THE 2019 GREENWICH NEIGHBORHOOD REPORT – Greenwich Real Estate Turned Upside Down

When you look at the individual neighborhoods in Greenwich in 2019, what was traditionally down was up and several neighborhoods that have done well did poorly. Much of this was driven by a fall in buyer interest in houses between $600,000 and $2,000,000 in Greenwich. A significant factor in the drop in sales is due to the aberration wrought by 2017 tax act’s effect on the Greenwich market in 2018. The Tax Cut and Jobs Act of 2017 spurred sales in 2018 as buyers fled the higher taxes of Westchester County and for once we had enough inventory under $1 million to satisfy demand as many retired Greenwichites decided to accelerate their move to Florida . In 2019, the Westchester effect was diminished and the TCJA directly impacted Greenwich sales and prices.

 

Greenwich Totals Total Sales 2019 vs 2018
Sales 526 -11.3%
Sum of Sales  $      1,249,417,255 -12.1%
Average of CDOM                             236 17.0%
 Min of Sold Price  $                 450,000  
 Max of Sold Price  $           18,600,000  
 Average of Sold Price  $             2,375,318 -0.9%
 Average of List Price/SqFt  $                        585 -2.5%
 Average of Sold Price/SqFt  $                        546 -3.2%
Average of SP/ASMT 1.512 -6.1%
Average of SP/OLP 87.7% -3.4%

 

For the year, the number of sales of single-family homes was down 11.3% in Greenwich. The average sold price dropped 1%. Lower sales combined with slightly lower prices meant that the total volume of sales in Greenwich dropped from $1.42 billion in 2018 to $1.25 billion in 2019 or a drop of 12%. Curiously, the median price went up from $1.77 million to $1.87 million. This happened because of the greater drop in sales under $2 million compared to a lesser drop in sales over that price. As a result, you had to go higher in the number of sales to get to our median in 2019.

All of the other indicators also showed an overall weak real estate market. Our days on market were up, and sold price/s.f., sales price to original list price and sales price to assessment ratio, were down. In 2019 the ratio of  sales price to the 2015 assessment value was 1.512. Assessments are based on 70% of the Assessor’s fair market valuation so a Sales Price/Assessment ratio of 1.512 indicates prices are up 6.5% from the last reassessment date on October 1, 2015 (1.512÷(1/.7)). That same ratio was 1.61 last year or an appreciation of 13% through the end of 2018.

But not all the news was bad, several neighborhoods did better in 2019 than in 2018, so let’s take a quick look at each neighborhood ranked by their percent increase in number of sales.

Section

North Parkway 2019 vs 2018
Sales 59 31.1%
Sum of Sales  $    193,124,350 24.7%
Average of CDOM                         363 21.2%
 Min of Sold Price  $            590,000  
 Max of Sold Price  $      14,875,000  
 Average of Sold Price  $         3,273,294 -4.9%
 Average of List Price/SqFt  $                     565 2.5%
 Average of Sold Price/SqFt  $                     510 0.3%
Average of SP/ASMT 1.325 -14.6%
Average of SP/OLP 84.6% -3.5%

 

Backcountry Greenwich epitomizes the Greenwich real estate world turned upside down. Ever since the Great Recession, backcountry has been the weak sister of Greenwich sales. Post-recession people wanted to live closer to town, on smaller lots, in more modest houses and with more activity around them. The spaciousness of large homes on 4 acres lots and the attendant privacy and tranquility of backcountry were not valued as much. As a result, prices have dropped fairly steadily in backcountry and that continued in 2019, but last year may be the last year that that happens.

Sales were up from 45 sales in 2018 to 59 sales in 2019 or an increase of 31%, which was the biggest sales jump of any section of town. (Actually, the biggest sales jump was in Banksville where sales went from 1 sale in 2018 to 3 sales in 2019 or a 200% increase, but this report is long enough as it is. Notably Banksville is as far north as you can get in Greenwich.) This jump in backcountry sales was concentrated in the $1 – 3 million range where sales were up 12 houses. Above $3 million sales were flat, which was a driving factor in the continued drop in average prices.

Younger buyers are going where the values are, and in 2019 the best values were in backcountry. Anytime sales are going up, prices will follow, so 2020 may look much better for backcountry. If that is the case now would be a good time to buy in backcountry Greenwich.

Section North Mianus 2019 vs 2018
Sales 13 30.0%
Sum of Sales  $    14,590,000 -11.7%
Average of CDOM                      106 -9.2%
 Min of Sold Price  $          580,000  
 Max of Sold Price  $      1,700,000  
 Average of Sold Price  $      1,122,308 -32.0%
 Average of List Price/SqFt  $                  481 -3.5%
 Average of Sold Price/SqFt  $                  471 -2.3%
Average of SP/ASMT 1.535 -18.4%
Average of SP/OLP 95.2% 3.8%

 

Closer to town, North Mianus continues to be a hot area with sales up from 10 sales last year to 13 sales this year. Four sales under $800,000 and only one new construction sale pushed the average sales price down by 32%, but the average sold price per square foot was only down 2% so values are doing OK. Developers are definitely looking for more properties to redevelop in this busy area.

 

Section Old Greenwich 2019 vs 2018
Sales 96 14.3%
Sum of Sales  $    224,682,160 22.4%
Average of CDOM                         174 -2.3%
 Min of Sold Price  $            480,000  
 Max of Sold Price  $      11,000,000  
 Average of Sold Price  $         2,340,439 7.1%
 Average of List Price/SqFt  $                     677 -2.9%
 Average of Sold Price/SqFt  $                     639 3.5%
Average of SP/ASMT 1.546 -6.3%
Average of SP/OLP 89.6% -2.1%

 

The village of Old Greenwich continues to drive sales in what was a significantly down year for Riverside. Sales increased from 84 houses to 96 houses with the average sales price and average sales price/sf were both up. While cumulative days on market were down it wasn’t all good news for OG with the sales price assessment ratio and the average sales price to original list price also down.

When you see the various price change stats moving in different directions, it means the market is also mixed with some areas and price ranges doing better than others. As you can see from the difference between the minimum sales prices and maximum sales price, Old Greenwich, for a comparatively small area, is a surprisingly heterogeneous place with ultra-high-end sales on the waterfront and modest sales on small lots north of the Post Road.

Old Greenwich and Riverside sales traditionally move together, but not in 2019. Old Greenwich sales were up 22%, while Riverside sales were down 37%. One factor potentially driving this disparity in market demand is the downtown area and its desirability for those who like to walk to shops and meet their neighbors. This desire has been emphasized quantified by the major real estate websites like Zillow that promote “walkability” scores for houses.

 

Section Byram 2019 vs 2018
Sales 14 7.7%
Sum of Sales  $    18,532,000 -39.8%
Average of CDOM                      158 -21.7%
 Min of Sold Price  $          450,000  
 Max of Sold Price  $      6,500,000  
 Average of Sold Price  $      1,323,714 -44.1%
 Average of List Price/SqFt  $                  484 -15.6%
 Average of Sold Price/SqFt  $                  451 -16.9%
Average of SP/ASMT 1.796 2.8%
Average of SP/OLP 87.1% -5.6%

 

Byram sales were also up this year, as we actually saw an increase in sales under $600,000 and Byram has the largest number of houses in that price range. Traditionally, we are supplied constrained under $600,000, but we did see a little bump up in inventory, which led to increased sales. At the same time,  we saw a drop in sales along Byram Shore Road where some of Greenwich’s most expensive houses are. While the number of these sales is small, the tail definitely wags the door here. Last year 207 Byram Shore Road sold for $17 million, this year the highest sale on that road was $6.5 million (but see South of Post Road report below), the result was a drop in average price statistics.

The one exception is to this is the sales price to assessment ratio which went up 2.8%. Since this is a ratio, high-end sales are not as much of a factor. This ratio was up 3% int 2019 and up 26% since October 2015 when the last revaluation was done.

 

Section Pemberwick 2019 vs 2018
Sales 11 0.0%
Sum of Sales  $   8,130,500 5.5%
Average of CDOM                    208 60.4%
 Min of Sold Price  $       475,000  
 Max of Sold Price  $   1,215,000  
 Average of Sold Price  $       739,136 5.5%
 Average of List Price/SqFt  $               417 2.9%
 Average of Sold Price/SqFt  $               400 1.5%
Average of SP/ASMT 1.695 3.6%
Average of SP/OLP 93.3% -1.1%

 

Pemberwick was the dividing line between up and down neighborhoods. Sales were flat in Pemberwick with 11 houses sold, but most other stats showed an improving market. The average sold price was up 5.5% and the SP/Assessment ratio was up 3.6%. It did however take longer for a house to sell and buyers were getting a little more discount this year, but a 93% sales price to original list price ratio is still very good. (NB: In NYC and some other areas, pundits use the sales price to last price ratio and this number is usually in the mid to high 90s. I prefer to use the SP/OLP ratio rather than the SP/LP ratio as to me it’s a better indicator of seller’s price expectations. So, when you see their SP/LP ratio as being much higher than these numbers in Greenwich it’s an apples to oranges comparison.)

Section South of Post Road 2019 vs 2018
Sales 49 -15.5%
Sum of Sales  $            162,507,300 20.7%
Average of CDOM                                 253 16.0%
 Min of Sold Price  $                    550,000  
 Max of Sold Price  $              18,600,000  
 Average of Sold Price  $                 3,316,476 42.8%
 Average of List Price/SqFt  $                             781 9.6%
 Average of Sold Price/SqFt  $                             726 6.3%
Average of SP/ASMT 1.739 -0.9%
Average of SP/OLP 87.9% -4.2%

 

South of the Post Road includes, Chickahominy, downtown Greenwich and Belle Haven so we get a very broad range of prices. For this section sales were down 16% from 58 sales in 2018 to 49 sales in 2019. We did have a major jump in the average price, but this is because some houses on Byram Shore Road, which are technically south of the Post Road, but should be listed in Byram got listed in the GMLS’s South of the Post Road section and one of these sales was for $18,000,000, which definitely helps your averages.

Over the last few years, all the neighborhoods in this area have done well. You literally can’t get any closer to town and the shoreline properties are always in demand. While there was a slight drop in the SP/Assessment ratio it is still up 22% from the October 2015 revaluation.

 

Section South Parkway 2019 vs 2018
Sales 129 -19.9%
Sum of Sales  $    381,048,183 -23.3%
Average of CDOM                         287 28.9%
 Min of Sold Price  $            550,000  
 Max of Sold Price  $         9,300,000  
 Average of Sold Price  $         2,953,862 -4.2%
 Average of List Price/SqFt  $                     575 -5.0%
 Average of Sold Price/SqFt  $                     531 -6.9%
Average of SP/ASMT 1.413 -4.4%
Average of SP/OLP 84.1% -5.6%

 

The biggest decline in house sales was South of the Parkway with sales dropping from 161 in 2018 to 129 in 2019 or a drop of 20%. This is curious, since as we saw, backcountry sales did very well last year. One reason for the difference between backcountry (sales up 31%) and mid-country (sales down 20%) maybe Armonk, NY.

When you look at where the sales are in backcountry in 2019, you’ll see a group of sold homes along the very northern border with New York State. Armonk has gone from a sleepy little town to a place with a lot of restaurants and new shopping venues. East of Armonk, Bedford, NY is still sleepy, but it does have a very cool recently created community playhouse which is very popular. Last year I listed the very last house on Round Hill Road, and it went to contract in 57 days, whereas in 2018 when the extreme northern part of Greenwich was slower it sat on the market for 273 days.

Mid-country shows the impact of the repricing of Greenwich under the TCJA’s limitation on property tax deductions. For lots of buyers the loss of SALT deductions over $10,000 means it’s going to be more expensive to own a house in Greenwich. At the higher priced ranges, this loss of property tax deductions is not as painful, as it is for people in houses under $2 million who are much more conscious of their monthly payment. This effect has hit home in this neighborhood.

 

Section Riverside 2019 vs 2018
Sales 78 -22.8%
Sum of Sales  $    155,759,962 -36.5%
Average of CDOM                         202 11.9%
 Min of Sold Price  $            555,000  
 Max of Sold Price  $         6,400,000  
 Average of Sold Price  $         1,996,923 -17.7%
 Average of List Price/SqFt  $                     581 -8.1%
 Average of Sold Price/SqFt  $                     548 -9.1%
Average of SP/ASMT 1.574 2.4%
Average of SP/OLP 89.8% -1.9%

 

Sales were down in most areas of the town, but in Riverside the sale drop was just downright weird. While many agents have mentioned Old Greenwich’s walkability to town and having Greenwich Point, OG has always had these benefits so what happened in 2019? The better question going forward for Riverside, is whether 2019 is just an anomaly or will this be the beginning of a trend with OG out pacing Riverside.

In 2019 the Riverside market was a real challenge. A house I listed in Riverside, that I thought would fly off the market didn’t, and the listing was cancelled. Developers are still active however and I did get a teardown in Riverside under contract to a developer. In 2020 sellers in Riverside will need to be aggressive on their pricing to stand out in this slow market.

One thing, that Riverside, and others of town should definitely look at is creating some small neighborhood commercial areas. If you look at the area from Riverside Elementary, past Eastern Middle School to Ada’s and around to the train station, there is a lot of non-residential property. If you created zoning for retail, daycare, play areas, etc. along that arc, we could have a win-win situation. The House eligible for commercial/non-profit activities would go up. With better walkability and more community meeting places, demand for houses and hence prices would go up in this newly walkable area – just a thought.

 

Section Glenville 2019 vs 2018
Sales 26 -23.5%
Sum of Sales  $                  31,038,000 -17.4%
Average of CDOM                                     227 18.3%
 Min of Sold Price  $                        565,000  
 Max of Sold Price  $                    2,250,000  
 Average of Sold Price  $                    1,193,769 8.0%
 Average of List Price/SqFt  $                                423 -1.1%
 Average of Sold Price/SqFt  $                                395 -3.0%
Average of SP/ASMT 1.511 -13.3%
Average of SP/OLP 87.7% -2.6%

 

Glenville had been one of our areas that had appreciated the most as people were priced out of Old Greenwich, Riverside and downtown Greenwich. The new Glenville Elementary and an award-winning principal at Western Middle School were making a big impact on the Glenville area. This year the TCJA got to Glenville with sales down by almost a quarter and most stats trending towards a buyer’s market.

The $10,000 limit on tax deductions applies to state and local taxes. While our local property tax hits $10,000 around $1.2 million, most homeowners are also paying state income tax. If you have a $600,000 house and you have a joint taxable income of $110,000, (which you’ll need to buy the $600,000 house) you will have $10,000 of SALT deductions, which means just about all Greenwich homeowners are impacted by SALT limitation. For many people Glenville is a great to place to buy their first home, but those are same people that are usually watching every penny when it comes to their monthly house payment.

The good news is that while fewer people bought in Glenville, both the average and the median prices went up this year. Unfortunately, both the sales price/sf and sales price to assessment ratio went down. So how was the average price up, but price square foot down? The answer is that people were buying the pricier houses, but getting more house for the same money in the upper end of the price range.

 

Section Cos Cob 2019 vs 2018
Sales 48 -36.0%
Sum of Sales  $    57,441,800 -49.2%
Average of CDOM                      178 6.1%
 Min of Sold Price  $          525,000  
 Max of Sold Price  $      3,400,000  
 Average of Sold Price  $      1,196,704 -20.6%
 Average of List Price/SqFt  $                  461 -9.8%
 Average of Sold Price/SqFt  $                  436 -11.1%
Average of SP/ASMT 1.491 -14.7%
Average of SP/OLP 90.1% -2.7%

 

Cos Cob was ground zero for all the problems with the market discussed above. Sales dropped from 75 houses to 48 houses or down 36%. What was selling was in the lower price ranges and buyers were paying less per square foot. Combining these two factors resulted in a price drop of 21% in the average sold price. A large portion of this price drop in average sales price was a real price drop, not just a change in the mix of what was selling; as indicated by the 15% drop in the sales price to assessment ratio.

Values in Cos Cob are up 4.4% since October 2015 based on the sales price to assessment ratio. It’s just that the average sales price was up 22% in 2018. The people who did sell in Cos Cob this year were particularly motivated and were willing to sell at lower prices. Given that Cos Cob had been trending higher as OG and Riverside got so expensive, we could see a good rebound this year due to greater demand.

 

                2020

We are seeing good demand so far this year, so hopefully, we can look back on 2019 as a transitional year when the TJCA tax increases for property ownership worked their way through the system. With a strong stock market, lessening trade tensions with China, historically low interest rates, a strong economy and nearly full employment 2020 is looking better already.

 

 

 

 

 

 

 

© Mark Pruner 2020 ∙ mark@bhhsne.com ∙  203-969-7900

Top Ten Residential and Commercial Sales in Greenwich, CT for 2019

Greenwich TimeKen Borsuk has a good article in today’s Greenwich Time that discusses the 10 biggest commercial and residential sales. On the residential side the biggest sale was huge, the second biggest sale ever in Greenwich of 110 Field Point Circle for $48 million. For 2019, the second biggest sale in town was 215 Byram Shore Road.

The sale of 110 Field Point Circle didn’t get a lot of press coverage as it was a private sale. We also had two other private top ten residential sale at 64 Oneida Drive which sold for $13 million and at 6 Smith Road which sold for 11.25 million.

These three sales make the over $10 million market look much better as it raises the number of over $10 million from 7 to 10, the same as last year.

Ken was nice enough to quote me a couple of times in the article about the SALT limitation effects on the high-end market and also the weaker, but still seller’s market under $1 million in Greenwich.

2019 GREENWICH REAL ESTATE MARKET YEAR-END REPORT

A poor beginning with a better ending

In Greenwich, 2019 was the Janus year. Like the two-faced Roman god who looked backwards and forwards, his head should be perched right at mid-year. If you look backward from there, we had 226 sales in the first half of the year down from 275 single family home sales in the first half of 2018. Looking forward from there you had 263 sales in the next five months compared to 268 sales in the July to November period of 2018 or almost the same number.

But this is the year-end report, so what happened in December, and that’s a really good question. In December 2019 we had only 37 sales compared to 50 sales in December 2018 and our ten-year average of 55 December sales. So, it looked like we ended the year on a down note and we did for the short sighted. However, when you add sales and contracts as of the end of December for both years we are looking at 109 transactions in 2019 compared to compared to 101 sales and contracts in December 2018 or an increase of 8%. And, that’s what we are seeing in the market place. I just had 3 showings over the weekend for 108 Pecksland, a house at a very good price, but that needs significant amounts of work, an issue that eliminates a large part of the buyers that are looking for new or near new appearance. This house hadn’t been getting a lot of showings and then come 2020 buyers were much more interested. People that had been waiting seem to be out looking in the dead of winter, albeit a mostly snowless winter so far.

As of 1/1/2019 Inventory Contracts Last Mo. Solds Last Mo Solds+ Contracts  YTD Solds  YTD+ Contracts Mos Supply Mos w/ Contracts Last Mo. Annlzd
< $600K 6 1 0 1 21 22 3.4 3.7 #DIV/0!
$600-$800K 20 5 4 9 35 40 6.9 6.8 5.0
$800K-$1M 17 4 3 7 47 51 4.3 4.5 5.7
$1-$1.5M 47 18 9 27 109 127 5.2 5.0 5.2
$1.5-$2M 48 14 4 18 83 97 6.9 6.7 12.0
$2-$3M 89 12 7 19 113 125 9.5 9.6 12.7
$3-$4M 69 11 7 18 53 64 15.6 14.6 9.9
$4-$5M 41 3 2 5 25 28 19.7 19.8 20.5
$5-6.5M 32 3 0 3 18 21 21.3 20.6 #DIV/0!
$6.5-$10M 39 0 0 0 16 16 29.3 32.9 #DIV/0!
> $10M 24 1 1 2 7 8 41.1 40.5 24.0
  0 0 0 0 0 0 0.0 0.0 0.0
TOTAL 432 72 37 109 527 599 9.8 9.7 11.7

Overall, the numbers for 2019 are down with only 527 sales for the year down 11.1% for the year, which is the lowest number of sales since the recession year of 2009 when we only had 370 sales. Our inventory as of 1/1/20 is also down to only 432 houses or 5.1% below last year. As mentioned, we ended the year with 72 contracts which is up 41.2% over last year so January should be a good month when those contracts close. Our months of supply for the overall market is about the same as last year with 9.8 months of supply.

 Interestingly, the median price is up for the year from $1,765,000 to $1,866,666 or an increase of 5.8%. This is a number that won’t get reported by the national press that likes to bash Greenwich, but for once that’s OK, since the increase in median price is mostly due to a decrease in sales. In 2018 we had a major run-up in sales as for once we got a good amount on inventory under $1 million dollars due to the $10,000 cap on SALT deductions. This year things went back to normal and we had 29 fewer sales under $1 million. The result was a shift in sales to the higher end so our median price went up. Our average price stayed about the same at  $2,376,978.

As often happens the devil is in the details. Even in a down market sales from $2 – 3 million were up as were sales from $6.5 – 10 million. The higher range’s increase in sales was due to people picking up some real bargains as high priced houses particularly in the backcountry were sold at real bargain price. Here you can look at the doughnut or the hole. If you focus on the doughnut rather than the hole, the good new is that 41 buyers thought that Greenwich is worth spending $5 million or more to live here. You could argue that equal number of people wanted to move, many of whom were moving out of state. That numbers seems to be shrinking however as our high-end inventory, over $5 million, is down by 16 houses or 14.4%.

Our biggest sale in 2019 was also our most under-reported story as a house on Field Point Circle sold for $48 million, the second highest sale ever after the Cooper Beach Farm sale for $120 million in 2014. Since this a private sale those numbers are not included in the numbers here. Had this sale been included it would have raised the average sales price for the year by almost $100,000.

Our months of supply are looking better in December, but that is normally the case at year end, when sales continue, but not many houses are listed in the last two months of the year. Having said that, we are down 44 listings from $1.5 million all the way up to the very high-end as of year-end 2019. Our months of supply from $5 – 6.5 million is under 2 years and from $6.5 – 10 million increased sales and lower inventory means that months of supply have dropped almost 6 months to 29.3 months of supply.

We are seeing increased months of supply under $1.5 million as a combination of increased inventory and lower sales makes this market more of a buyer’s market. It is still below 6 months of supply, so sellers are happy, just not as happy as normal. Going into 2020 our contracts are mostly concentrated between $1 million and $4 million so we will see this segment do better in January as these contracts close.

The rest of the year promises to be interesting. The stock market is up, interest rates continue to stay low and concerns about a recession have mostly faded. At the moment buyers are busy, let’s hope it continues for the rest of the year.

NOVEMBER 2019 GREENWICH REAL ESTATE MARKET – $6.5 – 10M Market Sales up, Inventory Down

Taxes, Locked Up Capital Gains, & Opportunity Zones

Taxes drive a lot of the Greenwich housing market. The general consensus has been that the higher priced the house the more taxes are a consideration in buying or selling. This market however is showing that the 2017 tax cut and SALT limitation may actually mean that tax consideration are having a greater impact at the low end.

As for sales, November was a little better than our 10 year average with 40 house sales compared to our 10-year average of 38 sales. After the bad start we had in the first half of the year any improvement, even 5% bump in one month is a nice plus. This bump up in sales in November sales was somewhat expected since October contracts were up 4% compared to last year.

This is the third year in a row that our November sales have beat our 10 year average. This may be indicative of sales happening later in the year as many financial firms no longer pay bonuses at the beginning of the year. This is the second year that our peak sales month was shifted later by a month. This year and last year, July and not June, were our highest sales month for the year.

If this trend continues, the result will be that the first half of the year will look weaker as sales shift to the second half of the year. I won’t be surprised to see articles in the first half of 2020 about a weak Greenwich market, when it is just sales shifting to later in the year.

As of 12/02/2019 Inventory Contracts Last Mo. Solds Last Mo Solds+ Contracts  YTD Solds  YTD+ Contracts Mos Supply Mos w/ Contracts Last Mo. Annlzd
< $600K 5 1 4 5 21 22 2.6 2.8 1.3
$600-$800K 23 5 2 7 31 36 8.2 8.0 11.5
$800K-$1M 22 4 6 10 44 48 5.5 5.7 3.7
$1-$1.5M 61 12 8 20 100 112 6.7 6.8 7.6
$1.5-$2M 62 14 6 20 79 93 8.6 8.3 10.3
$2-$3M 108 11 5 16 106 117 11.2 11.5 21.6
$3-$4M 84 11 4 15 46 57 20.1 18.4 21.0
$4-$5M 50 3 1 4 23 26 23.9 24.0 50.0
$5-6.5M 32 3 3 6 18 21 19.6 19.0 10.7
$6.5-$10M 45 0 1 1 16 16 30.9 35.2 45.0
> $10M 28 1 0 1 6 7 51.3 50.0 #DIV/0!
 
TOTAL 520 65 40 105 490 555 11.7 11.7 13.0

 

It looks like a stronger second half will not make up for the weak first half of 2019. We have 490 sales so far this year which is down 50 sales year-to-date or 9% lower sales. With contracts presently down by 12% we are very unlikely to catch up to last year’s 593 sales by the end of December.

But back to those taxes I was talking about before. You might expect that the 2017 Tax Cut and Jobs Acts’ elimination of the deductibility of the state and local taxes (SALT) over $10,000 would have their greatest impact at the high-end of the market, but that is not what we are seeing. Our median sales price so far this year is $1.89 million, which we’ll round off to $2 million for this analysis. If we look at sales, contracts and inventory below $2 million we see that sales are down 23 houses, contracts are down by 8 deals and inventory is up 20 listings. Below $2 million we are seeing a weaker market this year than we saw last year.

This is particularly bothersome below $1 million where we are usually supply constrained. Last year sales from $800K to $1 million took a big jump as for once we had enough inventory to meet demand. The result was that sales were up 49% to 64 sales in that price category last year through November 2018. This year we only have 44 sales in that price range.

If we go back one more year to 2017 under the old tax law our sales are about the same, but our inventory was less in that pre-tax cut year. It seems we have more people that want to sell and fewer people that want to buy in 2019, making for a weaker market.

Our under $2 million single family home market is primarily a young family market with some Westchester downsizers also. Both of these groups are particularly sensitive to increased costs from the loss of SALT deductibility. (BTW: If you want to do your own analysis of any of this, all of the monthly tables and charts, that can’t be fit in the Sentinel, are up at my blog, GreenwichStreets.com, going back to 2013.)

So, the 2017 TCJA may be making our under $2 million market weaker, what is it doing above that price? Just above that price, our $2 – 3 million dollar market is a transition zone where sales are up 7% and inventory is down 5%.

Above $3 million sales are down by 23 houses and contracts are down by 8 deals, but inventory is also down by 20 listings. It looks like not as many people are looking to move in, but also not as many people are looking to move out as last year.

Without talking to lots of the buyers and sellers it’s hard to say what’s driving these two markets. We are seeing lower sales across the board with two notable exceptions. Under $600,000 sales are up 47%, from 12 sales in 2018 to 21 sales in 2019 YTD. This shows we still have good demand for houses under $600,000 in Greenwich. Interestingly, this is also the price range where many buyers will be below $10,000 in SALT so they won’t be affected by the cap.

The other price range that is doing better this year is the $6.5 – 10 million price range. In that price range sales are up 78% from 9 sales in 2018 to 16 sales in 2019. Here what may be driving sales are some very large price drops in what were houses that would previously have sold for over $10 million.

Over $6.5 million we have had 29 house sales this year. This is up from 5 houses from last year. (To be clear, 5 of those 29 houses listed above $6.5 sold for less than $6.5 million) For these 29 sales, the median sales price to original list price ratio was 82%. This ratio is lower than the 89% for the whole market, but it is actually better than historic high-end SP/OLP ratios where high-end original list prices were often set with extreme optimism.

Of these 29 high-end sales the median year built was 1990 and only 2 of them were new construction. It’s a tough time to build high-end spec houses as we have 73 competitors and a couple of years of supply of houses on the market.

So, what’s likely to happen? Based on contracts being down, December has a good chance of being a mediocre month leading to sales for the year being down and also prices being down, though not as much as the pundits thought in their mid-year reports.

One wild card is that the new Qualified Opportunity Zones give people who have huge capital gains locked up in their houses or in the stock market a way to shelter these gains. For most people in Greenwich who bought before 1990, the Obamacare additional capital gains tax of 3.8% will kick in on the sale of even a modest house. A QOZ fund or QOZ company is a way to delay this tax for 7 years while not paying any capital gains on the return on their investment. QOZ funds may start playing a bigger factor for our downsizers allowing them to sell earlier.

One of the more innovative QOZ funds was created right here in Greenwich by Belpointe Capital. Their Belpointe REIT is publicly traded on the OTCQX with minimum investments of $100. You’ll still need to hold your investment for 10 years to get all the tax benefits, but it does provide a low entry price, low load and liquidity. Downsizers may not want to lock up their funds for a long time, but it is one solution for those folks that previously might have waited for the step-up in basis granted under the estate tax, which helped their heirs, but not the homeowners themselves.

As to the new year, recession fears seem to be fading so 2020 is looking up at the moment.

BACKCOUNTRY GREENWICH, CT SALES UP 29% IN 2019

Average Price/SF & SP/Assessment Ratio Up

By Mark Pruner

November 19, 2019

Last year 45 homes sold in backcountry Greenwich. This year it looks like we will end the year with around 58 sales. We already have 49 sales so far this year. With 9 contracts waiting to close including one with a list price of $12 million dollars the last month and half of 2019 should be a good. All 9 contracts might not close by year end, but for each one that doesn’t close we may well get an all-cash deal that isn’t presently under contract that will close before year end.

2017 2018 2019+Contr % change 17-18 % change 18-19
Sales 45 45 58 0% 29%
Average  $ 3,769,350  $   3,441,086  $   3,223,806 -9% -6%
Median  $ 2,680,000  $   2,675,000  $   2,327,000 0% -13%
Avg. $/sf  $           509  $             509  $            553 0% 9%
Med. $/sf  $           431  $             459  $            453 6% -1%
Med. OLP/SP 80.0% 89.0% 86.0% 11% -3%
Med. SP/Assmt                  1.110                    1.260 1.285 14% 2%
Med. SF                  6,097                    5,495                     5,713 -10% 4%
SP/Assmt % of ’15                    0.78                       0.89                       0.90

For the people that actually like good news, our average price per square foot is up 9% in backcountry. Our sales price to assessment ratio is also up 2% compared to last year’s ratio. None of this get’s reported in the Wall Street Journal, the National Review or even in the Greenwich Time’s front page article entitled “Sales still slumping for backcountry homes”. All three stories came about because Regis Philbin bought a beautiful home in 2008 for $7.2 million dollars and he has recently listed it for $4.595 million. This one property has come to define the market to readers outside of Greenwich, but anecdotes don’t make a market.

 

Had these reporters really wanted to bash Greenwich, they could have used the drop in the average sales price over the last two year, which is down 14.5% from $3.8 million to $3.2 million. Our median sales price is down 13.2% from $2.68 million to $2.33 million, both of these numbers are indicators, but not good indicators of what prices are doing in backcountry Greenwich.

The reason they are not good indicators is that higher sales in backcountry have brought average prices down, since the increased sales are mostly from $1 – 3 million. The result is that increased sales of below average homes are bringing down both the average and the median sales price in backcountry. (These houses are not otherwise below average houses, but more about that later.)

So, prices are down, and sales are up, which is basic supply and demand. Prices have reached the point where people are seeing good bargains in backcountry and they are buying. I’ve sold three houses in backcountry this year compared to none last year. Among the three houses there were 8 offers in total. None of the sales were easy and several times I was glad I’d been a real estate lawyer for 14 years before becoming a real estate agent. Buyers are driving hard bargains and you have to know when to push back. On the other side, I had two buyers walk away from accepted offers, when the inspection showed more work than they had planned for when they visited the house. If buyers are going to buy in backcountry, they really like the house to be in good shape.

Half of all the high-end houses in Greenwich are in backcountry, many of which are owned by well know people. These are the ones that get the attention in the national press. The oft repeated shibboleth is that we have a mismatch between what today’s buyers want compared to what was built in the go-go digits decade of this century. There is some truth to that, living large in a big English manor house or Georgian is not as popular as it was before the recession. Having said that, these houses sell better than old high-end houses. In the last three years we have had 22 houses sell for more than $5 million in backcountry of those 22 houses, 12 or 54% were built in this century with only 5 being built after the recession.

Backcountry Sales 2018

We actually have more of a problem selling 20th century houses that need work than we do selling, 21st century houses don’t have today’s homier, open floor plan. Now having said that they are still a tough sell. High-end houses, with lots of square footage, that need work, or don’t have today’s style in the backcountry are difficult to sell and are selling at a big discount to what they were sold for at the peek of market prices in 2009. For the old timers who have lived here for many years, they are seeing sales prices that are multiples of what they paid for their house originally.

Backcountry sales and contracts as of 11/19/19

You also can’t paint backcountry with a broad-brush. Even in backcountry houses over $5 million only represent 28% of the inventory. Under $1 million we have only one house, which means that 71% of our market is between $1 and 5 million. Much of that market is seeing good buyer activity at today’s lower prices. (Parkway school had to add another kindergarten class recently.)

As mentioned before these houses are not below average. What you can get for $1.8 million in backcountry compared to $1.8 million in downtown or Old Greenwich is amazing. Many people who grew up on larger properties really appreciate having more room for their activities and family. These houses are such values that they compare very well to building from scratch. Having said that people who really want their own home are building exactly what they want in backcountry where issues like siting, amenities and guest houses are much easier to get through town departments.

Right now, backcountry is going through major changes, which are often wrenching changes for those that bought in the late digits. Buyers however are finding great bargains and interestingly some of the most distant houses along the New York borders are attracting people due to the resurgent night-life in Armonk and an excellent community theater in Bedford. In a couple of years some folks will be kicking themselves that they didn’t buy when they could.

 

The Greenwich October Real Estate Market Report – Another Good, Average Month

October was our fourth month in a row that was “average”. In fact, compared to last October’s 37 sales, this October’s 40 sales are up a little, and is only one sale below our ten-year average of 41 sales. From July to October, the four “good” months, we have sold 223 single family homes compared to 222 last year and a ten-year average of 225 sales. The problem with 2019 has been the first six months. In those first six months, we only sold 226 houses, down from 275 houses last year, which was down from our 10-year average of 287 houses.

October2019.2017-2019.111219

For the entire year, we are down 9% in sales from 492 sales last year to 449 sales this year. And, the problem with our last four average months is that so far, we are not making up much of that first half shortfall in sales. On the good news side, inventory is down by 22 houses to 587 single family homes and our 40 October sales were up from last October.

As of 11/08/2019 Inventory Contracts Last Mo. Solds Last Mo Solds+ Contracts  YTD Solds  YTD+ Contracts Mos Supply Mos w/ Contracts Last Mo. Annlzd
< $600K 3 3 2 5 17 20 1.8 1.7 1.5
$600-$800K 28 7 3 10 29 36 9.7 8.9 9.3
$800K-$1M 22 7 1 8 38 45 5.8 5.6 22.0
$1-$1.5M 71 13 11 24 91 104 7.8 7.9 6.5
$1.5-$2M 74 17 7 24 73 90 10.1 9.5 10.6
$2-$3M 120 14 11 25 101 115 11.9 12.0 10.9
$3-$4M 98 15 2 17 42 57 23.3 19.8 49.0
$4-$5M 56 4 2 6 22 26 25.5 24.8 28.0
$5-6.5M 38 3 0 3 15 18 25.3 24.3   –
$6.5-$10M 48 3 1 4 15 18 32.0 30.7 48.0
> $10M 29 1 0 1 6 7 48.3 47.6   –
TOTAL 587 87 40 127 449 536 13.1 12.6 14.7

A couple of areas stand out; from $2 – 3 million our inventory is down 10% and sales for year are up 12%. The other stand-out area is from $5 – 6.5 million where inventory is down 32% and sale are up 40% from only 8 sales last year to 15 sales this year. The problem with this jump in high-end sales can be seen when you compare the sales price to the Tax Assessors 2015 assessment. Last year that ratio was 1.52 this year it is 1.41 or a drop of 8%. When you look at the $/s.f. that has slipped from $994/sf last year to $822/sf this year or a drop of 17%. The sales price to original list price is also down and the days on market is up.

Oct2019vs2018.Spreadsheet.mp.110819

For the glass half-empty and falling pundits this shows a weak and declining market. To me what is shows is a market adjustment that is likely near its bottom. Prices have dropped significantly in just one year, but sales are also up significantly. Three of the houses that sold between $6.5 and 10 million were on for an average of 1,265 days or 3.5 years. These three houses sold at 67% of their original list price, but they sold for a total of $24.2 million and an average price of $8 million. Buyers are swooping in to pick up these bargains as our 40% jump in sales show.

The Wall Street Journal has continued their Greenwich bashing with an article last week headlined, Television Host Regis Philbin Lists Greenwich Home for a Big Loss. The reporter sites her own previous article, Wealthy Greenwich Home Sellers Give In to Market Realities for support. This is her third Greenwich bashing article and is in contrast to her article on our neighbor Bedford, NY which is entitled, The Small Westchester Town That Draws Hollywood A-Listers and Billionaires. As I wrote above sales are down and prices are also down and I think that should be reported, but the reporting needs to be balanced to give an accurate picture of the market. The Wall Street Journal with her article President Trump’s Onetime Greenwich Estate Relists for 29% Less gives a one-sided and slanted view as I wrote in my article about today’s day-glo journalism.

One of the aspects of day-glo journalism is that other writers take a sensational article and further sensationalize it, often with a loss accuracy. We saw this with this week’s National Review article, Who Wants to be a Millionaire in Greenwich. That article opens with the inaccurate statement that Regis Philbin just sold his house, rather than just listed it. The article goes on to say that “sellers routinely have been taking losses of $1 million or more” Given that our median sale price is $1,900,000 this isn’t very likely. It is true of many high-end houses that were bought in the backcountry bubble from 2006 – 2010, but generally not true for folks who bought more traditional homes outside of north Greenwich.

Oct2019.MoS.110919

So, what have prices done this year? Well our median price is up 4.6% from $1,816,250 last year to $1,900,000. This is due not to a shift in values in Greenwich, but is due to a slight increase in the percentage of sales above the median price. A better indicator of what prices are doing is the sales price per square foot where prices are down 2.5%. The sales price to assessment ratio is also down 5.3% Clearly, the change in federal tax deductibility of state and local taxes have affected Greenwich prices just as they have done in NYC and the northeast.

On the good news side, sales in backcountry are up 48% from last year with 49 sales so far this year. (I’ve had 3 of those sales.) Sales are up, because prices are a bargain. There a couple of listings that I think are just amazing. If you are looking there give me a call. Most folks are now adjusting their price expectations to the new reality and people are buying in backcountry. Our least expensive house in backcountry went for $600,000; an 1829 house on 0.64 acres located on Riversville Road and our most expensive house went for $14.87 million; a 2011 house on 5.7 acres on John Street with 12,368 square feet.

Oct2019.Sales.Inv.Cur.Ks.110919

Overall our market is better, but still challenging. Correct pricing is crucial and houses that need work are tough sells. This has become such an issue with today’s picky buyers that I’m actually talking with builders and owners about renovating their properties before the sale and splitting the increase in value.

Our 87 contracts show a tilt to the higher end. This is a trend we are seeing post-recession with more sales above the median happening later in the year. As a result, our median sales price at year end may be even higher than it is now and thus even higher than last year.

Our market tends to change three times a year, so we are due for one more change before year-end. In Greenwich, average never lasts for long.

Oct2019.4Pie.110819

 

 

 

Sleazy practices in real estate offers, bad square footage numbers & wetland soil types

Over four decades as an attorney, business owner and Realtor, I’ve learned some hard lessons about negotiations and who you can trust in negotiations. In the Greenwich real estate market, we have over 1000 members of the Greenwich Association of Realtors, but there are probably only about 200 that do the very large majority of all the deals each year. We all know each other, or at worst know somebody who knows the other agent’s reputation for honesty and fair negotiating.

The Greenwich real estate community’s reputation for fair dealing is self-reinforcing in that the Realtors that are known to be sharp dealers are actually at a disadvantage as other Realtors don’t take what they say at face value. This means that even when they are actually being truthful, the other agent still has her doubts. As a result, deals that could be done if there were more trust between the parties don’t get done.

Let’s look at some of the tactics and situations to be aware of when negotiating a deal.

I.        The Phantom Second Bidder

Buyers tend to make higher offers and quicker counter offers when they are competing against another buyer. No one likes to get beat out for the house that they want and our surfeit of Type A personalities in town just hate “losing” period. If it’s a hot house in a hot market, multiple offers are to be expected. Unfortunately, the other bidder is not always real, or their level of interest may not be as high as represented. This is when having a good broker can be very helpful, to help determine just how worried a buyer should be about the other buyer.

II.      The Off-Market Buyer

Some buyers want particular neighborhoods or a particular type of house. In such cases, agents may contact owners whose properties aren’t listed inquiring whether they might want to sell their house. Every year several houses are sold this way. The problem comes when an agent purports to have a buyer for a property as a tactic to get a listing. One easy way around this for homeowners is to sign a listing agreement with the agent, but limit it to that one showing.

III.    Simultaneous or Concurrent bidding

Buyers sometimes make offers on two or even more houses at once, trying to play one homeowner against another or just to hedge their bets. It’s a risky strategy as one seller or both may decide they don’t want to get involved in such a negotiation and decide to pull-out. If the agent reveals that there are simultaneous bid, then everyone is on a level playing field.

Where this is a problem is when there are multiple offers on one house and the simultaneous bidder doesn’t want their offer tainted by the fact that they are bidding on another house. The simultaneous bidder can win the bidding war on house “A” and then turn around and accept an offer on house “B”.  The owner of house “A” can then find that the other bidder for their house has moved on. One way to fight this is to simply have your agent ask by email if the other party is making simultaneous offers. Very few agents, will want to misrepresent something in writing.

IV.    Basements, Attics & Square Footage

In Greenwich we can only use the house square footage from an architect, builder, or most commonly the square footage of the house on the tax card. The problem here is that this square footage may or may not include the basement depending on whether the basement is a walkout basement or is underground (and it’s even a little more complicated than that.) Lots of our financial types like to look at cost/square foot to figure out whether the house is fairly priced or not.

Our median price per square foot so far this year is $521/s.f. It’s a lousy number to use as it does not take into account; the size of the lot, the presence of wetlands, or whether the basement is included. If you do want to use that number, always ask if the basement and/or “attic” is included in the square feet. Even better go see the house and decide whether what is there works for you. Houses with identical square footages can feel spacious or cramped depending oh how they are laid out.

V.      Soil Types, Wetlands and Maps

Wetlands serve a vital purpose in protecting our natural resources and controlling flooding. State law mandates their protection and we have a town agency with a hardworking staff and well-educated board members to hear matters involving wetlands. We also have a town GIS department that puts out very useful maps showing where wetlands are located. Wetlands however are defined by soil types which can only be determined by a licensed professional. As a result, the wetlands shown on the Town GIS maps don’t always coincide with what a soil scientist would map out.

The presence of wetlands can greatly affect what you can do on a property. Also, the wetlands don’t have to be on your property to affect what you can do there. The presence of wetlands on the property in the area can prevent or cause modifications in what someone can do with a property. As a result. the FMV will be different depending on where and how extensive the wetlands are.

Both wetlands and the allowed above ground square footage (FAR) change the value of a property and some agents may not make this info readily available so if you are thinking of buying a property that might be affected by wetlands or if you want to expand a house that is already near it’s FAR limit, you want to do your own homework on this matter. The people at the at the Tax Assessor’s office and the IWWA can be very helpful.