Greenwich August 2019 Real Estate Stats by Neighborhood

 

Neighborhood Report

Inventory July 2019 Sales July 2019
Listings DOM Avg LP/SqFt Sales DOM Avg SP/SqFt Avg SP/ASMT Avg SP/OLP
Banksville 4 93 $337 1 324 $393 1.460 97.0%
Byram 10 259 $600 9 157 $417 1.807 90.3%
Cos Cob 58 176 $515 25 151 $427 1.512 89.9%
Glenville 21 203 $451 12 226 $421 1.565 85.5%
North Mianus 5 148 $470 6 99 $488 1.558 97.2%
North Parkway 119 348 $627 29 337 $525 1.350 86.3%
Old Greenwich 68 194 $698 51 148 $617 1.605 91.7%
Pemberwick 7 129 $491 5 301 $383 1.746 93.4%
Riverside 68 239 $740 45 181 $533 1.624 91.5%
So. of Post Road 66 194 $973 31 277 $748 1.895 89.6%
South Parkway 212 269 $643 82 286 $561 1.464 86.2%
Grand Total 640 252 $666 296 229 $555 1.567 89.1%

 

So, that’s how the overall market is doing, how are the individual neighborhoods doing. The short answer is things have reversed from last year. Where last year Cos Cob, Riverside and Glenville were hot; this year not so much. So, the bad news first.

Cos Cob

Cos Cob so far this year has seen the biggest reversal with sales down from 45 sales through July of last year to only 25 sales this year or a drop of 45%. Inventory is also up from 46 listings to 58 listings. Despite sales being down and inventory being up, the average days on market for sales is about the same as last year with 151 days this year compared to 161 last year.

As always, the people who price their listings competitively are ones that get sales. Homeowners will find that competitive prices this year are lower this year than last year. The sales price/sf, sales price divided by the town’s assessment and the sales price to original list price are all down compared to last year.

Riverside

Riverside has seen a decline of 17 sales so far this year from 62 sales to 45 sales or a drop of 27%. Part of the reduced sales in Riverside is due to a substantially reduced inventory going from 92 listings last year to 68 listings this year, which is a drop of 26%, which almost exactly matches the drop in sales. As to prices Riverside is telling a mixed story as sales price/sf and the sales price to original list price are both down from last year, while the sales price to assessment ratio is up.

Glenville

Glenville is a much smaller market, with only 21 listings and 12 sales so far this year, but the 12 sales is down from 21 sales last year. In Glenville, unlike Riverside the inventory is almost the same with 21 listings this year and 20 listings last year. As to the price change indicators, Glenville has the lowest sales price to original list price ratio. This means that houses are coming on higher in Glenville then the market thinks they are worth. Both Glenville and Cos Cob had seen more demand in the last couple of years as Old Greenwich and Riverside had gotten so expensive. It looks like, that bargain premium is down in 2019.

South of the Parkway

South of the Parkway has been a tougher market this year with sales down from 93 house sales last year to 82 this year. At the same time, inventory rose from 194 last year to 212 listings this year. All three price indicators are down though not a lot. Given that sales are down 16% for the town overall and sales in this area are only down 12%, you could argue that this area is actually doing better than average.

I have one of those 212 listings at 108 Pecksland and it is what I consider an amazing value with a list price of $1.65 million. This compares to the Tax Assessor’s FMV of $2.34 million. We are getting showings, mostly by families with school age children, but there is a real reluctance to take on even small renovation projects. If you are a buyer that doesn’t mind doing work on a purchase, you have some real bargains to pick from.

 

Now despite the fact that sales are down overall, we do have three areas with good news.

 

North of the Parkway

Deals have gotten so good North of the Parkway that sales are up for the year as is the average sold price per square foot, while inventory is essentially the same as last year. Now this isn’t a big turnaround, but it’s possible we saw the bottom for backcountry at the end of 2018.

Deals are still tough as can be seen from an original list price to sales price ratio of only 86%, but part of this is the large number of houses over $5M, where the traditional SP/OLP is more like 75%. Part is also some houses under $5M that started out too high a while ago have had to really chop their price to generate interest.

For folks in backcountry and mid-country two properties are generating lots of interest and concern. Aquarion Water Company announced that they are consider selling the 80 acres that they own on Lake Avenue just north of the Merritt Parkway. They had previously proposed developing this land in 2006. State law requires the water company to first offer the parcel to the town and then to open space organization and the whole process is likely to take a couple of years.

The other property, Mel Gibson’s old property between Old Mill Road and the Merritt Parkway is up for and Inland Wetlands and Watercourses hearing on Monday August 26th. The developer has proposed 28 houses on 75 acres in what is putatively the 4-acre zone.

                Old Greenwich

Old Greenwich’s inventory is down 13 listings as of the end of July to 68 listings from 81 listings last year. As townwide sales got back to our 10-year average in July so did Old Greenwich, but in Old Greenwich’s case this was not a pickup in the sales rate, but a slowing. OG has sold 51 houses so far in 2019 compared to 52 houses in 2018. The three price change indicators have also turned flat to slightly down, but regardless the activity earlier in the year still gives OG a leg up over other areas of the town due to its good sales earlier in the year.

Byram

The other southern corner of Greenwich, this one in the southwest corner, is doing spectacularly well if you look at the percentage change from last year. Sales are up 80% this year, while the market is even tighter with inventory down 33%. Now this is possible due to the law of small numbers which says when you don’t have much of something even a small change makes a big percentage change. The 80% increase in sales is from 5 sales last year to 9 sales this year, while inventory shrank from 15 listings to 10 listings. Two the three price change indicators are up in Byram. The sales price to original list price ratio went from 88% last year to 90% this year and the sales price to assessment ratio is the second highest in town at 1.807 or 27% higher than the Assessors assigned values as of 10/1/2015.

 

Summary

Like May, July was close to our 10-year average and therefore looked good compared to our weak sales in other prior months. Were it not for a slow June, we could call continued good sales in July a turn around. Also, the neighborhoods are spotty with no area reporting stronger sales, lower inventory and the price change indicators all up. We did have an above average number of contracts at the beginning of August and based on the first two weeks August is looking to be another “average” month, which is good in 2019.

 

 

JULY 2019 – A GOOD MONTH FOR SALES AND CONTRACTS IN GREENWICH

I’ve seen some market reports that compare this month’s sales to the prior month and on that basis Greenwich sales of single-family homes are on a long streak of improvement since February when we had 20 sales. Each of the following months saw sales climb steadily; March – 27 sales, April – 35 sales, May – 57 sales, June – 60 sales and in July we had 70 sales. We also have 95 contracts pending which is up 9 contracts from last year.

The problem with comparing this month’s sales to last months sales and trying to make any conclusions is that real estate sales have a pronounced seasonal element. The National Association of Realtors seasonally adjusts their numbers to try to take out the skew to higher summer sales and lower winter sales. The problem with this approach is that it misses systemic changes, which is what might be happening now.

If you look at our 10-year average for sales, there is a strong peak in June with a 10-year average of 84 sales compared to May’s average of 57 sales and July’s average of 72 sales. This year we had 70 sales in July compared to 60 sales in June 2019. This pattern is a repeat of 2018 sales where we had 76 sales in July and only 68 sales in June 2018. Going back to 2006 we have had this happen only twice; once was the recession year of 2009 and the other was in 2014 when we had a big jump in sales the last few days of July.

So, we’ve now had two consecutive years with more July sales than we had in June. The question is, is this a new trend with sales happening later in the year? If so then June 2019 sales don’t look so bad. We also saw the same thing in 2018 with July contracts there up over July 2017 contracts. If this trend continues then some of the gloom and doom that pundits were focusing on in the first half may simply be a shift in sales to later in the year. (BTW: If you ever need to look at prior months statistics the Greenwich Sentinel has my articles posted at GreenwichSentinel.com until July of 2015 and I have another two years of monthly reports posted GreenwichStreets.com that have additional charts I use both of these resources several times a week to answer questions that clients and other agents have. They are free for anyone to use.)

The July increase in sales was also matched with a drop-in inventory to 640 house listing. Now this is down only three listings in total from July 2018’s 643 listings, but it means that we have worked off the bubble of inventory that we had for the prior months in 2019.

When you look just at the present state of the market today, things don’t look too bad. Our inventory is down to 615 listings our July sales were only 2 sales below our 10-year average and our contracts are up over last year. But we are still transitioning from a poor first half. For the year to date our 296 sales are down 55 sales or 16% from last year. Lower sales for the year so far have led to an increase in months of supply for the year. We are up 2.3 months of supply for 2019 to 15.1 months from 12.8 months of supply at the end of July last year. That is not a great number.

We do have some residual bad news hangover. Three price categories have both higher inventories and lower sales for both the month of July and year to date. The curious thing is that these price categories are spread throughout the price ranges and isolated from good price ranges around them. Whenever you have transition months, things look confused, but if you have a listing from $600K- 800K or from $1.5M – 2.0M or from $4M -5M. It is more of a buyer’s market than it was last year.

As of 8/2/2019 Inventory Contracts Last Mo. Solds Last Mo Solds+ Contracts  YTD Solds  YTD+ Contracts Mos Supply Mos w/ Contracts Last Mo. Annlzd
< $600K 5 4 1 5 9 13 3.9 3.3 5.0
$600-$800K 26 7 2 9 16 23 11.4 9.6 13.0
$800K-$1M 24 7 11 18 29 36 5.8 5.7 2.2
$1-$1.5M 65 15 12 27 57 72 8.0 7.7 5.4
$1.5-$2M 96 18 11 29 46 64 14.6 12.8 8.7
$2-$3M 136 24 15 39 67 91 14.2 12.7 9.1
$3-$4M 98 7 9 16 34 41 20.2 20.3 10.9
$4-$5M 58 6 1 7 13 19 31.2 25.9 58.0
$5-6.5M 48 3 4 7 10 13 33.6 31.4 12.0
$6.5-$10M 51 2 2 4 10 12 35.7 36.1 25.5
> $10M 33 2 2 4 5 7 46.2 40.1 16.5
                   
TOTAL 640 95 70 165 296 391 15.1 13.9 9.1

On the flip side, inventory is down noticeably from $880K – 1.5M and from $5 – 6.5M. These markets which had looked weaker this year are matching lower inventory and sales similar to last July.

Hidden in the sales numbers is a significant improvement in months of supply from $6.5M – 10M where we are down 37 months of supply from a bad 72 months of supply to 34 months of supply this year. Now a little under 3 years of supply is not great, but it’s a lot better than 6 years of supply in 2018.

The other area that stands out is the $2 – 3M where whose inventory is down to only 21% of the market but has 23% of sales YTD and 25% of the contracts. This should continue to look good in August due to the number of contracts.

 

June 2019 Greenwich Neighborhoods Report – Backcountry looking better

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

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

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

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

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

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

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

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

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

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

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

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

 

Greenwich, CT First Half 2019 Real Estate Report

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

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

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

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

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

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

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

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

I have an Accepted Offer, What Could Go Wrong?

 

by Mark Pruner

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

 

What’s Your Greenwich Home is Worth in 2019?

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

New York Times and Hartford Courant quote Mark Pruner this week

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

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

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