So far this year, we have had 201 new listings and more than half of them are already off the market. Of those 201 listings only 97 are actually still on the market. So, what’s happened to the other 104 listings? On the good news side 32 of those 201 houses that have come on since the beginning of the year have already sold. Also, good news, 59 of those listing or 29% have gone to contract.
The surprising thing is just how many of those contracts are non-contingent. Of those 59 contracts, 43 of them are pending contracts waiting to close. So why are 73% of our contracts non-contingent? The main reason is that buyers that are putting in offers with a mortgage contingency are at a major disadvantage when there are multiple offers. Non-contingent offers are mostly winning the multiple offer competitions.
The other reason we have more non-contingent contracts is that with higher interest rates, many people have been priced out of the market. Some people (usually people not looking for house) would say that if prices have risen, buyers can still buy a smaller house for the same money. That’s true, but people buy houses to meet their family needs.
A family with two kids might feel just fine in a 4-bedroom, 2,500 square foot house. With higher prices they may only be able to afford a 3-bedroom, 1,700 square foot house with a smaller backyard. Many of these folks are dropping out of the market for the time being, because the houses they can afford don’t meet their family’s needs.
Once you take out contracts, sales and listings still active you have 7% of the 201 listings unaccounted for. Three percent of that seven percent are the 6 new listings in the hot new status of “coming soon”. The Greenwich MLS allows agents to make a listing public for up to a week, before we can show it. In this hot market, that status of visible, but not viewable, generates buzz and lets the listing agent schedule showings back-to-back.
Few things motivate a buyer more than having to wait to get into a brand-new listing that they want. Then once they get in, they are being ushered out early, because the next appointment is waiting to get in. Buyers looking under $2 million are having this experience often. While very useful, coming soon status doesn’t work if you have a house that needs work or that is listed too high.
This leaves 7 listings that came on in 2023 unaccounted for. We have 3 listings that are temporarily off the market, which can be for a variety of reasons. Sometimes a wedding is being planned, sometimes it’s a repair issue, sometimes it’s an illness. For whatever reason, the owner doesn’t want their house shown right then. That doesn’t mean that they don’t want to sell. If you like the house, have your agent check out the reason behind the temporarily withdrawn status. We also have 4 listings that have been cancelled. Mostly these were dual rental and sales listings that got rented and the sales listing got cancelled.
New listings are not spread throughout the year. March, April and May are the big months for new listings, our spring market. We also have a much smaller fall market with a much smaller bump in listing in September right after Labor Day. This year’s listings are following the same pattern, just less so. In 2022, we had 240 new listings in the same period as this year. Go back to 2021, our record-breaking sales year, we 377 new listings come on in the first part of the year.
Each of those years were a better sales year than 2023, because they had the fuel in more inventory to drive more sales. So far this year, our inventory has set all-time lows in January and February when we had only 39 and 47 new listings respectively.
If you compare the inventory we have now to the extraordinarily low inventory we had at the end of last year, our inventory is up only 20 listings. We started the year with only 134 listings and stayed below each week’s inventory compared to the previous year until March.
Backcountry listings have actually continued to fall this year with only 26 listings in backcountry compared to 33 listings at the beginning of this year. Most other neighborhoods are actually flat with no net gain in inventory so far this year. Byram and Riverside have seen noticeable inventory increases with 5 and 3 more listings respectively. Nearly all of our increase in listings this year has been concentrated in mid-country, that portion of town from the Merritt Parkway to the Post Road. In mid-country, we are up from 39 listings at the end of last year to 61 listings this week.
However, looking at only the supply side doesn’t tell you how the market in a neighborhood is doing, even in a year like this year. Yes, inventory has risen in mid-country by 56%, but sales are growing at an even faster rate. Months of supply in mid-country are at 8.7 months with 21 sales so far this year which seems like a pro-buyer’s market, but mid-country also has by far the most contracts waiting to close with 30 contracts. Add in in those contracts and months of supply falls to 4.2 months, a clear pro-seller market.
Every neighborhood is seeing months of supply fall, when you add in contracts, but that is normal as with more inventory in the spring comes more contracts. What we are seeing is that when you add in contracts, we are seeing a few big drops in months of supply. For example, backcountry was one of our weaker, though not weak, markets at the end of last year. In the first quarter of this year, sales are looking better, at least based on the drop to 26 listings we have now compared to the 33 listing at the beginning of the year.
What does all this mean? In some ways 2023 has been a normal year with more listings coming on as each month passes in our spring market. But that’s about it for normal market statistics. Clearly, we are not seeing a lot more inventory this year and the number of new listings is down from last year, which was way down from 2021.
The good thing for sellers is that while we have less demand than we have had, we have even fewer new listings. It’s still a good time for a seller to list their house. For buyers, the deals are where the crowds aren’t, older houses that need work. The high demand for move-in ready houses is distorting an already distorted market.
Personally, I was expecting this imbalance in supply and demand to continue for the rest of the year, but now I’m not so sure. The Fed is causing major disruptions in the market. Jacking up interest rates has led to several bank failures. These bank failures have led to people using their online banking accounts to jerk funds out of their bank accounts overnight and move them to banks that are “too big to fail”. This has left many banks with limited funds to lend. I know a banker whose bank has greatly restricted his ability to lend for mortgages and for businesses, since they don’t have the deposits they used to have.
Fewer deposits at these local and regional banks leads to fewer loans and less business activity, which leads to a shrinking economy. So far, the Fed with its monomaniacal focus on inflation has done little to get lendable money to the banking community. (They actually may see this credit crunch as a plus.) The problem is that the Fed’s actions will have their greatest effect many months in the future.
Are we likely to see a recession? Who knows? It just seems that if it does happen, it may have more effect on the Greenwich real estate market than was likely earlier. If you are a seller this may be a better time to list. At the same time, if you are buyer, with this very low inventory when you see the house you want, it’s good time to consider an offer. We have long way to go before we get to anything like a normal market.
The one thing we can be sure about is that the market, the economy and our world will be different at the end of the year than it is now.