Greenwich 2023 Rentals Are Up Over Last Year
Market Stays Tight
Rentals are back to average, well, almost. What is almost back to average is the number of rentals that have been reported on the Greenwich MLS. So far this year, we have had 676 rentals through the end of October. If you annualize that number, you get a likely 811 rentals for the year. This compares to an average of 829 rentals a year going back to 2007. So, this year, we are looking at 98% of our 17-year average. Given what we have been through, average is good.
Going back to 2007, we’ve had four "abnormal" periods: two up and two down. Rentals dipped in the go-go digits decade, and people bought rather than rented. In 2007, at the peak of house sales, we had only 684 rentals, which was 17% below the average for the next 16 years. When the Great Recession came along, rentals ticked up in 2008 and then took off in 2009 and 2010, with 959 and 962 rentals in those two years. When people are uncertain, they rent rather than buy, particularly as we were seeing house prices drop during the recession. This was one of the few periods where we saw house prices drop in the last 50 years.
As people started to recover from the Great Recession, we saw seven years of "normal" rentals close to the 829 rental average. Then came Covid, and rentals skyrocketed. In 2020, we had 1,041 rentals on the GMLS, which was 26% above the average. We would have had more, but there were only so many people who wanted to rent out their houses and condos. Having said that, a couple of hundred homeowners who hadn't ever considered renting their Greenwich homes decided that at the prices people were getting for rentals, they could hang out in their second homes and rent out their Greenwich home.
Our rental inventory has come back as the months go by this year, particularly from prior years. At present, we have 137 rental listings on the Greenwich MLS. This is up from the 108 listings we had in February of this year and way up from only 42 rental listings we had in April 2020.
You would think with more listings, we would see our days on the market rise, and we have, but it's still low. In 2021 and 2022, rentals were only staying on the market for an average of 30 days. So far this year, we are looking at a DOM of 46. That's a dramatic jump up, but our 17-year average for DOM is 68 days on the market. Yes, we have more supply, but we also have more demand. When economic times are uncertain, people rent. What's unusual is that our single-family home sales market is tight at the same time due to record-low inventory.
In 2020, we saw a jump in rentals from $4,000/mo all the way up to over $20,000/mo, while rentals under $4,000 actually fell. Most of the rentals under $4,000 are apartments and other smaller rentals, often with shared hallways and elevators, which is not what people wanted during Covid, so rentals under $4,000 fell during Covid.
Close quarters during COVID was not the only reason that rentals under $4,000 fell. Rentals under $4,000 and particularly under $2,000 also fell because of the rise in rental prices. In 2019, we had 71 rentals under $2,000. If you annualize this year's rentals under $2,000, you only get 22 rentals, a drop of 69%. There is less supply of lower-end rentals and very good demand, which means many of these lower-end rentals are now getting more than $2,000/month. (NB: It is always problematic to get a good handle on this price category as much of Greenwich’s lower-priced rentals don’t get listed on the MLS.)
Over $20,000 per month pre-Covid, we had 18 rentals in 2019. When Covid hit in March of 2020, the number of high-end rentals jumped to 71, an increase of 294% in one year. High-end rentals dropped back to 52 in 2021 and 47 in 2022, staying high but stabilizing somewhat. Also, many of the people who rented in 2020 extended their leases, so many of these 2021 and 2022 rentals were additional rentals, not simply putting new tenants in the same houses.
This year, we are on a path to 60 rentals over $20,000/month. Part of this is that many people who wouldn't have considered renting out their houses before COVID-19 have found that an extra $240,000 to $540,000 to rent out their high-end houses for a year is a nice thing to have. So far this year, our highest long-term rental price has been $45,000/month.
We have also had seven summer rentals that went for $45,000 up to $60,000 per month, and summer is getting longer. Traditionally, summer rentals went from Memorial Day to Labor Day. With more work from home, summer rentals may now start May 1 and run to September 30th or even into October. Tenant/commuters in these summer rentals aren’t having to go into their NYC offices as often.
We have also seen a few holiday and wintergreen rentals, where snowbirds who are in Florida for the winter are renting out their houses for the November to January holiday season or the whole winter. (One of the perks of writing this column is you can make up names like "wintergreen rentals" :).
Most of our rentals are concentrated in our smaller zones. Of course, part of that "concentration" when you look at a map is an optical illusion, as 14 lots in the R-12 zone could fit in the size of one RA-4 zoned lot. We have four areas where our rentals concentrate: South of the Post Road (25%), South of the Parkway (16%), Old Greenwich (15%), and Cos Cob (12%). Curiously, Riverside has only about half of the rentals that Old Greenwich has, with 57 rentals versus 101 rentals so far this year.
Also, rentals have gone up in Byram and Pemberwick this year compared to our 17-year average. On the downside, Riverside and South of the Parkway have seen drops in rental this year compared to our 17-year average. What this says is that we have more rentals this year in our most affordable areas and slightly fewer rentals, on a percentage basis, in two of our high-end areas. The one exception is that rentals in the backcountry, which are mostly high-end rentals, are up 40% this year over our 17-year average. Central Greenwich still has the plurality of our rentals, and this hasn't changed this year.
We have more rentals this year, but our days on the market are still historically low, so finding the perfect rental is still tough. (If anyone wants to rent a downtown condo, please call me or your favorite real estate agent, as downtown condos are still the holy grail for rentals.) Hopefully, 2023 will be a transitional year, and we will see the rental market return to normal in 2024.
Mark Pruner is a sales executive and part of the Greenwich Streets Team at Compass Real Estate. He can be reached at 203-817-2871 or [email protected], or at his office at 200 Greenwich Ave.