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.

 

Greenwich Luxury Sales up in May 2017 – The Greenwich Real Estate Market Report

by Mark Pruner

mark@greenwichstreets.com

203-969-7900

(Click to download Word Version May.report3C.mp.060117)

The idea that there has been a steady movement of people from Greenwich to avoid high Connecticut taxes, is not supported by our inventory numbers. At the present time, we have 654 single-family homes on the market. This is down slightly from May’s mid-month high of 665 listings, and it is substantially down from the 696 listings that we had on the market at the beginning of June last year. In the luxury market our inventory is down 24 listings from this same time last year, while sales over $5 million, as reported on the GMLS are up by 7 sales.

As of 5/31/17
Inventory Contracts Last Mo. Solds Tot. Solds+ Contracts YTD Solds YTD+ Contracts Mos Supply Mos w/ Contracts Last Mo. Annlzd
< $600K 5 2 2 4 8 10 3.1 3.3 2.5
$600-$800K 17 8 5 13 19 27 4.5 4.1 3.4
$800K-$1M 21 10 3 13 14 24 7.5 5.7 7.0
$1-$1.5M 62 22 9 31 44 66 7.0 6.1 6.9
$1.5-$2M 80 24 5 29 26 50 15.4 10.4 16.0
$2-$3M 148 20 12 32 45 65 16.4 14.8 12.3
$3-$4M 96 10 7 17 23 33 20.9 18.9 13.7
$4-$5M 63 10 3 13 8 18 39.4 22.8 21.0
$5-6.5M 59 5 2 7 13 18 22.7 21.3 29.5
$6.5-$10M 63 5 1 6 3 8 105.0 51.2 63.0
> $10M 40 1 0 1 2 3 100.0 86.7
TOTAL 654 117 49 166 205 322 16.0 13.2 13.3

This big drop in inventory would be even more dramatic were it not for a significant bump-up in listings between $2 and 3 million. In that price range house listings are up to 148 houses from 117 last year or an increase of 31 properties. If you ignore that price range then we are down 73 listings from last year or more than 10% so sellers are not rushing to list their properties for sale.

May2017.Sales.Inv.Cur.Ks.053117

Inventory is down or flat in every other price range. Now I don’t know what’s causing people to list their houses from $2 to 3 million in such numbers but the rest of the market does not support the idea that large numbers of people are selling out and moving out of Greenwich.

5/17 vs. 5/16
Inventory Contracts Mo. Solds Tot. Solds+ Contracts YTD Solds YTD+ Contracts Mos Supply Mos w/ Contracts Mo. Annlzd
< $600K -3 1 -2 -1 0 1 -1.88 -2.53 0.50
$600-$800K -7 5 4 9 2 7 -2.59 -3.71 -20.60
$800K-$1M -4 -5 1 -4 0 -5 -1.43 0.08 -5.50
$1-$1.5M -15 2 -4 -2 4 6 -2.58 -2.24 0.97
$1.5-$2M -7 -5 -7 -12 -7 -12 2.20 1.28 8.75
$2-$3M 31 -13 -2 -15 7 -6 1.05 4.09 3.98
$3-$4M -13 -4 3 -1 2 -2 -5.08 -1.33 -13.54
$4-$5M 0 6 -1 5 -1 5 4.38 -8.75 5.25
$5-6.5M -12 -4 1 -3 8 4 -48.31 -11.66 -41.50
$6.5-$10M -5 1 1 2 -1 0 20.00 -4.06
> $10M -7 0 0 0 0 0 -17.50 -15.17
TOTAL -42 -16 -6 -22 14 -2 -2.27 -0.76 0.69

On the year-to-date sales side, we are up to 205 sales from 191 last year or an increase of 14 sales. On the good news side for those 148 sellers between $2 and 3 million, the extra inventory has resulted in extra sales this year. We have 45 sales this May compared to 38 sales last May. At the high-end, the $5 to 6.5 million seems to be the new sweet spot as we are up eight sales to 13 sales from only 5 sales last year or a 160% increase in sales albeit from a small base.

MaySales.SFH.2015-May2017.053117

As I mentioned in the April report we did see a drop in contracts last month and this resulted in lower sales in May 2017 compared to May 2016. When you look at our sales by month it’s been a wild ride in 2017. January was up, February was back down to average, March was way up, April was down and May was back up. The 50 sales in May are however still below last May and below our 10-year average of 58 sales in May. There are always a few late reported sales so we may well end up closer to our 10-year average, but it is our second below average month for sales.

May2017.MoS.053117

Contracts are down again this month compared to last May. But it’s not across the board with several price ranges actually seeing small increases in sales. The one exception is the same $2 to 3 million range where we were down 13 contracts from last year’s 33 contracts leaving only 20 contracts waiting to close.

Now if you talk to some people in the real estate business they feel that it was a slow May but while there were some decline we are not falling off a cliff. The market under $800,000 was very competitive, even more so than last year. The $4 – 5 million market is also strengthening as we have 6 more contracts than last year. When you add the 10 contracts signed to the 8 sales so far the resulting 18 properties is up 38% from last year. .

The feeling on the seller side is one of concern at the high-end. Above $4 million we have 225 listings and as of the end of May we have only sold 26 properties YTD with another 21 contracts waiting to close. Our government is not helping as people are concerned with what is going on in Hartford and Washington, so sellers seem to be taking a wait-and-see approach resulting in an inventory drop.

On the buyer side, the ratcheting up of interest rates resulted in a lot of sales in March and significantly less urgency in May as interest rates for 30 year fixed mortgages once again dropped back below 4%. The political uncertainty affecting sellers also is having an impact on buyers. Once the budget is settled in Hartford and once the new administration in Washington gets past it’s steep learning curve, we could see a sudden release of demand, particularly if the Fed keeps talking about raising interest rates.

The one thing you can be pretty sure of is that we are going to see a bumpy ride with ups and downs this year. Having said that things are doing better than last year and there are some real bright spots in the market.

May2017.4Pie.053117

April 2017, a Mixed Month for Greenwich Real Estate Sales

by Mark Pruner

mark@greenwichstreets.com

203-969-7900

April was one of those months where you could look at the glass as half full or empty. Our inventory was slightly down compared to last year with 631 listings down 12 listings from last year making for more of a seller’s market.

Inventory Contracts Last Mo. Solds Tot. Solds+ Contracts YTD Solds YTD+ Contracts Mos Supply Mos w/ Contracts Last Mo. Annlzd
< $600K 7 1 1 2 6 7 4.7 5.5 7.0
$600-$800K 15 8 6 14 14 22 4.3 3.8 2.5
$800K-$1M 24 6 4 10 11 17 8.7 7.8 6.0
$1-$1.5M 52 19 3 22 35 54 5.9 5.3 17.3
$1.5-$2M 78 14 4 18 21 35 14.9 12.3 19.5
$2-$3M 136 18 4 22 32 50 17.0 15.0 34.0
$3-$4M 94 14 4 18 16 30 23.5 17.2 23.5
$4-$5M 61 7 0 7 5 12 48.8 28.0
$5-6.5M 64 3 3 6 11 14 23.3 25.1 21.3
$6.5-$10M 61 2 0 2 2 4 122.0 83.9
> $10M 39 0 0 0 2 2 78.0 107.3
TOTAL 631 92 29 121 155 247 16.3 14.1 21.8

We also were down for sales in April as we had 29 sales this year compared to 35 sales last year making more of a buyer’s market. For year we were still up in sales with 155 sales YTD compared 133 sales or an increase of 17% over last year.

Greenwich House Sales 2015 - Apr. 2017What was clearly different however, is that last year at the beginning of May we had 135 contracts pending and this year we only have 92 sales pending. So contracts are down about a third from where they were last year. This doesn’t bode well for sales in the month of May as we have fewer contracts ready to mature into April sales. Of the decline of 43 contracts from last year and 40 of those contracts are in the heart of our market from $800K to $3 million.

’17 vs ’16 Inventory Contracts Mo. Solds Tot. Solds+ Contracts YTD Solds YTD+ Contracts Mos Supply Mos w/ Contracts Mo. Annlzd
< $600K 3 -3 1 -2 2 -1 0.67 2.75
$600-$800K -3 5 1 6 -2 3 -0.21 -1.46 -1.10
$800K-$1M -1 -9 4 -5 0 -9 -0.36 2.48
$1-$1.5M -7 -1 -4 -5 9 8 -3.13 -1.76 8.90
$1.5-$2M 1 -17 0 -17 0 -17 0.19 4.11 0.25
$2-$3M 22 -13 -8 -21 8 -5 -2.00 3.56 24.50
$3-$4M -9 2 -1 1 0 2 -2.25 -3.00 2.90
$4-$5M 0 1 -1 0 0 1 0.00 -2.54
$5-6.5M -11 -5 3 -2 7 2 -51.73 -9.23
$6.5-$10M -3 0 -1 -1 -2 -2 58.00 25.21
> $10M -4 -3 0 -3 0 -3 -8.00 59.95
TOTAL -12 -43 -6 -49 22 -21 -3.05 0.85 3.39

On the flip side, the good news is that our market from $5 to 6.5 million is doing well as inventory is down by 11 houses while sales are up by 7 houses for the. As a result the months of supply is down dramatically by over 4 years of supply to less than two years of supply. This is really good news for that one price range. Unfortunately, above that price range sales are not doing well. Above $6.5 million we only have four sales with two contracts pending in a market where we have 100 listings.

The high-end market gets a lot of attention, because Greenwich is one of the few places in the US where there is a significant inventory above $5 million. At present, we have 164 listings over $5 million. Contrast this with our adjacent city in lower Fairfield County, Stamford, where in 2016 only eight houses were sold above $2 million. In the Town of Greenwich in the first four months of this year we have sold 68 houses over $2 million.

Now generally, I cut the months of supply chart off at 4 years of supply, because anything over 4 years is just a lot of excess supply compared to market demand. This scaling, however, doesn’t show just how good the $5 – 6.5 million market is doing which is right at 2 year supply.

The next category up, $6.5 – 10 million, has over 10 years of supply. Now that is a dramatic difference, but it is partly due to the fact that we have only sold 2 houses in that price range so far this year. When you add in the 2 pending contracts months of supply from $6.5 – 10 drops by over three years to “only” 7 years of supply. So a few sales or contracts in such a thin market causes big jumps in months of supply.

Buyer’s concern about the interest-rates has led to a whip saw effect as in February people rushed to sign contracts that closed in March. This led to a very good March. Then when interest rates didn’t continue to rise. Buyers backed off as there was no need to close immediately. The result has been a significant seesaw effect as January was good followed by a bad February and then March was excellent and April was below average. Our marketplace is driven by how the financial industry is doing, how the stock market is doing and the perception of rising interest rates.

The stock market did well and then has leveled. Interest rates went up and then went back down and really took the urgency out of the market. With the increased inventory that is normal for this time of year the anxiety about rising interest rates has ameliorated.

Overall though we are up 22 sales over last year and inventory is down 12 listings. Our months of supply is down 3 months, so if you get rid of the chatter we are seeing from month-to-month 2017 is doing better than 2016.

The future as has happened in the last three years is unpredictable. There was hope among some that with the election of President Trump that there would be a strong positive economic trend, however, so far this year we’re seeing markets driven by interest-rate’s and the perception of interest rates going up or declining. At the moment, the sentiment seem to be that interest-rate won’t be changing significantly and so people are waiting for just the right house, which means if interest rates do head back up then some folks are going to feel left out.

 

 

 

 

How Self-Driving Cars Will Change Greenwich?

Greenwich Sentinel

My weekly column in the Greenwich Sentinel this week was a little different. I took a look at what Greenwich might look like when self-driving cars are common in Greenwich. Will garages disappear?

Next week I’ll have the market report for April real estate sales in Greenwich. It looks like it is going to be another interesting month. My listing at 2 Bote Court listed at $1,449,000 got 4 calls on Friday and Saturday as the $1 – 1.5 million price range continues to be hot. (If you’d like to see it, the tenants will be out on Tuesday and it will be ready to show on Thursday after the Realtors open house. It’s just been painted white and looks very cool.)


Self-driving cars will change life in Greenwich as much or more than the change from horse drawn carriages to cars did.  In the next couple of years true self-driving cars will arrive in Greenwich and we are likely to be a leader in this new technology.

I say we are likely to be a leader in self-driving cars, because of a conversation I had with David Peabody of Peabody’s Automobiles before he died in 2015. David’s family’s business on Church Street has been around since Model-T’s were new. He used to man the pump there in front of Peabody’s Automobiles and was a very interesting fellow to talk to. He would tell stories about how Greenwich residents were pioneers in buying and driving some of the first cars.

Just as then, you can expect Greenwich residents to be the early adopters of many of these high-tech, and at least initially, high-cost cars. The Tesla’s we see so much of in Greenwich have a lot of the capabilities needed for full autonomous driving.

So, what changes will self-driving cars bring to Greenwich? More …

100 Greenwich, CT Open Houses on Sunday, April 23, 2017

If you want to see some beautiful trees in bloom, this is your weekend to go see some open houses in Greenwich, CT. We have an amazing 100 open houses on Sunday. The good thing is that we are getting some good new inventory on the market. Right now we have 617 single family homes on the market as recently as the beginning of March we only had 400 listing. With the increased listings we are also seeing increased sales. You can see my March report here.

So get out and enjoy the spring beauty and the many listings that are holding their first open house.

As always if you have any questions feel free to call me at 203-969-7900.

Greenwich, CT Open Houses

You can see the interactive map here.

Address Town Price Saturday
14 Coventry Lane Riverside $15,000 Sun 1-3 PM
636 Riversville Road Greenwich $40,000 Sun 1-3 PM
2 Homestead Lane  #112 Greenwich $379,000 Sun 1-3 PM
169 Putnam Park Greenwich $399,000 Sun 1-3 PM
53 Putnam Park  #53 Greenwich $415,000 Sun 1-3 PM
193 Putnam Park Greenwich $452,500 Sun 1-3 PM
188 Putnam Park Greenwich $465,500 Sun 1-3 PM
40 W Elm Street 5 C Greenwich $499,000 Sun 1-3 PM
47 Nicholas Avenue Greenwich $529,000 Sun 2-4 PM
31 Cary Road Riverside $549,000 Sun 1-3 PM
245 Byram Road Greenwich $549,500 Sun 2-4 PM
47 Nicholas Avenue Greenwich $599,000 Sun 2-4 PM
31 Windy Knolls Greenwich $699,000 Sun 1-3 PM
71 Richland Road  #A Greenwich $699,000 Sun 1-4 PM
45 Francis Lane Greenwich $749,000 Sun 1-3 PM
112 Pemberwick Road Greenwich $779,000 Sun 1-4 PM
1015 North Street Greenwich $819,000 Sun 2-4 PM
82 Silo Circle  #82 Greenwich $839,000 Sun 1-3 PM
25 Valley Road Unit  #25 Cos Cob $849,000 Sun 1-3 PM
49 Grey Rock Drive Greenwich $929,000 Sun 11-1 PM
21 Hoover Road Riverside $935,000 Sun 2-4 PM
40 Cassidy Street Greenwich $945,000 Sun 1-3 PM
25 Indian Harbor Drive  #9 Greenwich $950,000 Sun 1-3 PM
89 Loughlin Avenue Cos Cob $950,000 Sun 1-3 PM
48 Spring Street  #5 Greenwich $985,000 Sun 2-4 PM
12 Georgetowne North  #12 Greenwich $1,184,000 Sun 1-3 PM
44 Valley Road B Cos Cob $1,295,000 Sun 2-4 PM
28 Powell Street Greenwich $1,299,000 Sun 1-3 PM
85 Bowman Drive Greenwich $1,325,000 Sun 1-4 PM
150 Pemberwick Road Greenwich $1,349,000 Sun 1-3 PM
219 Glenville Road Greenwich $1,349,000 Sun 1-4 PM
15 Heusted Drive Old Greenwich $1,349,000 sun 3-5 PM
7 Cherry Valley Road Greenwich $1,395,000 Sun 1-3 PM
61 Hunt Terrace Greenwich $1,475,000 Sun 2-4 PM
66 Valleywood Road Cos Cob $1,495,000 Sun 1-3 PM
16 Idar Court  #A Greenwich $1,499,999 Sun 1-3 PM
20 Sunshine Avenue Riverside $1,549,000 Sun 1-3 PM
12 Laddins Rock Road Old Greenwich $1,549,000 Sun 12-3 PM
3 Nutmeg Drive Greenwich $1,549,500 Sun 12-3 PM
14 Tyler Lane Riverside $1,549,900 Sun 1-3 PM
636 Steamboat Road  #2b Greenwich $1,550,000 Sun 12-4 PM
16 Idar Court  #B Greenwich $1,599,999 Sun 1-3 PM
13 Linwood Avenue Riverside $1,649,000 Sun 1-3 PM
17 Tory Road Riverside $1,749,000 sun 12-2 PM
311 Cognewaugh Road Cos Cob $1,785,000 sun 3-5 PM
112 Patterson Avenue Greenwich $1,795,000 Sun 1-3 PM
1 Finney Knoll Lane Riverside $1,795,000 Sun 1-3 PM
315 Field Point Road Greenwich $1,795,000 Sun 1-4 PM
35 Turner Drive Greenwich $1,795,000 Sun 1-4 PM
17 Oval Avenue Riverside $1,795,000 Sun 2-4 PM
56 Londonderry Drive Greenwich $1,799,000 Sun 1-3 PM
73 Pemberwick Road Greenwich $1,800,000 Sun 2-4 PM
58a Orchard Cos Cob $1,845,000 Sun 12-2:30 PM
570 North Street Greenwich $1,900,000 Sun 1-3 PM
16 Wyngate Road Greenwich $1,995,000 Sun 1-3 PM
116 Pecksland Road Greenwich $2,100,000 Sun 1-4 PM
19 Saint Claire Avenue Old Greenwich $2,199,000 Sun 2-4 PM
38 Jones Park Drive Riverside $2,250,000 Sun 2-4 PM
38 Jones Park Drive Riverside $2,250,000 Sun 2-4 PM
323 Sound Beach Avenue Old Greenwich $2,370,000 Sun 1-3 PM
25 Copper Beech Road Greenwich $2,388,000 Sun 2-4 PM
6 Interlaken Road Greenwich $2,495,000 sun 12-2 PM
15 Hycliff Road Greenwich $2,650,000 Sun 1-4 PM
151 Milbank Avenue  #3 Greenwich $2,650,000 Sun 2-4 PM
31 Chapel Lane Riverside $2,695,000 Sun 1-3 PM
10 Shady Brook Lane Old Greenwich $2,695,000 Sun 2-4 PM
696 Lake Avenue Greenwich $2,695,000 Sun 2-4 PM
20 Dewart Road Greenwich $2,750,000 Sun 1-4 PM
11 Grimes Road Old Greenwich $2,750,000 Sun 11-1 PM
137 Clapboard Ridge Road Greenwich $2,750,000 Sun 12-4 PM
151 Milbank Avenue  #2 Greenwich $2,795,000 Sun 2-4 PM
7 Ricki Beth Lane Old Greenwich $2,850,000 Sun 1-4 PM
151 Milbank Avenue  #4 Greenwich $2,875,000 Sun 2-4 PM
151 Milbank Avenue  #1 Greenwich $2,975,000 Sun 2-4 PM
45 Burying Hill Road Greenwich $2,995,000 Sun 1-3 PM
323 Cognewaugh Road Cos Cob $2,995,000 Sun 2-4 PM
34 Hendrie Avenue Riverside $3,095,000 Sun 2-4 PM
50 Hillcrest Park Road Old Greenwich $3,100,000 Sun 11-1 PM
9 Game Cock Road Greenwich $3,199,000 Sun 2-4 PM
43 Grahampton Lane Greenwich $3,250,000 Sun 1-4 PM
14 Sherwood Farm Lane Greenwich $3,395,000 Sun 1-4 PM
99 Hunting Ridge Road Greenwich $3,395,000 Sun 10-1:30 PM
106 Lockwood Road Riverside $3,795,000 Sun 1-4 PM
9 Roberta Lane Greenwich $3,895,000 sun 12-2 PM
54 Mallard Drive Greenwich $3,925,000 Sun 1-4 PM
14 Coventry Lane Riverside $3,995,000 Sun 1-3 PM
82 Cat Rock Road Cos Cob $3,995,000 Sun 1-4 PM
20 Alpine Road Greenwich $3,995,000 Sun 2-4 PM
61 Winding Lane Greenwich $4,200,000 Sun 1-3 PM
4 Jones Park Drive Riverside $4,295,000 Sun 1-3 PM
79 Pecksland Road Greenwich $4,497,500 Sun 1-3 PM
636 Riversville Road Greenwich $4,595,000 Sun 1-3 PM
5 Indian Head Road Riverside $5,350,000 sun 12-2 PM
34 Club Road Riverside $5,495,000 Sun 1-3 PM
35 West Way  Old Greenwich $5,495,000 Sun 1-4 PM
38 Dairy Road Greenwich $5,495,000 Sun 12:30-3:30 PM
33 Vineyard Lane Greenwich $7,395,000 sun 2:30-4:30 PM
11 Cove Road Old Greenwich $7,995,000 Sun 1-3 PM

The Anti-Greenwich Tax Bill

A bill has been introduced in the Connecticut legislature which, if it is passed, will do great damage to the Greenwich housing market in a wide variety of price ranges. HB No. 7313 proposes to put a 19% surcharge on “income derived from investment management services”. This bill proposes to raise the Connecticut income tax to make up for the so-called carried interest revenue difference. Many investment management funds are set up so that the managers’ payments are taxed as capital gains.  The capital gains tax rate is 20% at the federal level and the maximum federal income tax rate is 39.6%. The idea behind the Connecticut tax is to tax investment managers for nearly the full difference between these two federal tax rates and have all the taxes go to Connecticut.

The authors of this bill realize that such a tax could encourage Connecticut investment managers to relocate to New York. So, the tax bill has a curious provision which provides that the 19% surcharge shall only be applicable in tax years where New Jersey, New York and Massachusetts have enacted substantially similar laws. The thinking seems to be that if the whole region is taxing investment managers at this rate then there won’t be an incentive to move between the states within the region. It’s not clear how this will prevent a move to Florida.

Now given this curious multi-state provision, some may see the proposed bill as a tempest in teapot. The problem with this bill is that it is only the worst of many efforts that have been made in the last few years to tax our wealthiest residents to make up for significant budget shortfalls.

Year Total Sales Total $ Difference
2003 45 $315,003,775
2004 73 $594,889,596 $279,885,821
2005 84 $674,754,878 $79,865,282
2006 85 $642,652,350 -$32,102,528
2007 113 $904,030,500 $261,378,150
2008 53 $467,504,500 -$436,526,000
2009 43 $383,193,112 -$84,311,388
2010 43 $417,500,875 $34,307,763
2011 52 $434,116,771 $16,615,896
2012 70 $542,890,550 $108,773,779
2013 53 $422,155,000 -$120,735,550
2014 72 $666,770,298 $244,615,298
2015 60 $465,171,045 -$201,599,253
2016 35 $267,660,990 -$197,510,055
Grand Total 881 $7,198,294,240

 

The idea of many legislators is that the wealthy residents can afford it and that ratcheting up the high-end tax rate percentage will result in the same percentage increase in tax revenues. While that is true up to a point it appears that point was passed sometime around 2014 when high net worth taxpayers starting to vote with their feet.

Over $5 million dollars sales in Greenwich 2003 - 2016

Over $5 million dollars sales in Greenwich 2003 – 2016

In 2014, we had 72 sales over $5 million, which was the largest number of sales since the pre-recession boom year of 2007. In that year, those 72 home sales generated $666,770,298 in sales revenue. The following year, however, sales dropped to 60 houses and $465,171,045. In 2016, we had only 35 sales over $5 million which totaled $267,660,990. The total revenue drop in those two years was just shy of $400,000,000.

The direct consequence of the reduced sales is a significant loss of property conveyance tax for both the Town of Greenwich and the State of Connecticut. However, these are minor taxes compared to the huge amount of lost personal income tax that the reduced sales to high income individuals represents. You also have lost sales tax and fewer local charitable contributions.

Several of our wealthiest homeowners are no longer Connecticut citizens. Most of the people in these income levels who can afford high-end homes in Connecticut have more than one home and often two or three. For these folks who spend more than six months in another state, Florida is popular given that it has no income tax, to eliminate their Connecticut tax burden.

It’s not quite that simple as it is a multi-factor test as to what state gets to tax you as a resident. At one point the DRS was looking at whether investment managers were still making contributions to local charities as a factor to determine if the manager was still a Connecticut resident. As a result, people were encouraged by their accountants to stop giving to local Connecticut charities. Luckily, the Connecticut legislature got the DRS to reverse their position (see DRS PS 2106-3).

And, while the focus is on the very highest earners, there are hundreds of mid-level managers and traders who make good salaries who are not headline worthy. If firms continue to move out of state, we lose many of these folks. All of the suppliers of these companies, the people doing renovations and even the local grocer get a lot of business from these companies and their employees.

You would think that the state would be trying to grow the pie rather than taking a bigger piece of a shrinking pie. It’s an industry of highly educated, high earning people who don’t overly tax the state’s infrastructure and don’t cause pollution problems. The problem is that Connecticut is two very different states. In Greenwich, our median home price is around $1.6 million, while for the state as a whole, the median home price is around $240,000 or 15% of prices here and that is the median price, meaning half of the homes sell for less than that amount.

Connecticut has a lot of citizens with real needs, but raising taxes has become a negative sum game. If you’d like to do something, write to Greenwich’s Senator Frantz or Representatives Floren, Camillo and Bocchino. They understand these issues well, but they need real life experiences and clear opposition to this method of solving the state’s budget problems.

We need to turn Connecticut back into a state that attracts the top investment managers and companies as it has done for the last three decades. It is a good solution for everyone.