we just had twice the inventory, we’d see some real jumps in sales, but sales are going stay below last year unless we get lots more houses to sell.

Stay tuned …

The Greenwich Real Estate Market by Neighborhood – April 2022

by Mark Pruner

In April 2019, things were not looking good for the Greenwich real estate market. We were in the sixth year of declining sales, and this was after we had recovered nicely from the Great Recession. The Great Recession caused an all-time sales low of 370 home sales in 2009. By 2013, we had recovered to 724 sales: an impressive recovery in only 4 years and well above our 10-year average of 650 homes. We then had a steady decline for five of the next six years.

We dropped from 724 sales in 2013 to 526 single family homes sales in 2019, a drop of 27%. With the exception of 2018, it was a steady, almost linear, drop. Greenwich, and in particular, north Greenwich had fallen out of favor.

The exception year was 2018, which perked up 4.4% due to the Trump tax bill that limited SALT deductions to $10,000. As a result, tax costs in Westchester County jumped by around 30% or whatever the taxpayer’s marginal tax rate was. At the same time, the $10,000 limitation on SALT deductions also encouraged Greenwich homeowners, like Westchesterites to relocate south, just not as many. We got a net 25 more Westchesterites moving into Greenwich than we had Greenwichites moving to Florida. By 2019, the decline had resumed with 67 fewer sales, than we had in 2018

The first quarter of 2020 had a slight uptick, and, then came Covid with all its knock-on effects. That year was a record year that only stood for one year. We had an all-time record in sales in 2021 and we would be having a stellar year this year, if we had more inventory.

                A quick look at the overall Greenwich real estate market in 2022

Our sales are down this year from last year, but up almost 100% from April 2019. Sales are down, because we are at all-time record low inventory. Both our months of supply, and our daily experiences as Realtors trying to find a home for multiple buyers, say that we have a highly competitive market all the way up $5 million (and if you add in contracts, it’s not till you get over $10 million, that you have a buyer’s market.)

April 2019 YTD – 108 SalesApril 2022 YTD – 204 Sales

By the end of April 2019, we had had 108 sales or only 53% of the 204 sales that we had in the first four months of 2022. These sales were also predominantly in the southern half of the town. This year we have had 204 sales and they are distributed throughout the town.

                2022 price appreciation

The thing that everyone wants to know is how much more is their house worth this year compared to last year. So, let’s take a look at price appreciation, the most misused numbers in real estate.

Average sales price, median sales price – the backcountry example

To illustrate why, price appreciation numbers can be misleading let’s take a look at what happened to backcountry prices between 2019 and today. What’s at first is surprising is that the average sales price in backcountry actually dropped from $4.55 million in 2019 to “only” $3.86 million so far this year. The average price of a house in backcountry didn’t go down 15% from 2019, it actually went up and probably around 24% or move over the last three years.

We’ve got three measures of price appreciation and they come in two flavors, median and mean. One way to calculate the average increase in the sales price from one year to another is to compare the average sales price from this year to last year’s average sales price.

It is the easiest to calculate and the most affected by the mix of what is selling especially if there are a few very high sales or a lack of them the following year. This is what happened in 2022. Our average dropped, but this was due to lots of sales under the average price as we had a surge of young families into backcountry. Our average backcountry price last year was also higher, because of a few very high-end sales.

The median price (half of sales above and below) is better, but it is also affected by the mix of what is selling and the law of small numbers, which causes calculated amounts to change significantly, with only one or two more sales.

                                Sales price/sf or sales price/assessment

Beside average and median sales prices, the other two price appreciation statistics are sales price/sf and the sales price to the assessment ratio. The latter is usually the better statistic, if you are trying to minimize the effect of a change in the mix of what is selling.

In 2019, our median sales price to assessment ratio was 1.285 or below the 1.428 ratio is there is no change is sales price. This 1.428 ratio comes about, because, the Town Assessor, by law, assesses property at 70% of FMV for tax calculation purposes. The reciprocal of 0.7 is 1.428, so the 2019 SP/Assmt ratio of 1.285 meant that backcountry sales price had actually dropped 10% from the last reassessment done on Oct. 1, 2015. Our present backcountry median SP/Assmt ratio is 1.82 which is 41% more than 2019 SP/Assmt ratio of 1.285.

That seems high and it is. We only had 24 sales in backcountry in the first four months of this year, so the law of small numbers kicks in. That law says only a couple of sales can make a dramatic difference and that is so here. If you drop to the next highest backcountry SP/Assmt ratio, it is 1.64, so you get an appreciation of 27% from 2019 to April of this year.

This looks more representative of what actually happed as it is similar to the increase in in the median backcountry price which went up 31% from 2019 to April 2022. The 1.82 and 41% appreciation are mathematically more accurate, but it is not more representative of what is actually happening in the market.

                Overall price appreciation in Greenwich

For the town overall, we saw

  • the average sales price goes up 18%,
  • the average sales price/sf go up 20%, and
  • the average SP/Assmt ratio go up 14.4%.

Bottom line, take any real estate appreciation figures in Greenwich with a grain of salt. Your house may have done better than “average” or maybe not as good, but the thing you can be pretty sure of is it did go up, by double digit percentages, regardless of which neighborhood you are in.

If you really want to know how much your house went up contact a Realtor (my numbers below 🙂 or an appraiser. Sellers and Realtors have done pretty well in estimating sales price. So far this year, the ratio of the sales price to the original list price is 97.6%. This is also an indicator of how strong the market is as this ratio was 88.1% in 2019.

                Backcountry & Mid-country

In 2019, we only had 11 sales in backcountry and only 9 sales in mid-country in the 2-acre zone just south of the Merritt Parkway. This year we have had 27 sales in backcountry and 39 mid-country sales in the 2-acre zone, which seems to be the Covid sweet spot, combing a good amount land, a larger house and better proximity to downtown Greenwich.

Greenwich 2022 YTD Sales as of 4/30/22 (Click for larger version)

The 27 sales in backcountry this year totaled $104 million dollars compared to only $54 million in sales in 2019. As of the end of April 2022, we only had 48 listings in backcountry compared to 109 listings in 2019.

Increased sales and decreased inventory led to a dramatic drop in months of supply. We’ve gone from 3.5 YEARS of supply in 2019 to 7 months of supply in 2022. Our contracts are also doing well with 11 backcountry contracts waiting to close.

Greenwich 2022 YTD Sales versus 20219 Sales as of 4/30/22 (Click for larger version. Green cells pro-seller, orage pro-buyer)

Now 2022 has not been a perfect year backcountry and northern Greenwich sellers. The one area that shows a balanced, and even a pro-buyer, market is the market over $5 million and backcountry has half of those listings.  

Townwide, we are looking at 7.2 months of supply from $5 – 10 million and 29 months of supply over $10 million. We saw the same thing last year, when we had the same 7.2 months of supply from $5 – 10 million and 28 months of supply over $10 million. Mostly, this is because high-end sales have shifted to later in the year, so the high-end is slower, but it looks to be more of seasonal issue.

Greenwich Inventory as of 5/11/22 – 177 Single Family Homes – Down 75% from April 2019

The 7.2 months of supply in backcountry, is an amazing drop, but it is the highest of any neighborhood in Greenwich. Much of this is due to the fact that the largest portion of high-end listings there.

                South of the Post Road

The next highest months of supply, with 4.0 months, is south of the Post Road where we also have a lot of high-end properties (think Belle Haven, Mead Point and Indian Harbor). South of the Post Road also includes Chickahominy and the east side of Elm St, two of our more affordable areas where sales are going fast.  Average three high-priced areas with two more affordable areas and add in all of the new construction around downtown and the numbers are a blend and not that indicative of any price range in this area.

The good thing is that, in general, the numbers for all price points in this area point to a tight market with high demand, whether they are waterfront properties in gated communities or older houses on 0.17 acres in walking distance to the Avenue. In April 2019, there were 69 houses in inventory, now there are only 20 houses for sale.

Like Byram and Pemberwick, the affordable areas have seen some of the most appreciation in the last three years.  So much so that we have no listings under $1 million and only 4 houses listed under $2 million. We actually have more houses listed over $15 million (5 houses) than we have under $2 million.

Not everything sells immediately. In fact, townwide, 60% of houses take more than one month to get to contract, some take much more time. Of 20 houses that are presently listed, 7 of them have been on the market for more a year and these slow sellers are not just at the high-end.

As to sales, we’ve had 34 sales this year compared to 14 sales in 2019. Of those sales, 2 were under $1 million and 8 more were under $2 million. We had 5 sales that had been on for over 300 days and 4 of those five long time sales were under $2 million.

                South of the Parkway

This is our largest area in town running from the Merritt Parkway to the Post Road. Inventory here shrunk from 240 listings in April 2019 to only 46 listings this year. At the same time, sales more than doubled going from 28 houses sold three years ago to 59 houses this year. This meant that months of supply went from almost three years of supply (34.3 months) to 3.1 months.

The average price also went from $2.81 million to $4.16 million an increase of 48%. Now much of this was Covid buyers wanting much larger houses than the average buyer bought in 2019. The result was that total sales volume soared from $78.6 million to $245.3 million. That certainly helped the town’s conveyance tax collections. (BTW: The increased Gold Coast conveyance tax for sales over $2.5 million gets rebated if you stay in Connecticut for three years.)

                Old Greenwich & Riverside

In Riverside, the public listings were about the same going from 83 to 14 listings with sales going from 11 sales in the first third of 2019 to 30 sales YTD in 2022. The days on market dropped from an average of 189 days to 99 days on market. The months of supply went from 303 months of supply to 1.8 months of supply. The lowest of any of our larger areas.

Sales volume actually fell in Old Greenwich from 2019 to 2022 from $58.1 million to $50.5 million. This is what happens when inventory drops from 86 listings to 14 listings. Sales numbers fell from 23 sales in the first four months of 2019 to 20 sales in the first four months of 2022. This “drop” is actually deceptive as the market was so hot in OG, that a bunch of listings never made it to market.

Of the 20 sales reported on the Greenwich MLS, 4 of them were for reporting purposes only, i.e., they were sold off market and were reported with zero days on market. Reporting off-market is voluntary and I know of other sales that were sold off market either by agents or by the owners directly and there isn’t a record on the GMLS of the sale.

As of May 1st, the Greenwich MLS rules have changed so private listings and listings that are not yet active are much more closely regulated. Private listings will have to stay private for at least 4 months unless the listing broker pays $1,000 to bring it live earlier. Listings that are being prepared to go live can be held in “delayed” or “coming soon” status, but showings aren’t allowed until the listing is put live.

                Cos Cob

House prices went up substantially in Cos Cob with the average price/s.f. going from $416/sf to $603/sf or an increase of 29.6%. The sales price to assessment ratio went from 1.56 to 2.35 the highest sales price to assessment ratio in town and a 24.3% appreciation. (North Mianus was actually higher at 2.58, but that was based on only 5 sales.)

The big quandary is inventory and how much the increase in interest rates and the drop in the stock and bond markets are going to affect market demand. Stay tuned …

High-Tech Real Estate Marketing in the 21st Century

The world of marketing home is becoming more complicated, but if you know what you are doing that is for the best. Realtors can now reach out to potential buyers that they were not able to reach before and do so quicker, but necessarily cheaper.

              Real Estate BCE

Not that long ago, realtors had the “book”, and you could get fined for losing it or giving it to a buyer. In the book was one small, grainy B/W picture of the front of each house listed and maybe a dozen items of info on the house. Now everyone with an internet connection has 10 times that amount of information. That information doesn’t just appear, it was crafted by realtors and other professionals to put the house in the best light without violating NAR regulations, Connecticut laws and the federal Fair Housing Act.

While Realtor.com, Trulia, Compass.com and hundreds of other websites have made lots of information available. Most of it is boring. What makes listing jump off the screen are photos, aerials, and video. A traditional photographer is great, but lots more gets done to the photo before it’s gets to your computer or cell phone screen.

              Graphics are not just photos

To begin with the Realtor needs to go over with the photographer the important things on the interior, the outside and the neighborhood that need to be emphasized and pick a time when weather, sun and tide are helping. Once captured, the photos have to be polished. Grass is greened up; skies are brightened, and photos are cropped to emphasize the property’s good features. What is not done, or shouldn’t be done, are removing telephone poles and lines to improve the view. Also, you can’t change the earth’s axis as one L.A. agent did by photoshopping in a sun setting on the southern horizon. Virtual staging of furniture in rooms and photos from prior listings that are no longer representative should be identified.

Drones have added some major impact to photos and are now de rigueur for high-end properties.

The other thing, which has become common are floorplans. If you don’t put them up, prospective buyers will call you up and ask for them. Floorplans cut both ways as some buyers who might otherwise come see the house, won’t come if the present floorplan doesn’t work for them. The Realtor never gets to explain how the floorplan can be improved. The question is for lots of these prospects is whether they might be persuaded to make an offer, i.e., were these buyers really buyers. Floorplans can save a lot of time for everyone.

              The rise of video

Videos are also becoming much more common. You have the automated slideshows, then what one videographer calls the Ken Burns videos and at the high-end you have the custom videos where the sky’s the limit in bells and whistles and cost. Ken Burns has done a masterful job of zooming in on photos and fading from one to another to give a static subject a sense of motion and presence. That’s what you get with the beter “virtual tours”. Both the Ken Burns videos and the computer generated slideshow video tours usually come with generic, non-copyrighted music. These generic tours are generated automatically but have a surprising amount of viewing time online.

Once you have the photos, a careful selection in a precise order is uploaded to the MLS along with lots of text information, surveys, maps, deeds and other documentation. This information is then encoded with special codes identifying each datum type and distributed using an IDX (Internet Data Exchange) formatted fee. This feed goes to each MLS broker and to a company called Listhub in Arizona. Listhub then sends the IDX to hundreds of sites, including their sister News Corp company, Realtor.com.

              Marketing Automation

In today’s real estate market that is just the ante to get in the game. Next the Realtor needs to put it up on their Facebook page, their Instagram and Twitter feeds and craft a postcard and research a mailing list. Postcards look simple, but behind the scenes there is lot of technology. At Compass, we have a drag and drop media production system, which means we can do in minutes what used to take hours and needed the help of graphic artist.  (Other brokers have this too, but ours is pretty slick. 🙂

What’s really changed is who those postcards go to. It used to be, and it is still common, that they go to the 100 nearest neighbors, whether they just moved in or are likely to live there for another 20 years. Now Big Data services can slice and dice 100’s of factors about someone to focus on those most likely to be interested in your particular listing.

              Online marketing ads and SEO and podcasts

Realtors also have paid online advertising to market each property. Prior to 2018, online companies like Facebook would give a realtor a hundred or more parameters to narrow the focus. In 2018, the U.S. Department of Housing and Urban Development issued a set of regulations banning the use of any parameters that might be discriminatory, such as marital status, children, age, religious affiliation, etc. There are still lots of ways to slice and dice the data that makes it much more likely that the ad will reach a potential buyer.

Search engine optimization is also a great way to reach out to buyers. Russ and I both have blogs at GreenwichStreets.com and RussellPruner.com that rank highly in search engines often in the top ten depending on the search term. PR can also be highly effective, and we just started a radio show on WGCH at 10 am on Mondays Greenwich Streets. That show is distributed not only via the local airwaves, but also streaming live on WGCH.com and in on podcasts on Spotify, Amazon, Apple and Google that people can subscribe to. Our local agents have a wide range of websites, some of which are pretty famous.

              Make a plan and work the plan

Realtors have lots of tools that are only getting more features that let us market a house. However, without a carefully crafted campaign integrating all these options with a phased marketing approach, these tools lose a lot of their effectiveness. In a market as hot as this one, a properly price house will sell but will it be for the best price and on the other terms that the seller wants.

Russ and I recently had a listing that went for the most dollars over list of any listing so far this year. The marketing plan for that property ran three pages and took weeks of work before the listing went live. Once live, new parts of the plan kicked in every day. The ultimate buyer came from a hundred miles away and never saw the ads in the Greenwich Sentinel, nor the other local marketing, but several of the other bidders did.

We are not unique, every agent and brokerage firm bring their own way marketing plans and systems. There a wide variety of ways to create a marketing program that works as all these successful agents show, but each year the requirement to do a great marketing program get more complex.

But, if it was easy, it wouldn’t be fun.

April 2022 Real Estate Market Report – Record Low Inventory, Sales Up 22%

by Mark Pruner

In April 2022, our sales were up 22% over our ten-year average. We had 62 single family home sales versus our ten average of 51 sales. At the same time, our sales were down 30% from last year’s all-time record April where there were 89 sales.

The remarkable thing is that the 62 sales happened at the time when we were experiencing record low inventory. On one day in early April our inventory slipped to 136 listings. Pre-Covid, the lowest inventory we ever had was 299 listings. Look at another way, our sales in the one month of April was nearly half of the listings on that date. However, that’s not the way it really works. Of our 62 sales in April 2022, only 8 of those sales went to contract in April; 54 of the sales were signed in March or earlier months. (One April sale went all the way back to a contract signed in June 2021. It was a foreclosure that took 11 months to get through the bank process. It shows why foreclosures often aren’t the deal they seem to be.)

By the end of April our inventory was up significantly for the first time this. year, but still not nearly enough to meet present demand. In the first quarter, we had been averaging around 150 listings before drifting down in early April to a weekly close of 140 listings. In the last two weeks inventory is up 21% to 170 listings a jump of 21% in only 3 weeks. One argument to be made here is that the smart-money homeowners are expecting that with the increasing interest rates that the market will cool, and they want to get their houses on the market, before the cooling becomes apparent. Or it could be just good weather that brought out more listings.

The good thing is that inventory is going up for whatever reason. This is also resulting in sales going up, but when you look at the slope of the curve, it’s not as steep as last year. Through April we have 204 sales this year versus 288 last year or a drop of 29% in sales.

Our contracts are down from 266 contracts last year to 152 as of the end of April this year or a drop of 43%. Contracts usually take 2 – 8 weeks to mature into sales, so don’t expect us to reach last year’s record sales in the next two months. Even if we have a substantial increase inventory it will take awhile before we see sales catching up to last year.

All this is like expecting that when Babe Ruth hit 60 home runs in 1927, that he was going to 73 home runs in 1928, since his 60 home runs in 1927 were 13 more than he hit the previous year. It’s just not going to happen. In 1928, he hit a still impressive 54 HR’s. Our 204 sales so far this year is almost twice the 109 sales we had in the first four months of 2019. If we can get the inventory, we’ll still have an impressive year, but it’s very unlikely, we’ll break the 1,000 sales mark like we did last year.

       The price range beating 2021

Every year there is some range or area of town that surprises you and this year it’s the $4 – 5 million price range. Sales there are up 67% from 15 sales last year to 25 sales this year. With 25 sales and only 19 listings in inventory you are looking at 3 months of supply. Add in the 14 contracts and months of supply drops to 2.7 months of supply. Annualize the 8 sales in April and you are down to 2.4 months of supply. When you see months of supply drop like this, it is a sign of an accelerating market, so if you have something to list in that price range, now is a good time to do that.

In fact, given that just about everything below $5 million has less than a 3-months supply, this is great time to list a house. It’s not till you get over $5 million that you see any sign of softness and that may not last. While we have about 8 months of supply from $5 – 10 million, if you throw in contracts, you are back down to a very pro-seller 4.5 months of supply. The one fly in the ointment is that April was a poor sales month for the $5 – 10 million sale bracket with a little over 8 months of supply when you annualize the six April sales against the 43 listings.

What this means is that we have way more sales (89 closings) than inventory (35 listings) up to $2 million. Above $5 million we have more listings (65) than we have sales (25). I wouldn’t however worry about this sector too much. Our high-end and ultra-high-end sales are now more oriented to 4th quarter sales as most of our financial folks no longer get one very big bonus in January or February which used to drive our first quarter high-end sales.

Another way to look at our market is that under our inventory under $1 million in only 5% of inventory and but represents 20% of sales. Our listings over $6.5 million account for 27% of inventory and 7% of sales, (but be patient with the high-end, it’s likely to look much better by December.

       What’s Going to Happen for the Rest of the Year?

It looks like we will finish this year with 549 sales down from our 10-year average of 621 sales. Inventory will recover throughout the year and climb back to around 400 listings by year end. Demand will continue strong but tapering throughout the year. We will see a pause in contracts in October as people await the election results followed by a rebound in November with a strong December. (NB: THIS IS NOT GOING TO HAPPEN!). Anyone who says they know what is going to happen to the Greenwich real estate market this year, doesn’t know the market and if you do know the market, you can be sure you don’t know what is going to happen, but let’s look at some factors that will be shaping the market this year.

       Rising interest rates

With the Feds announcement this week of a 0.5% increase in the fed funds rate and more to more to come demand should soften, but will it drastically cut into sales? First most people in Greenwich don’t have a mortgage contingency in their purchase contracts. This doesn’t mean that some of these buyers aren’t getting a mortgage, just that they are comfortable without having a contingency. So, will increasing rates affect the Greenwich market, some, but I expect the demand will continue to be high.

One aspect of this we are just starting to see is that homeowners with low interest rate mortgages may be more reluctant to put their houses on the market as they would have to give up a low interest rate mortgage for a high-interest rate mortgage and a higher cost per s.f. for a new house. Once again, though, if you don’t have a mortgage, this is much less of a factor. Mortgage interest deductibility is now limited to the first $750,000, so they are now a lesser factor and becoming even less of a factor as houses appreciate even more.

       Shrinking stimulus here, expanding it there

What is likely to affect the market is the disappearance of the Covid stimulus money. You take a couple of trillion dollars of stimulus money out of the market and inflation is likely to go down. But we have another major stimulus in the trillion dollar plus infrastructure bill. This at a time when construction workers of all types are in short supply. The infrastructure spending is spread out over five years, so the feds aren’t pumping a trillion dollars plus into construction this year, but it is going where it is likely to be a factor in pushing up housing construction costs.

       International issues

Shortages of all types and bottlenecks are likely to get better, but foodstuff shortages will continue to increase as the Ukraine war cuts into exports from two of our largest exporters of grains and oil. These are ingredients in much of the food that we eat. China with it’s Covid zero policy is also likely to continue exacerbate shortages as factories continue to shut down, but don’t forget it’s an election year for President Xi also.

       Work from home

Even as Covid recedes or maybe better said, as the impact of Covid recedes, with vaccines, better medicines and better treatment, you are not going force people back to Paree offices full time, once they’ve seen life on the Greenwich homestead. I’m guessing we have a couple of years, before the new office/home work balance finally settled into some form of homeostasis. With less time spent commuting a Greenwich home looks more inviting and will for a couple of years.

       List now or later or stay put?

It’s been an interesting week as three Greenwich homeowners in the finance industry have called me up to pick my brain about what they are thinking of doing. I love these conversations, as I learn as much, or more, than they do. (So, if you are wondering what to do please feel free to give me a call. I’d love to hear your thoughts.)

There is a genuine concern about a recession, but we all agreed it’s probably less than 50%. The big issue seems to be just how long it takes for higher interest rates to really affect the economy. Most of the time when the Fed does serious tightening it leads to a recession. The Fed often continues to tighten too long leading to recession. Let’s hope they learned their lesson and the Internet, and the faster flow of information means they are more nimble this time.

The thought last year for many people who decided stay in their house was that their Greenwich house was only going to be more valuable, and it is. While this is likely to happen again this year, it’s not as certain as it was. You have the issue of a possible recession, and you also have high inflation, so the price may go up, but your real return is less.

TINA is also dying. For much of the last decade of ultra-low interest rates, investor said There Is No Alternative to the equity market. With interest rates were so low and houses not appreciating much, keeping your money in equities didn’t looks so bad. Now, interest rates are going up, bonds are falling and so is the stock market as money is moving to the improving and lower risk returns in the bond market. The 2022 question is are you going to get your best return in stocks, bonds or Greenwich real estate?

The one thing we do know is that right now, our inventory is way down and we have lots of demand at least up to $5 million. Properly priced, your house should sell quickly, but there all those other issues too.

Stay tuned it’s going to be an interesting year…

Mark Pruner in the News, New Radio Show on WGCH, Highest Sale Over List in Greenwich

It’s been a busy couple of weeks with new listings coming on in the spring market, 14 Osee going to contract and being involved in 4 multiple bid situations. We won two and got out bid in two, but considering their were a total of 18 bidders we were happy with the results. Now to find our other two buyers their perfect house.

WGCH: Russ and I now have a radio show, “Greenwich Streets” on WGCH – 1490 at 10 am. We talk about the market, how buyers and sellers can get an advantage in this market and interview local movers and shakers. Each broadcast gets made into a podcast on Apple, Spotify etc. You can also stream it live on WGCH.com or subscribe to the podcast and get it the next day.

Bloomberg:  Backcountry Greenwich, Compass, fellow agent Brian Milton and I were mentioned in a Bloomberg article todayGreenwich Mansion Buyers Revive Deals in Sleepy Back Country – Bloomberg(opens in a new tab)

 Greenwich Sentinel: I wrote a column about technology and real estate in my weekly article in the Greenwich Sentinel (check out p.15)

Greenwich Time/Hearst Media : With ‘churning constantly’ housing market, Greenwich sees renewed increases in tax revenue, building permits(opens in a new tab) was an article looking at just how much the town’s revenue was up from the surge in sales in the 2021-2022 fiscal year.

 Michael Ferraro just put up one of his Leaders of Lifestyle interviews with me about the Greenwich market YTD.

Russ and I just sold 113 Woodside Drive, which went for $638,000 over list; the highest amount over list this year and it would have been the third highest out of 1,007 sales in 2021. The Compass marketing resources made getting this to market quickly a huge help. It let us create marketing material in a very compressed time scale. 

 

The 2022 Greenwich Rental Market

High Demand and Low Inventory at All Price Ranges

Two years ago, at this time, the fear of Covid was palpable. Covid was everywhere and we knew little about it. Everyone was wearing masks, and lots of people were wearing gloves, and, if you wanted to show a property, everyone wore booties. Despite this, our overall rentals in 2020 were up only 21% over the pre-Covid year of 2019. 

We went from 863 rentals in 2019 to 1,041 rentals in 2020. High-end rentals were a different story; over $12,000 per month rentals 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 were certainly an undercount.

As the irrational fear of Covid abated, rentals actually dropped in 2021 to 784 rentals down 25% from 2020 and even 5% below our 10-year pre-Covid average. Our rental market however was a tale of two markets. Below $8,000 rentals were down by 14%. Above that price, rentals were above our 10-year average and often far above that.

Our 10-year average of rentals less than $8,000 per month is 654 rentals, while in 2021, we only rented 561 rentals a drop of 14%. Above $8,000 our 10-year average for rentals is only 142 houses.

April 2022 – Rentals last 12 months

This year we are seeing the number of rentals continue to sink. In the first quarter we had 148 rentals. It seems that many people are hanging on to their rentals and there are fewer people willing to lease their houses. The uncertainty of people’s office situation means they are often staying in place. Having said that over the last 12 months we continue to see rentals throughout the town. They are mostly concentrated in our half acre and smaller zones, but mid-country and backcountry see a fair number of rentals, though not so much this year.

Our inventory has dropped to unheard levels. This week we have only 42 rental listings on the GMLS. At this time last year, we had 91 listings, so we are down by 54%. Go back to a pre-Covid period and we are down even more. Between $6,000 per month and $16,000 per month we only have 6 listings. If you’d like a nice rental in Riverside, you have two choices: one at $14,000/mo and one at $20,000/mo.

April 2022 – Active rentals (green) and expired rentals in prior 12 months

We actually have had more rental listings expire in the last 12 months, 45 listings, than we have in inventory now. Even in this market, it is possible to over price a listing. At least 45 folks thought the market would bear more than it would or were willing to rent at their price and not below.

The pandemic increased sales more than the Great Recession, but only a little bit more. 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. In 2009, when we hit our low for single family home sales of only 370 houses. That same year, we had 959 rentals.

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. Our rental market is always tight below $6,000/month where the majority of our rentals are.

In 2020, demand for homes took off as people wanted to get out of NYC. This increase in demand resulted in increased prices, which led to a big jump in inventory, which led to more home rental deals. People who never would have considered renting their houses were happy to do so if they could rent for $30,000 or $50,000. 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.  

As inventory started to drop in the second half of 2021, our days on market took a similar drop. New rental listings that came to market were snatched up quickly. Lower inventory resulted in fewer rentals in 2021. The good news is that so far in 2022 our days on market has lengthened a little bit from an amazing 31 days in 2021 in 2021 to 42 days in the first quarter of this year.

Non-listed rentals

We have more rentals each year in Greenwich on the Greenwich Multiple Listing Service than we have house sales, with the exception of last year, when we had more house sales, 1,006, than rentals only 784.

 These are 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 in a normal year. 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 were rented quickly in the hot, high-end market of 2020. So, take all these numbers with a grain of salt. The actual numbers are higher.

              What Do You Get?

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.

 It’s a good time to be a landlord and if are a tenant, a good time to have a well-connected Realtor.

How Back is Backcountry Greenwich?

Q1 2022 Report

by Mark Pruner, Compass – Greenwich – mark.pruner@compass.com

Real estate sales in backcountry Greenwich continued strong in the first quarter of 2021. So far this year, we have sold 24 houses north of the Merritt compared to 22 last year. Both Q1 ‘21 and Q1 ‘22 are more than double the 11 sales in the first quarter of 2020. Inventory has done just the opposite. It has contracted from 83 listings in 2020 year to 55 listings in 2021, to a really small 36 listings in backcountry this year. Inventory has gone down 57% in two years and 35% just since last year. It’s a tight market, and buyers are moving fast and keeping us Realtors very busy. The one fly in the ointment is that we only have 7 contracts in backcountry compared to 23 contracts in 2021.

Under $2 million, we have 3 listings so the backcountry bargains that we used to have are gone. In 2017, we had 129 listings in backcountry and 25 of them were under $2 million. Back then you had a 4,232 s.f. house on 4 acres listed for $1,575,000. Now it was built in 1953 and needed work, but it was a hell of a deal for the person that bought it. Today, the best you can do is 2,894 s.f. on 4.2 acres for $1,875,000 or 1,338 s.f. less for $300,000 more.

To get some perspective on this market, let’s go back 23 years and look at how we got here. Our previous high for sales in backcountry was 90 sales in 2000. For much of what people think of as the heyday of backcountry, sales actually fell from 90 sales in 2000 to 62 sales in the peak year of 2007. That year we sold $306 million worth of houses in backcountry with an average sales price of $4.93 million. If you look at graph of the period, you see a big rise in total sales dollars (volume), while the number of sales was actually dropping. That’s a pretty good definition of a bubble.

In 2008, the bubble started to burst with the number of sales dropping from 62 in 2007 to 34 in 2008 and sales hit their nadir in 2009 with only 27 sales. Sales volume dropped from $306 million to $163 million in 2009. We actually had a pretty good recovery going from 2010 to 2015 when sales grew from 45 to 61 houses.

At the same time, our sales volume and median sales price bounced around. We reached our post-recession low price point in 2012 as our backcountry median sales price dropped to $2,012,000 only to all most match that number three years later in 2015 with a median of $2,043,000.

We didn’t start to see a real recovery until the 3rd quarter of 2019. At that point, prices in backcountry started to look pretty good compared to what you could get in Old Greenwich or downtown Greenwich. In 2019, backcountry sales were up 31% while they were down 11% for the town overall and Riverside saw a drop of 23% as the $10,000 SALT limitation on local tax deductions finally hit Greenwich hard. All this was pre-Covid.

In 2019, our days on market dropped from its post-recession high of 475 days on market in 2017 to only 220 DOM in 2019. In 2020, after a slow first half of the year DOM dropped steeply to 145 days on market. In 2021 our median days on market was 142 and we have ticked up slightly to 151 days on market in the first quarter of 2022.

It’s easy to over analyze this market. There is a lot of Brownian motion in the numbers as the law of small numbers means that one sale like Tommy Hilfiger’s house selling for $45 million in 2021 throws off the averages. Take out that sale and the backcountry average sales price drops from $4.94 million to $3.03 million, which is still a pretty good average.

What is clearly remarkable is the number of sales we had in backcountry last year. Our 102 sales in 2020 is 13% better than our previous high of 90 sales all the way back in 2000 and several multiples of the 29 sales in 2009.

If you really want to make a “gee-whiz” graph, you can annualize our first quarter sales on a weighted basis. Most years the first quarter represents only 18.2% of our sales for the year, so, if you take our 24 sales so far this year and divide by 18.2% you get an expected 132 sale this year.

I’m betting that projection is really just fun with numbers as don’t forget the paltry 7 contracts that we presently have compared to 23 contracts at this time last year. Also, our inventory is much tighter than it was last year, and we are already seeing sales being supply constrained.

Backcountry has always been synonymous with larger houses, and we are seeing an uptick in our median size house sold. Our median house size peaked in 2009 at 8,300 s.f. From 2018 to 2020, our median house size has averaged around 5,600 s.f. In 2021 our median house size went up to 6,144 s.f. or more than 500 s.f. larger. So far in 2022, our median size is up again to 6,327 s.f., while our median house size for the town over all is 4,150 s.f. or almost 2,000 s.f. smaller.

This doesn’t mean that houses suddenly got bigger in backcountry. What it is indicative of is that the smaller houses have been snapped up and we do have supply is at the higher end.

One major issue in backcountry is that sales are distinctly slower when you hit $6.5 million. Over that price we have 2 sales and 16 listings in inventory. That might seem like a big discrepancy, and it is, but last year at this time, we had 29 houses listed in backcountry for over $6.5 million. Also, the majority of high-end sales have shifted to the 4th quarter, so high-end sales in the first quarter have limited meaning.

It’s likely to be a good year for backcountry; inventory will determine just how good, particularly, inventory under $2 million. Stay tuned …

Greenwich Q1 2022 Sales Down by a Quarter and Up by a Third

Greenwich Q1 2022 Sales Down by a Quarter and Up by a Third

You are going to see a bunch of pundits say sales in the first quarter of 2022 are down 27.2%, and while true that percentage is very deceptive. The first quarter of 2022 was an above average quarter even with record low inventory. In the first quarter of 2022, we sold 142 single family homes compared to a record-setting 200 homes in the first quarter of 2021. Go back one more year to the first quarter of 2020, our last pre-Covid quarter, and our sales are up 37.8% not down.

Go back two more years to 2019 and we are up 92% from the anemic 74 sales in Q1 2019. We often are so focused on our stellar sales and year over year focus that we don’t look back even just a couple of years. In March of 2019, we had 608 single family home listings on the market and only 67 contracts compared to this quarter’s 136 listings and 131 contracts.

In April 2019, the Wall Street Journal let a newly arrived Daily News transferee write an article the editor entitled, “Wealthy Greenwich Home Sellers Give In to Market Realities” with quotes such as, “The seemingly never-ending slump is leading some sellers to accept less—sometimes a lot less.” That was one of 6 articles in major publications that were bashing the Greenwich market in 2019. We had a piling on of reporters who were twisting numbers to make a slow market look like a disaster. They looked at their click counts and realized that their reader’s schadenfreude in reading articles bashing Greenwich’s real estate market, was good for their careers.

Three years later we have market where for the first time ever we may soon have more houses under contract than we have houses to sell. In the last couple of years of superlatives, I’m sure that no  one would have guessed that we could possibly have such an upside-down market.

              In 2022, flat inventory is good inventory

For the first two months of 2022 our market was looking up as inventory was flat, i.e., matching early season demand. This was a welcome hiatus after 7 months of falling inventory in the last part of 2021. Unfortunately, our winter burst of new inventory was more likely a slight pause in the buyer frenzy. Our inventory started falling in early March and has continued for the rest of the month. This is the time when inventory should be rising strongly in our spring market.

At the same time, we have contracts on a 6-week spurt. At the moment, we have 131 contracts and 137 houses in inventory. Theoretically, this could actually continue with contracts continuing to rise and inventory dropping to near zero, that’s if every over-priced, fixer-upper and teardown went to contract and what did come on the market went to contract in days, so that most of these new listings never showed up in monthly inventory numbers as they had gone to contract by end of the month, when we do the inventory numbers.

The under $1 million market

My brother, Russ, and I have both have very nice young couples that are looking for their first house for under $1 million in Greenwich. As of this week, they have a choice of 6 houses: 2 in each of Greenwich, Cos Cob, and Old Greenwich. There is nothing listed for under $1 million in Riverside, Glenville, Pemberwick or central Greenwich. These are all areas with R-6 and R-7 lots, where a conforming lot can be as small as 0.17 acres and we regularly see sales under $1 million. Contrast this to March 2019, when we had 608 total listings and 50 of them were under $1 million.

With all that inventory in 2019, we only had 15 sales of houses under $1 million. In 2022, we have the exact same number of sales in the first quarter of 2022, 15 house sales, as we had in the first quarter of 2019, but our inventory is down 78%. We don’t need a lot of inventory to have sales, provided we get new listings. The end result, 275% more sales under $1 million in 2022 compared to 2019. (We are putting on a house for under $1 million next week. I’ll report back on how it goes.)

              Why you should worry about low inventory

Does this mean that we shouldn’t be worried about low inventory? Absolutely not, if you are buyer, you should be very worried and even if you are seller, it’s no time to be complacent. Low inventory means that at any point in time, you as buyer have a small number of houses that fit your criteria.

The result is that motivated buyers, and we have a lot of those, have to broaden their criteria. Buyers have to be willing to go for a smaller house, or if they have the money, a larger house than they want. They may need to do more work fixing up an older house or have to be willing to buy a difficult lot with steep slopes, swamps, rock outcroppings or in a flood plain.

              Why buyers need an immediate alert

Low inventory also puts a big premium on being able to move quickly as well as being flexible. If you are looking now, and your price range is under $5 million you shouldn’t have a daily alert, but an instant alert that will email you as soon as the listing comes on. You don’t want to wait until the end of the day to get your alert. By then our 200 active agents have seen it along with 1,000 active buyers in the NY metro area and 10 people that are being transferred from the UK to NYC this week. They have all checked it out, and for a hot house, 10 buyers have alreadymade an appointment to see it. If you are a couple looking, the one working from home (where you are out of sight of your boss) should check each new listing as it comes on the market. You can even have one of your kids screen the houses if you can’t look when the houses come on.

You then need to get over to the house and see it. Don’t wait for the open house. In Greenwich, lots of our listings’ come on Mondays and Wednesdays. This is because our Realtor open house days are Tuesday for listings west of North St and Thursday for east of North St. If you can see the house before even the Realtor open house, you have a leg up on your competition. However, be ready to hear it’s SAOH, which means “show after open house”. If the new listing is SAOH, try to schedule your showing right after the Realtor open house ends. If the agents are walking out of the open house, while you, and your agent, are walking in, you are in a much better tactical position.

If you are working in NYC, and can’t get out during the week, have your agent give you a Facetime tour. These virtual tours can’t tell you whether this is the ideal house for you, but they are very useful in ruling out the houses that aren’t for you.

              Bad pricing strategies for sellers

If you are a seller, there is literally has never been a better time to put your house on the market. There is much less competition from other sellers and there are lots of buyers that are looking for houses like yours, but don’t screw it up.

Our median price is up from $1.87 million in 2019 to $2.60 million as of the end of the first quarter or an increase of 39 percent. But, just how long will this last? Interest rates are rising, inflation is sucking up money that people might otherwise spend on a new home and there is even more uncertainty about where the world is going. The result of all this is that we’ve got a very good chance of a buyer slowdown as the year goes on.

Also, even in this market, over pricing your house is a bad idea. If I had a nickel for every time a seller told me that let’s put my house at an above market price to “test” the market or let’s list it higher, so we have more room to negotiate down, I’d have two bucks, which is what these strategies are worth. The more people that come see your house, the more offers, the more offers, the higher the price. You want to go low, to end up high and the reverse is also true.

Of our 137 listings, on the market in the most pro-seller market we have ever had, 28 listing have been on for more than 1 year, 61 have been on for more than 6 months and 55% have been on for more than 3 months. In this market well priced listings can go in weeks and often in days. Pre-Covid, some agents would wait three months before proposing a price reduction. In this market, if you don’t have offers in 45 days, you need to have a long conversation with your agent, who has probably been waiting for your call.

We’re having an above average year and with more inventory, it could be another great year. Stay tuned …

How to Get the House in 2022 – When You Really, Really Want the House

I wrote an article last year about combat buying or how to be the prevailing buyer in a hot market. That article came down to basically, do your homework, be prepared and move quickly. This works well when the house that you want has just come on the market, but what do you do when you are not the first one to find the house and you are in the middle of the very hot 2022 market.

As of this week, inventory has started to shrink again after being flat for most of the year, albeit at record low inventory levels. For the first 11 weeks of the year our market inventory has stayed in a range of 145 to 158 listings. At the end of February, we were at 150 listings, each week subsequent, went 149, then 145 and this week 140 listings: a new all-time low. Amazingly, well not amazingly for any year, but this year, our contracts are up. This normally would not be amazing, because contracts normally rise in the spring market, however, this year they are going up when inventory is going down. This is clearly not a sustainable situation. Without inventory you contracts have to drop at some point.

Right now, we only have 7 single family homes listed in Old Greenwich and over $2.5 million, you have 2 choices: one at $4.4 million and one at $6.75 million.  

246 Single Family Home Sales and Contracts as of 3/23/22

140 Greenwich Single Family Homes in Inventory on 3/23/22

Extraordinary times call for extraordinary measures, when you’ve found the house that you really, really want and so have one or more or lots more people. First you need a good Realtor. There is probably no better time to have a good Realtor than when you are in a competitive bidding situation.

Let’s take a look at what you can do at each step of the offering and contract process.

  1. Interest expressed – If your Realtor tells you that other parties have expressed interest in the property it usually means that other buyers have been back more than once and/or are asking serious questions about the property such as when the roof was last replaced or how many bedrooms the septic system is approved for.

The solution when you hear that someone else is exploring an offer is to make an offer first and make it a good one.

Obviously, a high price is going to be attractive to a buyer, but don’t only focus on price also match the seller’s needs. Do they want a quick close or a delayed closing, is a lower all cash price better than a higher price with a mortgage contingency and so on? The highest priced offer doesn’t always get the deal. If you need a mortgage, and you are going up against all-cash offers, which is likely in this market; you absolutely need to be underwritten pre-approved. This means that your bank has done all the work and only needs the sales contract and an appraisal; think two weeks, versus 45 days.

If there is interest expressed this no time to make a low offer. You want to make it a high offer so that the other interested parties may decide to not even bid. You may pay a little higher than the other side was willing to go, but you may also save yourself from getting in a bidding war with two, three, or even more buyers. In a bidding war many people show their competitive nature and will offer more than they had originally intended just to “win” the bidding war. It can be a Pyrrhic victory for the victor, then again, what looks like an above market bid now, may well be a below market amount by the end of 2022 given how fast prices are rising.

  • Offer made – If another buyer has already made an offer you need to move quickly and make your own offer. You need to alert your house inspector that you may need them to do a house inspection on short notice and your attorney that they may need to turn around a contract quickly.
  • Offer accepted – If an offer has already been accepted, you are not out of the game. The rule in Greenwich is that there is no deal until the contract is signed. So, if it is the perfect house go ahead and make an offer. Submit your highest and best offer, and if possible, without a mortgage contingency. Even if you are going to get a mortgage you don’t necessarily have to have a mortgage contingency in the purchase agreement. You just have to be sure that you can close if the bank financing falls through. In an absolute worst-case scenario can you get financing from a rich uncle or is there a co-signer with good credit ready to step up. If your rich uncle fails you and you’ve signed a non-contingent, there is a good chance you are out your 10% deposit, which will be deemed liquidated damages. That’s $200,000 on a $2 million purchase. Be careful, but not too careful, unless you are happy to stay in your present rental for a good while.
  • Inspections completed – If the offer has been accepted and the other buyer has completed their inspection, your offer needs to be much better than the accepted offer. At this point the seller is mentally well down the road to selling the property to the other buyer, so your offer has to look significantly better than the offer they have already accepted. Your offer needs to meet all the seller’s requirements. For example, an all cash, quick close offer with no inspection and a significant price premium might do the trick.

Going without a house inspection is not a good idea, unless you are planning on tearing the house down or doing a gut renovation. Also, if the first buyer is moving to change the deal terms after the inspection that’s a red flag there may be a problem.

The buyer who wants to renegotiate after the inspection may, however, be a buyer that takes every opportunity to whittle down the price. Never under-estimate the fury of a seller that thinks they have been deceived. I’ve seen sellers take less money just to spite the “jerk” who was trying put one over on them.

If you are the first offeror don’t be that jerk. If you are the second offeror, be ready to move quickly if the other buyer turns out to be a jerk. Earlier this year, a buyer got gazumped, when the second buyer came in with a much higher, all-cash offer and no inspection contingency. The seller saw it as a no-lose deal. The second buyer waived the inspection believing that the house couldn’t be all that bad, if the first buyer was willing to go forward. They rolled the dice and got the house.

  • Contingent contract signed – Once a contract is signed with a mortgage contingency control of the deal shifts from the seller to the buyer. The buyer now has the ability to call off the deal if there is a problem with the financing. The seller is bound if the buyer wants to go through with the deal. Even if you are late to the game, you may have an opening if the other buyer has a financing problem or has buyer’s regret.

Buyers, particularly in competitive bid situations may not request enough time to actually get a mortgage approval. If the other buyer has to ask for an extension, the seller has the option to turn them down and accept your offer. You need to let the other agent know that your offer is a continuing one.

  • Fully executed contract – You would think that once the contract is fully executed, also known as binding, or as our MLS calls it pending, that you are out of luck, and you probably are, but people are people. If you really absolutely have to have that one particular property and price is no object you could consider paying the buyer to terminate the contract. This is very uncommon, but it can be done. Any contract can be terminated if all parties agree.

Before you start looking at ways around a contract whether a contingent or pending contract talk to your attorney. You don’t want to get involved with a tortious interference with contract claim or some other lawsuit. There are ways you can do this and ways that will almost certainly guarantee trouble.

Your best option as always is to get to the house before anyone else has expressed an interest and make a good offer first and be prepared to sign the contract quickly. If someone else got there first, show the seller that you are the better prospect and move quickly so that a third buyer doesn’t beat out both of you. Good luck!

February 2022 Real Estate – Contracts on the Rise

It’s not all that remarkable when contracts rise in the spring market. That’s what they’re supposed to do as more inventory comes on and buyers seeing the warm weather come out to buy houses. This year however rising contracts are actually pretty remarkable. Our inventory stands at only 151 listings. This is down 126 listings from February of 2021 and an amazing 362 listings from February of 2020, our last pre-COVID month.

Even with our low inventory, February 2022 was an above average month for sales with 38 sales. Our 10-year average for sales in January, pre-COVID is 31 sales, so we were up 19% over our average February. For the pessimists, they can focus on year over year date. There our sales are down 40% from February 2021 and 32% for the first two months of the year. Now normally that would be considered a disastrous collapse of the market, however, those two months last year were record months with an amazing 129 sales in two months compared to our “paltry” 88 sales year to date.

When you look at a color-coded chart of sales, our inventory is very much pro-seller with inventory down in every category, except for under $600,000 where we have one listing this year compared to zero listings last year. In fact, however under $1,000,000 we only have 9 listings. The rest of the color-coded chart looks flat or very much pro-buyer with contracts and year to date sales down for the first two months of the year. Normally, that indicates a lack of demand, however in 2022, it indicates a lack of supply.

If you go back to February 2020, our last pre-Covid month, the world looks much different with most of the cells in green in a pro-seller market. Not only is inventory down a lot, but sales and contract are about evenly split up and down.

Russ and I recently put on a house just under $5 million that was in very nice shape and it had 24 showings in three days and multiple offers. It went to contract in 8 days from coming on the market. We are just really, really supply constrained; the buyers are out there.

Now this is not to say there, you shouldn’t worry about the market. If we don’t have any gas/inventory to keep the sales engine running, sales will continue to sputter, but probably not in March.  The good news is our contracts are up significantly from last month, when we had 81 contracts, and now, we have 99 contracts. Our average sales in March are 38 houses, so with 99 contracts, we should be above average, but not near the 71 sales that we had in March 2021.

One thing to note however is that our inventory has been fairly flat for the first eight weeks of this year. What that means is that the new inventory coming on is matching our contracts. Having said that if we had more inventory, we certainly would have many more sales. This is the best time ever for a seller to put their house on the market and that’s true in every price range up to $10 million.

When you compare inventory to sales and contracts, we normally see a lot more inventory than we have sales or contracts. All the way up to $4 million, we actually have almost as many contracts and in some cases more contracts than we have inventory. It’s just a remarkable year.

if you look just at sales, we do see a little weakness above $5 million where we have 24 months of supply from $5 – 6.5 million and 36 months of supply over $10 million. The thing to look at however is months of supply when you add in contracts and for all price categories that months of supply is going down indicating an accelerating market. For the market overall we have 3.4 months of supply and when you add in contracts we are looking at a ridiculous 2.8 months of supply.

The specter of rising interest rates is temporarily accelerating demand from buyers who need mortgages and who want to get in at the lower interest rates. We also are starting to see the return of the transferee market and companies are once again moving their senior people around the U.S. and bringing in people from overseas after a long hiatus. Last week, we saw buyers from London, Australia and Dallas.

Stay tuned the first quarter is going to be a very interesting period….