January Greenwich Market Report by Neighborhoods

You can look at January 2018 Greenwich real estate sales as the glass half-full or half-empty. On the good news side contracts are up over January 2017 by 6 contracts for a total of 75 contracts.

Now while this is not a big jump, it is still very good news as there was lots of hand wringing over whether folks would buy in a high tax state like Connecticut. The answer is that they will and that they will continue to do so at the high-end.

Over $5 million dollars we saw 5 sales in January up from only 2 sales last January. The better news is that we have 10 contracts over $5 million that are also waiting to close which is up 2 contracts from the end of January last year.

Section Sales Sum of OLP Sum of SP Avg of SP/Assmt Avg of $/SF
Cos Cob 3 $3,077,400 $2,903,557 1.73 $ 424
Glenville 2 $1,594,000 $1,475,000 1.70 $ 398
North Parkway 4 $23,820,000 $19,476,000 1.37 $ 733
Old Greenwich 4 $8,317,500 $7,050,500 2.07 $ 520
Pemberwick 2 $1,489,000 $1,288,000 1.83 $ 738
Riverside 3 $4,089,000 $3,939,000 1.58 $ 561
South of Post Road 4 $12,097,000 $8,489,000 1.37 $ 577
South Parkway 8 $41,225,000 $35,707,500 1.30 $ 669
Grand Total 30 $95,708,900 $80,328,557 1.55 $ 592

Theses sales also made the backcountry look good where 4 house sales totaled $19,476,000. South of the Parkway, which is our largest area by far, we had 8 sales for a total of $35,707,500. So, these 2 areas totaled $55,183,5000 in sales, while all 6 other areas in Greenwich had sales only totaled $25,145,057. People are investing in mid-country and backcountry.

Jan. ’18 vs. Jan. ‘17

Now for those glass half empty types we have some bad news for you to be concerned about. Sales for the month were down 12 houses to a total of 30 houses sold; this is down from 42 house sales last year. This near 30% drop in sales was also focused in the heart of our market. With all price ranges from $1 – 4 million down. In all we were down 20 house sales in this price range from last year.

At the moment we have 500 house listings on the market and 299 of them are in this $1 – 4 million price range.  With sales down, months of supply was up. The biggest increase in MoS was in the $1.5 – 2.0 million price range where we saw an almost two years jump in supply.

Now you needn’t worry too much about. In that same $1 – 4 million price range we have 49 contracts waiting to close. The same $1.5 – 2 million price range that had the biggest jump in months of supply has 10 contracts waiting to close which is up 4 house contracts from last year. Add the contracts in and MoS is only up four months. The other reason is that one swallow does not make a summer. One month is just too short to get any good statistics other than some early indicators.

The sales were also spread out throughout the town with 8 sales South of the Parkway, and 4 sales each North of the Parkway, in Old Greenwich and South of the Post Road. We are also getting lots of good inventory coming on the market. So far this month we have 79 new house listings come on the market. Deals are also moving along, some at a pretty rapid pace.  So far this year, we have had 17 houses that came on this year already close or go to contract. (I’m putting a very cute, colonial on next week at around $1.1 million. It’s walking distance to the Cos Cob shops and I’ve had several agents tell me it won’t be on the market long at that price.)

Anecdotally, the market seems busy with a variety of people looking. Folks from Westchester County seem to be up, and I’ve seen a bunch from Stamford, both places with higher property taxes than we have here in Greenwich. We have the young NYC families as always in the spring market, but I’ve also seen or heard of transferees from London and NJ, as well as Texas and Holland.

It’s looking like 2018 might be a “normal” year with good demand and a little nice appreciation. Lots of swallows do make a summer.


The High End Market in Greenwich – A Historical Analysis

by Mark Pruner and Cesar Rabellino

In 2017 and YTD in 2018 the high-end market in Greenwich has recovered amazing well. Last year we had 65 sales over $5 million compared to 36 sales in 2016. That increase of 80% is remarkable and the trend has continued in the first few weeks of 2018. The turn around from 2016 is truly remarkable, but the year-over-year comparisons are somewhat misleading since 2016 sales were really poor.

In 2016 we had our worst sales over $5 million in many years. Even at our low point of 2009 and 2010 we had 43 sales over $5 million. So in the depth of the great recession, we had more high-end sales than we had in 2016, which results in 2017 looking really good.

Looked at from a post-recession viewpoint 2017 was still a good year. We had 65 sales over $5 million compared to 71 sales in 2014 and 70 sales in 2012. What was particularly impressive was that we had sales volume of $506 million in our over $5 million market. This compares to $296 million in the horrible year of 2016 and $411 million the year before that in 2015. The 2017 volume is about the same as we had in 2012 when we had $511 million of high-end sales. Now 2014 was even better, but only because Copper Beach Farm sold that year for $120 million. Take that sale out and 2017 was nearly a tie with our best post-recession sales year.

Pre-recession and post-recession are clearly two different worlds. Our high-end sales peaked in 2007 with an amazing 113 sales over $5 million for a total volume of $836 million or $330 million dollars more than last year.

In hindsight though, that year was not a good year for Greenwich real estate. It was followed by a major crash in the real estate market as the financial markets tanked. Ever since pundits have been comparing our high-end market to that peak bubble market and talking about how badly we are down from period that made little sense at the time and is not something to be emulated. That however is little comfort to those 113 people who bought a high end home in 2007.

In fact in some ways, 2017 is a little worrisome in that we set a new record for dollars/sq.ft for our sales over $10 million at $1,781/sq.ft. This price is in excess of the prices per square foot that we saw in the bubble year of 2007 when the price per square foot was only $1,461/sq.ft. Fortunately, this kind of analysis is somewhat silly in that last year we are basing the price/sq.ft. for sales over $10 million on 8 sales compared to 21 sales over $10 million dollars in 2007. Also 5 of those 8 sales were over $19 million while in 2007 only 1 sale was over $19 million. Exceptional high-priced properties lead to exceptionally high prices per square foot.

The other thing that exceptionally high-priced sales are derived from is even more exceptionally high-priced list prices. In fact, the higher the list price, the lower will be the percentage of the sale price to the original list price. High-end properties are unique and at the very top end the list price can be very aspirational.

Post-recession we have had 413 houses sold that listed for more than $5 million. Of those 413 sales 104 or about a quarter have sold for less than 80 percent of their original list price. When you look at the market over $10 million, the story appears to be about the same with 27% of the house sales being for less than 20% of the original list price. At the high-end house take longer to sell and they always have. In the hot market of 2007, it still took an average 6 months to sell a house over $5 million.

Now the idea that people are losing their shirts on these sales is not true if you look at the purchase price compared to the sales price. Of the high-end houses sold last year the average house was held for 10 years and sold for $1.2 million more than it was purchased for. This obviously doesn’t include the cost of additions, but a few houses selling well below there purchase price does not actually make a trend.

What we do see is these houses go on and off the market. It is very difficult to determine is the total days on market, because if you take a listing off the GMLS for over 90 days the days on market resets to zero. My co-author Cesar Raballino looked at the history for all 65 houses that sold for over $5 million last year and found that the average house had been listed twice and some had been listed 9 times since they were originally purchased. When you compared the initial list price of that first listing to the sales price the ratio is 76%. This compares to 86% if you only look at the sales price to original list price of the listing that finally sold.

The bottomline is that even for the very high-end if you price a high-end house closer to market value it is likely to seller sooner and for closer to list price just like a condo in downtown will. The good news is there hasn’t been any great deterioration in the ratio of sales price to list price. The higher price the greater the sales discount. You also see a greater sales discount in a weaker market like 2009 and 2016, but that was not the case in 2017. There most of the lower discount can be attributed to the higher sales prices where there is naturally a bigger discount.


The other thing we see is that days on market goes up in both in a poor market and in a strengthening market. In a poor market sales take looker. In a strengthening market, houses that have been sitting for months and years finally sell and bring the average up. Looking only at days on market can be deceptive if you don’t also look at how the number of sales is trending.

So where does the high-end market stand. Sales are up dramatically over a bad 2016 and the supply is down. From $5 – 10 million we are at the post-recession normal of about 2 years of supply and a sales price to list price ratio of 87%. Our dollars per square foot is strengthening and overall we have a positive market.

Over $10 million, is a separate market and to just lump it in as part of the high-end market misses a lot of the nuances. Over $10 million we had 8 sales down from 15 sales as recently as 2014, however, 5 of those 8 sales were over $19 million dollars. This is double any prior year. Here also our inventory is down and this has led to a dramatic drop in months of supply. This market is hard to predict, because even in a good years its only a dozen or so sales. If we get some folks relocating from Westchester  County and few folks moving money out of the stock market, 2018 could be a very good year for the very high-end.

Greenwich Real Estate Sales – After the New Tax Law

We have good news; the sky is not falling. So far this month, we have sold 24 houses in Greenwich in a cold winter. Our 10-year average for January sales is 36 sales so we are two-thirds of the way there with a week to go. These 24 January sales are also spread around town with concentrations in Pemberwick, Riverside and Cos Cob.

The prices are also spread out and the high-end continues to do well. We had two sales over $10 million dollars. On January 3rd, 11 French Road sold for $12,075,000 after being on the market for 406 days at a list price of $9,395,000 or nearly $2.7 million over list price. While our ultra-high end market has heated up, it’s not quite that hot. The sales price includes additional land also. The other sale over $10 million dollars was 11 Skyridge Road which sold for $11.1 million dollars after 130 days on the market. Eleven certainly seems like a lucky number.

Now both of these contracts were signed last year, so you might argue that the new tax law that came in to effect on January 1st, was not a consideration, but 11 Skyridge Road went to “pending” i.e. non-contingent contract status on 12/19/17 just before President Trump signed the new tax bill into law.

A better indicator of how the new tax bill is affecting Greenwich sales may be contracts. At the present time, we have 62 contracts outstanding; 26 contingent contracts and 36 pending contracts. At the end of January 2017, we had 69 contracts outstanding and we had 67 contracts outstanding at the end of January 2016, so we are right in the ball park.

If you look just at the contracts that have been signed since December 1, 2017 there are 39 contracts or 63% of our contracts are of recent vintage and the contracts are all over town.

We have a fair number of contracts in our 2-acre and 4-acre zones, which is the high rent district. Three of the contracts are for listings that are on for over $5 million and 22 of the 39 contracts are over $2 million dollars. This is above our last year median price of $1.8 million dollars, so our median price should continue its upward trend.

Now a few weeks of sales and contracts do not make a clear trend, but our market is humming along. You can also look at the other end of the pipeline and see what is coming on the market. There we also don’t see panic listing. We have 443 single family homes on the GMLS right now, which ain’t a lot of listings. This time of year is always the low point in the inventory as people are just beginning to add new listings in anticipation of what to my mind is really the late winter market as February doesn’t feel like spring, but being marketers, the spring market just sounds better.

So just before the spring market we have the aforesaid 443 home listings. This compares to 447 listings at the end of January 2017 and 460 listings at the end of January 2016. Once again, we are right in the ballpark and we are not seeing a rush of people desperate to get out of town. Of our current 443 listings only 31 came on in January.

So at the moment it looks like business as usual with continuing strengthening in the high end.

The Effect of the New Tax Law on High-Income, High-Tax Areas

by Mark Pruner

mark@bhhsne.com – 203-969-7900

This will be a crucial year for high-end residential real estate. The first major rewrite of the federal tax law in decades has just gone into effect and the general consensus among the pundits is that it is not good news for the high-tax states like Connecticut. The reality is more complex than that and it might actually help towns with low property taxes like Greenwich, CT.

Loss of SALT & Property Tax Deductibility

The new law limits the deductibility of both state and local taxes (SALT) and property taxes to a combined $10,000. This means that in Greenwich properties with an assessed fair market value of more than $1.2 million will have a Greenwich property tax bill that is greater than $10,000. The result it that the majority of homeowners will have to pay a portion of their property tax with after tax dollars since that portion won’t be deductible.

As to the deductibility of the Connecticut income tax that hits $10,000 for a married couple at about $198,000 of taxable income. Another way to get to the combined $10,000 is $5,000 each which would be a $600,000 home in Greenwich and a taxable income of $107,000 for a couple. Bottom line, just about everybody in Greenwich is going to find that that a portion of their state income tax and their property taxes are not deductible and for most people it’s going to be a big portion.

But what does this lack of deductibility mean in dollars and cents. Let’s take someone who has $30,000 of combined property tax and Connecticut income tax. For them the first $10,000 is deductible and the next $20,000 dollars is not deductible. To figure how much you extra you have to pay you just multiply the non-deductible portion by your marginal federal income tax rate. So, if your taxable income in 2018 is $200,000 you would be in the 24% federal tax bracket and that lost $20,000 in deductions would mean you would be paying $4,800 in extra federal taxes.

Lower Rates and Higher Brackets

But would you really be paying this much extra? Lost in much of the conversation about lost deductibility, is that the federal tax rates have been lowered at each tax bracket and the amount at which each tax bracket kicks in has increased. In 2017, if your taxable income was $200,000 you were in the 28% marginal bracket and you would pay $42,623 in federal taxes. In 2018 with that same $200,000 of taxable income you are in the 24% tax bracket and you would pay $34,942 or $7,681 less in federal income tax.

Federal Income Tax Table 2018 vs.2017 by $100,000s

Now the Greenwich resident with $30,000 of combined SALT and property tax has to pay $4,800 more in taxes for the lost deductibility, but they saved $7,681 with the lower rates, so even in the high-tax state of Connecticut they will pay $2,881 less in taxes, because the reduction in rates and increase in brackets is greater than their loss in deductibility.

Now what I just wrote is not accurate and it is only roughly applicable to your tax situation. Federal taxes are incredibly complex and there are deductions, credits, exclusions and a myriad of other provisions that may or may not affect your individual situation. Also, all the rates are for a married couple just to simplify the analysis. All of the rates are different if you are single. So, to get a handle or your situation you need to talk to your accountant and/or tax lawyer.

What I am trying to show is that the lower tax rates and the higher bracket amounts may mean that for many people in Greenwich, even with the loss of deductibility of SALT and property taxes, that they will still pay lower taxes.

The new highest tax bracket is 37% and it kicks in at $600,000, while the old maximum rate was 39.6% and it kicked in at only $480,000. So, under the old law if you made $600,000 you paid $181,744 in federal taxes now you’ll pay $161,379 or $20,365 less. As you go higher, the savings increase, so that at $2,000,000 you save $56,765 and at $5,000,000 of taxable income you save $134,765. This makes the loss of SALT/property tax deductions a lot more palatable.

The Florida Solution

Now some folks will say that’s fine, but if I move to a low tax state like Florida, I get these lower federal tax rates and there is no income tax. This is true, but one thing to note is that many of these states have higher property taxes than in Greenwich, so it’s not an all or nothing choice. If you are thinking about moving consult your tax lawyer and your Realtor.

Of course, Greenwich has always had people who retire and move to Florida for the warm weather. So, the question is not will Greenwich homeowners move to Florida and other states, but whether the new tax law will result in a significant increase of people moving to these low tax states. For our retirees that were thinking about moving anyway, the answer may be yes, but for people with good jobs in the NY metro area and kids in school they aren’t likely to move.

Kids & Schools

The new tax law also has two significant provisions for families with kids. First, the child care credit was increased from $1,000 to $2,000 and it is a tax credit, so you get to reduce your tax bill by that amount for every child under 17. For many Greenwich families the equally important change is that the phaseout of this credit was increased from $200,000 to $400,000 so it not only doubled in amount, but will be available for many more Greenwich families.

The second big change for families with school age children is that the 529 college savings plans can now be used for private school tuition, which is big plus for Greenwich. We have ten private schools in Greenwich and they are a strong draw for families looking to live here. Being able to pay for tuition from a tax-free saving plan will mean more families will consider moving to Greenwich and its private schools.

The Westchester Effect

Property taxes in many Westchester towns can be as much as triple what Greenwich property taxes are. In addition, the NY state taxes are slightly higher with a maximum rate of 8.82% compared to Connecticut’s 6.99%. Westchester retirees are one of the main sources of buyers in Greenwich. Once they retire having to pay these high property taxes out of their savings does not look so attractive and Greenwich’s low property taxes and excellent senior services look good.

New York State 2017 Tax Table by $100,00s

As a result of the new tax law, I expect that we will see an increase in buyers from Westchester and they will be relocating at younger ages. Employed, empty nesters who are no longer tied to their children’s schools may well decide to move to Greenwich.

Westchester County also just got a new county executive. The prior county executive had held county taxes steady for five years, but something was going to have to give this year. He lost his bid for re-election and taxes are likely to go up in Westchester further encouraging folks to relocate to Greenwich.

Mortgages & Weekend Homes & Inventory

The new tax law cut the mortgage deduction from $1,000,000 to $750,000, but left in place the provision that this could be shared over two houses. Where I live in backcountry, many of my neighbors are weekenders, and if they rent in the city, they can use the full amount of the deductibility on their weekend home.  Having said that mortgage deductibility for most weekenders was not a major factor in their decision to get a weekend house.

The reduction in mortgage deductibility may play in bigger role in our level of inventory. Since all the pre-12/15/17 mortgages are grandfathered, people who have larger mortgages may be reluctant to move and lose some of their mortgage deductibility when they get a new mortgage. The loss of deductibility of the interest on a $250,000 mortgage at 4% interest is $10,000. This means an increase in federal taxes of between $1,000 and $3,700 depending on your bracket. So, any reluctance to move may be more psychological, rather than financial. The impact on Greenwich inventory may be small, but could be larger in other areas where Greenwich sellers might be considering buying.

The Economy & the Stock Market

The stock market is setting new highs nearly every week, which means that people with big stock portfolios are seeing their wealth rise. The effect on Greenwich real estate at the high end last year was dramatic with high-end sales up 30% over 2016.

Now some people would argue that this is just evidence of wealthy homeowners fleeing the state and selling their houses at a loss and you can clearly find examples of this. The flip side of this is that 150 high-end buyers decided to buy in Greenwich last year. In fact, our buyers of the five highest price homes invested over $100 million in Greenwich real estate, which is a nice vote of confidence.

Other signs of a good economy are low unemployment and record holiday sales from what was supposed to be a dying retail sector. Lastly, this new tax bill’s lower rates will result in the injection of billions of dollars into the economy further boosting the economy. The higher stock market, better economy and lower taxes are all factors pushing real estate sales higher and will particularly benefit Greenwich with it’s many people in the financial industry.

A Mixed Bag

We have a variety of factors that are encouraging sales in Greenwich and many other factors that tend to discourage sales. The situation is so complicated, that my fellow columnists, Rob Pulitano, Cesar Rabellino and I actually formed a team to help homeowners analyze how all of this applies to their situation.

What Will 2018 Bring?

Are sales and prices going up or down? The short answer is that at this point no one knows, and everyone’s situation is different. The one thing that is sure is that 2018 will set the mold for how Greenwich, and the Greenwich housing market, is perceived for many years to come. Are we going to be perceived as winners or losers in this whole situation?

Last year the town, the Chamber of Commerce and the Greenwich Association of Realtors funded a program to promote Greenwich as a place to live and do business, but money is a much more effective way to promote Greenwich. Nearly, every homeowner in town is going to have pay a significant portion of their property taxes with after tax dollars, resulting in an effective increase of 10 -37% in the cost of these taxes to these owners. If Greenwich were to announce that in sympathy with them, the town is keeping the tax rate flat, this would serve as a powerful draw for those people in Westchester and other high property tax areas. It also signals to high-end buyers that pay a lot of our taxes that they are welcome here. Lastly, it shows that the town has been a good steward of its finances and will be in the future.

The cost is only a few million dollars in a budget of over $400 million and it may have many times that effect over the next few years, if Greenwich continues to be seen as the place to live.

2017 Year End Greenwich Real Estate Report – Very Good High-End Sales

Volume Up Over $200 Million

In 2017, $1.47 billion worth of single family homes were sold in Greenwich. This is up $204 million from 2016 or a 14% increase in the total value of homes sold in Greenwich. The biggest contributor to this increase was the major rebound in sales we saw this year over $3 million dollars where sales were up by 34 houses.

Looked at another way, our biggest GMLS sale in 2016 was $16,250,000. In 2017 we had 5 sales that were greater than $16.25 million. These five sales represented more than half of our $204 million in increased sales volume in 2017. Four of these five sales over $20 million which was twice the number we had in any previous year.


Unit Sales

We also finished the year strong with sales increasing in each month of the fourth quarter. In December 2107 we had 51 sales which is up from our 10-year average of 49 December house sales. The stronger finish in the fourth quarter, however, did not make up for slower sales in most of the rest of the year for our under $3 million price range, where sales were down 40 sales from 2016. Over half of this sales drop, or 22 houses, was in the $1.5 – 2.0 million price range, generally one our strongest price ranges.

We still sold 94 houses in that price, it’s just that in 2016 we sold 116 houses between $1.5 million and $2.0 million. In the price range just below this, $1.0 – 1.5 million sales were actually up 3 sales to 123 houses. Part of the reduction in sales was due low inventory under $1 million.



Low inventory of our most affordable housing has been a problem that Greenwich shares with the rest of the nation. Under $1 million we only had 34 houses to choose from at the end of 2017. With inventory this low buyer’s options can get very small. Once a buyer picks a neighborhood and eliminates the styles they didn’t like they may have only have a handful of houses to pick from in Greenwich.

Overall, our inventory is nearly the same as last year with 450 houses on the market, however, once again there are significant differences in our lower price ranges versus our highest price ranges. From $800 thousand to $3 million inventory is up 40 houses, while over $5 million inventory is down 35 houses.


As of 12/31/17 Inventory Contracts Last Mo. Solds Tot. Solds+ Contracts  YTD Solds  YTD+ Contracts Mos Supply Mos w/ Contracts Last Mo. Annlzd
< $600K 2 4 1 5 14 18 1.7 1.5 2.0
$600-$800K 16 2 2 4 44 46 4.4 4.7 8.0
$800K-$1M 16 10 3 13 46 56 4.2 3.9 5.3
$1-$1.5M 47 10 9 19 123 133 4.6 4.8 5.2
$1.5-$2M 54 9 12 21 94 103 6.9 7.1 4.5
$2-$3M 101 12 8 20 96 108 12.6 12.6 12.6
$3-$4M 59 6 4 10 59 65 12.0 12.3 14.8
$4-$5M 47 4 3 7 31 35 18.2 18.1 15.7
$5-6.5M 45 5 3 8 31 36 17.4 16.9 15.0
$6.5-$10M 32 5 3 8 21 26 18.3 16.6 10.7
> $10M 32 2 0 2 8 10 48.0 43.2
TOTAL 451 69 51 117 570 636 9.5 9.6 9.4



Contracts were down from 78 at the end of 2016 to 69 at the end of 2017. A significant part of this reduction is probably due to the uncertainty with the new federal tax law. Contracts over $5 million and under $1 million are up while the reduction in contracts is between $1 and $5 million where we are down 23 contracts compared to the end of 2016. Almost half of that, or 11 contracts, is between $1.0 and $1.5 million. This is the price range that would be most affected by the new tax law’s reduction in the mortgage deduction from $1 million to $750 thousand.

When you look at the 2017 chart of sales the price range that really stands out is this same $1.0 – $1.5 million price range. There we had 123 sales with only 47 houses in inventory. We also have 10 contracts waiting to close as of the beginning of the year in this price range, however, we had 21 contracts at the beginning of 2107.


Months of Supply

At the high-end the result of lower inventory and increased sales is a dramatic drop in months of supply. Over $6.5 million we are down three and a half years of supply. The other remarkable thing is that months of supply is generally a relatively smooth curve from under $600 thousand where we have we have less than two months of supply to over $10 million where we have had as much as 10 years of supply, but not now.

We have about the same demand/months of supply all the way from $4 million to $10 million. When you add in the contracts in this price range this demand is likely to hold steady during the beginning of 2018.


Now the high end is doing much better than in 2016 and the lower half of the market is a little slower, but you don’t want to lose the forest for the trees:

  • We have 47% of our inventory over $3M, while only 30% of our sales are over that price.
  • At the other end 9% of our inventory is under $1M, while 19% of our sales are under $1M
  • The large bulk of our sales, 56%, are between $1M and $3M. These sales come from only of 42% inventory.
  • The $1 – 3M segment was even more popular in December with 61% of our sales.



One thing you can be sure of is that 2018 will not be like 2017. The new federal tax law is going to shift real estate markets across the nation, but particularly in Greenwich. The accepted wisdom is that we are a high tax state that will see property values drop as people move to low tax states and the loss of deductibility of state taxes and local property taxes will discourage buyers.

The problem with this scenario is that New York State has higher income taxes and Westchester County towns pay much higher property taxes. Also, the new tax law has lower tax rates and higher brackets. Even with the loss of SALT and property taxes deductibility over $10,000 many folks will see their federal income taxes go down.

So how much motivation is there to move if your taxes are lower, and how many people will move from Westchester to Greenwich, and how much will a higher stock market continue to drive high-end sales and how much will inventory fall as people are concerned about buying a new house with lower mortgage deductibility?

Stay tuned 2018 is going to be an interesting year.



November 2017 Greenwich Real Estate – Sales Way Up 80% – Contracts Down 13%

Greenwich home sales were up dramatically in November. Last month we had 43 sales compared to only 24 sales in November 2016 or a jump of 80%. It seems a lot of people may have been waiting for the Connecticut budget issues to get resolved before closing.

As of 12/1/17 Inventory Contracts Last Mo. Solds Tot. Solds+ Contracts  YTD Solds  YTD+ Contracts Mos Supply Mos w/ Contracts Last Mo. Annlzd
< $600K 5 3 0 3 13 16 4.2 3.9
$600-$800K 19 2 4 6 42 44 5.0 5.4 4.8
$800K-$1M 18 8 6 14 43 51 4.6 4.4 3.0
$1-$1.5M 56 10 10 20 114 124 5.4 5.6 5.6
$1.5-$2M 59 17 8 25 81 98 8.0 7.5 7.4
$2-$3M 118 14 6 20 88 102 14.8 14.5 19.7
$3-$4M 69 7 4 11 55 62 13.8 13.9 17.3
$4-$5M 52 4 2 6 28 32 20.4 20.3 26.0
$5-6.5M 51 8 0 8 28 36 20.0 17.7
$6.5-$10M 36 7 1 8 17 24 23.3 18.8 36.0
> $10M 35 1 2 3 8 9 48.1 48.6 17.5
TOTAL 518 81 43 124 517 598 11.0 10.8 12.0

Now you would think that events that happened after the contracts were signed would not affect the number of sales in any particular month, but we see this over and over again. People wait to see what is going to happen before they set a closing. The result is that this October was only an average month while November was up almost double from last year.

The 80% jump in sales number this November compared to last November is mathematically accurate, but a little deceptive. November 2016 had the same time shifting problem with sales way down that month followed by a big jump up in December 2016. If you compare our November 2017 sales to last year you look at our 10-year average, our 43 sales are up 23% from our 10-year average of 35 sales. A nice jump, but not as dramatic as a year to year comparison.

The interesting thing is the prices where these sales increases are. In November we saw 12 more sales from $800 thousand to $2 million price range. The $1.5 – 2.0 million price range had been slow this year even with higher inventory available for purchase, so to see these additional sales was a nice November gift.

The high-end above $5 million continued to do well with 15 more contracts waiting to close compared to last year. Our high-end inventory has also been down all year and as of the end of November we had 39 fewer houses on the market than last year at this time. Our sales for this category are also 21 sales.

The result of lower inventory and substantially increased sales are massive drops in months of supply for the high-end compared to previous years. Months of supply are down from $5 – 6.5 million by 1.5 years, from $6.5 to 10 million we are down by 3 years of supply. Over $10 million we down by an amazing 6 years of supply from 121 months, or 11 years of supply to 48 months, 4 years of supply.

The over $10 million months of supply has literally been off the charts for years. It is still much higher than other price categories, but people are buying very high-priced houses in Greenwich. We doubled our record for over $20 million houses with four houses over this sky-high price.

These four houses alone represent $88 million in sales in Greenwich. So far, this year our total sales come to $1.33 billion dollars and this is in a town of 62,000 people. This compares to total sales last year of $1.15 billion. Due to the big jump in sales in November our number of house sales this year is down only 4 houses to 517 houses, while our high-end sales have increased our total volume by $180 million. The result is that our average price has gone from $2,206,908 to $2,575,130.

So, sales and inventory are about the same as last year, while high end sales and hence the average price are up substantially. Unfortunately, December promises to be another month of whipsawing sales. If you look at contracts, December sales should be down as contracts are down 12 from last year with most of that decline being, what had been up until November, our most popular price range from $1 – 1.5 million. Contracts are down 16 from last year in our prime market.

The Income Tax Bill and Real Estate

The great imponderable is the pending tax bills in the U.S. Congress. With both the House and Senate having passed bills we are only waiting for the compromise bill to come out and President Trump is waiting with his pen to sign the bill.

Now the general consensus is that property values are going to drop in states with high income taxes, high property taxes and lots of mortgages over $500,000 or $1,000,000 depending on whether the House or Senate mortgage limitation amount passes. The effective costs of property taxes and the other lost deductions will be higher as they will have to be paid with after-tax dollars. As a result, there is a good chance that we may see property values drop in Greenwich, but there is also a scenario where Greenwich house prices could actually go up.

Presently, you can deduct all property taxes from your federal income tax and both the House and Senate are proposing to limit this deduction to $10,000. So, anyone who has a property tax bill over $10,000 will see the real cost of those taxes go up next year. In Greenwich the $10,000 tax bill equates to a house value of about $1.2 million.

 Taxes & Real Estate – Greenwich Prices Up or Down

Westchester has some of the highest tax rates in the country so this reduction in property tax deductibility is more strongly felt there. For decades, downsizers and retirees have moved from Westchester to Greenwich for the substantially lower taxes. Once the tax bill passes Westchester homeowners whose jobs are in the NY metro area and thus can’t easily relocate to Florida may decide to move to Greenwich to avoid the higher taxes that will be paid with after-tax dollars.

Compounding this effect is that inventory may well drop as homeowners decide to stay in their homes to keep their grandfathered mortgages with there full interest deductions. A second, though less widespread effect, reducing inventory in our hottest areas, is that homeowners will have to occupy their houses for five years rather than two to avoid capital gains tax on the sale of their primary residence, so expanding families may well stay put longer.

Lastly, the lower income tax rates and lower taxes on pass through entities, may well mean that Greenwich buyers will not be as sensitive to the loss of deductions for SALT, higher mortgage amounts and property taxes.

We have so many moving parts in this bill and so many different household circumstances, that it is going to take a while before the factors in the tax bill pushing up and lowering demand create a new equilibrium of supply and demand for Greenwich houses. The bottomline is that there is no way of knowing how the tax bill will affect Greenwich. What is clear is that our low property taxes are a major boon in a changing world and will ameliorate whatever effect the loss of property tax deductibility will have when compared to other towns.


October 2017 Real Estate Report & the GOP Tax Bills Effect on Greenwich

October was a better month for sales than September with sales returning to their 10-year average. In addition, we continue to see strength in the upper end of the market above $3 million.

As of 11/1/17 Inventory Contracts Last Mo. Solds Tot. Solds+ Contracts YTD Solds YTD+ Contracts Mos Supply Mos w/ Contracts Last Mo. Annlzd
< $600K 6 0 0 0 13 13 4.6 5.3
$600-$800K 20 4 4 8 38 42 5.3 5.5 5.0
$800K-$1M 17 7 3 10 37 44 4.6 4.4 5.7
$1-$1.5M 68 18 9 27 103 121 6.6 6.5 7.6
$1.5-$2M 66 19 5 24 73 92 9.0 8.3 13.2
$2-$3M 130 17 5 22 82 99 15.9 15.1 26.0
$3-$4M 77 11 2 13 50 61 15.4 14.5 38.5
$4-$5M 59 2 4 6 26 28 22.7 24.2 14.8
$5-6.5M 55 5 3 8 28 33 19.6 19.2 18.3
$6.5-$10M 41 5 0 5 16 21 25.6 22.5
> $10M 38 1 2 3 6 7 63.3 62.4 19.0
TOTAL 577 89 37 126 472 561 12.2 11.8 15.6

October also continues our tradition this year of see-saw sales with alternating up and down months. Unfortunately, this see-saw effect has been taking place around a lower average. As of the end of October 2017 we have sold 470 houses compared to 552 sales last year. Only January and March of 2017 saw higher sales this year compared to last year.

Now, on the good news side, we should see an improvement for November sales. As of the end of October we had 89 contracts waiting to close compared to only 70 in 2016. Contracts are up in every price category from $800,000 to over $10,000,000 with the one exception of $4 – 5 million where they are down 3 contracts from last year.

Our under $800,000 market

Under $800,000 we continue to see significant inventory constraints. We only have 26 houses listed for under $800,000 in Greenwich. These houses that do come on the market usually sell fast and often for over list price. We have sold 51 houses under $800,000 this year at an average sales price to original list price of 95%. This compares with a median sales price to list price of 92%.

Now even in this competitive market you if you overprice a house it will just sit. Our lowest sales price to original list price in this category was 78% and that house stayed on the market for 539 days. Three other houses sold at around 84% of original list price and all three stayed on for over 300 days compared to a median of 75 days on market.

Of the 51 houses sold under $800,000, we had 13 sell at either list price or over with one of Gila Lewis’ Glenville listing going for 37% over its original list price and getting almost 2 dozen bids. As a group the house under $800,000 also sold for 15% more than their 2015 reassessment value.

October ’17 vs ’16 Inventory Contracts Mo. Solds Tot. Solds+ Contracts  YTD Solds  YTD+ Contracts Mos Supply Mos w/ Contracts Mo. Annlzd
< $600K -3 -3 0 -3 0 -3 -2.3 -1.2
$600-$800K 7 -4 -4 -8 -7 -11 2.4 2.7 3.4
$800K-$1M -5 3 -1 2 -6 -3 -0.5 -0.9 0.2
$1-$1.5M 8 2 4 6 3 5 0.6 0.5 -4.4
$1.5-$2M -2 5 -3 2 -28 -23 2.3 1.5 4.7
$2-$3M 23 4 0 4 -10 -6 4.2 3.4 4.6
$3-$4M -11 5 -3 2 2 7 -2.9 -4.2 20.9
$4-$5M 2 -3 3 0 2 -1 -1.1 1.6 -42.3
$5-6.5M -5 5 2 7 12 17 -17.9 -24.0 -41.7
$6.5-$10M -19 4 -1 3 5 9 -28.9 -35.0
> $10M -9 1 2 3 2 3 -54.2 -72.7
TOTAL -14 19 -1 18 -25 -6 0.3 -0.2 0.0

U.S. 2017 House and Senate Tax Proposals

The U.S. House and Senate tax bills have several provisions that would have a disproportionate impact on Greenwich. The proposal to lower mortgage deductible to only the interests on mortgages that are up to $500,000 has been getting the most attention, but it is not the only provision.

Mortgage deductibility

At first glance eliminating deductions on mortgages over $500,000 would seem to be a big deal for Greenwich, since so far this year only two houses in Greenwich have sold for less than $500,0000. Now if you assume an 80% loan to value ratio on the mortgage that would equate to a purchase price of $625,000.  That higher amount doesn’t provide much help since only 3% of our houses have sold for less than that.

Fortunately, the other 97% of purchases will see significantly different impacts. Obviously if you buy a home for all cash this deduction is irrelevant. The higher the purchase price the more likely the purchase will be all cash. For many people this change may push them to borrow less.

The main ameliorating factor is that there is already a $1.1 million limitation on mortgage interest deductibility, $1 million of home acquisition debt plus a $100,000 home equity line. So, what we are really talking about is that gap in deductibility between $1,000,000 and $500,000. If you assume an 80% loan, it’s those houses with a purchase prices of $625,000 and $1,250,000. So far this year, 121 of 484 houses sales fall in that gap or one-quarter of houses.

Property tax limitation

The House bill also proposes a $10,000 limit on property taxes, so houses in Greenwich over $1.2 million will see their property tax deductions limited based on our present mill rate. This provision might actually help accelerate movement of downsizers from high property tax Westchester County to Greenwich. At the same time, it would hurt Connecticut’s national competitiveness against low tax states.

Carried interests

One big factor that was left out of the proposal; any changes in taxes on the carried interest taxation. While even candidate Trump complained about taxing these carried interests at capital gains tax rates, leaving this policy unchanged will help mean many of our residents and prospective residents.

Capital Gain on Sale of Residence

On the downside, there is a proposal to change the $500,000 capital gains tax exemption for personal residents from a 2 out of the last 5 year owner occupancy requirement to 5 years out of the last 8 years. In addition, the proposal includes a phaseout for those families earning over $500,000 so that if you earned over $1 million a year you would get no capital gains exemption. This change will push more people to rent rather than buy if they might occupy their house for last than 5 years.

Now the bottom line is that these are just proposals and we can expect substantial changes as this legislation goes through the Washington sausage making machine. In addition, the interaction of all of these factors is complex, with increased standard deductions, reduced tax brackets and dozens of other details impacting each household differently, so to say this will help or hurt any particular Greenwich residents you just can’t say.

So, contracts are up, we have a Connecticut state budget that is better for Greenwich and we’ve got tax changes proposed in D.C. Things will continue to change and only the future can tell what will happen.