We have a lot of great houses in Greenwich that sell at premium prices, but these houses, particularly, the older ones, were not built the way you see them today. Their owners moved with the times and renovated these houses to include the features that they and other people want. Today we are going to look at 22 Cherry Tree to see some of the things that were done to make a good house great.
Location, Location, Location
First off, the house at 22 Cherry Tree Lane has location (Riverside), location (Harbor Point Association) and location (great views of Long Island Sound). For many folks in Greenwich, and even in Riverside, these streets may not be known, as unless you are going there, you aren’t going through there as the streets on the southern end of Riverside all end at the Sound.
The Harbor Point Association was at one time a great estate of some 40 acres and now hosts some 35 houses. The association fronts on Greenwich Cove and the Sound and comes with its own marina and beach along a breakwater that reaches out into the Sound. It also has one of the nicer security guards at the front gate and many of the houses overlook a tidal pond with a weir at the opening that keeps the pond full at low tide.
A Hot Neighborhood Today
The present owners bought the house back in 2013 and it was a good house with 5 bedrooms and 4/2 baths on 1.05 acres with beautiful views of the Sound and tidal pond. (On the other side of the pond is 34 Indian Point Lane that sold in June of this year for $42,175,000 and also 32 Indian Point Lane which is listed at $20,995,000, but it’s too late if you wanted to buy it as it is under contract.) In 2013, 22 Cherry Tree was a two-story house with a portico across the front and seven gables on the second floor. It had been listed originally in 2011 for $6.99M. The following year it came back on at $5.49M and towards the end of 2012 was relisted for $5.19M and sold for an even $5 million on July 8, 2013.
Finding Ways to Improve a Good House – The Pool
The question for the buyers was how to take a good, solidly built house and make it better. The new owners and the architects came up with several ways to improve the house. The most obvious change was the addition of a large pool right out the back door. The owners were originally told this could not be done, but with some creativity, perseverance and $400,000; the pool got built.
While the pool is beautiful much of that cost was not paid to Shoreline Pools to actually build the pool. The lot is 1.05 acres and this area is not served by town sewers, so each lot needs a septic system. In the case of 22 Cherry Tree Lane, the septic system was located right where the pool would go. So. Redniss & Mead had to come up with an engineering solution. The whole septic system was moved from the large yard on the side of the property to the rear of the property, which meant you needed engineering studies and the approval of the Town Health Department. The nice thing is that moving the septic system meant that area is now a level yard ideally suited for the present badminton court or other outdoor activities.
This area of Riverside falls within the Coastal Area Management Zone so it gets extra scrutiny from the town Planning and Zoning Commission. The regulatory process for all town agencies took two years to complete and cost a substantial portion of the $400K spent on the pool. Another major cost was that owners wanted the pool to be a roughly the same level as the first floor of the house to get better views of the water and sunsets. This required bringing in dozens of truckloads of dirt. At the end of the day the owners had a beautiful pool, an amenity that is in great demand in the Covid era.
Adding interior space and improvements
The owners also wanted several additional features including a large walk-in closet in the master bedroom, a screened in porch, an elevated place to sit and watch the gorgeous sunsets and more space. They also wanted an updated kitchen, a second floor laundry and more parking spaces. The walk-in closet had an easy solution that was hard to do. Right next to the master bedroom was a small bedroom that didn’t work well as a bedroom but made for a very nice walk-in closet and an upstairs laundry room.
The hard part was figuring out how to replace that bedroom as you don’t see many four bedroom houses at this price point. The solution was to add a third floor but zoning only allows for 2 and a half stories and a maximum height of 40 feet. A half story does not mean that ceiling is only 4 feet high on the third floor, it means that the size of the floor can only be half the square footage of the floor below. The height requirement would also have been violated with a standard peaked roof, so the third floor had a roof with two peaks each lower than a full peaked roof.
The setbacks in the RA-1 zone are 50 feet for the front and backyards and 25 feet on the side, so how to add floor space without significantly expanding the overall footprint of the house. One way to do this was to use the “wasted” upper space for the cathedral ceiling in the living room. By putting a ceiling over this space, the owners got a playroom on the second floor. Directly off of the living room they screened in part of the portico and put a roof deck on top, which became one of the great features of the house. Now you can sit and watch the water from an upstairs vantage point.
At the same time, they enlarged the windows on the second floor to let in more light and make the views of the Sound ever better. One area where many homeowners have particular requirements is the kitchen. Today’s kitchens are just as much gathering areas as are the adjacent family areas. The owners hired Kitchens by Deane to give the kitchen a warm inviting feel, while still being very functional. They also opened the kitchen to the family room and redid the large center island.
Much of this work was done before the family moved in, though the long approval process for the pool meant that that work was going on while the owners were there. These changes and improvements in total came to $4 million over and above the purchase price, but in the end the owners got a house that felt like new and had everything that they wanted.
As I often tell buyers, very few people ever regret creating the house that they really want. The costs to create a great house are not insignificant, but why put up with house features that make you unhappy every day. Your home should be the castle that you want.
Even in one of our hottest market ever 13% of our 491 listings have been on for more than a year. Of those 64 old listings that have had their birthday anniversary, 18 of them have actually had their second birthday and 5 of them have actually been on for more than 1,000 days, so what keeps houses from selling.
INITIAL PRICING: The biggest reason by far is over-pricing the house when first listed. The first two weeks of a listing is critical and if online buyers think the house is overpriced they won’t even go see the house. Even if their agent recommends seeing the house if what they see online doesn’t match up with their idea of its value they will turn down the showing.
So why do owners over-price their houses? First, it’s just human nature; no one wants to leave money on the table if a buyer would have paid more, so why not take a flyer at a higher initial price. This hope and a dream approach can set off a cascading list of issues that can easily leave the house on the market for a year or more and result in price well below what you might have gotten.
Second, owner’s value the unique features in their houses that were added as labors of love and money. The problem is that most buyers will only pay a little more, if any for these features. Paradoxically, the lowest list price often leads to the highest and fastest sales price, by generating the most traffic to the house.
Things like quality of construction, beautiful gardens, and homeowner care and maintenance often don’t play into a buyer’s decision as whether to see a house or not. With the rise of the Internet, items that can be rendered as numbers have reduced the unquantifiable elements. Buyers look at square footage, price per square foot, acres, days on market and other features that they can sort on their spreadsheets as signs of value.
PRICE REDUCTIONS: Every time, an owner changes the price it shows up on the Internet and each price change or lack of them have an unwritten tag line in buyers’ mind:
Price unchanged for 100 days – The seller won’t negotiate a “fair price” and may not want to sell at all, probably a waste of time to go see
A small price reduction – Seller will negotiate, but their bottom line is close to their present list price so that needs to be close to the buyer’s perceived value
A series of small price reductions – Must be something wrong with the house if no one has bought it after all those price reductions and the buyer is probably desperate and will take a lowball bid.
If the buyer traffic is not there initially, or if you had good traffic, but no offers have been made it’s time to take a major price reduction. You also don’t want to do this more than twice so the bigger the better. Once again paradoxically the bigger the price cut the better your sales price will be. What you don’t want to get caught in is the death spiral of a dozen cuts, if you do you may end up having to reduce the price below “fair market value” to get people to come see your house.
POOR PRESENTATION: I was talking to another experienced agent about how much clutter and poor presentation could cost a seller and we both came to the same figure. We posited two identical older homes, but one was neat and tidy and the other cluttered and dirty. If the neat house went for $750,000 we both estimated, it would be minus $50,000 if the other house was a mess. If you add dishes in the sink and mildew in the shower, you could take off another $25,000. Appearance counts.
So, the things you can do that will improve the value of your house starting at street side:
Curb appeal – A lot of people decide whether they like a property as soon as they see it, so trim the trees and bushes, remove fallen branches, fix the driveway, paint the mailbox and add big house numbers so the house is easy to find. Make sure the path from the driveway to the front door is a nice as you can make it; buy a new doormat with a welcoming message, paint the front door and replace any corroded door knobs and knockers.
First steps – Assuming they still like the house from the exterior the next most important is the first two steps inside. Make the inside air temperature the opposite of the outside; warm in the winter and cool in the summer. Make sure there are no unpleasant smells such as cat pee or cigars (we smell one of these every week.) The entry should have the warm inviting feel of a home not a hotel lobby.
Inside – Get rid of “bad memory points,” the things that people remember a week later about the house. I’ve seen dead squirrels in the attic, dead bugs under the sink, and used diapers left out. Even things that aren’t offensive should be fixed, like door that stick, dust on shelves and a used drinking glass in the sink should be removed.
NEGOTIATION: If you want to really insult a Greenwich seller make a lowball offer, however, if you are the seller put that irritation aside and consider the situation. Last year our median sales price to list price was 92% so if the parties were to meet in the middle the buyer would start with an offer of 84% of list price or an $840,000 offer on a $1,000,000 listing. A lot of sellers wouldn’t even counter this “insulting” offer and a lot buyers would be too embarrassed or prideful to raise their own opening offer so the negotiation is over, before it began.
My philosophy is to counter every offer. The buyer maybe an ignorant, irritating, cheapskate without any money, but you’ll never know unless you counter-offer (along with a strong, and often unneeded, admonition from seller’s agent to buyer’s agent to get serious in buyer’s counteroffer.)
The other major negotiation killer is the line in the sand. Very often the buyer and seller will be less than 1% apart, but they both draw a line in the sand and won’t make a better counter. (Seller: If it’s that small a difference the buyer shouldn’t have problem coming up 1%.”) If that happens try to add more negotiating options; a better closing date, larger down payment, or offer to include the yard furniture, or the Mercedes.
And, whatever you do, try not to tick-off the buyer. It never makes the process easier and greatly increases the chance that both parties will walk. At the same time try not to be ticked-off yourself. Yes some buyers are rude, but it’s a transaction not dating. Too often, what is perceived as rude is really a cultural, regional or national difference in style, so stay cool and a few showings, can lead to a good price and quick close.
Sales are up in Greenwich, but not in every neighborhood. Overall sales, as of the end of August, are up from 359 sales last year to 461 sales this year an increase of 102 sales or 28%. What’s up even more are contracts which are up from 83 contracts as of the end of August 2019 to 193 contracts this year or an increase of 133%. When you total up all of these sales, we went from a total sales volume of $877,661,399 last year to $1,180,418,928. This is $303 million increase in sales is 34.5%, which means that the town conveyance taxes are up nicely this year. At the same time, our inventory is down 14% and this week we actually dipped below 500 listings. So, it is a tight market overall.
As of 9/2/2020
Sum of Sold Price
Average of Cumulative DOM
Average of Sold Price
Average of List Price/SqFt
Average of Sold Price/SqFt
Average of SP/ASMT
Average of SP/OLP
So. of Post Road
These are the headline numbers, but the market gets much more nuanced when you look neighborhood by neighborhood. We have four neighborhoods that are up and three neighborhoods that are down, but even there some stats are up and some stats are down. The Covid buyers are definitely looking for land and as you might expect backcountry and mid-country are the big beneficiaries of this desire for more space and larger houses.
In backcountry sales are up 52 percent to 50 solds compared to only 33 last year. Our average sold price is actually down 22% from $3.13 million last year to $2.46 million this year. Now for my backcountry neighbors there is no need to worry about what some wag, somewhere, will call a collapse in prices. What we are seeing is just a major pickup in sales below $3 million. Anything that comes on the market in backcountry under $2 million gets snapped up quickly. Our average sales price/sf is down 4.3%, which also is due to the number of sales under the median of $2.46 million. While our inventory is down 14%, this is not a time to be asking for a premium price as discussed below. Priced correctly, houses in backcountry sell and under $3 million they sell pretty quickly.
South of the Parkway
Our second biggest increase in sales is South of the Parkway, an area that covers central Greenwich from the Merritt Parkway to the Post Road. There sales are up 47.4% with total volume up 53% to $451 million. Inventory is down 16%, days on market are down 11% and the average sales price to original list price is up 3.9%. All are signs of a stronger market. Even here though, you can see how the pandemic has shaped the market. Our average sold price is up 3.8% and our average sold price/sf is actually down 4.3%.
The average sales price is up, because we are seeing more high-end sales this year, which is bringing the neighborhood average up. The average sales price/sf and the sales price to assessment ratio are down, showing that we have some motivated sellers. Also, these averages cover the whole year and clearly lots of sellers were looking to sell in April and May at last year’s prices. We are seeing more recent sales prices at higher values and ratios, but not by a huge amount.
Aug 2020 vs. Aug 2019
Sum of Sold Price
Average of CDOM
Average of Sold Price
Average of List Price/SqFt
Average of Sold Price/SqFt
Average of SP/ASMT
Average of SP/OLP
South of Post Road
Cos Cob & Glenville
Cos Cob has had a good year, sales are up 40% over last year. Now part of that is because last year was not a good year for Cos Cob. In fact, Cos Cob had our biggest percentage drop in sales last year. This year Cos Cob is back; sales are up, the average sold price is up and the average sold price/sf is also up a little. Cos Cob has had 42 sales this year and has another 21 contracts waiting to close, so sales should continue to look good in September.
The past few years Cos Cob and Glenville have moved together, as alternatives to pricey Old Greenwich and Riverside. Like Cos Cob, Glenville also had a poor 2019 and this year it has recovered somewhat with 20 sales compared to last years 17 sales. One of the issues for doing statistics on Glenville is that people like the area so much they move in and stay and it’s a smaller area. So, a couple sales up or down can make a significant percentage change. Right now, we only have 18 listings in Glenville compared to 44 listings for Cos Cob,
Riverside & Old Greenwich
Riverside has returned to being a very preferred neighborhood after not being so favored last year. Sales there are up 35.6% compared to only 21.0% in Old Greenwich. This difference is due to the poor sales last year in Riverside. Between the two neighborhoods we have total sales of 155 houses or a third of all of our sales. When you look at a map, you see a lot of sales and contracts in an area that is a small fraction of Greenwich’s total land area.
Also indicative of Riverside’s rebound this year is the average sales price is up by $471,481 this year in Riverside, while the average sales price in Old Greenwich is actually down despite increased sales. Once again much of this is an adjustment in what prices are selling, rather than an overall change in prices. If you really want to make Riverside look good, we can include the private $42 million sale on Indian Point Lane earlier this year. If we do that, the average sale in Riverside goes up by over $500,000. In fact, that one sale would have brought up the townwide average sale by $91,000.
South of the Post Road, Byram and Pemberwick
Sales are down a little bit in the southwest part of town. Now while South of the Post Road includes Belle Haven, it also includes Chickahominy, which moves much more like Byram and Pemberwick. In these areas we have a lot of R-6 zones. The R-6 zone is a two family zone with a minimum lot size of 0.17 acres. In the Covid era, 2 families on a sixth of an acre is just a little too cozy for some.
The other issue for these neighborhoods where the median R-6 house sold for $655,000 is that they are seeing lots of competition from Westchester County, as well as Stamford, Norwalk and further up the line. The Covid buyer is hoping to only commute a couple of days a week so the longer commute from Norwalk, Wilton or Fairfield is less of a factor in 2020 than when employees had to be at there desks in the City every day.
Covid has turned our market on its feet. I say this because, the Great Recession turned our market on its head and now Covid is putting us back on our feet. Buyers from NYC are looking for more land, more square footage and more in-home amenities, which says 2 and 4 acre zoning in mid-country and backcountry. The second office and the pool are becoming bigger wants. At the same time, mid-size zones in Cos Cob, Riverside, and Old Greenwich are doing better than last year.
Our two family, R-6 zone is not doing as well with buyers even at the lower price ranges. In the Covid era, buyers are willing to pay higher taxes in Westchester or are willing commute further into Fairfield County for more space. We also have a fair number of Greenwich residents who are looking to upsize. Many of these folks were waiting to move and now that the market is so much more competitive and interest rates are at record lows, they are pulling the trigger.
As to where we are going, we have lots of contracts so September and even October should be good months. I’ve also met several buyers who had rented here for the summer and are now going to buy something in the near future. If you have a house to sell, now is a very good time to do it as who knows what will happen next year.
If you do put your house on the market, your Realtor needs to do a thorough analysis of the micro-market for your house. Some areas, styles, recent construction and amenities would support a higher price in this market, but you still need to be competitive. Every week, we see nice houses whose listings are expiring unsold.
On the buyer’s side, it’s also a good time to be in the market. Interest rates are down, and prices are not up significantly, however, we are seeing slightly higher prices in the sales starting in August. While the seller’s need to worry about recession/price drop, there is a better chance than we will see higher prices next year, so there is a good opportunity for buyers. Waiting may not be in your interest.
ERRATA: Last week’s article mentioned that this August was our best August ever with 108 sales reported on the GMLS. As my brother, and long-time Realtor, Russ Pruner pointed out we actually had 109 GMLS sales in August 2001. He is the keeper of stats that go back well into the last century and has a website with lots of good interactive stats in the “Market Data” section of his website at http://www.russellpruner.com. His data also shows that in the last 40 years we have had a couple of years where August was the highest sales month, just not this century. I apologize for slightly over-stating just how good August 2020. As Bum Phillips said about Herschel Walker, “He may not be in a class by himself, but it doesn’t take long to call roll in that class.” That’s what this August was like.
Sales Contracts are Up 133% at the beginning of September
August single family home sales were literally off the chart, at least my chart. We had 108 sales which meant I had to rescale my graph of monthly sales; it normally only goes to 100 sales. Post-recession, we have never had an August like this. We also have never had a post-recession year where the high point for sales was in August; it’s normally June or July. Covid has not only increased sales, but time shifted them, by two months or possibly more.
Starting in the 3rd week of June, we have seen weekly transaction, contracts and sales) in a trading range as the stockbrokers call it, that varies from 47 transactions to 68 transactions per week. The lower transactions weeks are primarily due to a 4-day holiday week or a tropical storm. Overall, we have been averaging about 60 transactions a week. In the most recent week we had 63 transactions. For the last 4 weeks, we have averaged 64.3 transactions per week.
September sales & contract
As a result September has a decent chance of beating August’s outstanding sales. We can be fairly sure that September sales will be the highest for any September since September 1990, but they may not beat August 2020’s 108 sales. We have 193 contracts up from 83 last year, however, that number is down 15 contracts from the 208 contracts that we had the beginning of August. We do have a late school start this year, so we will continue to see families in September pressing to get in before the beginning of school.
Inventory stays down, despite lots of new listings
On the inventory side we, only have 505 listings, down 14% from last year. So, with increased sales and lower inventory, we are seeing big drops in months of supply. For the market overall, we have 8.8 months of supply dramatically down from 13.0 months of supply at this time last year. The really dramatic number, however, is when you take August sales and annualize them, there you go from 9.3 months of supply for last August’s annualized sales to 4.7 months of supply August 2020. You just don’t see that kind of low number in a town, like Greenwich, where the median sales price is now $2,040,000. High-end houses take a while to sell and this results in higher months of supply, well at least did.
As of 9/1/2020
Last Mo. Solds
Last Mo Solds+ Contracts
Mos w/ Contracts
Last Mo. Annlzd
Prices trending up
Our median sales price in 2019 was $1,866,666 as of the end of August our median sales number is the aforesaid, $2,040,000 or an increase of 9.3%. Now as usually happens, most of this apparent increase in appreciation is due to a major increase in sales above our $2 million median, not an overall increase in prices across the town. As more house sell above our old median price, the median gets pulled up. But we may finally be seeing real appreciation as more of these houses that went contract after multiple bids close.
When you look at the sales price price/sf, that number is up 4.5% from $503/sf last year to $526/sf this year. The other key indicator is the sales price to assessment ratio and that is up only .73% over last year, but even there we are looking at real appreciation. Another key indicator does show actual appreciation. When you look at the August sales price to the original list price ratio (SP/OLP) we see a lot more hot sales. Of the 108 sales in August 2020, 44% of them were for full list or over list price. This compares to August 2019 when only 8% out of 63 sales sold at list or over list.
Sales under $1 million
When you look at the price ranges our inventory under $1 million is supply constrained with only 34 listings compared to 47 last year. Sales are the same as last year. One reason may be that these houses are on smaller lots, so these buyers may be buying large lots further upstate Connecticut and in Taxchester, New York.
Sales from $1 – 4 million
The standout part of the market is from $1 – 4 million where we have 339 of our 461 sales so far this year. This is up 121 sales from last year. We also have 138 of our 193 contracts between $1 and $4 million. This our family market.
The remarkable thing is that last one million price range from $3 – 4 million. This is traditionally an older buyer with high school or college kids or empty nesters looking for the large house that marks a lifetime of hard work and success. This year it includes successful families with toddlers and young children that might have otherwise stayed in the city.
Sales over $4 million
Even over $4 million we are seeing more young families. Patty Ekvall and I have had a bunch of showings at 22 Cherry Tree Lane in Harbor Point in the Little Belle Haven Section of Riverside. This house is on for $7.25 million and with one exception, the buyers have all been families with elementary school or younger children. Two of the buyers have had houses in the Hamptons who now want a high-end house that is a commutable distance from NYC.
If you are interested in percentage change rather than absolute number changes the high-end is the place to look. Our contracts from $6.5 – 10 million are up 350% from last year. Last year we had 2 contracts in that price range, this year we have 9 contracts. For the whole market over $5 million we are up 24 sales and contracts to 58 transactions this year.
The high-end market was slow to get started, but really started to heat up in the middle of June and has only continued to get busier. To see that just look at transactions over $5 million in the last three days from 8/31 to 9/2. We’ve had 4 sales over $5M including 75 Byram Shore Road at $12,000,000 after it had been on the market for 971 days.
The really remarkable deals are the 4 listings in contract in that 3-day period. The Helmsley place finally went to contract after 1,540 days on market. On the shorefront, 32 Indian Point Lane is under contract and is listed at $21,000,000. Over in Belle Haven, 66 Glenwood Drive listed for $13,750,000 has a contract after being on and off the market since April 2018.
Some Do’s and Don’t
Some sellers are seeing all this activity and are reaching for the golden ring on their listing price. Despite all this activity, that is probably not your best strategy. Any busy broker can tell you of houses that are overpriced and just aren’t getting showings. The idea that in a hot market people will come see houses that they think are overpriced is just wrong.
In most price ranges you are not competing against other Greenwich houses, but potentially two counties worth of similar listing. Traditionally, a Greenwich buyer was a Greenwich buyer. A Covid buyer just wants out and the particular town is not as crucial. Even if the market is tight here, buyers that think your house is priced to high are often looking Scarsdale or Bedford or New Canaan or Westport.
For buyers, be prepared and be prepared to move fast. You can check out my article in the Greenwich Sentinel from a couple of weeks ago about how to be the winning bidder in a hot market. Set up a meeting with your mortgage banker and your attorney, either in person or virtually. They need to know who you are before you need them. Also get the contact info for an inspector or two in case the first one is busy. You want to be able to get to contract before your competition. Even being a day faster can mean you get the house. I have had two buyers contact me after they lost a house, because they were day late and would not have been a dollar short, they had the money.
So, can this market just keep getting hotter? The short answer is yes. We still have lots of contacts waiting to close. We have a lot of inventory coming on the market now, something that normally is a trickle just before Labor Day. These last thre weeks were the hottest of the year when you count sales and contracts. We also have lots of folks looking.
For the glass half empty types, contracts are down a fraction and inventory from $5 – 10 million is up by 7 listings. We also need more inventory under $600K as we only have 1 listing. For me personally, the last two weeks have been the busiest of the year, but fall is coming, a time when the market slows down after a couple of weeks of post-Labor Day inventory increases. This year that slowdown may be much later.
In July 2020, we had 85 sales of single-family home in Greenwich. This blew away last year when we had 72 sales and is above our 10-year average of 74 sales. The sales are impressive, but what is really astounding is that we have 208 contracts waiting to close. This is up 119% from last year when we had a fairly normal 95 contracts at the end of July 2019. Contracts are up in every price range with a big jump in contracts between $1 and 4 million. Even our contracts over $4 million are up 21 contracts from last year going from 13 contract to 34 contracts are a jump of 161%
Our 10-year average for sales in August is 67 houses, so if a third of the houses under contract close in August we will still exceed our August average. The odds are that we are going to see a lot more than that. Of those 208 contracts, 148 are between $1 and $4 million, which means in Greenwich that most of those 148 families have school age children who want to be in their house before the school year starts.
July 2020 is also the third year in a row with more sales in July than in June, our traditional high sales month. It looks like we have a real market change with sales getting more complicated and shifting later in the year. The result is that first half of the year is just not going to look as good, since sales are shifting from June to July. What is going to be interesting is that August actually has a good chance this year of exceeding our already high July sales.
When you look back over the year you can see the market went through four phases this year. We opened the year with a typical run up in transactions; i.e., sales and contract. Everything was looking pretty normal in this first phase with transactions steadily rising, until the second phase, Covid lockdown came. We went from a good 33 transactions in the second week of March to only 17 transaction in the third week. While we never stopped showing houses, lots of people put off looking and our transactions dropped to an average of 20 transactions per week through the first week in May.
Starting with the second week of May, transactions increased steadily going from 33 transactions the first week of the third phase all the way up to 64 transactions in the third week of June when we reached the fourth phase that we are now. What we are seeing is a persistent high plateau of transactions with about 60 transactions each week for the last 5 weeks now.
As of 8/1/2020
Last Mo. Solds
Last Mo Solds+ Contracts
Mos w/ Contracts
Last Mo. Annlzd
As transactions increased, new listings followed, which is normally just the opposite in our market. In a normal year, inventory comes on in February, March and April, goes to contract in April and May and closes in June and July. In this year, our contracts started rising in in the first week of June and surged through the rest of the month and only then did we start seeing more inventory. Of course you might not notice the new inventory coming on if you only looked at the bottomline numbers. New contracts have been at such a rapid pace that they are actually pulling down our inventory at a time the owners are listing an unprecedented number of houses for July.
The increase in sales, as mentioned, is across the board from $600K to $10 million plus. The only category where sales are not up is under $600K where we have 9 sales YTD plus 4 contracts with an inventory of only 4 houses leading to only 2.6 months of supply, i.e. very hot. If we had more listings under $600K we had more sales. You can pick any price category and it’s much more pro-seller this year. Out total sales even with the Covid lockdown phase are still up 48 sales or 19% from last year.
If you are thinking about buying or selling a house you want to look at contracts not sales, since contracts tells you what the market demand is now.
Demand has increased the most over $1.5 million with an average increase in contracts of 189%.
The biggest jump in deals is from $3 – 4 million where we have 34 contracts compared to only 7 contracts in July 2019, an increase of 386%.
The market from $4 – 5 million has also changed a lot. We only have 6 more contracts, but 16 less listings. Months of supply in this price category have dropped by more than a year to 13.2 months of supply from 24.8 months of supply in July 2019.
We have seen a slight up-tick in inventory over $5 million with 142 listings compared to 132 listings in 2019 or 7.5%, but don’t worry too much as we also seen a big jump in contracts from 7 last year to 22 deals in 2020.
When you look at months of supply what jumps out is just how remarkable July is. If you take sales and contracts every category is getting tighter. If you look at just deals that close in July and analyze them, everything up to $4 million dollars is accelerating. The other thing is just the absolute numbers.
For most of the U.S. anything under 6 months supply is considered a seller’s market, but then median price for a home sale in the US is $329,000; i.e., half of the houses in the U.S. sell for less than $329K. The last time a house sold in Greenwich for less than that amount was in 2012. The idea of 6 months of supply being a seller’s market only works up to about $2 million. Above $3 million its more like one year of supply and above $5 million its probably 18 months of supply. Very high-end house just take longer to sell. Based on those criteria we have a seller’s market all the way up to $6.5 million.
When you look at where the contracts are they are concentrated between $1 million and $4 million where we have 148 contracts or 71% of all contracts. This price range covers successful young families at the lower end and folks looking for a weekend house at the upper end. Also, we continue to see an increase Greenwich buyers who realize that now is the time to buy before prices go up, since our median price is already up 5.6% this year. Curiously, that is not where to focus.
Lots of people and the press focus on what is happening to the average sales price of houses and that is not a good number to look at in Greenwich if what you are trying to do is to see where the overall market is going and the median price is only a little better. Most years, the change in the average price is not due to changes in overall market demand, but due more to the mix of what is selling. Given the broad increase in sales and contracts 2020 may be the exception to that rule as we are seeing an increase at most price ranges, but for the moment other price change indicators do not agree.
Average Sales Price
Median Sales Price
Median Sales Price/ sf
So, what are sales prices doing. As I said, if you look just at the average you’d say that prices are up 4.4%, which isn’t bad for 7 months appreciation. If you look at just the median, then sales prices are up 5.6%. But, if you take a look at cost per square foot for July 2020 compared to the median for 2019 then prices are only up 0.2% and if you look at the sales price to the tax assessors FMV assessment then we are actually down 1.0%. Throw in the sales price to the original list price which is up 3.4% and the median days on market, which is down 9 days or 6.4% you can get really confused, but it’s not that hard.
The median price is up, and the average price is up, but not as much. This is because, more higher-end houses are selling, but not compared to the very high-end so the median is up, but the average is up a little less. That’s the mix of what’s selling.
Overall prices in 2020 are flat based on price/sf and SP/Assmt ratio. This means we have some motivated buyers and many of the multiple offer deals that are rumored to be high have not closed as yet. At the same time the market is tightening as the sales price to original list price is up. Also the days on market is down so things are a bit tighter. Sellers are pricing their house better as indicated by the SP/OLP ratio and there is more demand as indicated by the sales price.
Another factor in why prices aren’t increasing yet is that many buyers are looking well beyond Greenwich, but not just in New Canaan and Darien, but also in Westchester County and even New Jersey. Our market looks tight inside our borders, but buyers are not coming to Greenwich per se, but fleeing the high density and lack of social distance in NYC. They are looking overall and hence have lots more choices, having said that there are lots more buyers for all the areas that have backyards and amenities. There, as always, Greenwich stacks up pretty well.
While we may not have seen a significant increase in sales price per square foot and sales price to assessment ratio as our 208 contracts close I expect that we will. There is just too much demand and I’m hearing of too many bidding wars for prices not to go up. When you look the 85 deals that closed in July, 25 of them went for the original list price or more. This percentage is up from 17% for all 2020 deal. Most of the deals that closed in July were signed in the Phase 3 ramp-up period. It will be interesting to see what percentage of deals signed in July go for over list.
Not only are some price ranges hotter than others, some areas of town are hotter. When you look at the market bey school district you can see that our areas with the largest acreage have become the most popular. Our two most northerly school districts are where the action is. North St and Parkway elementary school districts are in a tie for largest percentage of transactions with 96 sales and transactions each. As they used to say in elementary school, Parkway is the “most improved” in the Covid era with transaction up a third from 15.5% pre-Covid to 20.4% in the Covid era.
Post Covid %
School Districts in the Covid Era – Sales, Contract – 2020 Covid Era % vs Pre Covid %
Riverside Elementary School District has also seen a significant increase in transactions in the Covid part of this year, while Cos Cob has seen the biggest decrease. This doesn’t mean that Cos Cob School District sales are down compared to 2019, they are not only that there has been a shift in the post April 2020 sale percentage to Parkway and Riverside.
2020 Pre-Covid vs Covid-Era Sales and Contracts
When you combine to the two most northerly school districts with Riverside you have more than half the deals in town. Does this mean we are going to see more crowded schools; possibly. What isn’t clear is how many of these families have school age kids that will be going to public school. And, in some cases a family with school age kids may just be replacing a family with school age kids so there is no net increase in students. Also Parkway and North St have additional capacity, but Riverside which already has our largest elementary population and possibly Central Middle School may see some expanded enrollment.
After years of a shrinking, to flat population having a few more people in town will be a good thing, particularly if everyone has electricity. 🙂
With contracts up 100% over last year we are seeing lots of interest from the press about the increase in sales and the ways that the Coroanavirus have changed real estate in Greenwich and Connecticut. Here are three stories that I got quoted in about how the market is changing.
As of the middle of July, we have had 287 single family home sales in Greenwich. Of those sales, 44 or 15.3% went for list or over list price. Many of these, and others that sold for under list price were multiple bid situations. Many of these transactions were pre-Covid and you can expect that the percent of list and over list deals will go up. (I’m working on one now.)
Our contracts only really started to accelerate in the second week in May when we went a slow 23 transactions, sales and contracts, to 33 contracts in a week. Last week we had 58 transactions down slightly from 64 transaction the previous week when the Gold Coast conveyance tax increase kicked in on July 1st. The large percentage of those 58 transactions were contracts being signed.
Single Family Homes Sales and Contracts Each Week in 2020
The other interesting thing is where these list and over list contracts are. If you read my neighborhood report last week, you can predict where the competitive sales are. They are in the hot neighborhoods. Old Greenwich, Riverside and Glenville are seeing their fair share of over list activity. Mid-country and Cos Cob are seeing hot sales and the” backcountry is back” area is also seeing over list activity, while we’ve yet to see this in Byram and Pemberwick.
Closed sales for list or over list in Greenwich, CT as of 7/14/20
What’s really remarkable is the number of outstanding contracts we have. As of 7/14/20 we have 198 contracts which is an amazing number when you consider that last year that number was around 99 contracts. This is a 100% Covid driven increase. You can be sure that many of those 198 contracts went for list or over list. The market is hot and so far is only getting hotter with each passing week.
On the inventory side we are getting new inventory, but it is going off fast also. We presently have 566 listings; this is down from 640 listings as of the end of July 2019 or a drop of 12%. We had been done down about 20% in inventory, so only 12% down is an improvement, but some price ranges in some neighborhoods are very much combat buying.
I have spoken to several of our longest serving agents, in some cases their tenure goes back 40 years. They say they have never seen a market like this; not after 9/11, not in the go-go years of the 80s, nor in the bubble years of the digits decade. This really is an unprecedented time.
So how does a buyer get an advantage in a competitive bidding situation in a tight market? The short answer is to be better prepared than your competition and move faster than they do.
Build a Team Early
Everyone knows to get a good Realtor when they buy a house, but you will need other professionals too. If you are going to need financing, talk to a mortgage broker or banker early, even before you start looking. Meet with them and build a relationship. Very few financings are pro forma today and you’ll want a banker who will go to bat for you to move the process along.
Most buyers don’t think about a real estate attorney until after their offer has been accepted. Be prepared and find your attorney early. Let him or her know your level of experience and that you’ll probably need a quick turn around on the contract rider.
Building inspectors can also be a big help. Once again, speed can be crucial. In a competitive bidding situation, you may only have a day or two to inspect the property. The only thing worse than coming in second in a bidding war is winning war only to get a house with problems.
The top capital gains tax has increased and there is an additional 3.8% Medicare tax on gains. The rules are complex, but if you have a significant gain in your present house, you may face a bigger tax bite than you thought. If you are selling your own house and you need the funds from that house to close, consult a tax attorney or accountant now to see just how much the taxman taketh and ways to minimize that take.
First relax you’ve got a team of advisors if things get difficult. You’re better prepared than most of your competition.
Second, have your mortgage broker or banker pull your credit and check for any problems. Get not only pre-qualified, but pre-approved and not just pre-approved, but under written pre-approved. What this means is that the bank has done everything necessary to approve your loan for a house except the appraisal on the house. A pre-approval letter and shorter mortgage contingency goes a long way when bidding against someone who only has a pre-qual letter. Also, the beginning of the process is the time to fix your credit score rather than when your entire loan hangs on getting your credit score a few points higher.
If there is some way you can do an all cash purchase great. An all cash offer in a competitive bid situation can move you to the top of the list and often reduce your purchase price by $10,000 to $20,000 for deals under $1,000,000 and by as much as $50,000 or more for deals under $2,000,000. Consult with your team before you do this.
You may want to make an all cash offer even if you are going to finance the house later, to free up cash after the purchase. Post-purchase refinancing can be tricky and may affect your taxes, so check with your accountant or tax attorney before you pursue this path. And, the time to do that is before you saddle up and go looking for your dream house.
Also, a high price is good, but if you want to be in your new house in two weeks and the sellers can’t find a new place and arrange a move for two months, your higher, all cash offer, may be DOA. You want to match your other terms to your seller’s needs.
Third, be available. If you are a couple and one of you can’t always take phone calls, what about email or texts? Whenever possible whoever is most available should be able to make decisions for both. Discuss various options in advance so you are both comfortable with this. Also putting in a bid and going on vacation or a trip is a not optimal. Often, an hour or two or even minutes can make the difference in whether you get the house. Making decisions and responding in minutes gives you a big advantage over the competition that can’t get back to the seller until tomorrow.
Fourth, be flexible and reasonable. Don’t let a minor deal point or an item worth a few hundred dollars become an ego issue. Work with your team to come up with other options, particularly when the other side is being unreasonable. Don’t yell and scream. The seller has lived in your house-to-be for years and knows all your new neighbors. You want to arrive in their good graces.
Fifth, be human. Let the seller know why you like their place and what it will mean to you and your family to live there. Also try to connect with each person you deal with; don’t become just another case number.
Lastly, have fun. How often will you get to do this? With a good team you’ve got people to talk with. Even if you lose out the first time around you will have gained valuable experience. You will get a house and often a better house at a better price.
A call for a welcoming Greenwich
I’ve been dealing with a lot of Covid refugees who are going through the ups and downs of buying a house in a tight market. Many of them are scared of moving to Greenwich. Often, they have lived in New York City for decades and really don’t know what to expect. What will it be like for their kids? Will they be able to go to a school here? Will people from Greenwich look down on them? Where do they shop for those specialty items they love? Will there be dangerous wildlife in their backyard? We are all in this together and if you see someone that looks a little unsure of themselves you might ask if you can help. If you get a new neighbor introduce yourself or just drop a welcoming note in their mailbox.
Also, it would be great if each neighborhood association would host a welcome function for our new arrivals. It’s a great way to get some new members and tell people about your community. Associations could do a zoom function or small, social distancing, get-togethers outdoors. Just as we are seeing with business practices, this year is going change Greenwich and accelerate trends already taking place. Let’s make it as pleasant as possible for everyone and having a little fun along the way would be nice too.
This week we start with a quick update on June sales and how June went out like a lion, which given that we are now in our Covid time-shifted spring market is a little to be expected. The rest of the article is look at how our neighborhoods did in the first half of the year.
June Sales Update
If you could take one day of the year and clone it for the rest of the year, that date would be June 30, 2020. On that date we sold 12 houses out of 76 sales for the whole month of June. Of those 12 sales, the average price was $5.93 million. A house at 49 Midwood Road sold for $10,750,000 after 435 days on the market and a house at 45 Field Point Circle sold for $12,800,000 after 220 days on the market. In addition, we had sales of $7,500,000, $4,995,000 and $4,200,000 all on June 30th. As I wrote last week, the July 1st increase of 1% in the state conveyance tax for sales over $2.5 million was the motivated factor to get all these high-end deals done before the new tax kicked in.
But let’s get back to those 76 total sales for the whole month, that number is well above the 60 sales we had in June 2019 and even 4 sales above what we had in June 2018 when we didn’t’ have a pandemic. We also have 171 contracts waiting to close which is up 68 houses from last year or a 66% jump from last year. We are doing better in just about every neighborhood, but three neighborhoods are seeing some headwinds.
The last time the conveyance tax was raised in 2011 we saw our biggest sales month ever with 114 sales in June 2011, followed by our worst July with only 48 sales. We won’t see that this July as we have just too many contracts waiting to close.
THE 2020 FIRST HALF GREENWICH NEIGHBORHOODS REPORT
The tight neighborhoods
When you look at months of supply the neighborhood that really stands out is Glenville and not so much for its 11 sales, but for its 11 contracts waiting to close for a total of 22 transactions. When you throw in only 17 listing with these 22 transactions you get a tight 5.8 months of supply with contracts which is the best in town. This is down 11.7 months of supply from last year. A lot of that drop is attributable to the number listings going from 28 house listings at the end of June last year to only 17 listings left this month. Tight markets don’t just happen, smart agents and sellers help. While we have a tight market the average list price in Glenville has dropped from $1.13M to $1.09 as sellers are more competitively pricing their listings.
Old Greenwich & Riverside
Last year I sold a house in Riverside to a developer and had another listing cancelled for lack of buyer interest. Riverside was a tough place to sell in 2019 which is unusual. This year Riverside is back and once again running neck and neck with Old Greenwich, a perennial favorite of buyers. Even in a time when people are looking for more space and larger houses, the village of Old Greenwich continues to attract buyers. One factor is the R-7 zone in both Riverside and Old Greenwich, which is mostly north of the Post Road, are smaller lots, but they look good to a family living in a small 2 bedroom apartment in NYC. Inventory is down for these two contiguous neighborhoods by a total of 49 listings to a total of only 118 listings. The average sale price is down in Old Greenwich, but took a big jump in Riverside up by $792K. Anytime you see a change like this, a large part is because of the mix of what is selling. Higher end houses with more space and more land are selling in Riverside, but we are also seeing higher sales price/sf a better indicator of an overall market move.
The Rapidly Changing Neighborhoods
Backcountry & Mid-Country
Last year we saw sales jump 30% in backcountry Greenwich and also go up in mid-country (which for GMLS data purposes goes all the way down to the Post Road). This year that trend is continuing. Mid-country is the new sweet spot in Greenwich with sales up 20 houses from last year and contracts up by 47 houses while inventory is down by 52 houses to only 187 listings. The average price, average price/sf and sales price to assessment ratio are all down, as motivated sellers are covering their bases just in case we do see a depression next year when their values might drop. While the stock market is at record levels and is not predicting a depression, it’s a good time for sellers to take some of their chips off the table.
In backcountry, sales are up 4 houses, but contracts are up 27 and listings are down 31. The result of all that is when you look at months of supply with contracts you only get 12.4 months of supply. Even if you just look at the actual sales months of supply, that is down 10.4 months from last year. People want land and houses with amenities; backcountry is one of the best places to get that.
Cos Cob has seen a strong rebound after being our neighborhood with the poorest results in 2019. Now 2019 results looked down in Cos Cob, because it had done so well in 2016-2018. In 2020, Cos Cob is back like those prior years. Sales are up 10 houses and contracts are up 14 houses while inventory is down 10. This result in a competitive 9.3 months of supply. On the sales only side, months of supply is down 10.2 months of supply from last year to 11. 3 months of supply.
Higher density neighborhoods
Byram, Pemberwick and North Mianus have seen the greatest appreciation since the Tax Assessor last did a revaluation in 2015. Byram is actually up 33% from 2015 when you compare the sales price to the assessment ratio. Pemberwick is up 18% from 2015 when you look at the same assessment ratio. Lots of folks want to live in Greenwich and those are our most affordable areas. This year a combination of all this prior appreciation and a desire for more social distancing have made these three neighborhoods slower this year than last year.
In Byram, we have 14 listings and only 2 sales so far this year. In Pemberwick it is 8 listings and no sales. North Mianus was our hottest neighborhood last year, but this year months of supply are up 3 months from last years to 10 months of supply. If you throw in the 2 contracts pending and only 5 listings its drops to a very active 7.5 months of supply, it’s just not as hot as last year.
All three of these neighborhoods are small so a few sales would change things dramatically, but it is a little strange that these lower priced areas have not done as well so far this year, since the R-7 zones in Old Greenwich and Riverside are doing well.
For the town overall, inventory is down 20% and this is true across most every neighborhood. Sales are up 18% and once again this is widespread with big jumps in Cos Cob, Riverside, and mid-country. The really dramatic change is in contracts which are up 66% as this market is just getting hotter. The areas that are hot right now based on contracts are backcountry, mid-country, Riverside and Old Greenwich. As I write this, I’m negotiating three deals, two in backcountry and one in mid-country. Trying to find good listings in those areas is tough and if you are looking to sell now is a good time to list.