May ’18 Greenwich Real Estate – New Tax Law Increases & Decreases Sales

May 2018 was a good month for transactions, but not everyone may feel that way as the tax acts changes explained below work their way through the housing market.

In May, our single-family home inventory was up significantly to a monthly high for the year of 687 single family homes listed on the Greenwich MLS. This is 33 more listings more than we had at the end May last year or an inventory increase of 5%. The mid-market price range saw an even greater percentage increase. Between $800,000 and $2 million we saw an increase of 51 listings which was a 31% increase over last year. This increase was partially offset by a decrease of 20 listings in our over $4 million market or a high-end inventory decrease of 9%.

As of 6/2/18 Inventory Contracts Last Mo. Solds Mo. Solds+ Contracts  YTD Solds  YTD+ Contracts Mos Supply Mos w/ Contracts Last Mo. Annlzd
< $600K 4 1 1 2 7 8 2.9 3.3 4.0
$600-$800K 16 7 5 12 19 26 4.2 4.0 3.2
$800K-$1M 29 10 5 15 22 32 6.6 5.9 5.8
$1-$1.5M 94 19 12 31 33 52 14.2 11.8 7.8
$1.5-$2M 91 27 9 36 34 61 13.4 9.7 10.1
$2-$3M 147 34 6 40 35 69 21.0 13.8 24.5
$3-$4M 101 13 7 20 23 36 22.0 18.2 14.4
$4-$5M 56 8 2 10 13 21 21.5 17.3 28.0
$5-6.5M 63 9 3 12 11 20 28.6 20.5 21.0
$6.5-$10M 55 3 1 4 4 7 68.8 51.1 55.0
> $10M 31 1 2 3 5 6 31.0 33.6 15.5
TOTAL 687 132 53 185 206 338 16.7 13.2 13.0

On the sales side we had 53 sales up 4 sales from last May. The good news is that the price ranges where increases in sales were the greatest are the two price categories where we were also seeing the biggest increase in inventory; $1 – 1.5M and $1.5 – 2.0M. This increase in sales brought down the months of supply for the $1.5 – 2.0M price range by 2 months to 13.4 months of supply, (Months of Supply: If no more listings came on the market in that price range it would take 13.4 months to sell all the listing at the sales rate so far this year.)

Now 53 sales is better than last year, but it is not as good as our ten-year average of 58 sales. All the cold, damp and snow weather earlier this year has not been great for sales. Luckily, by May people were out looking and making offers faster than last year so our contracts are up over last year.

The price range where people were really busy was $2 – 3 million where we were up 14 contracts over last year. This will catch us up, and then some, with the YTD drop in sales in that price category, where YTD we are down by 10 sales. Somebody, who looks on at sales will report this drop in sales as a problem. Luckily, it is a problem that will cure itself in the next couple of months as these contracts close.

We have 147 houses listed between $2 and $3 million, but unlike the next three lower price ranges this is the same as last year. Year-to-date we have 35 sales from $2 – 3 million, 34 sales from $1.5 – 2.0 million and 33 sales from $1.0 – 1.5 million. The two price ranges between and $1 and $2 million are very interesting. From $1.5 million to $2.0 million our sales are up 8 sales from last year to the aforesaid 34 sales, and we have 27 contracts pending which is up 3 contracts from May of 2017. Just below that from $1.0 – $1.5 million our sales are down 11 houses and we have 19 contracts pending down 3 from last year.

The curious thing is that if you ask agents the whole segment from $1 – 2 million feels slow with significant amounts of time between both showings and offers. This is because we are up 185 listings in this price range, 43 more than last year. The 2017 Tax Cut and Jobs Act has encouraged owners thinking about moving to a low tax state to retire to accelerate their plans resulting in more inventory.

This $1.5 – 2.0 million range is where we see another issue for Greenwich house sales which is the locked-in, working, Westchester downsizers. Before TCJA, the Westchester downsizers generally waited until after they retired and had to pay the high Westchester property taxes out of their savings, before they sold their place in Westchester and bought a place in Greenwich. These retiring downsizers were principally in the 65 – 75 year age range.

With the loss of deductibility of these high property taxes caused by TCJA, they are looking to move earlier, often when they become empty-nesters in the 50 – 65 year age range. The problem for them, is that unlike the buyers who are driving the over $4 million market, carrying two houses is not easy and they are having trouble selling their houses in Westchester. The result is more inventory, more lookers and a couple more sales, but not enough to heat up the market.

The price range, from $1.0 – $1.5 is where TCJA has had its greatest impact. Our inventory is way up from 62 listings to 94 listings as many of our own retiring downsizers decamp to Florida where sales over $1 million are seeing a nice bump up. We have always had folks retiring and moving to Florida. This increase in people selling is likely just a one-year bump as this group adjust to a new steady state moving rate at an earlier age.

The demand side of the $1.0 – 1.5 price range is where TCJA’s $10,000 limitation on the deductibility of property taxes and SALT is having the greatest impact. Most of the people buying in this property range, like most of America, need a mortgage to purchase a house. To buy in this price range they are also likely earning over $198,000 where Connecticut income taxes exceeds $10,000 for a joint return. Alternatively, on the property tax side, those buying a house assessed at over $1.2M FMV are paying more than $10,000 in property taxes to Greenwich. So, in total buyers in this price range are going to be paying a significant part of their Connecticut income tax and Greenwich property tax burden in after tax dollars.

As a result, they have less money to spend on monthly payments at the same time that interest rates are rising. For young families the result is that they can’t get the house they want. This segment is also losing demand due to the locked in Westchester downsizers, whether working or retired, who want to move, but can’t.

This is not a Chicken Little situation; the sky is not falling in Greenwich. Transactions, sales and contracts, are up. Sales last month were up over last year. Inventory above $4 million is down. Under $1 million it is still a seller’s market.

What we have is a series of adjustments as a result of the new tax act effect working their way through the NY metro real estate market. Much of that will be accomplished this year and the worriers will have to find something new to worry about next year. However, at least for this year, the young family reaching above $1 million for a house for their growing family, and the locked-in Westchesterite, and the Greenwich retiree wanting to move to warmer weather with a house under $2 million may find that 2018 is not be the best of times. For folks with houses over $4 million they are seeing a much better market than last year with months of supply way down due to the lower inventory and higher sales.

If you would like more information please feel free to contact me:

 

 

 

Greenwich Neighborhoods – Who’s Up and Whose Down

This year has been different from prior years with more transactions and less inventory at the higher end and fewer sales and more inventory in the heart of our market from $1 – $3 million. The result is that our neighborhoods have seen a shift in activity levels and demand.

Greenwich Neighborhood Real Estate Activity – April 2018

Greenwich Neighborhood Real Estate Activity – April 2018

South of the Parkway

The largest number of listings in the GMLS system is South of the Parkway which extends all the way from the Merritt to the Post Road (except for those parts in another neighborhood like Old Greenwich or Glenville.) I tend to think of it as a shorthand for the mid-country one and two-acre zones, but it also includes other zone. As usual this area has the most listing with 211 listings or 38% of all our listings.

This area has the highest average price of any area in town with $3.18M and the most sales with 46 sales. It also has our lowest appreciation rate when you compare the sales to the Greenwich Tax Assessor’s assessment as of October 1. 2015. The assessment ratio is 70% so if prices had not changed at all the Sales Price/Assessment ratio would 1.42 the reciprocal of .70. For this area the assessment ratio is 1.52 which is only 7% appreciation in 2.6 years, but the good news is that it is appreciation.

North of the Parkway

North of the Parkway is doing better this year, primarily because our high-end market is doing better this year. You can see this, because this area had a sale for $11,100,000 and it still only came in third. Both Riverside with a $14.5M sale and South of the Parkway with a $12,075,000 came in above the northern section of town. North of the Parkway did have nearly the highest average with $3,171,630 compared to South of the Parkway’s average of $3,180,354. These nearly identical high averages bode well for the northern half of the town. Together these two areas represent almost 2/3rds of our listings so this improvement in the higher end is good news for the town.

North of the Parkway still however has some ways to go on the sales side as the 113 houses listings there constitute 24% of all our listings, but only 7% of the sales. The good news for backcountry is that the trend is in the right direction. In fact, backcountry has the second highest appreciation SP/Assmt ratio at 2.04 or 89% appreciation, but this, like all early season numbers in this article, factors in the effect of a few anomalous sales which causes averages to swing wildly in the first half of the year. With only 10 sales, I don’t think Old Greenwich needs to worry that they will have less appreciation than backcountry by the end of the year.

Old Greenwich & Riverside

Old Greenwich and Riverside are actually pretty diverse when it comes to real estate. Prices so far this year have varied from $740,000 to the aforementioned high sale of $14,500,000. Each area is just under 9% of our inventory, while on the sales side OG is 12.5% of sales and Riverside an even more competitive 15.8% of sales, so both areas are still quite popular. As you might expect their sales price to original list price ratio is also quite high at around 93% compared to 91% for the town-wide average.

As between the two areas, you can see some of the popularity shift towards Riverside as we’ve seen the last couple of years. We have greater sales in Riverside than in Old Greenwich, 24 houses to 19 houses and a higher average price of $2.7M in Riverside compared to $2.2M in Old Greenwich. They are still premier places to live in the NY metro areas and demand exceed supplies supply which is what drives these high average sales price.

Cos Cob & Glenville

Unlike north and south of the parkway and OG and Riverside these two areas are not contiguous, but buyers who look in one area often look in the other area across town. These two areas have not reached the heady averages of OG and Riverside, but they are headed that way. Cos Cob has a higher average price at $1.71M compared to Glenville’s $1.02M, but Glenville sales have fewer days on market and a slightly higher sales price to original sales price ratio.

Both areas are smaller with limited inventory, however, when you compare the percentage of sales to the percentage of inventory town wide, the sale percentage is 3 – 4 times more than the inventory percentage. We seen more inventory in $1 – 1.5 million range this year and slightly slower sales so these ratios are down a little bit from prior years.

Summary

Compared to last year our inventory is up and so are our contracts, while our sales are about the, albeit with a shift to the higher-end.  The movement of people from Westchester is also starting to build. I recently did an open house at 108 Pecksland which is on for $2.3M; we had 9 groups come through and 6 of those were from Westchester. I expect the trend of more Westchester buyers will continue, especially as the BET proposed and the RTM just approved a budget with no property tax rate increase.

The northern half is picking up, and some of the hot areas have cooled a little, but this is all relative. The one area that has had the biggest change this year is mid-country with noticeably increased interest, but value pricing is still key there and in every part of town.

GREENWICH REAL ESTATE APRIL 2018 – Sales Bounce Back, Contracts Up

Sometimes when you follow the market closely you just can’t wait to see what the next month is going to bring and April 2018 was one of those months. The first quarter of this year was very different from what we had seen after the Great Recession. The high-end was doing well and the mid-market was seeing more inventory and fewer sales. Was this a trend or was it just an anomaly of the fact that with that a few sales up here and a few less listings in the winter doldrums numbers tend to jump around in some random Brownian motion?

April2018Sales.SFH.2016-Apr2018.050218

High-End Moving Along

Now the definitive verdict is still out, but the high end is still doing better this year than last year, though not quite as good in April as it was doing in the first quarter. Above $4 million we are down 30 listings while our year to date transaction (sales and contracts) over $4M are up 13 sales. As a result, months of supply are down dramatically over the last few years.

Over $10 million when you look at sales and contracts months of supply are down 6 years from last year. Now our negativists will point out that in the whole month of April we did not have one sale over $10 million and this dramatic 6-year drop is due to reduce inventory and sales from prior months. True, but we have 2 contracts pending and only 32 ultra-high-end listings at the peak of the market inventory.

As of 5/2/18 Inven-tory Contracts Last Mo. Solds Tot. Solds+ Contracts  YTD Solds  YTD+ Contracts Mos Supply Mos w/ Contracts Last Mo. Annlzd
< $600K 5 1 2 3 6 7 3.3 3.9 2.5
$600-$800K 14 8 4 12 14 22 4.0 3.5 3.5
$800K-$1M 19 9 4 13 16 25 4.8 4.2 4.8
$1-$1.5M 80 21 6 27 21 42 15.2 10.5 13.3
$1.5-$2M 82 20 12 32 25 45 13.1 10.0 6.8
$2-$3M 145 22 8 30 29 51 20.0 15.6 18.1
$3-$4M 92 15 8 23 16 31 23.0 16.3 11.5
$4-$5M 49 9 4 13 11 20 17.8 13.5 12.3
$5-6.5M 61 6 1 7 8 14 30.5 24.0 61.0
$6.5-$10M 53 3 0 3 3 6 70.7 48.6 *
> $10M 32 2 0 2 3 5 42.7 35.2 *
TOTAL 632 116 49 165 152 268 16.6 13.0 12.9

 

Mid-Range Getting Back to Normal

In the mid-range, we have 307 listings between $1 and $3 million. This is up 41 listings or 15% from this time last year. For those commentators that focus on sales only, our sales from $1 – 3 million are down from 88 sales last year to 75 sales this year or a drop of 15 sales. I wouldn’t worry too much however as contracts in that same price range are up by 12 houses or just about the same as the decrease in sales. Also, the $1 – 3 million price range saw an improvement in April, as was expected from the number of contracts waiting to close in March. We will likely see another improvement in May as the 63 contracts in this price range start show up as deeds in the Town Clerk’s office in May and June.

Apr2018.MoS.050218.

In fact, contracts were up in every price category from $800,000 to $10 million. We have a total of 116 contracts, 44 contingent and 72 pending, which is up from 92 in April 2017. This bodes well for the market overall. Whenever you see most price ranges seeing increased sales and increased contracts things are looking up. Our contracts were up 24 and sales were up 20 from April 2017.

Apr2018vsApr2017.Spreadsheet.mp.050518

Under $800K has a lack of inventory

Now this was not true under $800K where contracts were flat at 9 houses under contract and we had only 6 sales. I wouldn’t worry about this being some sort of sub-$800K sea change. We only have 19 listings under $800K down 3 from last year so there just not much to buy. We are still looking at less than 4 months of supply indicating a strong sellers’ market.

Apr2018.4Pie.050218

 

What’s Hot in Greenwich in Greenwich Residential Real Estate in April 2018

So what’s hot in Greenwich? There are couple of ways to define that. What sold quickly and also what sold at or above the list price. If you look at a map of these quick sales and also what went to contract quickly you have an interesting map. As usual back country looks slow followed by mid-country and those area close in town do better.

Figure 1. Sales under 30 days on the market or at list or over

What this analysis does not take in to effect is that north of the Merritt we have a 4-acre zone, while we are looking at R-6 and R-7 zoning in Byram, Pemberwick, parts of Glenville and in Old Greenwich and Riverside north of the Post Road. If you standardize on 1 acre then for the four acre zone multiple the number of sales and contracts by four and for the R-7 zone divide the number of sales by 6 since the minimum lot size is 0.17 acres.

When you do that the area that jumps out is the two- acre and one-acre zone. As I wrote in my first quarter report, the high-end is doing better and we see several sales in the old golden triangle around Clabboard Ridge and the new golden triangle in Deer Park, Zaccheus Mead and Pecksland where buyers are looking for larger houses and lots, but still want to be near town.

We continue to see quick sales in the R-7 zones of Riverside and Old Greenwich. This is understandable since, as you go lower in price the pyramid of buyers broadens quickly and these areas along with Cos Cob are seeing high demand. The more expensive areas south of the Post Road in Riverside and Old Greenwich are seeing less demand as their price appreciation over the last 5 years is slowing demand. Central Greenwich continues to be in demand, but it is a very nuanced market.

The one thing that the map shows that is not nuanced is value. If you put your house on or near to the sales price the time on them market is drastically reduced. What has changed from last year and particularly 2016 is that as the map shows this good value proposition extends from the lowest price range to the highest price range and throughout every neighborhood.

In fact the one area where we are seeing a bit of a decline in quick sales is the southwest corner of Byram, Pemberwick and Glenville. This is the area that is most sensitive to the increase in interest rates and the lower deductibility of property taxes under the new federal income tax.

Figure 2. Sales and Contract over one year on market

If we look at the other end of the days on market analysis and focus on those properties that have been on the market for more that one year with their present agent, once again we see a town-wide distribution. What we frequently see with sales that have been on the market for a long time is that they frequently go to contract after a significant price drop.

Of the 47 houses that had been on the market for more than one year and have sold or are under contract, the median price was $3.59M, i.e.  well above the average list price. This is indicative of the interest that buyers have shown in the high-end market in Greenwich in the first quarter of this year.

These sales are also distributed throughout the town, though with an emphasis on the higher priced areas. When you take into account the smaller zones in Riverside and Old Greenwich you can see that finally getting to the value price for the market results in sales, even for those properties that have been on for more than one year.

You also don’t see many sales of listings that have been on for over one year  in Byram, Pemberwick and Glenville, because even the over-priced houses in that area are usually under $1M and eventually sale.

It’s an interesting market and so far 2018 is different that what we have seen in the past 8 years.

THE HISTORIC OVERLAY ZONE CAN SAVE HISTORIC GREENWICH

Major Revision in Historic Reg Gives Major Incentives to Owners of Historic Houses

Earlier this year the Greenwich Planning & Zoning Commission did something very courageous; they significantly loosened the zoning requirements on historic properties. Under the new regulations people with historic homes can build a second house on their lot or significantly increase the size of their present house. They might even be able to convert it to a business use if it is in within 1,000 feet of a business zone.

The adoption of this regulation was hastened by the demolish of three historic homes last years. All of which had stood in Greenwich for more than 150 years. With the new, more flexible historic overlay zone all three of these historic homes might have been saved from demolition.

So just what does the new regulation do? On the residential side, you get an FAR bonus and the potential for another unit either in the present structure or in a separate, single family house. There are also bonuses for our historic business structures and the possibility of smaller setbacks on old homes. The bonuses break-out like this:

Zone FAR Bonus Unit Bonus
RA-4 25% 1.5
RA-2 25% 1.5
RA-1 15% 1.5
R-20 15% 1.5
R-12 15% 1.5
R-7 15% 1.2
R-6 15% 1.2

The FAR bonuses are a little easier to understand, if you have a home in the R-20 zone (aka the half acre zone, though in reality the 0.46 acre zone) you can build a 4,500 s.f. house on a conforming lot. With the 15% bonus for a historic home you could expand up to 5,175 s.f. if granted by P&Z.

For the unit bonus, if you had a conforming lot with a historic home built before 1940 you could have 1.5 units on your lot. Now, you might ask what you can do with half a house, other than in certain divorce situations. The regs allow you to round-up to the next whole number. So, 1.5 units becomes 2 houses; one historic and one new.

The troublesome word here is “might”. Up until now I’ve talked about what you might be able to get, but the devil is in the details of the process. Just because you have a house that was built before 1940 does not mean that you are going to get an FAR or unit bonus. Your house must be “architecturally or historically notable”.  A 1938 cookie-cutter, center hall colonial that has the same floorplan as every other house on the street and has no room for a second house is probably not going to qualify.

It might however if the house is associated with events that have made a significant contribution to the broad patterns of our history; and/or [been] associated with the lives of persons significant in our past

So, if the first transatlantic radio broadcast happened from your modest cottage or if Truman Capote grew up in your house you probably have a good chance for a bonus. Once again, it’s only probably, because we don’t know yet how the Commissioners will use their broad discretion.

The prior version of the historic overlay zone was a functional failure. For the new historic overlay zone regulation to work, P&Z needs to remove as much risk and cost as can reasonably be done. For example, a guideline that a house that is older than say 1880 is presumptively historic if major elements of the original structure and exterior survive, would encourage applications.

So just how much of our market is historic. Of our 615 house listings, 7 were built before 1800 and 22 were built in the 19th Century. Together, they are less than 5% of the market. The “real” number is even lower as some of these historic homes are that old in date only. Many of these housed have been so extensively renovated that little is left but some hand-hewn beams in the crawlspace.

The process is complex and requires a variety of skills to analyze what could be done and your chance of success. We actually have a group of five people looking at what options might be workable to save these old houses. One big factor is will we see the same extensive reports for a modest 1790 house on the Byram River as we see for a 1920 great estate.

The good news is that I think every member of the Commission wants to do what they can to save historic Greenwich and I know Director Katie DeLuca has made this a priority. We have a workable regulation, now if we get a workable process that takes in to account the means of the applicant and value of what is being requested, we could save a lot of Greenwich’s history from the wrecking ball. The first few applications will set the tone for this new regulation.

 

 

1st Quarter 2018 Greenwich Real Estate Sales

The New Tax Law Raises High-End Sales and Lowers Mid-Range Sales

by Mark Pruner

203-969-7900

mark@bhhsne.com

 

The Tax Cut and Jobs Act of 2017 passed by the U.S. Congress has had two major effects on the Greenwich, CT real estate market. The first is to accelerate the sale of high-end houses, those over $4 million. The second is to increase inventory and reduce sales for houses in the $1 – 3 million price range.

As of 4/1/18 Inventory Contracts Last Mo. Solds Tot. Solds+ Contracts  YTD Solds  YTD+ Contracts Mos Supply Mos w/ Contracts
< $600K 2 1 0 1 4 5 1.5 1.8
$600-$800K 18 4 3 7 10 14 5.4 5.8
$800K-$1M 14 12 3 15 11 23 3.8 2.7
$1-$1.5M 67 21 7 28 15 36 13.4 8.4
$1.5-$2M 83 16 3 19 13 29 19.2 12.9
$2-$3M 125 15 7 22 21 36 17.9 15.6
$3-$4M 79 17 2 19 8 25 29.6 14.2
$4-$5M 49 9 4 13 7 16 21.0 13.8
$5-6.5M 55 7 4 11 7 14 23.6 17.7
$6.5-$10M 45 2 2 4 3 5 45.0 40.5
> $10M 30 2 0 2 3 5 30.0 27.0
TOTAL 567 106 35 141 102 208 16.7 12.3

In the high-end Greenwich market, inventory has dropped by 39 listings or 18% to 179 listings. At the same time that we have fewer listings, we have significantly increased sales and contracts. For the first quarter, high-end contracts and sales are up to 40 houses over $4 million. This is a jump of 60% in activity and this totals over a quarter billion dollars of high-end transactions in the first quarter of 2018; this in a town of only 62,000 people.

While Connecticut is thought of as a high-tax state, the Town of Greenwich has the lowest property tax rate in the New York metro area. As a result, high-end buyers are flocking to Greenwich in 2018. Greenwich’s grand list of all properties is the largest in the state and that along with prudent fiscal management has resulted in the lowest mill rate in the metro area.

This prudent fiscal management is a bipartisan effort in town. The Board of Estimate and Taxation just switched control from the Republicans, where it had been for 100 years to the Democrats. Despite the change in control, the BET is proposing a 0.00% increase in the present mill rate of 11.37. While there were several factors that went into this no tax rate increase, one factor was an effort not to further burden town residents who saw the effective cost of their property tax rise as a result of the Tax Cut and Job Act’s $10,000 limitation on the deduction of property and state taxes.

Once the town budget of $424 million is approved by the Greenwich Representative Town Meeting and the new mill rate becomes official, we may well see even more buyers snatching up high-end homes in Greenwich.

 

While the federal tax act has had a positive effect on high-end sales, it appears to have had a negative effect on sales from $1 million to $3 million. In that price range inventory is up 42 listings while sales and contracts are down 15. Two provisions in the new tax act have their greatest impact in this price range. The drop in deductibility of property taxes and state taxes, has spurred more people to list their homes for sale. While on the buyers side the benefits of buying were reduced somewhat with the reduction in the mortgage deductibility from $1 million to $750,000.

A bigger factor however is the increase in mortgage rates. Most buyers in this price range, unlike at the high-end, have mortgages. The reduction of mortgage and property tax deductibility along with the increase in interest rates has been a significant factor in reduced sales and contract. Overall, however, the economy is doing well and contracts in this price range are also up from last year despite a snowy March. Only time will tell how the various contending forces will impact this price range.

The market from $1 – 3 million represents about half of the inventory and sales in Greenwich so changes in this market segment greatly effects the total sales in the town. Total sales of single family homes in Greenwich was down 23 houses or 18% from last year.

 

We also saw a reduction in sales under $800,000, but this was due more to a lack of inventory at the low end. Demand for houses under $1 million is always strong in Greenwich and the result has been price appreciation pushing most houses above the $800,000 price range. Some of the drop in sales from $1 – 3 million was offset by the increase in sales over $4 million. The $1 – 3 million dollar price range has seen an increase in contracts this year, so the downturn in sales in the first quarter may be reduced in the second quarter of 2018.

As you might expect with high-end inventory down and sales and contracts up in the first quarter Greenwich saw dramatic drops in months of supply. Over $10 million months of supply is only 2.5 years. This compares to 2016 where Greenwich had over 10 years of supply in its ultra-high-end price range. With contracts included Greenwich has barely a year’s supply of houses from $4 -5 million. This is down from over 3 years of supply in the first quarter of 2017.

In 2018 high-end sales represented 20% of the market in the first quarter compared to only 14% of the market in the first quarter of 2017. On the contract side the high-end market had 19% of high-end contracts compared to 12% last year.

In the middle of the market from $1 – 3 million, sales this year were 47% of the market compared to 62% last year. On the contract side this price range had 49% of the contracts compared to 47% last year, so we should see some recovery in the second quarter.

Summary

Clearly, the new tax law is having a significant effect. At the high-end low property tax rates are encouraging people to move to Greenwich. In the mid-range from $1 – 3 million, limitations on state and property tax deductibility is encourage more people to list their house for sale, while higher interest rates and these same deductibility limitations are decreasing the number of buyers slightly. Greenwich’s fiscal prudence going forward will pay off in increased sales in the future as other areas are seeing tax increases.

 

February 2018 Greenwich Real Estate

Market Stays on Track

As of 3/7/18 Inventory Contracts Last Mo. Solds Tot. Solds+ Contracts  YTD Solds  YTD+ Contracts Mos Supply Mos w/ Contracts Last Mo. Annlzd
< $600K 1 0 2 2 4 4 0.5 0.9 0.5
$600-$800K 13 5 1 6 7 12 3.7 3.8 13.0
$800K-$1M 17 10 4 14 7 17 4.9 3.5 4.3
$1-$1.5M 64 14 3 17 8 22 16.0 10.2 21.3
$1.5-$2M 73 14 8 22 10 24 14.6 10.6 9.1
$2-$3M 111 16 10 26 14 30 15.9 13.0 11.1
$3-$4M 71 12 4 16 6 18 23.7 13.8 17.8
$4-$5M 52 5 2 7 3 8 34.7 22.8 26.0
$5-6.5M 47 9 0 9 2 11 47.0 15.0
$6.5-$10M 41 3 0 3 1 4 82.0 35.9
> $10M 34 1 1 2 3 4 22.7 29.8 34.0
                   
TOTAL 524 89 35 124 65 154 16.1 11.9 15.0

We had 35 sales in February, which is 4 sales above our 10-year average of 31 sales. February 2018 looks a little better after a slightly below average January. This up and down pattern has become the norm for the last few years. While our 10-year average sales line approximates a nice sine wave with peak sales in June and our low point in in February, the market today jumps around from month to month, particularly in the first quarter.

On the contract side in March 2018 we had 89 contracts at the beginning of the month which compares to 86 contracts at the beginning of March 2017, which was one of our better Marchs for sales. Now this contract activity is actually somewhat surprising given the three nor’easters that we have had. (Though I must say this last nor’easter was a bust here in Greenwich and didn’t really deserve the name, more of a bor’easter.) If we get some truly spring like weather, we have may see a nice turn out of buyers at open houses.

We are certainly seeing enough open houses. Last weekend we had 85 open houses listed on my weekly open house email and the weekend before we had an amazing 92 open houses. I think that may be a record for that early in the year.

The open house trend is expanding for a couple of reasons. We are seeing more open houses on Saturday and more open houses for listings over $5 million. Open houses are also a way for sellers to reach out to unrepresented buyers.

What used to just be only a trickle of unrepresented buyers is now becoming a significant part of the market. You see unrepresented buyers particularly at the low end, but even at the very top people are exploring open houses without having spoken to an agent. Now this is growth is particularly curious, because the buyer doesn’t pay the sales commission, the seller does.

Some people, usually attorneys, say that the buyer does pay the commission, since commission comes out of the sales proceeds that come from the buyer. The commission is part of the original listing agreement, which was signed and fixed long before the buyer showed up. As a result, it doesn’t cost the buyer any more to use an agent. Most buyers in Greenwich do end up using a buyer’s representative agent for the latter parts of their new home acquisition process, but using an agent earlier in the process can be very helpful and time-saving.

As to the market itself, when you compare this February to last February some definite trends show up. The biggest one is the early season jump in listings between $1 million and $3 million. This is a trend to more inventory in this price range is a carryover from the second half of last year.

Last year we also saw slightly slower sales from $1.5 – $3 million. So far this year the sales from $1.5 – $3M have picked up while the next price bracket down from $1 – 1.5 has seen lower sales in the first two months of 2018. The result of the higher inventory and slower sales in this price range is that we have practically the same months of supply from $1 million to $3 million at 16 months of supply.

Now 16 months of supply is a lot of supply in the price ranges where we have the most listings, but no need to panic just yet. Sales are uneven in the first quarter and that’s when see the spring inventory start to come on the market, so months of supply always go up this time of year, but is this year’s jump an effect of the new tax law? It is too early to tell, but it does bear watching in the upcoming months. (Conversely, I just had a multi-buyer bidding war for that price range, so there are buyers out there for the good listings.)

In the market below $1 million dollars sales are down, but this is principally due to a lack of inventory. Below $600,000 we only have 1 listing and we had 2 sales last month. In that price category we have 2 weeks of supply. Over $5 million, inventory is down significantly, possibly due to the cold, snowy weather, but total sales and contracts are up, so our high-end improvement is continuing.

So, all in all we have a market that is moving along just not all at the same pace.