This week, I’m going to talk about something everyone is interested in, and I don’t like talking about, price appreciation. The reason I don’t like talking about price appreciation is that most homeowners want a percentage number that they can apply to their purchase price and come up with what they think their home is worth today.
It doesn't work that way. When it comes to your house, and its particular style, in your specific neighborhood and in its current condition, that average percentage appreciation is very unlikely to be correct for your house. Given that caveat, let’s look at what house prices have done in Greenwich from pre-Covid, through Covid, to today’s post-Covid market.
Prices are all about supply and demand and for the last three years the market has been driven by declining supply, but we are seeing just a bit of a change.
Inventory by Price Range is Changing
- The biggest drops in inventory have been in the heart of the Greenwich market from $1 million to $4 million.
The changes in inventory over $6.5 million are much less dramatic. In fact, we are seeing a slight upturn in 2024 inventory over $6.5 million this year.
- We are also seeing an upturn in inventory from $1 - $2 million. This is particularly significant, because it means that new listings are starting to meet the very active demand in this price range.
- At the same time, under $1 million, inventory continues to drop. Much of this drop is due to appreciation. Houses that used to list for under million are now worth over $1 million. (Which might be why the number of listings between $1 and $2 million went up this year.)
- Today, I can show a buyer all the single-family home listings that are under $1 million in a single afternoon, since we only have 4 listings under $1 million. This compares to 61 listing under $1 million in 2019.
Inventory Up Means Contracts are Finally Up
- For nearly every week this year our contracts have lagged where contracts were in 2023, which has led to a drop in sales.
- For the last 8 weeks our inventory has been slightly above the inventory in the same weeks last year, which is an important change. The question is will it continue?
- In a hot market it takes a month or two before inventory becomes sales and contracts, so June’s higher inventory numbers finally resulted in higher contract numbers in the third week of July.
2024 Greenwich Real Estate Sales Down Except at the High-End
- In 2021, we had all time record sales with 1,007 house sales, but the large portion of the increase was in the heart of market from $1 million to $4 million with a much smaller increase in sales in other price ranges.
- We did see a big jump in sales from $4 – 6.5 million in 2021and demand for this segment has continued to hold up through 2024
- Since 2021, sales in every price category have steadily fallen due to lack of inventory
- The one exception has been sales over $6.5 million where more inventory has led to more sales this year.
- Appreciation over the last 5 years has made single family home sales under $1 million, an endangered species with less 7% of our sales under $1M.
Four Different Ways to Look at Appreciation
- Our median price for single family home sales in the first half of 2018 was $1.87 million, i.e. of the 273 sales in the first half of 2018, half were above $1.87 million, and half were below.
- This year in the first half of the year our median sales price had increased to $2.73 million or an increase of 46.2% in 6 years.
- On the flip side, our average price has gone from $2.54 million to $3.56 million or an increase of 40.2%. Now 46% appreciation in the median price is similar to a 40% increase in the average price, but 6% of $3.56 million is $214K, so while the percent difference can seem small, it can be a lot of money in real terms.
- If you average the price/sf, the average price and the median price appreciation you get an appreciation of 44.4% in 6 years. In reality, this appreciation is really over 4 years as this average dropped slightly in both 2019 and 2020.
- This year we have had a jump of 11.5% as very good demand has chased extraordinarily low inventory in the first half of 2024.
In other parts of the US such as Austin, Texas and Boise, Idaho we are seeing the return of a buyer’s market. We do not have that in Greenwich, but we may have seen the inflection point. If you are a buyer in this market, it’s still a tough market and prices are very likely to continue to rise for the rest of the year. If you are seller, you know what the market is now, waiting to get that last little bit of appreciation, may not be in your interest.
Stay tuned for the second half…
Mark Pruner is a principal with the Greenwich Streets Team at Compass. He can be reached at 203-817-2871 or [email protected].
