Sales Likely to Fall in August as Low Inventory Limits Sales
The numbers for July are pretty amazing. We just had our biggest sales month ever with 142 sales and $448M in sales volume in one month. That’s more sales than we had in the entire first four months of 2020. This sales number broke also last month’s record of 135 sales and last year’s monthly record of 118 sales in September 2020.
Pre-pandemic you have to go all the way back to June 2011 to find the previous record of 114 sales which was a one-month blip caused by an increased sales conveyance tax increase. The last record for market-driven demand was 109 sales in August 2001.
Prices are up about 18-20% in nearly all price levels. Backcountry and mid-country are seeing the biggest rebounds since these areas are the furthest from town and suffered the most in the post-Great Recession years.
So far in August demand continues to be high, though not as frenzied as in the second quarter of 2021. Contracts are down about 17% from July 2020 when we were seeing a major acceleration in sales as Covid restrictions loosened. Sales peaked two months later in September 2020.
While we have had low inventory all year, our total number of listings are up 60% for the year. Listings have just gone to contract as fast as they have come on, which has hidden this jump in total listings numbers. We have even more listings than that as many listings never hit the market. One internal email of a coming listing and a fellow agent contacted the listing agent and said he had a buyer. (That happened twice to me, once on the sell side and once on the buy side.)
The drop in contracts is partially due to summer vacation with lots more buyers travelling, often for the first time in over a year. Contracts traditionally fall in July, but what is really driving the drop in sales this year is our shrinking inventory. As of Wednesday, we are down to 290 listings, when were at 555 listings at this time last year.
When you look at where the changes are year over year, the drop in inventory is a very consistent story. We have lower inventory at every price range from under $600K to over $10 million. Our inventory number are not just down by a little the smallest drop is 30% from $6.5 – 10 million from 53 listings in 2020 to only 37 listings as of the end of July this year. Under $600K we are down 75% from 4 listings to 1 listing and most of the year we have had nothing to sell under $600K.
Among major price categories, the biggest percentage drop is from $1 – 1.5 million, where we are down from 68 to 30 listings or a 56% drop in the number of listings. A couple of weeks ago, I put on a house in this price range. We had 6 offers in the next four days, the majority over list. While most price ranges are tough, our entry level houses are particularly tough. We only have 2 months of supply from $1 – 1.5 million and an amazing 1.6 months of supply from $600 – 800K.
Overall inventory is down 46% and months of supply is down 71%. (The months of supply is how many months it would take to sale our present inventory based on the demand rate so far this year). At 3.2 months, we are at ridiculous levels. This ridiculous level continues all the way up to $6.5 million dollars. While low months of supply are not uncommon under $1 million to see months of supply under 4 months of supply for prices over $3 million is just unheard of.
From $6.5 – 10 million, we only have 7 months of supply. Compared to our other price categories that might seem like a lot, but in June of 2019 we had 42 months of supply. We’ve dropped 83% in months of supply in two years, and this is after a long period where months of supply in this price category were measured in multiple years of supply not months.
On a percentage drop basis, the story is almost as good above $10 million. We went from almost 6 years of supply last July or 70 months, to only 20.1 months of supply this year. This is a drop of 70% and the market is getting better. If you take the sales in July over $10 million and annualize them, you come up with 11.5 months of supply.
This last analysis is a bit of fun with numbers as we only had 2 ultra-high-end sales in July, but we only have 23 listings on the market today down from 37 listings in July 2020. And, most of our high-end sales post-recession now happen after August.
What we are seeing is a drop in the number of high-end and ultra-high-end homeowners that are looking to move out of Greenwich. To my mind, our first selectman, Fred Camillo, and our governor, Ned Lamont (also a Greenwich resident) have done a good job navigating the Covid crisis, while many other states have not handled Covid, and particularly, the Delta variant well.
Stay tuned, August will tell us a good deal about where the market is going.
