GREENWICH, CT AUGUST 2019 REAL ESTATE SALES STATISTICS

Good Sales, Better Contracts

by Mark Pruner

We had 63 single family homes sales in August 2019 in Greenwich. This is 2 more sales than we had last year and just 1 less than our ten-year average. We also have 83 contracts waiting to close which is 22 or a third more than we had last year at this time. Both are indicative of our strengthening market. Earlier in the year sales and contracts were not good and there was some real worry about whether Greenwich real estate was going through a paradigm shift that meant we were just going to have a slower market in the new federal tax regime with non-deductible state and local taxes.

As of 9/2/2019 Inventory Contracts Last Mo. Solds Last Mo Solds+ Contracts  YTD Solds  YTD+ Contracts Mos Supply Mos w/ Contracts Last Mo. Annlzd
< $600K 2 6 1 7 10 16 1.6 1.2 2.0
$600-$800K 26 6 6 12 22 28 9.5 8.8 4.3
$800K-$1M 19 8 3 11 32 40 4.8 4.5 6.3
$1-$1.5M 59 17 13 30 70 87 6.7 6.4 4.5
$1.5-$2M 88 14 11 25 57 71 12.4 11.8 8.0
$2-$3M 120 16 17 33 84 100 11.4 11.4 7.1
$3-$4M 93 6 4 10 38 44 19.6 20.1 23.3
$4-$5M 54 6 3 9 16 22 27.0 23.3 18.0
$5-6.5M 43 0 4 4 14 14 24.6 29.2 10.8
$6.5-$10M 48 2 1 3 11 13 34.9 35.1 48.0
> $10M 33 2 0 2 5 7 52.8 44.8 #DIV/0!
                   
TOTAL 585 83 63 146 359 442 13.0 12.6 9.3

It may be possible that we are seeing a sales slowdown, but the last two months we have started to pick up ground on last year and on our historical averages. Just as in this month, our contracts were up in July pointing to the better sales month that we had in August. With a higher number of contracts, we are very likely to see a better month in September 2019 than we saw in September last year. However, it’s not like the last two months were stellar, they were just average. Average looks pretty good compared to bad and we’ve had two months of average, so things are looking up.

It’s not only sales that are back to average, but also inventory. Above $2 million we are basically the same as last year, except for $5 -6.5 million where we are down from 51 listings to 43 listings this year. Below $2 million we have a mixed bag. We have more inventory from $600K – 800K and from $1.5M – 2.0M, but less inventory from $800K – $1.5M. These changes in both directions are not small. From $1.5M – 2.0 million we are up 19 listings and from $800K – $1.5M we down the same 19 listings. When you add it all up, our inventory at 585 listings is only 3 more than last year or not even 1% different.

That’s the market overall, but for any one house, you really need to look at the competition on a house by house basis. Buyers are going to compare your house to handful of others and pick one. That’s when good marketing and staging can make a real difference.

Under $600K, you have less to worry about, since you don’t have even a handful of competitors; you only have one other house listed. In this price range your competition is not the other houses in Greenwich, but Stamford, Norwalk and Westchester. I wouldn’t be too worried though as we’ve sold 10 houses under $600K so far this year and have 3 others under contract. This makes for an amazing 1.6 months of supply. As always folks are very interested in getting into Greenwich at that price.

Just above that price from $600K – 800K a lot more people are interested in getting out of Greenwich. Right now, buyers in that price range have 26 options compared to only 13 listings last year. Year-to-date sales are down 13 in that price range, but contracts are up 5 from last year, so we should start eating into that inventory as demand for this price range has grown the later we get in the year.

In fact, that increased demand is true all the way up to $3 million. Just above that price range, $3 – 4 million has fewer contracts and fewer August sales than last year. The result is that months of supply for $3 – 4 million is up to 19.6 months of supply compared to 15.5 months last year.

Above $4 million the market is also improving slightly with a few more sales and about the same inventory, but this masks some really dramatic price drops, that sellers have made to bring their houses in line with today’s market. It’s clear that the 2017 tax law limiting the deductibility of our state income tax and our local property tax has made owning a home in Greenwich more expensive.

As a result of houses being more expensive to own, we are seeing in Greenwich what we have always seen in Westchester County. In Westchester, homebuyers are facing the highest property taxes in the country and as a result home prices are lower than they are in Greenwich on a dollars per square foot basis. Here in Greenwich it’s more expensive to own a house now than it was in 2017. The result is that we are seeing lower prices particularly above $4 million where the state income tax and the non-deductible property taxes make homeownership more expensive. (Alright you can deduct the first $10,000 of SALT, but that doesn’t go far when you have $50,000 of Greenwich property taxes and $100,000 of state income taxes to pay.)

The other tax law change that is having an impact is the lowering of the mortgage deductibility from $1.1 million to $750,000. This has been offset by falling interest rates as people continue to demand U.S. Treasury debt as a safe haven in a turbulent world. This may explain some of the slow down in our market just above $1.375 million ($1.1 million divided by an 80% mortgage.) At the same time, we had significant tax rate deductions, but the NY metro area with its high income and property taxes, seems to be one of the areas where lots of people are paying more federal income taxes even with the new, lower federal tax rates.

The Fall Market

So, what do we have to look forward to in the fall market? Well the easy part to say is that we will have good sales in September. We have the aforesaid 83 contracts waiting to close and our average September sales are 47 houses.

The rest of the market is harder to predict. Inventory will rise in September as it always does, but by a lot or a little is the question. Also, what areas are going to do well. Carline Martin and I are putting on some land in a new development near the Chieftains in western Greenwich, which is an area that has seen more activity as people move from Westchester, but want to stay close to their old friends in Westchester who can’t sell their houses.

Backcountry and Old Greenwich will also probably continue to do well but will the shift in sales to later in the year continue. If so, will there be enough additional sales to make up lost ground from the first half of the year? We are still down 53 sales from last year or 13%. However, if you throw in contracts, we are only down 7% from last year. Stay tuned it will be an interesting fall m

June 2019 Greenwich Neighborhoods Report – Backcountry looking better

The last couple of months have been good for some neighborhoods in Greenwich and no areas have really gotten worse. Having said that, the overall Greenwich market is still weak with over 19 months of supply. A couple of smaller areas, Pemberwick and North Mianus, both with 7 listings each stand out, but it’s not enough to move the whole market. The two areas that are large and are getting better are in northern Greenwich.

Sections as of 6/30/19 Inventory Sum of List Prices Listing DOM Number sold Mos of Supply Sum of Sold Prices Solds DOM
Byram 11 $39,712,400 244 6 11.0 $3,712,000 71
Cos Cob 61 $92,147,499 167 17 21.5 $23,681,500 160
Glenville 28 $44,618,000 186 8 21.0 $9,061,000 251
North Mianus 7 $9,482,999 129 6 7.0 $7,225,000 99
North Parkway 125 $654,099,286 341 26 28.8 $90,936,350 252
Old Greenwich 83 $202,670,997 186 41 12.1 $96,249,660 158
Pemberwick 7 $5,482,900 147 4 10.5 $3,538,000 361
Riverside 84 $258,539,150 217 34 14.8 $66,033,322 209
South of Post Road 77 $445,364,000 178 21 22.0 $59,448,800 299
South Parkway 239 $1,035,131,393 261 63 22.8 $191,256,267 297
Grand Total 729 $2,797,351,624 239 226 19.4 $551,141,899 231

The area that gets the prize for most improved is North of the Parkway. In backcountry months of supply is down to 29 months of supply from 40 months of supply at the end of April. We have had 26 sales in backcountry YTD and picked up 15 of those 26 sales in just the last two months. Our inventory is also up but should be falling soon as more sales hit the MLS and the number new listings coming on the market slows as sellers and their agents wait for the fall market.

The 26 sales in backcountry total $91 million. This is almost as much as the $96 million of sales in Old Greenwich, where we have seen 41 sales. While backcountry has fewer sales, it has the highest average sales price at $3.5 million dollars, while Old Greenwich’s average sales price is $2.3 million. However, Old Greenwich  has the lowest months of supply for any large area of town at 12 months. This is less than half of the 29 months of supply in backcountry. What we are seeing in backcountry are prices that more nearly reflect today’s value and value-oriented buyers stepping in to buy these houses.

Many of these buyers are also younger families who came of buying age after the Great Recession and have never really seen prices go up, and certainly, not in double digits in one year like they did in several pre-recession years. Today’s buyers are going where the values are and they have a lot of good options in backcountry. As a result of this influx of young families Parkway Elementary School had to add a third kindergarten class this year.

Prices in backcountry are down. Based on the sales price to assessment ratio, prices in backcountry are down 5.1% since the last revaluation in October 2015 or about 1.3%/year. Activity started to turn around in the 4th quarter of last year and is continuing to get better.

Now better here is a relative term. For the sellers that bought in the bubble from 2004 – 2008, they are not getting their money back. You have to go back to the 20th Century to find buyers that consistently seeing a profit, but that is much of backcountry as folks that buy there tend to hold for years and decades. While backcountry is still not a strong market, we are seeing the trends go in the right direction.

Sections as of 6/30/19 Min of Sold Price Max of Sold Price Average of Sold Price Average of List Price/SqFt Average of Sold Price/SqFt Average of SP/ASMT Average of SP/OLP
Byram $535,000 $729,000 $618,667 $415 $408 2.010 96.0%
Cos Cob $749,000 $3,400,000 $1,393,029 $464 $434 1.552 88.0%
Glenville $750,000 $1,800,000 $1,132,625 $488 $449 1.578 82.4%
North Mianus $580,000 $1,690,000 $1,204,167 $497 $488 1.558 97.2%
North Parkway $790,000 $14,875,000 $3,497,552 $582 $536 1.347 86.9%
Old Greenwich $725,000 $11,000,000 $2,347,553 $651 $617 1.612 91.5%
Pemberwick $495,000 $1,215,000 $884,500 $392 $374 1.833 93.3%
Riverside $555,000 $3,900,000 $1,942,157 $541 $517 1.678 90.8%
South of Post Road $550,000 $9,400,000 $2,830,895 $726 $679 2.030 89.8%
South Parkway $550,000 $8,325,000 $3,035,814 $594 $558 1.492 86.6%
Grand Total $495,000 $14,875,000 $2,438,681 $582 $548 1.600 89.0%

Mid-country is also seeing this same trend increase in activity as months of supply dropped from 34 months of supply to 23 months of supply. Once again there are some real bargains to be had, particularly for those people that are willing to do some work. One great way to get a real value is to do what developers do and buy an older house and add today’s buyers’ de rigueur requirements of walk-in closets, spacious bathrooms and quartz-topped, kitchen islands.

The other area where we are seeing significant improvement over the last two months, and to relief of many of its residents, is Riverside. Riverside got off to a very slow start this year, but it is trying to make up for lost time with 23 houses sold in the last two months after only 11 houses were sold in the first 4 months of 2019.

Cos Cob & Glenville are both doing about the same over the last couple of months as they did earlier in the year. The market there can best be described as slow but steady. Cos Cob’s inventory went up by 8 to 61 houses, but at the same time it’s list price to sales price ratio improved to 88.0% from a weak 84.4%.

So Old Greenwich, Riverside, North Mianus, Pemberwick and Byram are the better parts of the market, while north and south of the Parkway are improving.

 

Greenwich, CT First Half 2019 Real Estate Report

We had 60 sales in June 2019 totaling $156 million. Year to date we have had 226 sales totaling $556 million. Our volume of sales would be the envy of many other towns, but it wasn’t a good June for Greenwich. Our 60 sales were down only 6 sales from June 2018, but June 2018 was not a good year for sales either compared to our 10-year average of 84 sales.

6/30/2019 Inventory Contracts Last Mo. Solds Last Mo Solds+ Contracts  YTD Solds  YTD+ Contracts Mos Supply Mos w/ Contracts Last Mo. Annlzd
< $600K 6 2 2 4 8 10 4.5 4.5 3.0
$600-$800K 23 4 5 9 14 18 9.9 9.6 4.6
$800K-$1M 32 14 5 19 18 32 10.7 7.5 6.4
$1-$1.5M 79 13 12 25 45 58 10.5 10.2 6.6
$1.5-$2M 114 16 8 24 35 51 19.5 16.8 14.3
$2-$3M 154 23 10 33 52 75 17.8 15.4 15.4
$3-$4M 107 15 7 22 25 40 25.7 20.1 15.3
$4-$5M 71 5 3 8 12 17 35.5 31.3 23.7
$5-6.5M 52 6 3 9 6 12 52.0 32.5 17.3
$6.5-$10M 56 2 5 7 8 10 42.0 42.0 11.2
> $10M 35 3 0 3 3 6 70.0 43.8 #DIV/0!
TOTAL 729 103 60 163 226 329 19.4 16.6 12.2

We had some bright spots. Sales from $6.5 – 10 million were double last years sales with 8 sales so far and 5 of those sales were in the month of June. We also have seen more sales from $2 – 3 million where we had 52 sales up 4 sales from last year. Unfortunately, in both of these cases, our contracts for those price ranges are down and inventory is up so this may be a short-lived increase.

When you look at the bottom-line numbers our inventory is up, sales are down 17% and our contracts are down 14%. This is after we saw a significant recovery in May sales with 57 sales, which matched our 10 average. Part of this sales spurt in May came from a bunch of contracts closing quickly that month, which resulted in us going into June with a reduced number of contracts. At the end of June, we are down 17 contracts compared to June 2018. Most of this reduction in contracts is because of the weakness from $1 – 3 million, which unfortunately is the heart of our market.

One contract bright spot is the over $10 million market where our 3 contracts are 3 more than we had in June 2018. On July 1, we also saw a dramatic drop in inventory, as we do most years, since many listings expire on June 30 as the first half of the year ends. So, as of now we are looking at 699 listings. This will help our months of supply, which for the overall market is at 19 months of supply up 4.6 months of supply from last June.

New York and New York City are continuing to help out our market as the mansion tax in New York City just dramatically increased on July 1st. In NYC the city “mansion” tax starts at 1% at $1 million and increases to 3.9% for sales over $25 million. This tax is traditionally borne by the buyer, which certainly won’t encourage sales. In NYC, the seller pays a 1.425% transfer tax starting at $500,000. Meanwhile if the buyer actually takes out a mortgage, the buyer gets to pay a 1.925% mortgage tax if the mortgage is over $500,000 and only pays 1.8% for mortgages under $500,000.

This compares to Connecticut’s single conveyance tax that is 1% below $800,000 and 1.5% above that amount. Starting July 2020, we will get our own mansion tax as the conveyance tax will be 2.5% over $2.5 million. Now the new Connecticut law purports to give that increase back if you stay in the state for three years. As I wrote before it’s a silly tax that doesn’t raise much revenue and gives the New Yorkers a chance to claim that we have a mansion tax just like they do. We, however, only have one tax and they have three.

All this is happening at time that Wall Street is setting record highs, unemployment is low, and the economy continues to hum along, so the second half of the year may well look better. Let’s also hope for a repeat of last year where the peak sales month was in July rather than June as it normally is.

I have an Accepted Offer, What Could Go Wrong?

 

by Mark Pruner

As a realtor, my primary job is to get the seller or buyer to an accepted offer and then send that to the attorneys for them to transform the terms of the offer into a contract that can be signed by both parties.

The whole thing starts with the buyer and seller negotiating back and forth to an accepted offer including inclusions and exclusions of personal property and fixtures attached to the property. The parties then send their attorneys the accepted offer. Back in the 90’s when I was a practicing real estate attorney, the attorneys generally drafted a contract at this point with an inspection contingency and a mortgage contingency, if the buyer was using bank financing. This quick contracting had the effect of transferring control of the deal to the buyer. The buyers could decide whether they wanted to exercise the inspection contingency and either walk away, ask for repairs or a price adjustment.

Now days, the seller’s attorney usually wait for the inspection results before drafting the contract. This keeps control with the seller, as the rule in Greenwich is that there is no deal until the contract is signed. As a result, sellers can accept offers from other buyers and if they do the first buyer may find themselves in a bidding war or just be out of luck. If the first buyer had already done their inspection, the polite thing for the seller is pay the first buyer the cost of the inspection, but the seller may or may not do that.

Let’s assume that another buyer doesn’t come in the picture and the buyer does an inspection to verify the house is in good shape. The inspector always finds a bunch of issues, but unless they significantly change the value proposition, the deal often goes forward “as is”. If there are major issues or if the buyer wants to get a better price, they can renegotiate the original deal.

Once the inspection issues are resolved, the seller’s attorney drafts the contract and sends it to the buyer’s attorney. The contract will almost always be the standard Fairfield County Bar Association contract which the attorneys revise from time to time as laws change. (Several year ago, I was on a contract revision committee and one of the great things about Greenwich real estate attorneys was that there really was an effort to be fair to both buyers and sellers, when considering the needed revision.)

Each seller’s real estate attorney has their own tweaks to the FCBA contract, but they are usually more in the way of clarifications or that cover unusual situations that firm encountered in the past. The seller’s attorney then sends the proposed contract incorporating the offer terms to the buyer’s attorney. The buyer’s attorney attaches a rider to the contract with various representations and other pro-buyer provisions. This is when the attorney’s negotiation really begin, but eventually the sales contract is negotiated to a final contract.

The buyers then sign the final contract and attach a downpayment check usually for 10% of the purchase prices. The sellers then sign the contract and there is a binding contract (which may have contingencies). The downpayment check is deposited into the seller’s attorney’s escrow account until closing. At this point any other buyers can only be a backup offer, as the buyer has a contractual right to buy the property.

The “binding” contract may have a mortgage or other contingency. Mortgage contingencies are usually 30 – 45 days while the buyer gets approved for a mortgage. Once approved the mortgage contingency is waived by the buyer. If the buyer is making good progress, but has not gotten final approval by the contingency date, the seller has the option to extend the contingency date, but if there is a higher backup offer, they may decide not to grant an extension of the mortgage contingency. Things can get pretty exciting for all parties when this is about to happen.

Between the contract signing and the closing, the seller is required to continue to maintain the property and fix any appliances that break. The seller has to deliver the premises “broom clean” and empty of all their personal property (i.e. anything movable). Ideally, the seller moves into to their new place in the week before closing, so the seller’s cleaning people have a day to clean the property, before the buyer’s final walk through.

All fixtures, such as chandeliers and wall sconces affixed to the real property stay unless the seller specifically excluded them in the contract. All personal property must be removed unless included in the contract.

Over my many decades as either a real estate attorney or real estate agent, the large majority of disputes at closing have been over inclusions and exclusions. The buyer does the final walkthrough and there is a hole in the dining room ceiling. At closing you hear, “The buyer should have known that the seller was going to take the dining room chandelier.” Alternatively, you hear buyers say, “The seller “should have known that they had to remove all those old paint cans and tiles”, since the buyer didn’t need them for touch-ups. It’s really important to cover each of these items that are exceptions to the rule that fixtures stay and personal property goes in the contract.

In the contract will be a closing date, when title passes to the buyer. At closing the seller’s attorney gives the buyer’s attorney the deed and the seller delivers all the keys, garage door openers, security codes, appliance manuals etc. Buyers are often surprised that the sellers are not at the closing, but the seller’s work is basically to sign the deed and a title affidavit and those are usually signed before and held in escrow by the seller’s attorney.

These days, and particularly, if it is an all-cash deal the buyer may not be at closing either. I always go to closing in case there are last minute issues. I have arrived at the appointed time at the seller’s attorney’s office only to find that the buyer’s attorney arrived 10 minutes early and everything is all done on an all cash deal.

Sometimes the seller will hold over after the closing with the buyer’s permission, because for example their new place isn’t ready yet. There will usually be a separate agreement if the seller holds over with provisions for payments, liability and damages. Conversely, sometimes the buyer will move in before closing and the title actually transfer to the buyer. Most attorneys prefer not to do these agreements as the situations create all sorts of legal difficulties should a problem arise.

At the closing, the buyer’s attorney gets the deed signed by the seller, the seller’s check for the Connecticut and town conveyance taxes, the conveyance tax form and a title affidavit saying that the seller hasn’t recently done and work on the property that would entitle the workmen to a mechanic’s lien on the property. The seller’s attorney gets a certified check for the balance of the purchase or the funds may be wired directly into her account.

Usually, the buyer’s attorney goes to the town clerk’s office from the closing table to verify that there are no new liens on the property and to record the deed and new mortgage if the buyers used bank financing. In the good old days, banks would send the seller’s mortgage release to the seller’s attorney to be held in escrow pending receipt of the money by the seller’s attorney. Now days, banks are a lot less trusting and won’t send out the release of the seller’s mortgage until they get the payoff money. So often the last thing that is done is the recording of the release of the sellers’ mortgage which can be weeks later.

The process can seem complicated, but each step is there for a reason and if you have two good attorneys that know the process in Greenwich, it can be relatively painless, but these days it usually isn’t. Having a good attorney can be a big help, when problems arise.

 

What’s Your Greenwich Home is Worth in 2019?

How Real Estate Prices are Changing in Greenwich – Over $5M and under $1M

The most common question I get asked by homeowners in Greenwich is, “How’s the market doing?” People are very curious as to what’s selling and not selling, but as you would expect people are even more interested in how their house is doing? Has it gone up or down in price recently? Until the Great Recession, the question was not up or down, but how much up prices had gone, because year after year prices went up in Greenwich and in most of the United States.

If you want to see what prices are doing from one year to next, the best way is by looking at multiple metrics. The average, and even the median, is significantly affected by the mix of what’s selling. You can easily see why this is so when you compare average and median sales prices for 2018 and  2019 year-to-date sales.

May-18 May-19 % change
SALES PRICE
Average Price  $  2,530,970  $  2,387,636 -5.7%
Median Price  $  1,837,500  $  1,950,000 6.1%

Our median sales price as of the end of May is up 6.1% compared to sales through May of 2018. That sounds pretty good, but when you look at the average sales price it is down 5.7%. So what is it; are price up or down? The answer to that question is “Yes, they are.” Both answers are mathematically correct. If you are a glad-handing broker you use the median, if you are some reporters at Bloomberg or the Wall Street Journal looking to bash Greenwich you use the average.

What is causing the difference in these two values is the drop in sales in the $600,000 to $1,000,000 range. Last year we had 41 sales in this price range. This year we had 21 sales. As a result, you have to go higher in price to get 50% median price and so the median price is up.

At the same time, we had fewer sales over $5 million. We went from 20 sales last year to 9 sales through the end of May this year. Because Greenwich has such a long tale of high-end sales the change of only a few sales at the top, either way, dramatically affects the average sales price. If high-end sales drop the average price drops much more dramatically, than if low end sales drop.  As a result, the change in the average and median sales prices may not be a good indicator of how the value of your house is doing since they are both driven by the mix of what is selling. Luckily, these aren’t the only metrics that we have. Let’s look at what two other metrics are saying about today’s Greenwich real estate market.

May-18 May-19 % change
SALES PRICE
Average Price  $  2,530,970  $  2,387,636 -5.7%
Median Price  $  1,837,500  $  1,950,000 6.1%
PRICE/SF
Average $/sf  $              575  $              544 -5.4%
Median $/sf  $              529  $              502 -5.0%
ASSESSMENT RATIO
Average SP/Assmt                 1.65 1.62 -1.4%
Median SP/Assmt                 1.52 1.47 -3.3%

One metric you can look at is price/square foot. This metric looks at the whole market and for 2019 is down around 5% for both the median and the average. You’d expect the median and the average to be closer together as the mix of what’s selling has less effect. That’s not say it has no effect as we are seeing fewer very large houses selling so year to year its not an apples to apples comparison.

The next metric, and the one I like, is the ratio of the sales price to the assessment. Every 5 years the Greenwich assessor revalues all of the properties at 70% of what her department thinks is fair market value. If a house sells for exactly it’s assessed value the sales price to assessed value ratio will 1.42, the reciprocal of 70%.

Once nice thing about the average and median assessment ratios is that it can tell you something about the new construction and renovation market. If the average assessment ratio is higher than the median it means more new construction is being done. Assessment go up the most when a new house replaces a tear down and even more so when a new house is built on vacant lot. Our average assessment ratio 1.62 while our median ratio 1.47, so we are still seeing a significant amount of new construction and major renovations being added to our housing stock.

When you compare the 2018 and 2019 assessment ratios, our average is down 1.4% and our median is down 3.3%. If you want just one number to look at, the median assessment ratio of 1.47 is probably the best indicator.

For 2019, our median assessment ration is 1.47 which is only 3% higher than the aforementioned 1.42 ratio which indicates no price change between sales price and assessment. The 2019 1.47 median assessment ratio is up 3% from our last revaluation on October 1, 2015. It, however, is down from 1.52 last year. The result of all this is yes prices are down this year and if you need just one number, they are down 3.3% this year compared to last year.

That one number doesn’t tell you the whole story about today’s market. You can also look at overall supply and demand using the numbers for sales, inventory, days on market, months of supply and the sales price to original list price ratio.

             2,018              2,019 % change
HOUSE SALES                  208                  165 -20.7%
INVENTORY                  687                  738 7.4%
DAYS ON MARKET                  180                  158 -12.2%
MONTHS OF SUPPLY                 16.7                    22.4 34.1%
SP/OLP RATIO
Average SP/OLP 90.2% 88.4% -1.9%
Median SP/OLP 91.0% 89.0% -2.2%

What you see when you do that is a 21% drop in sales year to year and a 7% rise in inventory. Our months of supply is up 34% to 22 months of supply and our median sales price to original list price has slipped 2% to 89%. On the good news side our days on market has gone down by 12% showing that houses priced to today’s market are selling faster than last year.

Overall, it’s a weak market with only the $2 – 3 million market doing better than last year and much of the increased sales in that price category are concentrated in Old Greenwich, Riverside and Cos Cob. Our sales were up on in May over prior months this year, but so far sales in June seem to be returning to a weaker 2019 pattern. Let’s hope June repeats what we saw in May with most sales for the month concentrated in the last 10 days of the month.

So what about your house, is the price up or down this year and how much? The odds are it’s down a little bit, but value and convenience are what is driving today’s buyer. Today’s buyers aren’t depending on prices going up while they own their home and are working very hard to get the best deal that they can on purchasing the home. They also want to do as little work as they can before moving in as often we have two very busy adults who don’t feel they have the time to take on a large construction project. This results in them missing out on one of the best ways to generate value and that is the fixer-upper.

I have a great example of that at 108 Pecksland; it’s a classic house that needs work to be adapted for today’s market. We recently reduced the price from $1.99 million to $1.65 million. At that price it is getting a lot of showing, but most buyers, particularly, the under 40 set, who have been the primary lookers are concerned about the amount of work needed to create today’s popular open floor plan, walk-in closets and very large master bath.

Most of the buyers are focusing on the cost and their time needed to get the house modernized. What they are missing is that in this case the cost is not an expense, but an investment. Replacing a roof or putting in a new hot water tank are expenses; they don’t add much value to a house but solving a house’s problems does. The costs in this case significantly increase the value of the house now and going forward. Making improvements that the market wants and is the quickest way to add value to a house. Working with a realtor that knows contractors, the market and ways to solve problems can make for a nice return on your investment even in today’s market.

New York Times and Hartford Courant quote Mark Pruner this week

New York Times logoThe New York Times has an excellent, and to their credit, a balanced article about backcountry Greenwich. Lisa Prevost wrote this excellent article entitled “Living in Backcountry Greenwich“ with Jane Beiles adding some beautiful pictures that do a good job of capturing the spirit of backcountry Greenwich.  I got quoted on how sales were this year and last year in backcountry. (They are even better since the story came out as you can see below.) My listing at 633 Round Hill Road is also featured with a photo by Jane. That listing has been getting a lot of attention. It’s in excellent shape, has a beautiful pool, waterfall and hot tub and at $1.69M is on for less than $300/s.f. about 60% of the average list price per square foot. We are seeing more activity in backcountry with sales up 69% from last year as it’s seen as the value place to buy.

Hartford CourantNeal Vigdor wrote an article for the Hartford Courant entitled “Mansion tax draws the ire of the wealthy, real estate industry”. The article is a political analysis of how the law got passed and the reaction in the real estate community, which as you might imagine is not good. I got quoted on the number of sales statewide and prepared a map that got used in the story showing that the sales are concentrated in the Gold Coast towns of Greenwich, Darien, New Canaan, Westport and also Fairfield. He also quotes me about the big spike in sales in June 2011 the month before the last conveyance tax increase on July 1, 2011. You can read more of my comments on the new conveyance tax in my May market report and see the 2011 sales spike in the graph that was featured in the print version of my Greenwich Sentinel column.

I’d also like to thank Neal Vigdor for his many years of covering Greenwich at the Greenwich Time and Connecticut politics for the Hartford Courant. He was a reporter you could trust to present the story fairly including lots of information in a concise writing style. He got a great offer to covering breaking news for the New York Times, who recognized his excellent reporting. Connecticut will miss his insightful reporting.

May 2019 Greenwich Real Estate Report – Sales are Up

A good average month and a new conveyance tax

by Mark Pruner

Many years ago, I took taekwondo classes. When we would spar, my instructor had a tactic where he would feint three quick kicks to my head and pull them back. Each time my arm would go up to block the kick and then come down to be ready for his next move. The fourth time the kick would start out looking just the same, and I again raised my arm to my head to block the kick, but this time he’d go for my now exposed ribs and connect every time. It didn’t matter how many times he did it I’d get kicked in the ribs every time because my instincts told me that fourth kick was also headed for my head.

This is kind of like the May market. We had three down months and the first two-thirds of May looked to be just the same and then sales picked up. We closed the month of May with 56 sales and 24 of those sales were in the last 10 days of the month. Those 56 sales were 2 more than last year and just one less than our 10-year average. So, all in all an average month, which looks pretty good after 3 down months.

6/1/2019 Inventory Contracts Last Mo. Solds Last Mo Solds+ Contracts  YTD Solds  YTD+ Contracts Mos Supply Mos w/ Contracts Last Mo. Annlzd
< $600K 5 4 1 5 6 10 4.2 3.3 5.0
$600-$800K 19 5 5 10 9 14 10.6 8.8 3.8
$800K-$1M 40 11 3 14 12 23 16.7 11.3 13.3
$1-$1.5M 74 17 11 28 33 50 11.2 9.6 6.7
$1.5-$2M 106 16 9 25 27 43 19.6 16.0 11.8
$2-$3M 165 24 16 40 42 66 19.6 16.3 10.3
$3-$4M 113 15 6 21 18 33 31.4 22.3 18.8
$4-$5M 74 6 4 10 9 15 41.1 32.1 18.5
$5-6.5M 54 4 1 5 3 7 90.0 50.1 54.0
$6.5-$10M 52 5 0 5 3 8 86.7 42.3
> $10M 36 1 0 1 3 4 60.0 58.5
TOTAL 738 108 56 164 165 273 22.4 17.6 13.2

The corollary of more closings is fewer contracts waiting to close. So, we are down 24 contracts from last year to 108 contracts this year, but I’ll take sales over contracts any day.

On the inventory side we are still up at record post-recession levels with 738 single family home listings, up 51 listings from last year. This extra inventory and slower sales from February to April means that for the whole market we are up 5.7 months of supply to 22.4 months compared to last year. This is high, but it’s lower than the 25.7 months of supply we had at the beginning of May.

Backcountry sales up

That the 5,000-foot view, but the situation is more nuanced as you get to treetop level. For the month of May, it’s the backcountry trees that are sticking up particularly high. Last year we only had 13 sales in backcountry at the end of May 2018 with 4 of those 13 backcountry sales in May. This year backcountry sales are up 70% with 22 sales and 10 of those sales were in May. (I have two listings in backcountry, and they are both getting a lot of activity.) Lisa Prevost at the New York Times also wrote an excellent article about “Living in Backcountry Greenwich“.

It’s not all rosy for backcountry as half of our inventory over $5 million is in backcountry. Townwide in that price range we had only one sale in the month of May out of 142 listings. June will be better as we have 10 contracts over $5 million waiting to close. The lack of sales in this price category is worrisome as so much of our total volume is in that section, but the legislature is working to increase sales there as you can read below.

Backcountry’s 22 sales do add up to $79 million in sales, second only to the mega-section, South of the Parkway, which has 40 sales totaling $106 million. In third place Old Greenwich has 30 sales, which total $75 million. Old Greenwich’s days on market is 150 days for sold properties versus 258 days for backcountry.

May sales up to average

When you look at the sales just in May it’s a mostly average month with two areas that stick out. One is the poor sales over $5 million, though inventory is lower there. The other is the jump in sale in the $2 – 3 million range where we are up 10 sales over last year 42 sales YTD. When you map these sales compared to last year, the 2019 increase in sales are mostly in the southeast in Old Greenwich, Riverside and Cos Cob.

This price segment also has the highest increase in inventory, up 18 listings from last year to 165 listings. This segment has the most inventory and the most sales and it equates to 19.6 months of supply, which is not great, but is still down from 21.0 months of supply last year and this includes our poor February to April sales. If you annualize the May $2 – 3 million sales, you come up with a pretty good 10.3 months of supply.

Our $1 – 2 million price range actually has more listings at 176, but this is traditionally broken down in to two segments above and below $1.5 million. It’s a good thing, because this year, as we often see, the $1.5 million price is a break point for demand changes. Below that price range we are looking at less than a year of supply, particularly when you add in contracts, which show where the market is going. Above that price range you have more than a year’s supply and above $4 million you are looking at more than 2 years supply.

The New Higher Connecticut Conveyance Tax

Our legislature is doing what they can to encourage sales above $2.5 million for the next thirteen months. They increased the conveyance tax for sales over $2.5 million by 1% to 2.25% starting on July 1, 2020. The last time the conveyance tax was raised was in July 2011. That month the conveyance tax was increased by only 0.25% all price ranges. The result was that, the prior month, June 2011, was our biggest sales month ever with 114 sales when we normally have 83 sales.

2011 Single family home sales in Greenwich showing sales spike in June 2011, the month before the Connecticut conveyance tax went up by 0.25%.

2011 Single family home sales in Greenwich showing sales spike in June 2011, the month before the Connecticut conveyance tax went up by 0.25%.

 

An unique, and possibly unconstitutional, feature of this new tax is that after 2023, the tax is refunded at the rate of one-third per year if you don’t move out of the state. You would need to stay for six years to get the full amount refunded. That kind of burden on interstate commerce will have a tough time getting past the U.S. Constitution’s commerce clause. (For more analysis of this tax increase check out Neal Vigdor’s article, “Mansion tax draws the ire of the wealthy, real estate industry” in the Hartford Courant.)

This tax is aimed squarely at the Gold Coast towns of Greenwich, Darien, New Canaan and Westport, and also Fairfield which has been quietly putting in a fair number of sales over $2 million to join the “golden” four. Of these towns, Greenwich has the majority of $2.5 million plus sales with 196 sales last year. In the rest of the state, there were less than two dozen sales over $2.5 million in 2018.

2018 Connecticut sales over $2.5 million showing concentration of sales in Fairfield County Gold Coast

This tax won’t raise a lot of money in the just passed $43 billion budget. Last year we had 196 sales that sold for $2.5 million or higher. These sales totaled $870 million, when you subtract the $2.5 million base and apply the additional 1 percent you get an additional $3.87 million of conveyance tax from Greenwich.

2018 Sales over $2.5 million showing sales in Greenwich, Darien, New Canaan, Westport and Fairfield. Data is from the SmartMLS and only shows about half of the over $2.5 million sales in Greenwich which are shown on the Greenwich MLS.

So why would the legislature pass a tax that will only raise a tiny fraction of a percent of the $43 billion needed for the budget? It all goes back to Hartford tradeoffs. Senator Looney and others wanted to raise the capital gains tax, the top income tax bracket and other changes that would impact lots of Greenwich residents every year and not just when they sold their house. This would have had much more impact on the housing market, so given the choice between a higher conveyance tax and higher income and capital gains tax, I’ll take the conveyance tax. What I can tell you is that June 2020 will be a really good month for high end sales.