Backcountry Greenwich vs. Midcountry Greenwich, CT 2000 – Sept. 2017

Backcountry Greenwich gets a lot of attention in town for its 4 acre zoning and some very high sales prices, but there is another area in town that is similar, has more sales and for the moment a higher average price and that is the 2-acre zone. The RA-2 zone runs along the south side of the Merritt Parkway about halfway down to the Post Road. It also includes three small areas; a section just west of the Merritt Parkway on the NY border, the area around Field Point Circle and an area on Mead Point. These last two areas account for some major high-end sales, but in any given year only contribute a handful of sales. So for most purposes the 2-acre zone is a stand-in for upper mid-country.

In the RA-2 zone the floor area ratio is 9% versus 6.25% for the for 4-acre zone. This means that the above ground portion of the house is limited to 9% of two acres or 7,841 s.f.   The FAR does not count the size of the basement, so developers these days include a fully finished basement often with 10-foot ceilings. The size of the resulting structures is usually in the 8,500 s.f. to over 10,000 s.f. Given that only 16 out of 437 houses that have sold this year are larger than 10,000 s.f. the bottomline is that most people can get a house as big as they want in the 2-acre zone.

Greenwich Zoning Map

With one notable exception the average sales price in backcountry and mid-country have fought each other for pre-eminence from 2000 to the present. Some years mid-country had a higher average price other times it was backcountry. The one exception is the period from 2006 to 2010 when the average sales price in backcountry exceeded mid-country’s average sales price by as much as $1.78 million in 2009.

The 2017 average priced house in the RA-2 zone is $3,158,622 this is down from  $3,347,559. The least expensive house in RA-2 zone sold so far this year sold for $935,000 for a house on a non-conforming 3-acre lot, while the highest sale was for $13,065,000 for a house on an 8.1 acre lot on Meadowcroft Lane. We are seeing an uptick in demand for the 2-acre zone as some people who pre-recession might have bought in the 4-acre zone north of the Merritt Parkway now want to live closer to town on somewhat smaller lots and the 2-acre zone meets their needs.

Greenwich Mid-Country Sales, Average and Median

Post-recession the number of sales in the RA-2 / Mid-country area averaged 89 sales each year with a total sale volume averaging $320,000,000. The average sale price in the RA-2 zone in 2017 has been $3,158,622. This is down slightly from 2016 where the average sales price was 3,347,559.

The average price for a single family home in the RA-2 zone in 2015 was even higher at $3,921,555, but this apparent drop in the value of house in the RA-2 zone is more attributable to the change in the mix of what is selling rather than a drop in all house values. From year to year each individual price range may be up or down resulting in change in both the average and the median price.

In addition, the very highest price range, the over $10 million market, has a disproportionate influence on the average. For example, the highest sale in 2015 was for $26,000,000, while in 2017 our highest sale so far in the RA-2 zone has been for “only” $13,065,000 or just half of the highest sale in 2015. From 2000 to October 2017 our highest sale, with one exception was the Helmsley place which sold for $39,500,000.

These very large sales can significantly distort averages from year to year. The one exceptional sale that show this is the sale of Copper Beach Farm, a 50 acre estate on Long Island Sound that sold for $120,000,000 or more $80 million more than any other residential property in Greenwich. That property has been excluded from this analysis as including it would have single-handily raised the average sale price of all RA-2 sales for 2013 by $1.3 million.

Another factor that plays into a market analysis for the subject properties is that these properties are new construction and there is greater demand for new construction and much less inventory.

 

From 2000 to 2007 we averaged 10 new houses a year in the RA-2 zone sold on the Greenwich MLS. From 2011 to 2017 we have averaged only 3 new houses a year in the RA-2 zone. Now this only counts the house that were publicly listed, so called “spec” houses. In fact. in 2013 not a single new house was built for speculative sale in all of the RA-2 zone. At the same time there were dozens of custom houses built for individual owners.

The problem was not a lack of demand for new spec homes. New houses in the RA-2 zone sold for an average of $90/s.f. more than previously occupied houses in that zone so people were willing to pay a premium for new homes. The problem has been financing. Getting financing for owner-occupied housing has not been a problem, but it has been for speculative houses.

Overall demand in the RA-2 zone has been good all the way up to $6.5 million. Generally, we see months of supply rising from the lowest to the highest priced home going from 3 – 5 months of supply under $1 million to several years of supply over $10 million. (see Appendix XII.B. below.)

 

RA- 2 zone

(As of 9/2/17)

Inventory Contracts Last Mo. Solds Tot. Solds+ Contracts  YTD Solds  YTD+ Contracts Mos Supply Mos w/ Contracts
< $600K 0 0 0 0 1 1 0.0 0.0
$600-$800K 0 0 0 0 0 0
$800K-$1M 0 0 0 0 1 1 0.0 0.0
$1-$1.5M 9 1 0 1 9 10 8.0 8.6
$1.5-$2M 18 0 1 1 11 11 13.1 15.5
$2-$3M 34 1 0 1 16 17 17.0 19.0
$3-$4M 28 1 0 1 11 12 20.4 22.2
$4-$5M 10 0 0 0 5 5 16.0 19.0
$5-6.5M 20 1 1 2 8 9 20.0 21.1
$6.5-$10M 21 2 1 3 2 4 84.0 49.9
> $10M 14 0 0 0 1 1 112.0 133.0
TOTAL 154 6 3 9 65 71 19.0 20.6

 

In the RA-2 zone we see a similar pattern with one anomaly. Sales from $4 – 6.5 million in the RA-2 zone are doing particularly well in the 2-acre zone and as they have in the rest of the town. The steady rise in the stock market over the last 12 months, regularly setting new record highs, has encouraged buyers with substantial portfolios to buy this year. Sales have climbed through the year in the high-end price ranges as the year goes on.

This is reflected in the months of supply for the price range from $5 – 6.5 million which is down 24 months this from 44 months last year to only 20 months of supply. A drop in months of supply by two years is a dramatic drop. Now 20 months of supply might seem like a lot of months of supply, but the higher the price the longer that houses take to sale leading to these higher numbers. The drop in inventory and increase in sales in this price ranges shows a competitive market.

Guide to Organizing a House Hunt and Buying the House You Want

Buying a house can be one of the most fun things that you do in your life. How often do you get to go out and look at million and multimillion dollar properties and buy them. It outranks jewelry and cars by an order of magnitude in usefulness and price. Unfortunately, for some people it can also be one of the more tension-filled and miserable experiences of their life. Some people who start out happy end up miserable. This often happens if people don’t have a plan and start coming up against time barriers.

Figure out what it is that you need in your new place. Is it more bedrooms? Is it more space for her favorite hobby? Is it less hassle for maintenance? The next thing to do is to figure out what you like, what you like to do and what you’d like to have in your house so that you can do those things that you want to do. Do you like to have friends over and entertain? Do you like to go away for long weekends? Do you want to be able to hang out in the backyard without nosy neighbors?

If there are two or more of you, each of you can make a list of want’s and don’t wants and compare them. Often people will find a common denominator and things they hadn’t thought of. The next thing is to check with your Realtor and your mortgage company. Get an estimate of what you can afford and take a look at houses in that price range either in person or online to see if they meet your needs. If you are in a competitive market segment, then do more than get an estimate, pay the application fee and get pre-approved.

Bing.com’s birds eye view can help give you feel for the neighborhoods before you head out. When you do go out don’t so much look at houses as look at neighborhoods and see if those are the areas where you would like to live. This newspaper publishers a weekly open house list, and I, and a lot of other folks will send you a list of open houses for each week. So check out the open houses and get your agent to show you the houses that look interesting. You shouldn’t let all this be a straitjacket but you also shouldn’t be going from Byram to Banksville and from Old Greenwich to Quaker Ridge to find a house.

Once you get to a house ignore the furniture. Unless you have identical taste to this homeowner try to imagine what the house would look like furnished to your taste. One of my favorite examples of how not to do this was when I was out a public open house checking out some houses that I had gotten around to see. As I was walking down the upstairs hallway I heard a voice coming from the master bedroom that said, “Honey we could never live here this house has a blood-red bedroom!”. If you were planning on renovating anyway don’t be put off by small dark rooms. They can be opened up with a few extra windows, sliding glass doors and/or moving a walls. The one thing you should look at is ceiling height, because that can be easily changed.

If you like the house check out the basement. If it’s unfinished you can check for cracks in the foundation; minor vertical cracks are usually not a big issue while wide horizontal cracks may mean you should move on to a another house   Another thing to look for is efflorescence. When concrete gets wet some of the lime is leached to surface and leaves a fluffy mineral deposit.  Even if the basement is dry now, it’s worthwhile to find out why those lime deposits are 3 feet up the wall.

Even for a new house, you want to set aside some funds to get the house just the way you want. For an older house you can get a real bargain if you’re willing to do some work to fix it up to your taste. Lots of people are unwilling to take on a large renovation challenge, so if you are, you have a leg-up on the competition.

If you’re not finding what you want you should revisit that table you made of what it is that you’d like to see in the house and also consider some more financing options. In Greenwich, in particular, everything from artwork to stock portfolios, to rich relatives can be helpful in deciding how much you can spend.

Mark Pruner is part of The New Team at Berkshire Hathaway. He can be reached 203-969-7900 or mark@greenwichstreets.com

 

 

Backcountry Greenwich Market Analysis 1999 to August 2017

Backcountry Greenwich is recovering, though its recovery has been slower than southern Greenwich. In the recession year of 2009, we had only 27 sales down from the 84 sales five years previously in 2004. In  2009, we also saw the highest backcountry average sales price; $6,040,185 and a median price of $4,500,000.

BackCountry Median Sales Price and S.F.

From 2004 to 2009 sales and price diverged with sales falling nearly every year while the average price also went up every year. Falling sales and rising prices are the classic signs of bubble, but then hind sight is always 20:20.

Backcountry Greenwich House Size and Median Price

So, what’s been happening since the depths of the Great Recession. From 2009 to 2015 we saw a jagged increase of sales to a peak of 61 sales in 2015. In 2016, sales dropped back to 49 sales and through August of 2017 we have seen 25 sales in backcountry Greenwich.

BackCountry Volume & Sales Nos.

Now only 25 sales might make you think that 2017 will be another down year for sales, but high-end sales are now skewed to later in the year, so it’s not over till it’s over and the last house sale gets counted early next year. This high-end shift to later in the year is epitomized by the three properties listed for over $20 million that have either sold or gone to contract in the last 30 days including one in backcountry.

As of 9/2/17 Inventory Contracts Last Mo. Solds Tot. Solds+ Contracts  YTD Solds  YTD+ Contracts Mos Supply Mos w/ Contracts
< $600K 0 0 0 0 0 0
$600-$800K 0 0 0 0 0 0
$800K-$1M 1 1 0 1 0 1 9.5
$1-$1.5M 6 0 0 0 6 6 8.0 9.5
$1.5-$2M 12 0 1 1 4 4 24.0 28.5
$2-$3M 15 1 1 2 7 8 17.1 17.8
$3-$4M 12 1 0 1 4 5 24.0 22.8
$4-$5M 11 0 1 1 2 2 44.0 52.3
$5-6.5M 12 1 0 1 0 1 114.0
$6.5-$10M 15 2 0 2 2 4 60.0 35.6
> $10M 11 0 0 0 1 1 88.0 104.5
TOTAL 95 6 3 9 26 32 29.2 28.2

What we have seen in 2016 and 2017 is an increase in the average size of backcountry houses that have sold. In 2015, we had the smallest average size or 4,861 s.f., which would be a large house in most of the U.S. So far in 2015 the average size house had increased to 6,020 s.f.  This is a nice house, but in the peak year of 2009, the average size of a house in Greenwich hit an all-time high of 8,289 s.f. Those days of big, for big sakes, mansions are not likely to return anytime soon.

You do have to be careful when dealing with averages in a changing market. Much of what drives these changes in the average house size is not that houses are getting smaller.  (We haven’t seen people lopping wings off their 8,000 s.f. houses to make them more saleable.) What we are seeing is that the mix of the houses that are selling were tending to smaller houses and that mix has started to get bigger as town-wide the high-end is having its best post-recession year.

Also, as you would expect if the average size of houses being sold is increasing then so is the price of those houses and that is what we are seeing. In 2015, the median price of a house sold in the backcountry was down to $2,043,000 while the average was $800,000 more or $2,834,464 as the high-end sales pulled up the average. The high-end didn’t pull up the average as much as it could have in 2015 as that was our first year since 1990’s without a single, backcountry sale over $10,000,000.

The median sales price in the backcountry was up to $2,200,000 in 2016 and is at $2,495,000 so far this year or an increase of 22% in just two years. Now this doesn’t mean that your house is up 22% if you live in backcountry, but it does mean that we are seeing more high-end sales that are pulling up both the average and the median.

Backcountry Inventory, Sales YTD, August Sales and Contracts

Backcountry is also sharing in some of the 2017/best year for sales over $5 million since the Great Recession ended, e.g. the over $20 million September contract mentioned before. However, we still have some seller expectations to be reset to the 2017 reality. Many of our younger, family buyers want to live closer to town. Peter. What used to be highly desirable in a property; more acreage and privacy is not as highly desired by many in this group. Having said that you don’t need a lot of buyer to change backcountry sales, an increase of 20 sales would easily do it.

BackCountry Greenwich Months of Supply August 2017

In addition, for sales from $1 – 4 million demand for backcountry homes is about the same as in other parts of town. We are not seeing the same demand for the price range from $5 – 6.5 million. In the rest of town, we around 20 months of supply in backcountry we have yet to have sale out of 12 listings.

On the good news side, we are seeing more interest in the backcountry as a place for weekenders who used to roughly account for about a third of backcountry sales. Some weekenders are getting tired of the long schlep out to the Hamptons. A resurgent Armonk has also helped backcountry sales. What used to be a quiet little time with little nightlife has seen a resurgence of good restaurants; such as Fortina, Zero Otto Nove, Mariachi Mexico, Koku, Nick’s Pizza, while DeCiccio’s Market has become a Saturday destination for my wife.

Once we get the budget settled in Hartford and the fear of uncertainty goes away, 2017 might turn out to be a nice year for backcountry.

 

Mark Pruner is a Realtor with Berkshire Hathaway. He can be reached at mark@bhhsne.com and 203-969-7900.

August 2017 – Greenwich Real Estate Market Report

** High End Market Looking Up – Even Way Up **

Our high-end market is back from the dead, though I’d say that at worst it was only seriously ill. For all price categories over $5 million, sales are up and inventory is down, and in many cases months of supply is way down. The best indication of this is 460 North St. which just reported a sold price of $22 million. The curious thing is it was listed for 379 days on the market at $20 million. Regardless, it’s quite a sale and speaks to the perking up of the high-end market.

Inventory Contracts Last Mo. Solds Tot. Solds+ Contracts  YTD Solds  YTD+ Contracts Mos Supply Mos w/ Contracts Last Mo. Annlzd
< $600K 1 2 0 2 11 13 0.7 0.7
$600-$800K 15 4 3 7 34 38 3.5 3.8 5.0
$800K-$1M 17 4 3 7 32 36 4.3 4.5 5.7
$1-$1.5M 68 11 12 23 87 98 6.3 6.6 5.7
$1.5-$2M 75 11 10 21 62 73 9.7 9.8 7.5
$2-$3M 125 11 11 22 73 84 13.7 14.1 11.4
$3-$4M 76 6 7 13 44 50 13.8 14.4 10.9
$4-$5M 47 5 2 7 19 24 19.8 18.6 23.5
$5-6.5M 55 4 3 7 22 26 20.0 20.1 18.3
$6.5-$10M 47 7 4 11 12 19 31.3 23.5 11.8
> $10M 37 3 1 4 3 6 98.7 58.6 37.0
TOTAL 563 68 56 124 399 467 11.3 11.5 10.1

Above $5 million total sales and contract through August are up 20 to 51 houses wanted by buyers. At the same time, the sellers have pulled back and inventory is down in the high-end price category by 36 houses to 139 listings. Now all of that is good news but not great news.

Over $10 million we only have 6 sales and contracts out of a total 37 listings which equates to 59 months of supply or almost 5 years. While 5 years of supply is still very much of a buyer’s market, it compares to over 12 years of supply at the end of August 2016. This dramatic drop of 93 months of supply from last year to this year is due to inventory falling 11 listings and sales and contracts increasing only 3 houses. When you have a very poor market, a few sales can dramatically reduce the months of supply, but it’s still only a handful of sales. Still the high-end market is seeing more sales. Part of this is sellers are taking significant haircuts on prices, but that’s what makes for a better market; buyers and sellers finally agreeing on the value of a property.

Greenwich R.E. Months of Supply Aug. 2017

To see the part of the high-end price range that is doing the best look at the $5 to 6.5 million price range. There we only have 20 months of supply which is a down from 44 months of supply last year. Sales and contracts are up 12 and inventory is down 12 making for this dramatic drop. In this price range, we have 57 house houses on the market and 26 sales and contracts so far this year. This compares to only 14 sales and contracts at the end of August last year. We are seeing almost twice as much activity in this price range.

Another price range that has become so competitive that has almost disappeared is our inventory of single-family homes under $600,000. We only have 1 house in inventory and we’ve sold 11 this year; the same as last year’s sales.  They go off the market as fast as they come on. This equates to three weeks of supply. Last year we had 3 1/2 months of supply.

Greenwich Real Estate Sales 2015 - Aug 2017 w/ 10 year average

In between $600,000 and $3 million the situation is muddled, particularly from $1,000,000 to $3,000,000. In this price range inventory is up 41 listings from last year while sales are down 22 from 2016. This is the heart of our market where we have 268 listings out of a total of 563 listings. We also have 255 sales and contracts, curiously this is down by 38 sales and contracts from last year. If anyone knows the reason why the middle market is down somewhat, while the high-end is looking much better I’d love to know what it is.

’17 vs ’16 Inventory Contracts Mo. Solds Tot. Solds+ Contracts  YTD Solds  YTD+ Contracts Mos Supply Mos w/ Contracts Mo. Annlzd
< $600K -4 0 0 0 0 0 -2.91 -2.92
$600-$800K -4 -8 -4 -12 3 -5 -1.37 -0.45 2.29
$800K-$1M -5 -4 -1 -5 0 -4 -1.25 -0.74 0.17
$1-$1.5M 10 -3 -6 -9 4 1 0.66 0.91 2.44
$1.5-$2M 15 -9 -4 -13 -19 -28 3.75 4.12 3.21
$2-$3M 16 -4 -2 -6 -7 -11 2.80 3.24 2.98
$3-$4M -11 0 1 1 5 5 -4.03 -3.93 -3.64
$4-$5M -11 1 -1 0 -2 -1 -2.31 -3.44 4.17
$5-6.5M -12 2 3 5 10 12 -24.67 -25.37
$6.5-$10M -13 2 4 6 3 5 -22.00 -17.21
> $10M -11 3 1 4 0 3 -29.33 -93.42
 
TOTAL -30 -20 -9 -29 -3 -23 -0.51 -0.04 0.93
% change -5.3% -29.4% -16.1% -23.4% -0.8% -4.9% -4.5% -0.4% 9.3%
Pro-Seller Pro-Buyer

The end result of all of these changes in sales and contracts in different price ranges is that inventory is down 5% from last year and sales are down a minuscule 0.8%. You could say that overall 2017 is about the same as 2016. The disappointing thing at the moment is that our contracts are down 29% from this time last year from 80 contracts to 68 contracts, which tends to indicate that September will also underperform the average.

So, what does this all mean? It all depends on who you are. If you are a seller in the mid-range from $1.5 to $3 million you’re going to find the market a little tougher than last year. However, if you have a new house in Riverside under $3 million, of which there are vanishingly few, you will still do well if you price it right.

And, that’s where our market is today at every price range. Buyers will buy if they think the house is a good value. It doesn’t have to be a bargain, it just has to appear to the buyer to be a fair price. As prices have adjusted to what buyer’s think is FMV at the high end, folks are buying. Maybe that’s what’s happening in the middle. Sellers have seen lots of demand the last few years and may be starting out and then holding out for a price that is more than the buyer’s price.

As a result, the fall market promises to be interesting. We had 57 new listings coming on the market in just the last week and my buyers are asking about all this new property, so this should be a busy open house weekend. If you are out this weekend, I have a nice 3,800 s.f. house with a pool on 6 acres in the backcountry for $1.69 million that’s having an open house from 1 – 4 pm on Sunday. Stop by and let’s talk about the market.

 

July 2017 Greenwich Market Report

July 2017 has continued to see the see-saw that Greenwich single-family home sales have been on all year. In July, we had 53 sales compared to 69 sales in July 2016. At the same time, we have 80 contracts that have been signed and are waiting to close, so August will likely be a good month for sales.

As of 8/4/17 Inventory Contracts Last Mo. Solds Tot. Solds+ Contracts  YTD Solds  YTD+ Contracts Mos Supply Mos w/ Contracts Last Mo. Annlzd
1 1 2 3 11 12 0.6 0.7 0.5
$600-$800K 16 4 5 9 31 35 3.6 3.9 3.2
$800K-$1M 17 2 6 8 29 31 4.1 4.7 2.8
$1-$1.5M 68 13 12 25 74 87 6.4 6.6 5.7
$1.5-$2M 80 14 9 23 52 66 10.8 10.3 8.9
$2-$3M 136 18 9 27 62 80 15.4 14.5 15.1
$3-$4M 80 9 4 13 37 46 15.1 14.8 20.0
$4-$5M 53 4 4 8 17 21 21.8 21.5 13.3
$5-6.5M 56 5 2 7 19 24 20.6 19.8 28.0
$6.5-$10M 54 9 0 9 8 17 47.3 27.0
> $10M 38 1 0 1 2 3 133.0 107.7
TOTAL 599 80 53 133 342 422 12.3 12.1 11.3

The really amazing thing is that most of this drop in sales is in the heart of our market from $1.5 to $3 million. In this price category, we are down 20 sales from last year and down 13 contracts from last year or a total drop of 33 transactions from July 2016.

 
July ’17 vs July ’16 Inventory Contracts Mo. Solds Tot. Solds+ Contracts  YTD Solds  YTD+ Contracts Mos Supply Mos w/ Contracts Mo. Annlzd
< $600K -6 -1 1 0 0 -1 -3.82 -3.87 -6.50
$600-$800K -8 -7 2 -5 7 0 -3.39 -1.94 -4.80
$800K-$1M -9 -7 3 -4 2 -5 -2.64 -1.48 -5.83
$1-$1.5M 5 -15 3 -12 9 -6 -0.35 0.89 -1.33
$1.5-$2M 13 -10 -10 -20 -15 -25 3.77 4.04 5.36
$2-$3M 17 -3 -8 -11 -5 -8 2.92 2.96 8.11
$3-$4M -13 0 -3 -3 4 4 -4.59 -4.04 6.71
$4-$5M -9 0 0 0 -1 -1 -2.29 -2.50 -2.25
$5-6.5M -12 2 -1 1 7 9 -19.04 -18.70 5.33
$6.5-$10M -9 4 -2 2 -1 3 -1.75 -11.25
> $10M -7 1 0 1 -1 0 28.00 -19.83
TOTAL -38 -36 -15 -51 6 -30 -1.01 0.09 1.93
% -6.0% -31.0% -22.1% -27.7% 1.8% -6.6% -7.6% 0.7% 20.6%

After all this sturm und drang we are at about the same place for sales this year as we were last year with 340 sales compared to 336 sales last year. As always, and even more so this year, the devil and the angels are in the details.

You can look at the total house sales in July and worry or you can look outside of the $1.5 – 3 million soft-spot and see a market that is actually looking better than last year. Below $1 million our market always tends to be tight, but this year it is particularly tight with only 2 to 4 months of sales supply. At the other end of the market, above $3 million we are also looking better than last year. We are up 5 sales from last year in this upper half of our market.

The other really remarkable thing about these upper and lower market segment is the shrinkage in inventory below $1 million and above $3 million. We are down 23 listings below $1 million in a market that didn’t have a lot of listings to begin with. Above $3 million inventory has dropped drastically. We’re down 50 listings to only 281 listings compared 331 listings last year.

This large drop in inventory and slight gain in sales has led to some dramatic drops in months of supply. For example, from $5 to 6.5 million dollars we’re down a year and a half or 18 months in supply. In fact, the months of supply/market demand for the price segment has dropped so much that we have the same months of supply from $5 to 6.5 million dollars as we do from $4 – 5 million.

The market over $10 million continues weak, however inventory is down to 38 listings compared to 45 last year at the end of July. We also just had 6 Meadowcroft Lane sale for $13,065,000, but it is not included in these calculations, because it closed on August 1st.

We are already starting to see some buyers responding to the sharp rise in the stock market with the Dow cresting 22,000 for the first time ever. If the market stays high for a quarter or two you can expect to see some more of the assets created by this remarkably rise shifted to the housing market as it traditionally has done in the past when the market goes up.

Mark Pruner is a Realtor with Berkshire Hathaway in Greenwich. He can be reached at 203-969-7900 or at mark@bhhsne.com.

The June 2017 – First Half Greenwich Real Estate Report

A Great Month for High End Sales

by Mark Pruner

mark@greenwichstreets.com

203-969-7900

 

June was a good month for sales in Greenwich with 79 sales up 2 sales from last year. While June was a good month for sales overall, it was a great month for high-end sales. We had 9 sales over $5 million in June. To add to the good news, 5 Meadow Place listed for $7,195,000 just went to non-contingent contract which means that we now have 11 contracts waiting to close with list prices over $5,000,000. So, we have 20 houses over $5,000,000 sold in June or under contract which compares to only 18 total high-end sales for the first five months of the year. June was a good month.

6/30/17 Inventory Contracts Last Mo. Solds Tot. Solds+ Contracts YTD Solds YTD+ Contracts Mos Supply Mos w/ Contracts Last Mo. Annlzd
< $600K 3 2 1 3 9 11 2.0 2.0 3.0
$600-$800K 15 8 7 15 26 34 3.5 3.3 2.1
$800K-$1M 22 5 9 14 23 28 5.7 5.9 2.4
$1-$1.5M 62 19 16 35 62 81 6.0 5.7 3.9
$1.5-$2M 85 15 16 31 43 58 11.9 11.0 5.3
$2-$3M 149 16 8 24 53 69 16.9 16.2 18.6
$3-$4M 89 13 8 21 32 45 16.7 14.8 11.1
$4-$5M 64 6 5 11 13 19 29.5 25.3 12.8
$5-6.5M 59 5 4 9 17 22 20.8 20.1 14.8
$6.5-$10M 62 4 5 9 8 12 46.5 38.8 12.4
> $10M 39 2 0 2 2 4 117.0 73.1 #DIV/0!
TOTAL 649 95 79 174 288 383 13.5 12.7 8.2

Inventory: We also saw a major drop in inventory compared to last year with only 649 single family home listings on the market down 48 listings from last June. We also saw lower inventory at the high-end as over $5 we were down 21 listings. The drop in inventory combined with better sales resulted in a huge drop in months of supply in this price range. From $5 – 6.5 million months of supply dropped 2.7 years to only 21 months of supply; one of the lowest numbers we have seen in quite a while.

First Half Sales and Contracts Over $5M in Greenwich, CT

First Half Sales and Contracts Over $5M in Greenwich, CT

 

A Shot to the Heart: So, for all price ranges, sales are up 21 houses and inventory is down 48 houses. Not all price ranges however, saw lower inventory and increased sales. From $1.5 to $3 million inventory is up 29 listings and contracts are down 27 from this time last year. Slower sales are letting inventory accumulate on the market. This higher inventory and lower sales resulted in a jump in months of supply for this price range from 9.8 months to 11.9 months of supply.  In the price range from $1.5 – 3 million we are up 29 listings and we are down 29 sales and contracts from last year.

’17 vs ’16 Inventory Contracts Mo. Solds Tot. Solds+ Contracts YTD Solds YTD+ Contracts Mos Supply Mos w/ Contracts Mo. Annlzd
< $600K -5 0 0 0 0 0 -3.33 -3.41 -5.00
$600-$800K -13 0 3 3 5 5 -4.54 -3.93 -4.86
$800K-$1M -6 0 -1 -1 -1 -1 -1.26 -1.35 -0.36
$1-$1.5M -19 0 0 0 6 6 -2.68 -2.36 -1.19
$1.5-$2M 7 -15 1 -14 -5 -20 2.11 3.49 0.11
$2-$3M 22 -12 -3 -15 4 -8 1.32 3.83 7.08
$3-$4M -8 -4 3 -1 6 2 -5.70 -2.09 -8.28
$4-$5M -5 3 0 3 -1 2 -0.03 -5.18 -1.00
$5-6.5M -11 -3 1 -2 9 6 -31.68 -12.70 -8.58
$6.5-$10M -4 0 2 2 1 1 -10.07 -6.25 -9.60
> $10M -6 2 -1 1 -1 1 27.00 -39.38
TOTAL -48 -29 5 -24 23 -6 -2.26 -0.73 -1.20
Pro-Seller Pro-Buyer

 

As mentioned, our inventory continues to be surprisingly high from $2 – 3 million with 149 listings. This is even higher than the combined two ranges between $1 and 2M, which is usually substantially higher than the $2 -3 million dollar price range. Were it not for this hole in the heart of our market from $1.5 to $3 million we would be up 6 contracts from last year instead we are down 29 contracts. The result is that July should be a good month for high-end sales and a so-so month for our middle market. The market under $1 million continues to be tight.

The sales always go up this time of year. June is the month for peak sales, but we have seen an especially sharp jump this year from our poor April sales to good June sales. Having said that we are still slightly below our five year average of 84 sales for June, however year to date good sales in January and March put us 23 sales over first half of 2016.

We have now had two consecutive strong months of sales increases breaking the monthly see-sawing sales we saw in the first four months of sales. Unfortunately, we are likely to return to the see-saw in July as we are down aforesaid 29 contracts from this time last year.

Low Interest Rates Slowing Sales: Now an economist will tell you that increasing interest rates increase monthly mortgage payments and result in lower home sales. A Realtor will tell you that the perception of increasing rates will encourage buyers that have been sitting on the sidelines to make their purchases now rather than later so rising interest rates increase sales in the short term in Greenwich.

Despite the Federal Reserve’s increase in the fed funds rate, mortgage rates have gone back down below 4%. My weekly email from Wells Fargo show their 30 year fixed jumbo mortgage rate is 3.75%, a rate that does not encourage a horde of buyers to get off the dime and buy houses in Greenwich, but does keep sales moving.

Months of Supply: When you look at months of supply, two things stand out: The very low months of supply under $800,000 and the relatively low months of supply from $5 – 6.5 million, even lower than the months of supply from $4 – 5 million. As I said last month, this is the new sweet spot for high-end buyers, however, the news is also pretty positive for $6.5 – 10 million. (BTW: I divide the $5 to 10 million range at $6.5 million rather the mid-point $7.5 million, because that is roughly the mid-point for the inventory from $5 – 10 million.)

Last month we had nearly 9 years of supply from $6.5 – 10 million. At the end of the first half of the year we are down to less than 4 years of supply. You don’t often see such dramatic drops often. So for once, we are starting to feel some urgency in our high-end market. Stay tuned to see what happens next.

June 2017

 

 

 

 

 

The Greenwich Rental Market in 2017

There is a real estate market in Greenwich that practically no one talks about and that has more transactions than we have single-family home sales. Last year we sold about 640 single-family homes, but we had 809 rentals that were done through the Greenwich. MLS. During the recession years the rent versus buy equation shifted toward rentals. In 2009, we had we had 959 rentals and only 370 sales. By the following year in 2010 rentals peeked at 962 rentals and sales had recovered to 549 sales.

So far, this year we have had 456 rentals, which if you annualize this number would equate to 829 rentals or about the same as last year. The one thing we have seen this year is a slight shift to higher-end rentals with rentals from $4,000 to $10,000 up slightly as well as rentals over $18,000, but this could change in the second half of the year.

Now there are a lot more rentals than appear on Greenwich MLS. Particularly, under $2000 most rentals are done either in the classifieds in the newspaper or on Craigslist. Under $2000 we have between 100 and 150 rentals per year on the GMLS. At this price range, the units include everything from one room garage and basement apartments to smaller condos throughout town.

The heart of our market however is between $2,000 and $4000. Last year we had 327 rentals out of the 809 Rentals listed on the Greenwich. MLS. This number has gone as high as 375 rentals in 2009. In this price range, you’re mainly looking at condos and apartments, though you do occasionally find some smaller houses for rent.

Price Range 07 08 09 10 11 12 13 14 15 2016 17 Anlzd 17 YTD
10 Yr. Avg. Post-Rec. Avg 17 Anlzd vs. 16
<$2,000 140 132 202 227 157 129 113 108 103 89 98 54 140 114 9
$ 2 – 4K 270 302 375 357 333 276 317 262 301 327 287 158 312 300 -40
$4 – 6K 116 142 177 148 161 152 174 160 153 159 178 98 154 162 19
$6 – 10K 55 75 79 93 84 85 74 83 81 86 113 62 80 87 27
$10 -14K 71 78 81 89 100 99 101 87 104 99 84 46 91 96 -15
$14K -18K 10 19 23 27 23 21 22 21 25 29 31 17 22 25 2
$18K+ 22 17 22 21 17 21 22 18 21 20 38 21 20 22 18
Total 684 765 959 962 875 783 823 739 788 809 829 456 819 807 20

We still have a good number rentals up to about $6,000. Above that price we mainly have single-family homes and the number of listings drops significantly. Last year over $18,000 we only had 20 rentals. (They were, however, really nice rentals.) At the high-end these numbers should also be taken with a grain of salt since some of them represent summer rentals on Long Island Sound at a much higher monthly rate.

Greenwich Rentals by Month - 10 Year Average

We have a distinct seasonality in our rentals, though not as dramatic as we do for residences. Rentals peak in May and are slower from September to February. We also have a little bump up in August as people rent places before the start of the school year and also before the start of new jobs for recent grads.

So, who rents their property in Greenwich Connecticut. A surprising number of properties are rented by local Greenwich entrepreneurs and real estate investors. The listing at 2 Bote Court was bought by a family that lived there for over a decade and then decided to hold it for both sale and for rent. The house was updated with a new kitchen, master bath and a Nest thermostat system throughout the house.

2 Bote Court, Greenwich, CT

The house is on the market at $6,900 per month and is 3,000 s.f. on 0.42 acres. It is close to Central Middle School, Greenwich High School, and Greenwich Country Day. It is also for sale for $1,400,000.

2 Bote Court, Greenwich, CT - Kitchen

Real estate rental property not only generates rental income but also depreciation which you can offset against the property’s income sheltering that income for taxes. At sale, however you may well have to recapture this depreciation deduction when you sell. In addition, rental properties are held for appreciation and provide asset allocation for owner’s investments.

So, who are the tenants for these places? We have young couples who buy a bigger house than they might otherwise be able to afford and rent out part of it for income to pay for their mortgage. We have seniors who like that someone else is on the property with them. We also have people who get transferred overseas and want to rent out the property because they want to come back to Greenwich. You also see the parents of college kids rent out their kids’ bedrooms.

In Greenwich people are always allowed to have tenants in their house unless restricted by a condominium association. While most rentals in Greenwich are for a year we have a surprisingly robust Airbnb market in Greenwich with over 300 listings. So far, the short-term tenants have not proved to their neighbors.

Two rental provisions provided by planning and zoning regulations that are often forgotten are the senior accessory apartment and the affordable accessory apartment. The senior accessory apartment allows you to put in a second kitchen, which is otherwise prohibited in the R-7 and larger zones. For the senior accessory apartment, the tenant or the landlord is over 62 years old.

The affordable accessory apartment does not have an age limit but does have an income limit on either the landlord or the tenant. I helped write this regulation and it would be a great way to help meet the state mandate for accessory housing. Were we to meet that mandate, developers couldn’t come in with affordable proposals to put in higher density housing in areas that are zoned for lower density housing.

We have a very robust rental market with listings coming and going quickly. If you can’t find what you want just wait a bit.