Backcountry Greenwich, CT 2018

by Mark Pruner

Berkshire Hathaway HomeServices – New England

203-969-7900 – mark@bhhsne.com

What’s going on in backcountry Greenwich? That’s actually a really hard question to answer. Some stats point to backcountry getting better. For example, our days on market this year are dramatically down to about 9 months compared to 15 months in 2017 and 12 months in 2016. On the other hand, our median price for a backcountry sale is down to $2.45 million compared to $2.68 million the prior year but is up from 2016’s median price of $2.20 million.

Backcountry as of 9/19/18 Inventory Contracts Last Mo. Solds Tot. Solds+ Contracts  YTD Solds  YTD+ Contracts Mos Supply
< $600K 0 0 0 0 0 0
$600-$800K 0 0 0 0 1 1 0.0
$800K-$1M 0 0 0 0 0 0
$1-$1.5M 9 0 0 0 5 5 17.1
$1.5-$2M 12 0 3 3 6 6 19.0
$2-$3M 19 0 3 3 7 7 25.8
$3-$4M 15 1 1 2 7 8 20.4
$4-$5M 14 0 0 0 1 1 133.0
$5-6.5M 18 0 0 0 1 1 171.0
$6.5-$10M 16 0 0 0 1 1 152.0
> $10M 11 0 0 0 2 2 52.3
0
TOTAL 114 1 7 8 31 32 34.9

Our sales on an unadjusted, annualized basis come out to 39 sales compared to 45 sales in 2017 and 62 sales as recently as 2015. The good news for those of us who live in the backcountry is that we will very likely have more sales than that in 2018, as we have seen sales in backcountry shift to the fourth quarter, (but then again may be not this year).

The one scary number for backcountry homeowners this year is “1”, that’s the number of contracts waiting to close in backcountry. When I put in the search criteria in to the GMLS for backcountry contracts and that number came up, I was sure that it was wrong. We have 114 listings in the back country and we have had 31 sales so far this year how could we only have 1 contract in the backcountry.

So, I mapped all the contingent and pending contracts on the MLS and lo and behold there were 4 contracts, not great but better I thought. Unfortunately, it turns out that while the GMLS calls backcountry “North Parkway” they don’t really mean it. Two of the sales that are geographically north of the parkway are in Glenville according to the MLS. As to the other contract it turned out to be just over the border in North Stamford; so, we really do only have one pending contract in backcountry. As President Trump would tweet, “not good”.  

It is not all bad news, inventory is down by 12% from last year and we have the previously mentioned big drop in days on market for the backcountry houses that are selling. Our highest price range in particular is looking much better. Over $10 million we had 24 listings at this time last year and this year we are down by more than half to only 11 listings. We also have had 2 sales over $10 million in backcountry Greenwich this year and last year we had none at this this time.

From $1.5 – $4.0 million inventory is down an additional 9 listings. What we are seeing is more people deciding that backcountry is a nice place to live and as a result our inventory in backcountry is down in most price ranges. On the sales side, we can’t really say till the end of the year since post-recession the 4th quarter has seen better sales. (Let’s go contracts!)

The reality is that you can over-analyze the market when you are dealing with only a few dozen sales. What we have seen is that when you look at price/s.f. the market has been stuck in a trading range between $470 and $565/s.f. for the last seven years with no clear trend. We have yet to have three years in a row where the price per square foot has continued a “trend”.

The same can be said for days on market. In the last 7 years, days on market has stayed between 267 DOM and 367 DOM with the one exception being 2017 when we saw an average of 475 days on market.

So, what does this all mean? Firstly, the backcountry market has not recovered like front country has. Old Greenwich, Riverside and central Greenwich continue to look good, while Cos Cob, Glenville and Pemberwick are arguably doing even better, albeit off a lower base price. Also, as you can see when you compare backcountry to mid-country, backcountry had a distinct bubble from 2004 to 2008. If you ignore this period, the “decline” in backcountry is more like a slow drifting. However, for anyone who bought in those years it makes for wrenching changes.

So, what can be done about this? Several groups are working on this. The Round Hill Association, under it’s new president, John Conte, has formed a committee to emphasize all the good things in mid-country and backcountry Greenwich and there are many. Some of the wealthiest people in the U.S. have made backcountry Greenwich their homes over the last 100 years and much of what attracted these people has not changed. The Town’s Economic Advisory Committee is also promoting Greenwich as a place to live. The BET’s no property tax increase budget this year finally got some national play in an article about Old Greenwich that appeared in the Wall Street Journal’s Mansion Global affiliate. (I might have helped that a little. 🙂

All these things move in cycles and backcountry will be back, but so far this year, it’s still mostly drifting, with occasional bright spots.

 

 

 

The August 2018 Greenwich Real Estate Market Report – Fighting High Federal & State Taxes with Low Property Taxes

To realtors, buyers and sellers who are active in the market, contracts are where it’s at. More accurately contracts are where the market will be next month. The good sales we had in July 2018 were predicted by the 120 contracts that we saw at the end of June.

Despite this some folks were feeling depressed, because sales for the first half of the year were down compared to the prior year and some even were making dire predictions about the market by focusing solely on sales. So, July came and went, and low and behold lots of those contracts we had at the end of June closed. In total, July 2018 saw 23 more sales than we saw in July 2017, when we only had 54 sales.

As of 8/31/18 Inventory Contracts Last Mo. Solds Tot. Solds+ Contracts  YTD Solds  YTD+ Contracts Mos Supply Mos w/ Contracts Last Mo. Annlzd
< $600K 2 3 0 3 9 12 1.8 1.6
$600-$800K 13 1 6 7 35 36 3.0 3.4 2.2
$800K-$1M 29 5 7 12 41 46 5.7 6.0 4.1
$1-$1.5M 68 15 11 26 72 87 7.6 7.4 6.2
$1.5-$2M 69 11 10 21 70 81 7.9 8.1 6.9
$2-$3M 122 10 13 23 78 88 12.5 13.2 9.4
$3-$4M 93 11 7 18 48 59 15.5 15.0 13.3
$4-$5M 52 1 2 3 22 23 18.9 21.5 26.0
$5-6.5M 51 2 3 5 22 24 18.5 20.2 17.0
$6.5-$10M 48 2 2 4 7 9 54.9 50.7 24.0
> $10M 35 0 0 0 8 8 35.0 41.6
TOTAL 582 61 61 122 412 473 11.3 11.7 9.5

Contracts

On the contract side, at the beginning of August, we were up slightly and by the end of the August the slight rise in contracts resulted in a slight raise in monthly sales compared to August 2017. Unfortunately, outstanding contracts at the end of this August, aren’t that outstanding. We are down 7 contracts from 2017 indicating that September 2018 will likely be a little down from last September. The good news, however, is that anecdotally, we are continuing to see more house showing activity in early September which is continuing from last two weeks of August.

The New Tax Law Changes

The new tax law imposed a $10,000 limit on the deductibility of SALT (State And Local Taxes including local property taxes). As a result, the real cost of high property taxes went up as they had to be paid with after-tax dollars after the new tax law came into effect.

The predicted result was that sales were going to drop in states with both high property taxes and high income taxes. At first, the numbers seemed to bear that out, but recently the fall in sales in Westchester County seems like it may not be as high as first reported. What was initially reported as a sales drop of 18% in Westchester County, may actually only be a drop of 5.7% in sales according to Hudson Gateway Association of Realtors. If this is the case, then the effect of their high property taxes may actually not have the immediate jarring impact predicted and a general economic rise may ameliorate this impact even more. (I also apologize for relying on these early numbers, which showed a bigger market decline. I, and others, saw the impact as more dire than it seems that it was.)

The long and short of all this is that 2018 in Greenwich is starting to look like 2017. This might seem like less than excellent news, but given what was supposed to be a market collapse a return to average might not be bad. Several indicators seem to be saying we are reaching the end of the beginning that the new federal tax law changes have wrought. We see this in three principal areas:

  1. The increase in inventory, particularly under $4 million, and even more so from $800,000 to $2 million, is slowing. Whereas in July we had 44 more listing than in July 2017, by the end of August this had slipped to only 19 more listings.
  2. The hardest hit area in Greenwich was from $1.0 – $1.5 million which is now recovering nicely. In August, inventory was the same as last year and sales for the month were up 4 houses from the previous year. We are, however, still down 15 sales from this time last year.
  3. At the high-end the jump in market activity over $4 million is mellowing. Inventory, which actually had been down at the high end, is about the same as last year. On the sales side, we are now up only slightly in sales YTD. Contracts waiting to close are also down throughout the high-end price range. In fact, now that the $1.0 – 1.5 million price range is doing better, the $6.5 – 10 million price range is where we are seeing the most dramatic changes from last year. Total transactions are down by 10 houses, while inventory is back to average after having shrunk. The result is we are looking at 51 months of supply; up over 2 years from this time last year.

Overall though, the folks fleeing to Florida seem to have moved from a jog to a simple walk, much like we have always had. Also, the influx of high-end buyers from New York as well as those from other parts of Connecticut may be slowing also.

At this point, I’m just curious, not concerned. The biggest driver of the Greenwich market for the last several decades has been Wall Street; and the Dow just hit a new all time. Unemployment is very low and new housing construction is limited. All of these factors point to a rosier housing market. The other major reason is these are  August numbers, possibly the flakiest month of the year. People are gone, inventory additions are minimal and few sales here and slightly more inventory there can significantly change things.

 

 Post Labor Day

We have had a bunch of new listings come on the market in only a couple days since Labor Day. I put 151 Lockwood on the market Wednesday afternoon and by the evening I had 5 showings scheduled. Now it is the only house under $1 million in Riverside south of the Post Road, but the buyers are there. So far 81 houses out of 412 have sold for full list price or over list.

As always, it’s where the balance is between people selling and people buying. Having said that I’d still rather be a buyer or seller in Greenwich than over the border in NY.

Mark  Pruner is an award-winning Realtor with Berkshire Hathaway HomeServices New England in their Greenwich office. He can be reached at mark@bhhsne.com or 203-969-7900.

 

2018 Real Estate: What’s Going on in Greenwich, CT Neighborhoods

Let’s take a quick look at the neighborhoods from north to south in Greenwich and see how they have done in the last three months from April 30th through July 31st., but first let’s take a look at house sales in the whole town.

 

Totals & Averages

Listings                                 643

Percent of Market           100%

Listing DOM                       242 days

No. of Sales                        351

Sold DOM                            208

Average Sales Price         $2.50M

Sales Price/S.F.                 $572

Months of Supply             12.8

For the town overall, sales are up slightly from last year. We have had 199 sales in the last 3 months, since I last did a neighborhood report. These sales were boosted by a particularly good July this year. Our inventory is up by 44 houses all between $800,000 and $4,000,000 as the new tax law encourages our downsizers to move earlier than they might. August 2018 looks like it will be up a little from August 2017 when we had 57 single family home sales in Greenwich. Contracts are about the same as last year with 68 contracts outstanding. More on this next week when we have the final numbers.

 

Backcountry

Listings                                 114

Percent of Market           18%

Listing DOM                       375 days

No. of Sales                        24

Sold DOM                            321

Average Sales Price         $3.47M

Sales Price/S.F.                 $486

Months of Supply             33.3

Backcountry is showing some signs of perking up with an $11.1 million sale so far this year and an average sold price of $3,471,799 up $300,169 from the end of April. This is our highest average neighborhood price except for Byram (see below). Prices are also up since our last assessment in 2015, however we are still seeing the lowest townwide sales price to original list price ratio at 88%. We have had some remarkable discounts from what people paid pre-recession, which have garnered their share of attention. We also have 33 months of supply, but this is down from 79 months of supply when we had our spring inventory surge in April and sales had not caught up with the surge of spring inventory.

 

South of the Parkway

Listings                                 194

Percent of Market           30%

Listing DOM                       252 days

No. of Sales                        93

Sold DOM                            247

Average Sales Price         $3.32M

Sales Price/S.F.                 $593

Months of Supply             14.6

Now you might think of this “neighborhood” as mid-country, but it goes all the way from the Merritt Parkway to the Post Road. It has our most listings, 194, and our most sales, 93. Sales range from $725,000 to $12 million plus. This area has seen some nice improvement over the last three months with 47 houses sold during those three months. Inventory is down 17 listings; the most of any neighborhood. It also has had the most sales in the last 3 months, 47, and the biggest decrease in sold days on market, from 299 days to 247 days, though this is still above the townwide average. We also are seeing a good 14.6 months of supply in a market that was not doing nearly as well at this time last year.

 

South of the Post Road

Listings                                 63

Percent of Market           10%

Listing DOM                       209 days

No. of Sales                        33

Sold DOM                            199

Average Sales Price         $2.43M

Sales Price/S.F.                 $718

Months of Supply             13.4

This area also covers a wide variety of price ranges, as it covers from Belle Haven to Chickahominy. As a result, the sold prices range from $515,000 to $9,245,000. The area around Greenwich Avenue continues to be very busy. We also have a fair amount of construction going on particularly of condos, but this condo construction will slacken off as the recent R-6 zone revisions reduces demand for developable land in this zone. The waterfront sales give this section the highest sold price/s.f. at an average of $718 s.f. for houses, with the new construction in the downtown helping also. This leading number however is down from $754/s.f. through April of this year. This could be just a change in the sales mix, or slight lessening in demand in an area that has seen more appreciation than some other areas. It is worth monitoring going forward.

 

Cos Cob

Listings                                 46

Percent of Market           7%

Listing DOM                       198 days

No. of Sales                        45

Sold DOM                            161

Average Sales Price         $1.60M

Sales Price/S.F.                 $500

Months of Supply             7.2

Cos Cob is busy. So far this year we have had 45 sales through the end of July with 46 listings looking for buyers as of this week. This represents 7% of our total inventory. This neighborhood has also seen the most appreciation based on a sales price to assessment ratio of 1.85 or a 30% increase since October 2010, when the last reassessment was done by our Tax Assessor.  Part of this popularity is the average sales price of $1,598,812 is where we usually see the most sales activity. Unfortunately this year, the $1.0 – 1.5 million price range has been the area where we have seen the most impact from the new federal tax law, but it doesn’t seem to have hit Cos Cob as much as other areas in town (which is good as I have a listing coming on in the downtown Cos Cob area for a very competitive $749,000.)

 

Riverside

Listings                                 92

Percent of Market           14%

Listing DOM                       192 days

No. of Sales                        62

Sold DOM                            177

Average Sales Price         $2.45M

Sales Price/S.F.                 $598

Months of Supply             10.4

While Cos Cob is only about 7% of our market, Riverside and Old Greenwich are both about twice that. We have seen lots of good appreciation in this area post-recession, as Riverside has become one of the most desirable neighborhoods in the entire NYC metro area for successful young families. There are some signs that the pace of this appreciation is slowing as Riverside’s price per square foot is almost $600. Riverside still has a better than average days on market of 177 DOM compared to a town wide average of 208 DOM. People still love Riverside, they just love it a little less at these prices.

 

Old Greenwich

Listings                                 81

Percent of Market           13%

Listing DOM                       191 days

No. of Sales                        52

Sold DOM                            174

Average Sales Price         $2.34M

Sales Price/S.F.                 $615

Months of Supply             10.9

I grew up in Old Greenwich and never saw that much difference between Riverside and Old Greenwich. Statistically, that is also true this year. Riverside has a slightly higher average price, but OG can claim a slightly higher price per square foot. The both have the same sales price to original list price ratio at 0.93, which is above the townwide average of 0.91. Things seem to have gone from hot to warm for these two areas as they both have over 10 months of supply.

 

Glenville

Listings                                 20

Percent of Market           3%

Listing DOM                       148 days

No. of Sales                        21

Sold DOM                            219

Average Sales Price         $1.09M

Sales Price/S.F.                 $411

Months of Supply             6.7

Glenville has a lot in common with Cos Cob they both had months of supply around 7 month with Glenville having 6.7 months.. It’s a place where people are finding what many call a good value and sales are doing well in Glenville. The average price per square foot is a reasonable $411 and the average sales price is $1,092,976. That average sales price per square foot is our lowest of any neighborhood. (Well, OK, Banksville is lower at 4313/s.f., but its only had 1 sale so far this year and 4 listings.) Glenville Elementary has had a significant part of this. It’s a modern, well-designed, well-run school that has made this area more desirable.

 

Pemberwick

Listings                                 6

Percent of Market           1%

Listing DOM                       150 days

No. of Sales                        8

Sold DOM                            131

Average Sales Price         $643K

Sales Price/S.F.                 $413

Months of Supply             5.3

I wish people didn’t like Pemberwick so much, then we Realtors would have more houses to sell. We only have 6 houses in inventory; we have sold 8 Pemberwick houses so far this year. It ties Glenville for our lowest price per square foot, since unlike Byram, there isn’t an ultra-high-priced area that skews the numbers. Pemberwick also has the lowest days on market and the highest sales price to original list price ratio in town. If they only had more turn over it would get more attention.

 

Byram

Listings                                 15

Percent of Market           2%

Listing DOM                       121 days

No. of Sales                           5

Sold DOM                            369

Average Sales Price         $3.85M

Sales Price/S.F.                 $585

Months of Supply             21.0

Byram is small part of our inventory, but now holds the record for the highest sales price this year at $17,000,000. This sale also led to Byram having the highest average sales price for any neighborhood, $3,845,100. Byram also has the lowest priced sale this year in Greenwich at $408,000. What we have are really two markets in Byram; north of I-95 we have a market much like Pemberwick where listings are few compared with demand and prices are mostly below $1 million and often well below. South of I-95 in the Byram Shore area most prices are over $3 million and houses tend to linger on the market. The result is some confusing numbers if you don’t’ consider this market dichotomy.

 

The question is what will the fall market bring? We can be pretty sure there will be some rings some surprises. Lately, my listings have been getting more showings so I’m hoping the changes will be in the positive direction.  I’ve got four listings coming on in the next two weeks and can’t wait to see what that market is going to bring.

The 2018 Co-op & Condo Market in Greenwich, CT

In Greenwich, we have two condo markets; one pretty good and one that appears to be not so good with a sweet spot in the middle. As of 8/8/18 we have 139 condominiums and co-ops on the market here in Greenwich. Of those 139 listings, 103 of them are below $2 million, leaving 36 above that price. This a 75:25 split above and below $2.0M.

Curiously, we only have 5 listings between $1.5 and $2.0 million, while we have 22 listings between $2 and 3 million, the next higher price range. As a result, the price range from $1.5 – $2 million is the sweet spot in the middle with a very low 4 months of supply.

8/8/18 Inventory Contracts Last Mo. Solds Tot. Solds+ Contracts  YTD Solds  YTD+ Contracts Mos Supply Mos w/ Contracts Last Mo. Annlzd
< $600K 34 4 8 12 37 41 6.7 7.3 4.3
$600-$800K 24 3 4 7 22 25 7.9 8.4 6.0
$800K-$1M 23 2 2 4 17 19 9.8 10.6 11.5
$1-$1.5M 17 1 3 4 14 15 8.8 9.9 5.7
$1.5-$2M 5 1 0 1 10 11 3.6 4.0
$2-$3M 22 2 0 2 6 8 26.6 24.1
$3-$4M 10 1 0 1 1 2 72.6 43.8
$4-$5M 4 0 0 0 0 0
$5-6.5M 0 0 0 0 0 0
                   
TOTAL 139 14 17 31 107 121 9.4 10.1 8.2

On sales side this dichotomy above and below $2 million is even larger. Below $2 million we have 100 sales so far this year, while above $2.0 million we only have 7 sales or a 93:7 split. Once again, the $1.5 – 2.0M price range stands out with nearly twice the sales of the $2-3M price range, even though the higher price range is twice as wide, a $1 million range versus a $500,000 range.

To be clear, $2.0 million is not our median for condos. For inventory, half of our inventory is below $899,000 and half is above. On the sales side the condo median is $720,000. This compares to our single-family home inventory median of $2.95M and our sales median of $1,855,000. What’s obvious is that the two markets are very different.

Not only are the prices different, the buyers are different, the primary difference being kids. A lot fewer kids live in condos and co-ops in Greenwich than in single family homes. That not to say that we don’t have children in condos. The Old Greenwich Gables has a surprising number of children. It’s a nice complex and it also a lower cost way to get into Dundee ISD and Eastern MS, than the houses in Old Greenwich. In general, however, most of the people enjoying the lower maintenance lifestyle and the additional amenities you get in condos are younger singles, couples and downsizers.

More amenities have become a battleground in NYC, which has experienced lots of new, luxury condo construction. In Greenwich, we have not seen much new construction of condos until the last two years. If you look at the whole condo market both active and sold units this year, we only have 4 condos built between 2010 and 2106. Now more than 4 condos were built during that period, but (a) not a lot were built, and (b) most of the ones that were bought haven’t come back on the market.

Most of what was built during this condo developments nadir were smaller developments, particularly in the R-6 multi-family zone in Byram and Pemberwick. Starting in 2016, larger projects got underway, particularly in downtown Greenwich. As some people became concerned about the density of these developments, Planning & Zoning shut this door, by only allowing 2 units per R-6 zone lot, so we instead of the R-6 zone being the multi-family zone, we can call it the duplex zone going forward.

In our luxury condo market, the prices range from $2 – $4 million where we have 32 listings. (We do have 4 condos from $4 – 5 million, but nothing above that price.) This market looks more challenging for sellers as we have 2 years of supply from $2 – 3 million compared to less than a year of supply below that amount. Part of this is that a significant part of the listings in this price are still under construction and those units are harder to sell until completed. On the plus side, several of these luxury units under construction are also under contract. As these units are completed, C.O.’s are issued and the sales close, this will push our luxury market months of supply down.

 

 

 

 

 

 

 

 

 

July 2018 Greenwich Real Estate Sales Take a Large Jump from June

My wife really likes barn swallows. I do too, but when they set up a nest in our garage and proceeded to sit on one particular rail over the back of my car and mess up my back window every day as they grew to maturity; I was a little less joyful. By July, all of the babies had fledged and were out looking for any flying insects. The cool thing is when I’m mowing the fields on my tractor kicking up lots of insects, it looks like a World War I dog fight with swallows flying in every direction including right at me and then dodging away at the last second.

08/01/18 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 2.3 2.3 3.0
$600-$800K 17 5 6 11 29 34 4.1 4.3 2.8
$800K-$1M 28 11 5 16 34 45 5.8 5.3 5.6
$1-$1.5M 78 12 16 28 61 73 9.0 9.1 4.9
$1.5-$2M 78 17 15 32 60 77 9.1 8.6 5.2
$2-$3M 141 16 17 33 65 81 15.2 14.8 8.3
$3-$4M 100 13 6 19 41 54 17.1 15.7 16.7
$4-$5M 47 3 5 8 20 23 16.5 17.4 9.4
$5-6.5M 63 4 3 7 19 23 23.2 23.3 21.0
$6.5-$10M 52 3 1 4 5 8 72.8 55.3 52.0
> $10M 36 0 1 1 8 8 31.5 38.3 36.0
 
TOTAL 643 86 76 162 351 437 12.8 12.5 8.5

The reason I mention this is that there is a saying that a single swallow does not a summer make. Well it’s July and lots of swallows do make a summer. Our sales are up a lot over June, which is unusual as June is almost always our highest sales month.

For those folks who read my June report you may have been expecting this as while June 2018 sales were down over 2017 we had a lot of pending contracts. Well in July 76 of those contracts closed. This was a 43% jump over the 53 sales that we had in July of 2017. Also, our overall sales are officially ahead of last year 351 sales to 342 sales.

Not only are our July sales higher than June 2018 they are also above our 10-year average. Contracts are continuing to look good with 86 contracts waiting to close which is 6 contracts more than at the end of July 2017, so August 2018 should also be a good month.

On the inventory side, we are continuing to run high with 643 single-family homes up 44 listings from 599 houses last year. Folks that might have moved over the next couple of years, have decided that with the new Tax Act that they are going to move in 2018, leaving us with April level inventory in August when inventory is normally down significantly from its spring peak, but in just about every other way things are looking up sellers. Our total monthly transactions, sales plus contracts, are up significantly with 29 more transactions as of the end of July 2018; from 133 in July 2017 to 162 houses in July 2018.

From $800,000 to $1,000,000 contracts are up 9 houses over last year and year to date sales are now u over last year. This is a total of 14 more transactions this year than last year or a 33% increase.

The result is that the lower end of the market is tight. In fact, the extra inventory we’ve gotten under $1 million has been helpful as it is giving people in an area where we normally have a strong sellers’ market a few more options.

The additional sales in July were concentrated from $1- $4 million where we were up 20 sales over last year. This is also the area where we have had an increase of 33 houses in inventory, so as of July, more inventory is finding more buyers. The word seems to be getting out that we have some low property taxes for the NYC metro area.

There are two area where we continue to see some signs of weakness, one is getting better and one still needs some improvement. In our market from $1.0 – 1.5 million market. We had good sales in July, but we are still down 13 sales from last year.  At the high-end our over $10 million market has been doing stellar, but the market from $6.5 – $10 million has lost some of the momentum that it had earlier in the year. Inventory is still down as more people are deciding to stay in their houses in this price range, but total transactions are down 9 from last year. The result is a big jump in months of supply for this price range.

Now I’d like to say that July 2018 was a great month with sales way up over last July, but, last July like this June was a poor month for sales. When you look at the 10-year average for sales it was only a pretty good month. July 2018 sales had 76 sales, up 23 sales from last year, but up only 3 sales over our ten-year average of 72.9 sale. You might think we just switched poor sales months, but when you add June and July together this year and for last year, 2018 sales are still up by 8 sales.

The key thing is that it is up. As several articles have pointed out Westchester County and NYC have been suffering significant sales drops over last year. To have our sales go up, when our surrounding areas are going down is a significant factor.

The even better news is that contracts continue to be up over last year with 6 more contracts than last year. The odds are therefore that we will do better than last year in August 2018, but not by as big a margin as we saw in July.

If you are in the NYC Metro area, it’s a good time to be living in Greenwich.

 

WHY AVERAGE HOUSE APPRECIATION NUMBERS AREN’T ALL THAT USEFUL FOR BUYERS AND SELLERS

Real estate appreciations statistics can be dangerously deceptive leading both buyers and sellers to make expensive decisions that in hindsight they wouldn’t have done. Here’s a guide to some of the bigger red flags to watch for.

       How are average price appreciation numbers deceptive?

When you see a figure like average house prices have increased by 5.803% you need to ask a bunch of questions for that number to mean anything and even then, for most sellers and buyers, that number is of only marginal usefulness. Often this appreciation is stated as Y-O-Y or year over year, but are they looking at all sales in the first half of 2018 compared to all sales in the first half of 2017 or is it just June 2018 versus June 2017 sales.

      How many sales?

If you are talking just the monthly sales, then the appreciation number is less reliable as it contains fewer sales. Even worse, if we are talking appreciation on a monthly basis for a small subset of houses, say just sales in Cos Cob, the appreciation number is practically worthless since purely by luck you might have 5 predominantly higher sales this year compared to 8 predominantly lower-end sales last year. This is no way to determine if houses in Cos Cob are appreciating.  So, look at the time period and the number of sales that are compared in year over sales.

     The end price ranges works a little, the middle doesn’t

Some people look at appreciation within a price range. The problem with this approach is that houses appreciate out of the price range, so a house that was $989,000 and appreciates to $1,044,000, an appreciation of 5.6% i,s not counted in the under $1 million dollar range and may actually be bringing down statistics, like $/s.f., for the over $1 million price range.

For the middle price ranges this effect applies at both the top and bottom of the range and rarely does what’s moving up into the price range balance out what is moving out of the price range. So looking just at the price appreciation from say $1 million to $1.5 million doesn’t tell you anything. Prices could be going up, but if 6 houses move out of the high-end of the price range and 3 move in at the bottom due to significant market appreciation, the average price for that range could actually show a drop in average price.

For the very top and bottom ranges, this effect is a little ameliorated as houses can only move into the bracket one way. If house prices are going up at the high-end for all houses over $10 million or down at the low end you for all houses under $600,0000 you can be sure that is a real price change, but the same can not be said for the reverse.

             Luxury is not a percentage

Another variation of this is defining the luxury market as the top x% of the market, say 10%. The problem here is that sales vary from month to month so sometimes the top 10% in Greenwich might be at $5.5 million and other times it might be at $4 million. The result is that the average price for “luxury” sales in the 10% has very little meaning.

This luxurry by percentage also doesn’t work for more homogeneous communities, where the top 10% is similar in price to the top quarter. Lastly, I don’t want to be the one telling someone with a gorgeous multi-million dollar house that it is not a luxury house because it’s not in the top 10% of a high-end community.

                 Is seasonality a factor?

Another number that you see for appreciation is quarter-to-quarter sales price appreciation. This is another number that I personally ignore. The problem is that residential real estate has a major seasonality effect as you can see in the 10 year average line below. What is mostly selling in the first quarter are the leftovers from last year which tend to sell at a discount; whereas in the second quarter you have a lot of new listings selling with much shorter days on market and at closer to original list price. Each quarter has a different mix that problem so what appears to be a price appreciation/depreciation from one quarter to another is often just the seasonality of the sales.

                Differences in what price ranges are selling

But, by far, the biggest issue is a change in the mix of what is selling. Let’s say house prices are flat, heck let’s even say some high-end house prices are drifting downward, but if we have fewer low-end sales and more high-end sales than in the prior period the average is going to go up even though the value of individual houses is going down. This is just what happened this year. Our sales below $1.5 million are down while our sales over $10 million are up 350% from 2 sales to 7 sales. The result is that our average sale went from $2,402,151 to $2,541,557 this year an increase of 5.8%, but house values haven’t gone up nearly 6% in one year.

               Median helps, but still has a mix problem

What some people say is don’t use the arithmetic average a/k/a the mean, use the median. (Instead of adding all the numbers up and dividing by the number of sales. Let’s line all the sale prices up and take the one in the middle.) In 2017 our first half median was $1,817,500 and the median for the first half of 2018 was $1,865,000 or an increase of 2.6% in the median price Y-O-Y or less than half of the Y-O-Y appreciation in the mean.

The median has the advantage in places like Greenwich where the high prices are so high of having lower volatility, so seven more high end sales only move the median the same as seven fewer sales below the median. The problem is still that if you have fewer sales below the “middle” number and more sales above that number the median is still going to go up even if all the values of the houses are drifting downward.

            The better way: sales price to assessment ratio

Now the ratio that I like to use is the sales price to assessment ratio. This compares what the tax assessor thought the value was at the last revaluation (10/1/2015) to what is sold for this year. Now some folks think that the Tax Assessor wants a high value for houses, but that isn’t so. What she really wants is for the relative value of all the houses to be correct so each house pays it’s fair share of the total budget as approved by the RTM. If the relative value of every house was increased equally, you’d still end up paying the same tax, so she has no incentive to inflate house prices.

            Problems with SP/Assmt ratio

The mandated assessment ratio is 70% so if a house sells for 1.42 times the assessment, (the reciprocal of 0.7) then there has been no appreciation. Now you would think that you can simply compare this year’s SP/Assmt ratio to last year’s ratio and get a better estimate of actual house appreciation in Greenwich and you’d be right, but it’s not quite that easy.

The problem is two part; changing properties and garbage data. The SP/Assmt ratio number are usually pretty tightly grouped between 1.35 and 1.70, so if you throw in a larger number say a ratio of 4 or 5 it moves the average a lot. This happens when a property is sold for land value and then a big house is built on it. It’s great appreciation, but most of the additional value comes from the beautiful new house.

The other issue is just bad data, agents miss a decimal point or two and the assessment ratio comes out to be 1,301 rather than 1.301 as happened on one listing this year. That single number totally destroys the average, so a couple of times a year I calculate the SP/Assmt ratio after taking out the top 10% and the bottom 10%.

Does knowing the sales appreciation percentage help in ?

Now you would think that is a pretty good number, new construction is removed (as well as a few demolitions), most human errors are removed and seasonality is not a major factor, but just what good is that number? If you are a buyer or seller trying to negotiate a sale does it really tell you what the value of that particular house has done. It’s of some help, but you really need to look at what houses of similar style, price range, condition and age have done in that particular neighborhood. When you do this in Greenwich you will find that there aren’t enough sales to be statistically significant. So the tow wide appreciation percentage may be the best hard number you can get as to what the overall market is doing, but it’s not going to tell you whether your particular house has gone and by how much. And, it definitely won’t help to figure out what it’s value is likely to be over the next couple of years.

In the end the best thing to do is consult an experienced Realtor when it comes to making those decisions and take all those numbers out there with a grain of salt.

 

 

 

 

 

Six Thoughts on How to Make Greenwich Better

Greenwich is a great place to live. One of its greatest assets is the people that volunteer to serve on a wide variety of boards and in elected offices. These people bring a wealth of talents, education and prior experience to these positions and in the main come up with useful, cost effective solutions to problems.

Having said that one of the things that the Town could be do better is adopting more innovative solutions, more quickly. Some things I’d love to see are:

 

  1. A “Greenwich Card”

Right now, you have to have a beach card, a library card, a golf card, a parking card and several other forms of licenses to enjoy many of the benefits in Greenwich. The question is why do we need a different card for every activity. This system penalizes the occasional user. If you only play tennis once a year a $35 annual fee is excessive, particularly for a resident whose taxes help build and maintain these facilities.

Let’s have one card, that you only have to apply for one time, that lets you use the beach, the library, the golf course and can even be used to pay parking fees. One card would save both residents and government time and its basic cost could be rolled into our taxes. If you wanted to go the beach once a year, no problem and no standing in line for a beach card whether one time or annual. (Let’s also throw in 10 hours of metered parking.)

 

  1. Simplify and Make More Certain Land Use Decisions

At the present time, lots of simple land use decisions require lots of time, lots of money and lots of professionals. The usual procedure is you need to file an extensive formal application and will likely need to hire an attorney, a surveyor, a soil scientist and possible others. You and your hired professionals may also may have to appear before three or four land use agencies and wait hours for your application to be called. At the end of the day most of the applications end up getting approved.

But, that’s for the people that apply for permits. What we as Realtors see every week, are the number of people that got someone to do the work without the permits and are now having problems selling their homes. We see this kind of “illegal” work on properties in Byram on 0.1 acre and in the backcountry large lots and everywhere in between. We need an intermediate system where proposals that are likely to be approved, can be reviewed, tweaked as necessary and permitted quicker and for less money.

Now I’m not suggesting this procedure for big projects, but things like variances to setbacks for a deck where there are no neighbors shouldn’t need a full review. Either staff could approve the change or where a state statute requires the approval of the Commission these items could go on the consent calendar as the RTM does with motions. Any item needing a full review could be pulled off of the consent calendar with a majority vote.

As part of this the staff in each agency should be given more authority. Right now, the staff can’t say yes. They can say maybe or it’s possible, but woe be it if they say the full commission would allow something no matter how certain. At present lots of small things require full hearings. These commission hearings can go on for hours and even into the next day, before the application is heard. Once heard it may have to come back, for review of even smaller tweaks and then the homeowner may have to go to another commission who may not meet for another month(s). A lot of these decisions could be made at the staff level. If so we’d have shorter hearings, less expense for applicants and more compliance with the regulations.

 

  1. Making More Use of Under-Utilized Schools

Today, we have several elementary schools that are operating at full, or more than full capacity, and other elementary schools with empty classrooms. The geographic lines are very strictly drawn about where you have to go to school. I have a client whose son goes to Parkway, which does an excellent job, and they’d like to keep their son there with his friends. They are reluctant to move, because if he moves even a short distance out of the district he’ll have to go to a different elementary school unless he can get special permission.

Why not let students anywhere in town select any of the under-utilized schools? We relieve pressure on one school and better use the facilities at another school. It might actually help with some of our redistricting issues. If the parents bear the cost of transportation, it’s worth a trial.

 

  1. More Vacation Homes in Greenwich

For over a century Greenwich was known as a great place to have a summer house. We need to bring that back. Much of the pressure on sellers in the 2 and 4 acres zone is due to the loss of demand for summer and weekend homes. When I moved to the backcountry 20 years ago, half of the houses on our street were owned by people who lived out of town.

The real estate agencies here in town need to do a better job of bringing this market back. If you are a homeowner who has a house that would be a great weekend house, ask your agent what their firm is doing to reach out to the weekender and vacation home market. If you live here, tell your friends from out of town what a great place this is for weekenders and summer people. And if you are in town government there could always be a summer version of the Greenwich Card.

 

  1. Publicize our lower taxes to encourage buyers

When you got your tax bill for this fiscal year it was the same as last year or may even have gone down. Not many people outside of Greenwich know that. If you do a news search on Google for Greenwich lower property taxes 2018, very little comes up. My article from last week’s Greenwich Sentinel is there, but not much else. We have a great story to tell, but it isn’t getting much coverage.

Our sales over $10 million are up 350% from last year and our contracts are up 25% (now sales overall are down 5% for the year, but that’s mostly due to the $1.0 – $1.5 million range which seems to be a problem throughout the area). If you a reporter, you should tell your assignments editor there’s a story here and it’s likely to get better as those 120 contracts close.

  1. Support the Greenwich Sentinel

One of the great things about Greenwich is we have an excellent weekly paper covering a wide variety of people and stories and it deserves your support. It helps build the sense of community here in Greenwich and gives local vendors a way to reach people here in Greenwich. If you’ve been getting it free you should take out a paid subscription and support hometown news.