February 2022 Real Estate – Contracts on the Rise

It’s not all that remarkable when contracts rise in the spring market. That’s what they’re supposed to do as more inventory comes on and buyers seeing the warm weather come out to buy houses. This year however rising contracts are actually pretty remarkable. Our inventory stands at only 151 listings. This is down 126 listings from February of 2021 and an amazing 362 listings from February of 2020, our last pre-COVID month.

Even with our low inventory, February 2022 was an above average month for sales with 38 sales. Our 10-year average for sales in January, pre-COVID is 31 sales, so we were up 19% over our average February. For the pessimists, they can focus on year over year date. There our sales are down 40% from February 2021 and 32% for the first two months of the year. Now normally that would be considered a disastrous collapse of the market, however, those two months last year were record months with an amazing 129 sales in two months compared to our “paltry” 88 sales year to date.

When you look at a color-coded chart of sales, our inventory is very much pro-seller with inventory down in every category, except for under $600,000 where we have one listing this year compared to zero listings last year. In fact, however under $1,000,000 we only have 9 listings. The rest of the color-coded chart looks flat or very much pro-buyer with contracts and year to date sales down for the first two months of the year. Normally, that indicates a lack of demand, however in 2022, it indicates a lack of supply.

If you go back to February 2020, our last pre-Covid month, the world looks much different with most of the cells in green in a pro-seller market. Not only is inventory down a lot, but sales and contract are about evenly split up and down.

Russ and I recently put on a house just under $5 million that was in very nice shape and it had 24 showings in three days and multiple offers. It went to contract in 8 days from coming on the market. We are just really, really supply constrained; the buyers are out there.

Now this is not to say there, you shouldn’t worry about the market. If we don’t have any gas/inventory to keep the sales engine running, sales will continue to sputter, but probably not in March.  The good news is our contracts are up significantly from last month, when we had 81 contracts, and now, we have 99 contracts. Our average sales in March are 38 houses, so with 99 contracts, we should be above average, but not near the 71 sales that we had in March 2021.

One thing to note however is that our inventory has been fairly flat for the first eight weeks of this year. What that means is that the new inventory coming on is matching our contracts. Having said that if we had more inventory, we certainly would have many more sales. This is the best time ever for a seller to put their house on the market and that’s true in every price range up to $10 million.

When you compare inventory to sales and contracts, we normally see a lot more inventory than we have sales or contracts. All the way up to $4 million, we actually have almost as many contracts and in some cases more contracts than we have inventory. It’s just a remarkable year.

if you look just at sales, we do see a little weakness above $5 million where we have 24 months of supply from $5 – 6.5 million and 36 months of supply over $10 million. The thing to look at however is months of supply when you add in contracts and for all price categories that months of supply is going down indicating an accelerating market. For the market overall we have 3.4 months of supply and when you add in contracts we are looking at a ridiculous 2.8 months of supply.

The specter of rising interest rates is temporarily accelerating demand from buyers who need mortgages and who want to get in at the lower interest rates. We also are starting to see the return of the transferee market and companies are once again moving their senior people around the U.S. and bringing in people from overseas after a long hiatus. Last week, we saw buyers from London, Australia and Dallas.

Stay tuned the first quarter is going to be a very interesting period….

GREENWICH’S GATED COMMUNITIES

by Mark Pruner

203-969-7900 * mark.pruner@compass.com

Privacy & Community & Amenities

Greenwich is lucky in that we have a variety of communities. We have duplexes in the R-6 zone in Pemberwick. We have mid-rise apartments in downtown Greenwich and a variety of condos, but what usually gets the national press are some of our largest houses, selling for prices that can get into 8 figures. We have two areas that get particular attention along these lines, Belle Haven on Long Island Sound in the south and Conyers Farm in the north that overlaps the New York border.

Surprisingly, these two large, gated communities are not the gated communities sales leader in Greenwich. Milbrook has had by far the most sales over the last two decades with 195 sales from 1999 to 2021 (which is as long as the GMLS has kept electronic records.) These 195 compare to 139 sales for Belle Haven and only 61 sales in Conyers Farm.

If you look at total sales dollar over the same period, then Belle Haven with its combination of the second highest sales number and very high average sales has total dollar sales volume of $854 million compared to Milbrook’s $440 million, which shows just diverse Milbrook housing is with homes ranging from 1,700 s.f. to 10,000 s.f.

              Our hidden away gated communities

In addition to the big three of Milbrook, Belle Haven and Conyers Farm, we have some really nice, gated associations tucked away in areas where many people don’t see them as the drive by or that are down a long road. Classic examples of the latter are Partridge Hollow in north central Greenwich and Harbor Point in Riverside. Both are at the end of long roads with manned security stations.

They provide lots of privacy and also great places to walk and meet your neighbors. I was lucky last year to represent a seller in Harbor Point and a buyer in Partridge Hollow. They are both great places to live. In fact, they are such great places that people don’t leave. Partridge Hollow has had 23 sales on the GMLS in 22 years and Harbor Point has only had 20 sales in the same period.

Part of the reason for this is that there are a lot of intra-community private sales. While many gated-community homeowners love their community, they often have their heart set on that one perfect house in their community. They let their neighbor know, that when it’s time to sell, they’d love the first option to buy. In my Partridge Hollow purchase my clients had been looking for the perfect Greenwich house for two years. Fortunately, we found the perfect community for them and closed on the private sale, before it got to market.

              Sales history

Gated communities are special and there aren’t a lot of them. Most years we have 15 to 30 sales in these communities; and then came the pandemic. In 2020, sales in gated communities jumped to 44 sales and in 2021, sales further increased to 53 sales. This was a jump of 150% in sales over the prior 10-year average of 21 sales.

The pandemic encouraged people to seek out more privacy and space, the increase in crime in NYC during the pandemic also strongly encouraged, interest in these gated communities with security gates and/or patrolling security.

Paradoxically, the outdoors amenities of Milbrook, Conyers Farm, Belle Haven and the other gated communities also drew buyers to these communities. There are probably few sports that are better for social distancing than golfing at Milbrook, sailing at Belle Haven or horse riding at Conyer’s Farm. Of course, the beach and it’s own picnic island at Harbor Point isn’t bad. Nor is a walk at Mead Point or Field Point Circle with it’s beautiful water views and no traffic to speak of.

Clearly, the club house, dining room, tennis, paddle and water views at both Belle Haven and Milbrook bring in a lot of people. They also make for a congenial crowd of neighbors from a wide range of backgrounds and nationalities. There is nothing like a couple of sets of paddle tennis, a drink afterwards and having spouses join you for dinner to make for a relaxing evening in a world that can seem very complicated. Of course, a lot of folks say that about Greenwich as whole.

              Renovations and additions

There is one issue with what might otherwise seem idyllic places; they aren’t making any more of them. The youngest gated communities are the Chieftans in western Greenwich and Conyers Farm on the New York border. Both of these “newbies” were carved out of two of the Greenwich’s great estates in the eighties, while Belle Haven goes back to the 19th Century and Milbrook was founded in the 1920s.

As a result, they both have a variety of older houses that are great candidates for renovation, which is just what they owners did at 113 Woodside Drive in Milbrook. It’s hard to believe it is the same house. The original house they purchased in 2015, sat on a wonderful lakefront lot, but was an older colonial with half a second floor and a 2-car garage stuck on the side.

The new purchasers transformed it into a Tudor, one of the traditional designs in Milbrook. They created a full second floor with extra height ceilings and four bedrooms. The first floor and lower level were totally redone and to balance out the design, a second 2-car garage was added. So far. we have had 10 showing requests and the house isn’t even officially on the market. You can stop by the public open house on Sunday from 1 – 4 pm to see the transformation yourself.

Since they aren’t making any more gated communities, it’s not a bad place to consider investing give the limited supply and high demand.

Condo Market Soars in 2021

Sales Up 24%, Inventory Down 47%

Last year was an amazing year for condo and co-op sales in Greenwich. We sold 272 condos in Greenwich in 2021 and this was up 52 sales or 23.6% compared to 2020. If you want to go back to our last pre-Covid year of 2019 sales were up 71%. Condo sales did not fare well in the early days of Covid. Buyers didn’t want to move out an apartment in NYC into an apartment-like condo in Greenwich. Buyers didn’t want the same shared elevators and hallways that they had in New York City.

As the first wave of Covid trailed off in 2020, this reluctance fell away, and condos sale picked up going from 159 sales in 2019 to 220 sales in 2020 and then to 272 condo sales last year. (In this article references to condo numbers include co-ops, since co-ops trade similarly to condos.)

              2022 sales shrink under $600K due to excess demand

Our 272 condo sales increase got no help from the lowest price range. Sales under $600,000 actually went down from 82 sales in 2020 to 74 sales in 2021. This drop in sales was not due to any drop in demand from buyers. In fact, it was excessive demand from buyers that drove down sales under $600,000. Lots of demand at our lower end, resulted in price appreciation, pushing list prices above $600,000 into the next higher price bracket.

Sales up 61% from $600K – $800K

Last year our 79 sales from $600,000 to $800,000 represented 29% of our sales, our largest percentage of any price range in 2021. As discussed above, this price category benefitted from more listing prices appreciating into this price range. Many of the sales in this price range were in Putnam Park, central Greenwich and along River Road in Cos Cob.

              Lots more inventory needed

If we had more inventory, at the lower end, we would have had more sales. Under $1 million all three of our price categories have less than 6 weeks of supply. Right now, we only have 47 condos available for sale. Of those 47 listings, only 17 are priced less than $1 million. Under $1 million represents 60% of our sales in 2021, but only 35% of our inventory.  

If you do a static analysis, then it’s hard to see how we could get to 190 condo sales under $1 million in 2021 with only 17 listings on the market now. The good news for buyers, who’d like to buy a condo in Greenwich under $1 million, is that last year we had more than 227 condo listing come on the market under $1 million. Of those listings, 190 were sold last year, another 20 are under contract now and 17 are left in inventory.

We actually had more than that, as some of the condos were listed for rent and rented before they were sold. In addition, another 19 listings under $1 million expired unsold. One condo listed for $620,000 was on for an amazing 1,196 days, before expiring unsold. The ever tighten market and increasing prices got it to contract in September 2021 in only 21 days.

It’s not just our under $1 million market where we need more inventory. The only place where inventory is not tight to ridiculously tight is $2 – 3 million where we had 16 sales last year and have 12 condos in inventory. Of course, if you want to live anywhere else but 89 River Road in Cos Cob, you’ll find the market is very tight. That address, which has some beautiful new condos represents 8 of the 12 listings between $2 and $3 million.

I have three clients that are gridlocked. They would love to buy a nice downtown condo in that price range, but we only have one listing in downtown Greenwich. Of course, if they would like to live south of I-95 there are three more choices, but they want a short walk to Greenwich Avenue and preferably not an uphill. (If anyone knows of such of a downtown listing coming on, please let me know.)

              Our high-end condo market is also tight

With the big shift of most white-collar jobs to a work from home model, our high-end sales have done particularly well. Our median sales price in 2021 was $1,052,917, so sales over $2 million are certainly, the high-end of Greenwich condo sales. In 2021, we had 31 condo sales over $2 million, with our highest sale being $4,900,000. The prior year, 2020, was also a good year for high-end condo sales with 28 sales. Compare these two years to 2019 when we had only 12 sales over $2 million and 2018, when we had 16 sales.

Part of this increase in high-end sales can be attributed to several beautiful new developments that hit the market at the right time. Of our 28 high-end sales in 2021, 8 of them were new construction. In 2020, 11 of the 28 high-end sales were new construction.

Covid really bailed out these projects, because while these were beautiful units with lots of amenities and located close to town, many were hitting the market at the same time. Much of this was a result of Planning and Zoning reducing the R-6 to multi-family zone to a two-family zone. Developers rushed to get in under the old rules, resulting in a bulge of high-end units coming on at the same time. Of course, when you are talking about Greenwich downtown condos, this “bulge” was only a few dozen units. Several of these projects could not be built under today’s rules.

              What about prices?

Our condos are spread out in multiple neighborhoods and multiple price ranges. Having said that the large part of our condo sales are within a half-mile of the Post Road, albeit, literally stretching from the Port Chester to the Stamford border.  So, take the following with a grain of salt.

As noted, before, the median condo sales price in 2021 was $1,052,917. This was up 6.3% over 2020’s median price of $990,137. In 2020, condo prices were up even more with median prices increasing 9.4%.

While mathematically accurate are those price increase representative of the market. Much of these price increases could be in the mix of what was selling. One way to check this is to look at other measures of price appreciation. If you look at price appreciation by square foot, then some of the effect of price changes driven by higher priced units, or in 2019 more lower priced units, is reduced. The price/sf price increases are similar to the median sales price increases.  

Year Median Condo Price% YoY changeMed $/s.f.% YoY changeMed. SP/Assmt% YoY change
2018 $           967,502$  4691.58
2019 $           904,872-6.5%$  425-9.5%1.55-1.9%
2020 $           990,1379.4%$  4669.6%1.571.3%
2021 $        1,052,9176.3%$  5037.9%1.665.4%

However, when you look at the change in the sales price to the assessment ratio, the appreciation is much more focused in 2021 and the drop in prices in 2019 and the increase in 2020 is not as dramatic. It looks like the much of the “price appreciation” was driven by more high-end units selling driving up the median and the price/s.f. While the price changes are not as dramatic, the price changes are in the same direction; down in 2019 and up in 2020 and 2021.

What does mean if you are buying or selling? Actually, not all that much. You shouldn’t determine your list your house based on town wide averages, nor should you make your buying decisions off these price increases. You want to check the half dozen best comps for your condo, who your competition is and what buyer demand is.

              What to expect in 2022?

Demand is likely to hold up in 2022 at least for the first half of the year. We still have lots of New Yorkers looking to move to Greenwich as commuting times are way down, when you only have to go into the office once a week. At the same time, the condo market is much more sensitive to changes in mortgage rates, so the market may shift towards a more balanced market, but it would have to go a long way to be considered a buyer’s market in 2022.

 Stay tuned, we just might get some more inventory in the upcoming spring market…

Good News! Inventory is at Record Lows, but it’s not Dropping Even More

You know you’re in a tough market when you’re actually happy, that while the inventory is at extraordinarily low levels, it’s not going down even more. We presently have 155 single family home listings on the market, this is down 46% from last year and down 66% from January 2020 one of the last pre-COVID months. The good news is that that, unlike the last six months of 2021, inventory is not in a steady decline. We have stayed above 150 listings all month (except for a couple of days which don’t count).

To use a gardening analog, we are seeing some of those early blooming snow drops, but the crocuses are still a few weeks away. The week after the Super bowl is traditionally the beginning of the spring market but if you look at the buyer demand it’s already well underway. I put on a new listing at 5 Anderson Rd at 2:00 AM this Wednesday morning and by 9:30 I had seven inquiries and two scheduled showings within 10 hours of it going public on the Greenwich MLS.

BTW: Realtor.com continues to get changes within minutes of them being made on the Greenwich MLS. They are an affiliate of ListHub, which distributes the vast majority of the IDX (Internet Data Exchange) feeds from multiple listing services. Zillow was getting their feed via Listhub sometimes, hours after Realtor.com. To get around that, Zillow actually created their own Zillow brokerage firms so that as a broker/member of each MLS, they could bypass ListHub and get a direct feed from the MLS. Of course, they were also using the Zillow brokerages in their iBuying programs and using their own Zestimates to set prices. After running up a half-billion dollars in losses, in a rising market, they figured out that was a bad idea. If you believe the Zestimate, I’m sure Zillow still has a few houses they would like to sell you.

Here in Greenwich, like the rest of the country, the work from home movement is driving a lot of buyers this way. For the moment however the real spur to buyers to move faster is the rise in mortgage rates, which are expected to go up for many months, so buying earlier can save you a good chunk of change in your monthly mortgage bill. One of my listings recently went to contract and the buyer’s agent did an excellent job of pestering me daily to make sure the contract got signed so no one else could come in and gazump her clients, but in this case, the clients wanted to get the contract filed so that they could lock in lower rates for the life of the mortgage.

While our inventory is hanging around 150 listings, an amount, that no agent expected to see in their lifetimes, at least we’re not Darien. Their inventory is up 25% in January, from 12 listings at the beginning of the month to 15 listings month. That sounds tight, but you’ve got a better chance in Darien than in Old Greenwich where we only have 8 listings on the market.

As a result, homebuyers these days are more flexible. They are not stuck on just one style or neighborhood, at least they’re not if they actively want to look for houses because otherwise all they can do is to keep refreshing their screen waiting for a new listing to come up on realtor.com. Actually, that’s not quite true. A good buyer’s agents are out there actively seeking out houses for their clients.

If you’re a homeowner and haven’t gotten a couple postcards asking you to list your house or an agent’s letter saying that the agent has a client who is interested in your house, you should feel slighted. (NB: Take these ready buyer’s letter with a large of grain of salt. The buyer may not be all that ready or on occasion may not even exist. You may be better off talking to agent that you trust, and they can talk to that agent. It’s always good to have someone on your side.)

There are some early hints that the market might be changing. When you look at how this year compares to last January and to January 2020, we may actually be seeing a little price resistance under $3 million. The two price ranges where we saw the biggest drop in sales were $1.0 – 1.5 million and $2 – 3 million. Both price ranges are down 6 sales from 2021 or -38% and -50% sales drop. The price range where we’ve seen a significant jump in contracts is $4 – $5 million where went from 7 contracts in 2021 to 13 contracts this year. Then again this could just be random chatter in sales and contract numbers.

Clearly, if we had more inventory, we would have a lot more sales. From $1.0 – 1.5 million we have 3 weeks of supply. The one area where that may not be quite so true is over $10 million. In that price range, our months of supplies including sales and contract is up from 11.5 months of supply last year to 25 months of supply this year., I wouldn’t worry too much however as this big increase is due to going from 5 sales and contract to 2 this year. Just under the ultra-high end we went from a hot 7.5 months to a very hot 4.8 months, when you include contract. Think about that, we would blow through our 21 listings from $6.5 – 10 million in less than 5 months.

You should always be a little skeptical of January numbers, my brother, Russ, never even did a market report until the end of February, but Beth won’t let me do that. Another problem in a hot market is that traditional real estate statistics don’t necessarily show what is causing the change. You can’t really say for certain, whether sales are down because of lower inventory or because of buyer price resistance due to double digit price increases the last couple of years.

For the moment, you can be pretty sure that it is low inventory is causing the sales drop, however, rising interest rates may become a bigger factor in a slowdown later this year. Rising interest rates often the Fed fighting rising inflation rates, which may encourage people to move money from cash into real estate.

We’re also getting reports of excellent bonuses on Wall Street. In the good old days, those were paid out in cash and people were signing purchase contracts in January and closing in February. Now that compensation maybe deferred to the second half of the year and granted in company stock rather than cash, our biggest months for high-end sales are now in the fourth quarter.

We’re going to have to be patient at least another month to see which way the 2022 market is heading. Inventory is down, which is choking off a lot of sales but we’re not seeing what we saw in December where stellar demand led to sales increases even as inventory continued to drop. We are seeing the snowdrops from an early market showing up keeping inventory at least flat. If you look at Caesar Rabellino accompanying lists of sales and new listings, you’ll see that last week we had 25 new listings and 19 sales. It’s been a while, since we’ve seen a week where the number of new listings coming on exceeded the number of sales going off.

That’s exactly normal in the spring market, inventory comes on in February and March. Deals get made in April and May and our big sales months are June and July. This year we’re getting a little more early inventory, which is really heartening. I, and some other agents, were actually concerned that we might have burned through all of our inventory. But the nice thing is there are still houses is to be listed, deals to be made and certainly the buyers are here and ready to pay a premium. It’s possible that prices may not go up quite as fast as it did the last couple of years, it’s hard to sustain double digit annual price increases and they are not good for the long term health of the market.

Stay tuned, the first quarter is going to be interesting to see which of these trends has the greatest influence on the housing market.

2022 Guide to Westchester County and Fairfield County Luxury Real Estate Market

Similar Markets with Remarkable Differences

by Mark Pruner

You might think that with the common issues of high demand and low inventory facing the luxury markets in all the high-end towns in Westchester and Fairfield County, that the market in each town would be similar. However, we see large differences among these towns, all of whom have median sold prices over $1 million.

We have been bemoaning our lack of inventory of inventory in Greenwich all year, but compared to Darien, we have a major surplus of inventory. We have 152 listings on the market, Darien has 12 single family homes on the market which works out to 10 days of supply.

We also have marveled at how many of our houses have gone for full list price or over list but among the high-end towns in Westchester and Fairfield County we’re actually at the bottom with only 41% of our listings going for full list price or over list. Compare this to the Sound Shore Communities in Westchester County. In Larchmont, Mamaroneck, Rye and Rye Brook 57% of the houses sold for list or over list with one of them actually going for 44% over the initial asking price.

We were quite pleased with our 11% median sales price appreciation, however, Westport had 18% price appreciation. The one place where we clearly were the leader is our 16% sales growth in the number of single-family homes sold in 2021 compared to 2020. We had 1,006 sales compared to last year’s 864 sales: more about this later.

Similar Issues

Across the country, COVID has initiated the reshaping of the housing market. The pandemic led to a huge increase in work from home and the associated increase in the demand for larger homes. For most of 2020 and 2021, we saw extraordinarily low interest rates that kept monthly mortgage payments low. Less talked about is the run up in the stock market and it’s effect on housing demand. There’s nothing like having a bunch of gains in your stock portfolio to make you think that now might be a good time to buy a house and reallocate some assets, in case the stock market goes down.

Inflation has also encouraged house buyers to move assets from cash that is devaluing into hard assets that are appreciating. They also want to buy, before prices go up further. We’ve seen a jump in sales in December and the first part of this month as mortgage rates go up, presaging the Fed’s announced interest rate increase in March.  

The common wisdom is that increased interest rates slow the economy and over a long enough period of time that’s certainly true, particularly if you sharply increase interest rates in a short time. However, in the short term, the anticipation of increased interest rates and the initial portion of rising rates only drives sales as people move to quickly buy before interest rates go even higher. We’ve certainly seen that in last two months as what is normally a very slow holiday season in December saw lots of people out looking and that has continued, and even heightened, in the new year.

          Inventory, Supply & Demand

For towns that had inventory in 2021, we saw big jumps in sales. For towns that didn’t have inventory, sales dropped or just inched up over 2020. Westport and Darien actually saw the number of single-family home sales drop in 2021 compared to 2020. In Westport, sales were down a remarkable 13%, but this drop was due to insufficient supply, not low demand. The biggest drop in sales also resulted in the biggest jump in median price, up 18% in Westport to $1,599,500 last year. Where inventory was the lowest relative to demand, we saw prices go up the most.

New Canaan was the one exception to lower sales, higher prices. In New Canaan, prices increased by 23% and sales increased by 13%.  The price increase bumped their median price to $1,725,000 and sales to 440 sales, not bad for a town of less than 20,000 people.

It’s gotten so bad that months of supply don’t really tell the story; we are now looking at days of supply. New Canaan, with only 49 active listings has only 39 days of supply at last year’s torrid sales price, it will be interesting to see what happens this year. In Connecticut, Greenwich also saw nice increases in sales numbers and median prices, just not to New Canaan’s level. Both these towns have the highest median price with a fair number of houses at the very high end. While sales at the high-end jumped last year, we still had good inventory to keep the sales numbers chugging along.

When you look at the Westchester towns, Scarsdale and the Sound Shore Communities of Rye, Rye Neck, Mamaroneck and Larchmont all had double digit increases in their 2021 sales numbers and single digit increases in their 2021 median price. They also had; well, you really couldn’t call it good, but certainly better days of supply than in other towns. Scarsdale and the Sound Shore Communities have 60 and 54 days of supply.

Northeast Westchester, which includes the towns of Rye Brook, Harrison, Armonk and Chappaqua, our nearest Westchester neighbors, saw a big jump up in median price, which was directly related to a small increase in the number of sales caused by very limited inventory. What’s curious is that the two area in each county that are the furthest from New York City, Northeast Westchester in NY and Westport in CT, are the ones that saw the least growth in sales.

It looks like Northeast Westchester, Darien and Westport all saw major saw major increases in 2020 which wiped out much of the shadow inventory. Also, the work from home movement meant that these towns were less inconvenient, i.e, they had shorter weekly commuting times as people no longer commuting every day. As a result, these areas were more attractive to more buyers.

          List, Over-List and Multiple Offers

Throughout all the towns, we saw houses going for full list or over list from 41% in Greenwich to 58% in Westport and 57% in the Sound Shore Communities of Westchester. Demand is not easily is not easily quantifiable, but these numbers show that the demand is out there. Every agent I’ve talked to, has stories of new houses coming on the market and getting anywhere from 25 to 70 appointments in the first couple of days. You hear stories of having so many offers that the only way to keep track of them is with a spreadsheet.

Clearly, there is lots of demand and at the lower price levels under $1,000,000 or even $1,500,000 is where competition is the fiercest. In Greenwich, we only have 14 listings under $1.0M, and only 6 more, if you go up to $1.5M. From $1.5M to $2.0M, there are eleven more listings for a total of 31 listings under $2,000,000. We see similar shortages of affordable houses throughout the area.

          Inventory vs. New Listings in a Hot Market

Today’s hot housing market is driven by new listings. Looking solely at inventory can be a little deceptive for two reasons. First many new never get counted as active inventory in monthly report and certainly not in the quarterly report. You don’t get to 1006 sales in Greenwich or 866 sales in Northeast Westchester without a significant number of new listings coming on and going off.

Greenwich, with its 152 listings, stands out among all of the towns. Greenwich is more like a small city with multiple neighborhoods, multiple price ranges, a population of over 63,000 people and 22,000 plus housing units. Even with these 152 listings at the present pace of sales seen last year, we only have 54 days of supply which is similar to most of Westchester. East of Greenwich, the days of supply drop. Westport has 42 days of supply; New Canaan has 39 days and Darien only has 10 days of supply.

Now, this days of supply does not mean that we are going to run out of houses to sell. New listings will come on to replace sales and even in this market houses that are priced above market rate and particularly, if they need work, can still be tough sales.

Over $5 million, even newer houses can stay on the market for a while. Our median year built for all sales in 2021 was 1961. The median year built for houses that are active on the market over $5 million is 2004 and the median days on market 240 days or 8 months. Our market at the high end, and particularly those high-end houses in back country and midcountry are doing much better than in 2019, but over $10,000,000 we are still looking at 13.7 months of supply. This is the same price category that only a couple of years ago we were looking at months of supply measured in years.

What’s the new year going to bring?

The short answer is I don’t know, and I tend to be concerned about anybody who says that they do know. If we assume that interest rates are going to go up, we should have a short burst of sales. Presently we have 29 sales in the middle of January and our ten-year average for January is 35 so despite this incredibly low inventory we will very likely be above our 10-year average for sales by the end of the month. If interest rates increase significantly, they may well cut into sales as our lower inventory is doing now. Increasing interest rates will also likely switch some money from stocks to bonds, potentially resulting in lower demand for stock and hence lower stock prices. Higher interest rates will also push down bond prices lessening the wealth effect.

With stock prices down, bond prices down and interest rates up, you would expect that demand will drop, however interest rates are likely to below particularly compared to inflation. Even some softening in buyer demand is unlikely to result in a major correction given the lifestyle shift caused by work from home which looks to persist even after the pandemic.

On the flip side, after two torrid years of sales, lots of folks who had been thinking about downsizing or upsizing may have already done so. Downsizers often move out of the area or switch from houses to condos, while upsizers are more of a zero-sum game. Their purchase of a larger houses reduces inventory, but their sale of their older house adds a listing back to inventory.

Also, a thank you to my fellow Compass agents, Heather Harrison in Scarsdale, Peggy Jackson in the Sound Shore Communities, Kori Sassower in NE Westchester, John Bainton in Darien, Christine Saxe in New Canaan, Laurie Morris in Westport and Michael Ferraro online for their statistics and insights in their markets. I, however, am responsible for any misstatements, mischaracterizations or just bad conclusions. Lastly, we can never discount, the black swan events and the emotions of the market.

Stay tuned it’s going to be a fascinating market.

Greenwich Real Estate 101 – Introduction

Greenwich, CT has a lot of neighborhoods and nuances. Here is an introduction to Greenwich neighborhoods and Greenwich real estate statistics. Click on the

The Town of Greenwich

People
63,500 people
60% married
33% with children under 18
Median age is 43
23% Foreign Born
Real Estate
$30B Grand List
22,271 total housing units
66% single family houses
Taxes $8,400/$1M
Zoning from 0.17 Ac. to 4 Ac  
2021 Sales (GMLS)
1,007 House Sales
272 Condos & Co-ops
777 Rentals
39 Land Sales
1,000 agents
Click the link below for the basic of Greenwich real estate statistics and Greenwich neighborhoods.

Mark Pruner, Compass, Greenwich, 203-817-2871, mark.pruner@compass.com

Every Neighborhood in Greenwich Does Even Better than in 2020

Well Almost All

For just about every neighborhood, and every statistic in every neighborhood, 2021 was an amazing year. We had total sales of over $3 billion and this was up 31% over what was at the time a record setting 2020. Our sales were up $718,204,338 over 2020, in increase in dollar sales that is more than most towns total sales.

What’s really remarkable about that 31% increase in sales volume is that our number of sales were up only 17%. We had 863 sales in 2020 and were up 143 sales in 2021 to 1,006 sales this year.

Townwide, 2020 was a good time to be a seller as we were up in every category, except for those categories where being down is pro-seller. Our average sales price was up 12% and our median sales price was up 11%, while our days on market were down 40% from 205 DOM in 2020 to 124 DOM in 2021, i.e., on average houses were on for almost 3 months less last year over the year before.

Scattered around the table comparing neighborhoods this year to last year there are a few stats that moved in the buyers’ direction, but nearly everyone is just statistical noise in neighborhoods with small numbers of sales. If you take out North Mianus (11 sales), Pemberwick (16 sales) and Banksville (5 sales) just about every statistic was up. The only significant exception was number of sales in backcountry, but more about that later.

When you draw a line through the sales for each neighborhood by year, it’s looks like a Ralph Cramden quote, “Too the moon, Alice.” Cos Cob, backcountry, Old Greenwich and South of the Parkway were all neighborhoods where total sales volume were up by a lot. In mid-country sales volume was up by almost a quarter billion dollars.

We are getting these big jumps in sales volume for two reasons. Our total number of sales are up, and the average price is also up. Combine those two things and get these big jumps.

When you look at the number of sales in each neighborhood, you only have one factor pushing the numbers up. In just about every neighborhood, our sales were up: by 15% in mid-country (aka South of the Parkway) and up 26% in Cos Cob our biggest gain for our larger neighborhood. Also, all our smaller neighborhoods, who have lower average prices, saw dramatic jumps in sales. Pemberwick’s sales were up 78% going from 9 sales in 2020 to 16 sales in 2021.

As mentioned above the one area that saw a drop in sales, (besides North Mianus where sales went from 13 sales to 11 sales) was backcountry. There sales fell from 102 sales in 2020 to 92 sales in 2021 or a drop of 10%. As noted above a 22% jump in average sales price per s.f. more than made up for this small drop with total sales dollars up in backcountry.

The natural thing is to think that high-end sales are dropping in backcountry, but townwide sales from $5 – 10M were up over 100%, so it’s going to take more slicing and dicing to figure out the details of what is up and down in backcountry. One thing that is definitely down is inventory dropping from 49 listings at the end of 2020 to only 37 listing at the beginning of this year.

Going forward inventory is going to determine how we do this. To be more precise, it’s not inventory, but the number of new listings. We were at record low inventory almost every week last year, but we still set a record for sales. You are looking for a new neighbor, now might be a good time to encourage your neighbor to list their house. They’ll get a good price, and you’ll get a new neighbor. 😉

Greenwich Breaks 1,000 Sales in 2021 for a New All-Time Record

Record Sales – Record Low Inventory

 1,000+ Sales

We broke 1,000 sales in 2021, a goal that most people thought we would never see, and we did it on the last business day of 2021. Pre-Covid, our 2019 sales were only 528 sales, so we are looking at sales up 90% in just two years and we were up 16.8% this year over 2020; a year when many towns outside of Greenwich saw lower sales this year.

For example, both Darien and Fairfield saw single family home sales decline in 2021, not because of any drop in demand, but due to lack of inventory. In Darien sales dropped 3.4% and in Fairfield sales dropped an amazing 14%.

Greenwich was not immune from such drops. Under $600,000 our sales were down 53% as many of the houses in our lowest price range appreciated over $600K, but that still didn’t raise sales from $600,000 to $800,000. In that price range, our sales were down 17% from 54 sales in 2020 to 45 sales in 2021. We also saw sales drop from $1.5 to $2.0 million, from 154 sales in 2020 down to 139 sales in 2021 and this is in the heart of our market in Greenwich.

Sales were down in some price ranges, but overall sales were up 16.8%, that means that we had to see big jumps in other price ranges and we did. Our biggest gainer by numbers of sales was from $2 – 3 million, where we had 59 mores sales this year leading to 251 total sales. This was an increase of 31%.

Part of what led to this big increase was that many Greenwichites who owned homes in the $2 – 3 million price range upsized their houses to get more offices, amenities, homework areas and just space in general. What that meant was that their homes were available for sale both to people coming from New York City and coming from smaller houses and rentals in Greenwich. These homeowners then listed their homes otherwise we would never have had enough listings to make it to 1,005 sales in 2021.  

Our biggest percentage increase was from $6.5 million to $10 million where we saw sales jump 120% from 25 sales in 2020 to 55 sales last year. Some of this sales increase were those Greenwich people who were selling their $3 million house and moving to a $6.5 million, but we also had a lot of New Yorkers concerned about their safety in New York City as well as Covid. Hopefully, the new ayor, Eric Adams, with his police background will bring the crime rate down. Problems in New York City bode ill for Greenwich in the long run, even if they lead to a temporary influx of new residents.

Overall, our high-end has been the strongest part of our market with sales from $5 – 10 million up 216% since 2019 and up 82% just from 2020, which was itself a record setting year. Interestingly, another price range where we saw a slight sales drop was over $10 million where we went from 15 sales in 2020 to 14 sales in 2021. I’d take that “drop” with a grain of salt. I know of a bunch of private high-end sales, such as the $19.3 million sale on Lower Cross Road that were never listed. I’d love to know how our private sales did both years. I’m betting that like the rest of the market, our private sales were up last year.

 Very Little New Inventory

 All this is happening while our inventory, which was never close to normal levels this year, dropped precipitously in the last part of the year. We started this year at 152 listings, when we should have around 400 listings. Pre-Covid you have to go back 21 years to Dec. 2000 for the prior record low number listings and that prior low was almost double what we have now. In 2000 we hit a low of 291 listings and this week we have 152 listings.

In some areas of town, our inventory is almost comical. In Byram we have 3 houses for sale. In Glenville, 5 houses, in Cos Cob we are up to 6 houses and we have 8 and 9 houses in Riverside and Old Greenwich. These incredibly low numbers mean that we have zero inventory in some price ranges in these neighborhoods.

For example, in Cos Cob we have 6 listings, but nothing between $1.8 million and $3.2 million, i.e., if you are looking for a house anywhere around $2.5 million you won’t find anything to see in Cos Cob. This is after we sold 28 Cos Cob houses in that price range in 2021. This $2.4 million wide price range was mostly emptied last month, December 2021. In that month, we had 8 Cos Cob houses go to contract creating that big empty space where we would normally have a couple of dozen listings.

Our inventory peaked at 342 listings in June and dropped for most of the rest of the year. In a normal year we peak at around 650 listings. As we had less to sell, contracts dropped in the second half of the year, then surprisingly flattened out in the last 3 months of the year as buyers rushed to buy, before interest rates and prices went up. At year-end, our contracts dropped, as our mini-yearend buyers’ frenzy started to see even a dearth of house priced reasonably.

 Strong Buyer Demand in Greenwich –   While our new listings have slowed, demand has not slowed as winter is here. Buyers are snapping stuff up as quickly as it comes on the market.  Of our 152 listings, only 30 have been listed for 60 days or less. In Old Greenwich, our hottest market, buyers have a choice of 9 houses with only 3 houses under $1.5M. Of those 9 houses, only one has been on the market for less than two months.

You can see that we have strong buyer demand from Westchester County, if you look at the map of 2021 sales in Greenwich. Our border looks like a Seurat pointillism painting with a series of sales right along our western and northern borders with New York State. These folks are in a new state, but in some cases their old friends are just across the street or only one exit away.

Price Ranges – Sales, Inventory and Months of Supply

We have low inventory across the board. In some price ranges, our contracts waiting to close exceed the inventory. From $1 – 1.5 million we have 13 contracts waiting to close, but only 10 listings. The ten listings in this price range are nicely distributed. You have one listing in Old Greenwich, Riverside, Cos Cob and mid-country. You have two listings in backcountry, Glenville and central Greenwich. At least the buyers in one of our most popular price ranges have a choice of neighborhoods. Another price range with more contracts than inventory is from $600,000 to $800,000, where we have 7 contracts and only 4 listings.

To see just how tight the market is check out our months of supply. The traditional dividing line between a buyer’s and a seller’s market is 6 months of supply, i.e., all listings would sell out in 6 months at the present rate of sales, if no more inventory came on the market. We have less than 6 months of supply all the way up to $10M and less than 3 months of supply under $5M.

Our total months of supply is an astounding 1.8 months, but is it really that tight? Looked at some ways, our market really isn’t that bad as the stats make it out. In part, this is because these stats are designed for a normal market not the hot market we have.

One of things that the traditional stats don’t show well are listings that go on and off the market in less than a month. In a typical market, this isn’t a big factor, but last year, 351 of our 1,005 sales were on the market for less than a month. Many of these listing probably never appeared as “inventory” as they weren’t an active listing when stats were run at the end of the month or quarter.

Of those 351 shooting star listings, 73 were on for zero days on market meaning they were private sales that were “listed” on the MLS “For Reporting Purposes Only”. And, there were a lot more of these private sales that weren’t reported on the MLS.

Real Estate in 2022

Regardless of how much inventory we get on in the next two months we are going to have a tight market for a while and possibly the entire year. For the time being, the smart money is out there buying their houses before prices go up even more than the 10.6%, they did this year. Also, for the majority of our buyers that need mortgages, they are rushing to buy, before the Fed raises rates.

The greatest imponderable is how many people are left to sell their homes after 1,869 house sales in the last two years. In 2021, we had a stellar first half and a good 3rd quarter. We should have had a much slower fourth quarter and thats the way it looked to be at the end of October, but some of the Frenzy that we saw in second quarter came back in the last two months and sales went up even as we had less and less inventory to buy.  

The one thing that we do know is that this year is going be different, than the prior two years. Covid will go away or at least no longer be at pandemic levels. During the year most people will have a much better idea of just when they will have to be in the office. People who are waiting out this uncertainty in rentals are likely to buy and we will get some more upsizers listing their “smaller” houses which will look big to those people in rentals.

Interest rates will go up, meaning some money may move from stocks to bonds, potentially flattening the stock market. But, a lot of Wall Street people are going to get some nice bonuses for last year’s market. Also, a major economist says that stimulus money takes about a year to have its full effect, so alot of the $2.2 trillion of stimulus money is still sloshing and will be looking for a home well in to 2022 (preferably a nice home here in Greenwich.)

If you have a home, January 2022 is a great time to list it. If you are buyer, it’s not as bad as the headlines look, but there is probably no more important time to have a good Realtor, banker, home inspector and attorney and if you need a mortgage pay the fee and get underwritten pre-approved. You are going to be going up against a lot of buyers that are bringing all cash to the table and no mortgage contingency.

Stay tuned, it’s going to be a really interesting first quarter…

By Mark Pruner, 203-969-7900 – mark.pruner@compass.com

The Real Estate Records in a Record-Breaking Year

by Mark Pruner

  1. Total Sales

This year has been a remarkable year. On October 23, 2021, we passed last year’s all-time sales record of 861. So, every sale thereafter, sets a new record. As of the middle of December, we are at 971 sales within striking distance of a 1,000 single family home sales year. To break 1,000 sales, we only need 29 more sales this month. So far in December, we have had 42 sales and the last two weeks of December are usually the busiest.

2021 Single Family Home Sales in Greenwich, CT

Greenwich real estate attorneys dread the last week of the year. At a time when many employees here in the U.S. take off and many European countries and Canada practically, shutdown, our real estate attorneys are doing back-to-back closings. At the end of October, we looked like we weren’t going to make it, but then sales jumped 30% in November as we got a small spurt of new listings. We need 29 sales to reach 1,000 sales in the next two weeks; it’s looking like we may make it.

2. Highest Sales Price

A. Greenwich

i. Listed on Greenwich MLS

Our highest sale for the year is 100 Field Point Circle which sold for $50,000,000 on December 1st after being on the market for 201 days. It started out at $55,000,000 and hence sold for 90.9% of original list price. It is a special property with 2.46 acres of land with direct waterfront views of the sunrise every morning.

We also had the sale of Tommy Hilfiger’s house for $45 million in backcountry. It sold in only 61 days on the market for 94.7% of its original list price. Next on the list is 23 Smith Road, which sold for $27,750,000 after 627 days on the market. Bill Andruss also here at Compass had a $15,088,000 sale in Belle Haven. This was the second highest sale ever in Belle Haven and the fifth highest out of 971 sales so far.

ii. Private Sales

Non-public sales are notoriously hard to track, but my fellow Compass agent, Shelley Tretter, sold a Conyers Farm property on Lower Cross Road for $19,250,000 which comes in as the fourth highest sale of the year. (If anyone has a higher private sale, please let me know.)

B. The Gold Coast and the Rest of Connecticut

Greenwich is part of the Gold Coast of Connecticut, which is traditionally Darien, New Canaan, and Westport and sometimes Fairfield. This year Fairfield made a bid for permanent inclusion in the CT Gold Coast with the highest non-Greenwich sale in Fairfield County and the whole state. Set on only 1 acre, 1093 Pequot Ave sold for $10,900,000. In Greenwich it would have been our 12th highest sale price.

After the Town of Fairfield, the Gold Coast high sales by town were a $10 million sale in Westport, an $8.2 million sale in Darien and a $7.85 million sale in New Canaan. Stamford was not far behind with a $7.5 million sales.

2021 Connecticut Sales over $7 million (Source: SmartMLS)

The highest sale in Connecticut outside of Fairfield County was in the only town with a mill rate lower than Greenwich’s mill rate, Salisbury, Connecticut, where a 239-acre property sold for $7.4 million. This would place them in 43rd place in Greenwich, of course 239 acres would be a large part of backcountry.

Even within the Gold Coast, Greenwich stands outs for high-end sales.

Highest Sales by Town Outside of Greenwich

3. Lowest House Sale Price in Greenwich

We only had one house sell for less than $500,000 in Greenwich; 15 Highland Place in Pemberwick, which sold for $450,000. The next lowest price was 11.1% higher at an even $500,000 at 196 Byram Road.

Both Byram and Pemberwick are two of our fastest appreciating areas in town. If you are looking to invest and past is prologue, it’s not a bad place to invest. Anybody who bought in pre-Covid is doing well in these areas.

4. Largest and Smallest House Size

In extreme northeast backcountry, 4 Cherry Blossom Lane was listed at 16,802 s.f. and sold for $7,500,000 or $446/s.f. It was followed closely in size by 857 Lake Avenue at 16,775 s.f. This house sold for $9,710,000 or $578/s.f.

Our smallest house sale this year was at 66 Pemberwick Rd, where this 2 bedroom, 1 bath house with 760 s.f. sold for $870,000. It was listed for $800,000 so it went for 109% of list and $1,145 for each of those 760 s.f.  Coming in second was 196 Byram Road, a 960 s.f. house also with 2 bedrooms and 1 bath, that sold for $500,000.

5. Land

After graduation, Russ and I worked in a family business selling oil and gas investments in the deep Anadarko in Oklahoma and the tight sands of the Appalachian basin back in the early ‘80s. Together we bought the smallest lot in Old Greenwich, a 0.09 acre property at 1 Tait Road around the corner from where we grew up at 46 Tomac. This year’s winner for smallest residential lot has 1 Tait Rd beat by 33%. Both 2 Bolling Place in downtown Greenwich and 18 W. William St in Byram came in at 0.06 acres. They sold for $1,094,300 and $750,000 respectively. On a per acre basis, 2 Bolling Place sold for $18.2 million per acre. Trying to build affordable housing near the central Greenwich train station is not a good idea unless you have big government subsidies.

Our largest land sale was up in northwest backcountry at 39 Pierson, where 36.4 acres were sold to a neighbor to be held for open space. It cost them $9,000,000 or just over $247,000/acre. Bill Andruss had the second highest sale land sale also, for $8.875 million in the very private Indian Harbor Association. Those 3.05 acres went for $2.9 million/acre. People really like Long Island Sound waterfront.

6. Shortest Days on Market

Of our 971 house sales so far this year, 71 houses or 7.3% sold in zero days on market, which is deceptive. These 71 sales were private sales that got reported on the Greenwich Multiple Listing Service as “NON-MLS” sales. Having these Non-MLS sales reported is very helpful, when trying to figure out where the market is going. What’s interesting about off-market sales is that there is a concentration at the low end where people are being as frugal as possible and also at the high-end where privacy is a major factor.

Going beyond off market sales, we had 13 listings that were on the market for less than 5 days. This means that a couple of lawyers were working very fast as listings go from “active” to “contingent” or “pending” only occur when a contract is signed, not when the offer is accepted. As you might expect all 13 of these listings went right to pending skipping any mortgage contingency and at that pace, many buyers likely also skipped an inspection.

7. Longest Days on Market

One of the things that you see in a hot market is that houses that have been on for a while, and I mean a long while, find a buyer. Our 2021 record for listing longevity is 9 Conyers Farm Drive which was on for 2,125 days or 5.82 years. It sold for $8.8 million.

You don’t have to be a very high-end house to be on the market for a while. In second place for days on market is 280 Riversville Road which was on for 1,082 days or just short of 3 years on the market. All in all, we had 11 houses sell in 2021 that had been on the market for more than 2 years and 48 houses that had been on the market for more than a year.

Also, those days on market are LADOM, not CDOM. LADOM is “listing agent days on market” and means that one agent listed the property for all that time without any breaks of more than 90 days off market. CDOM, “cumulative days on market”, counts how long the property was on the market whether with different agents or firms without a 90-day break.

For CDOM, the “winner” is 549 North St. which was on for 6.5 years with various agents. On a cumulative days on market basis, we had 57 listings or 5.9% of our sales that took more than a year to sell.

8. Sales Price to Original List Ratio – Best and Worst

Thirty-eight percent, that’s how much the buyer paid over list for a 2,800 s.f., 1931 house in Riverside to set the 2021 record for highest percent sale over list price. As you might expect it went to contract in 8 days.

2021 SFH Sales at full list or over list price

We have had 234 sales out of a total of 971 listings that went for over list price this year, two of which were my listings. We also had another 159 that went for full list price. In total, 40.4% of our listings sold at full list or over.  

At the other end, we had 25 listings that went for less than 75% of their original list price. Of those 25 listings, the median LADOM was 292 days. After 6 months, and in this market, after 3 months, if you don’t reduce to market price quickly, you risk getting caught in a death spiral.

2021 SFH sales at less than 75% of original list price

Today, we only have 194 listings, when we should have twice that number. Of those 194 listings, 41 have been on for more than 292 days and 139 or 72% have been on for more 3 months.

It’s been an amazing year, stay tuned, the one thing you can be sure of is that 2022 will have it’s share of records too.

What Will 2022 Bring for Real Estate?

A third record year, a slump or déjà vu?

by Mark Pruner

               

Where are we now?  

Sales and Listings

To know where Greenwich real estate is going, it helps to know where Greenwich real estate is now. As of the first week of December 2021, we have had 950 single family home sales. The question isn’t however, whether we will break 1000 sales, we have already easily exceeded that number. The reason is that that 20 to 25% of our sales are usually off market and this year we are at the upper end of the range. I, and every other agent with a motivated buyer, are constantly asking other agents whether they have or will be getting a new listing. This year, lots of buyers, have been thanking their agents for “finding them the house, that no one else could find.”

As to public listings sold, we are right now looking at year-end total of 990 sales made on the GMLS, if we have a normal 57 house sales this December. We may, however, break the 1,000 sales mark; It will be close. The demand is there, but what may prevent it is our falling under 200 listings. Right now, we are at 199 house listings on the GMLS and December is a time for sales and not new listings.

950 YTD house sales in Greenwich 11/20 (Note, concentration of sales along the western and northern border with NYS)

                                Contracts

On the contract side, we presently have 109 contracts which is a significant drop from the 121 contracts that we had at the beginning of the month. In total, we have 1071 single family homes sold or under contract so far this year.

                Where are we going in 2022?

The big problem with black Swan events, like Covid, is not only do you not expect them to happen, but when they start to die out it’s equally uncertain what will follow. We don’t know even know whether the increasing positivity rate that we’re seeing primarily from the delta variant will continue to get worse as the cold weather drives people indoors. If you look at the map of where COVID has gotten worse, it corresponds to where we are seeing our coldest weather. Our positivity rate bounces around, but it is going up, not down, as we see more cold weather in Connecticut.

Clearly, 2022 is not going to be a repeat of 2021 and certainly not a repeat of 2020. The pharmaceutical industry is rolling out new vaccines, new treatments and if you haven’t picked up a home testing kit, they are becoming regularly in stock at our local pharmacies. Personally, I think easy, early and ubiquitous testing will cut into the spread Covid significantly as people will know much earlier whether they are contagious or not.

The bottom line is, COVID is going to be COVID and there’s not that much we can do about predicting its effect on the housing market. What is quite clear, however, is that The US economy can do very well with large numbers of people working from home and that large numbers of those people working from home will quit if they are required to go back to 9 to 5, five days a week. Given our labor shortages, companies are going to have to bow to workers desires to spend more time at home.

                WOOFH

As a result, we will continue to see the average house size increase as people need offices and homework areas, so they are not in their bedrooms 14 hours a day. Working occasionally or often from home (“WOOFH”) will mean that where people want to live will change and clearly Greenwich is one of those places that looks better in a post-Covid, WOOFH demanding world. With eight and a half million people in New York City and 22 million people in the metro area, we’re going to see a continuing demand for the larger homes, bigger yards with on-site amenities that Greenwich provides. This bodes very well for the Greenwich real estate market in 2022.

                Whither Inventory?

The biggest impediment to 2022 being another record year in Greenwich is our lack of inventory. This is not a Greenwich problem, but a nationwide problem as people want more single-family homes with yards in the suburbs around major metropolitan areas.

(N.B. We are seeing announcements of a major uptick in sales and rentals in many major cities however, these jumps in transactions are often because they are being compared to the dearth of transactions in 2020, when nothing was going on. When you compare 2021 numbers to 2019 these big jumps in sales and rentals often goes away.)

                                Can our inventory go to zero?

One thing that won’t happen in 2022 is our inventory going to zero. I work with my brother, Russ, here at Compass and he has statistics going back 37 years. The lowest inventory he ever recorded pre-Covid was 290 listings in the last week of 2000. The end of the year is usually when we see our lowest inventory and it’s normally just under 400 listings not the 199 listings that we have now.

The good thing is that real estate always has new listings being generated by lifecycle changes. People have kids, get married, get divorced, downsize, and pass away. This year in Greenwich much of our inventory has come from people who are upsizing driven by COVID and WOOFH. For each one of those families that bought a bigger house, most also sold their old house or their landlord re-rented their place to one of the many first-time homebuyers. Not many people keep two homes in Greenwich.

                                What about zero listings at the low end?

Unlike the overall inventory, It is possible, for our listings for single family homes under $600,000 to go to zero. With our price appreciation, we just don’t see many homes listed under that amount in Greenwich. In 2020, we sold 17 houses under $600K, so far in 2021 we have only sold 8 and only have 2 houses on the market. I expect that next year we will have no houses listed under $600K for many months of the year.

                                Do we have enough high-end inventory?

The greatest surge in sales this year compared to last year is in our $5 to 10 million price bracket. In that price range our sales are up 110% over last year and our inventory is down 35%. Given our very limited availability of waterfront lots, I expect to see a resurgence of new construction in mid-country and backcountry as the demand is there from high-end buyers.

Unfortunately, one of the things that’s driving sales at the high end in addition to COVID and WOOFH is the increase in crime in New York City. Personal safety is something we all will pay to insure but at the higher price levels being free from personal danger is something that people will spend millions of dollars on. You can expect Mayor Eric Adams to move strongly to lower NYC crime rates in 2022.

                Will there be enough money to buy Greenwich houses in 2022?

People talk about the cost of goods going up however an economic professor of mine used to say it is equally valid to talk about the value of money going down. With 6% inflation, the $1 that used to buy 100 cents of goods, now only buys 94 cents worth of goods. Traditionally, one of the hedges against inflation has been to shift money from cash, a depreciating asset, into an appreciating asset such as real estate. In 2022, we are going to hear more pundits talk about inflation driving sales, particularly, at the high end.

We also have lots of people sitting on appreciated company stock and on unspent discretionary savings. Both of these are likely to push Greenwich home sales higher.

                Will rising interest rates kill our market?

The Fed is expected to let interest rates rise in the first half of 2022. This is way overdue. The Fed has been inflating the economy at a time when they don’t need to do so and it’s pushing up the cost of goods for everyone including the cost of Greenwich houses. Once the stimulus payments are no longer occurring and the Fed is not artificially keeping mortgage rates low you can expect some softening in demand.

However, the National Association of Realtors did a study and they found that periods of rising interest rates were also generally periods of rising inflation encouraging people to buy hard assets. An increase in interest rates may slow the increase in demand but it’s unlikely to stop it. In fact, one thing driving our low inventory is our smart money buying houses with very low mortgage rates, before interest rates go up.

A related factor that will push home sales up is that many more people now have enough for a downpayment, since they been staying home saving money. (When was the last time you paid $400 for a ticket to a hot Broadway show?) Also, we are in the midst of the greatest wealth transfer ever from the baby boomers and greatest generation to the millennials and Gen Xers.

For more than a century, Greenwich has attracted well to do people, whose sources of wealth have varied greatly. We’ve also seen wealthy people come from all over the world to buy in Greenwich. Whether motivated by new found riches, such as we saw with the OPEC countries in the 1980’s or problems at home was we have seen with various South American countries, people from around the world come to Greenwich.

                2022

Are we likely to have another 1,000 single family home sales in 2022? Personally, I think that’s unlikely. Are we likely to have a year with sales well above the 600 sales, our dividing line between a good year and a poor year? That I think is likely.

Stay tuned it’s going to be an interesting year, and hopefully not as traumatic as this year.