The Greenwich Real Estate Report for November 2014

The Greenwich Real Estate Market

November 2014 REPORT

By Mark Pruner, Realtor

Berkshire Hathaway – N.E. Properties

203-969-7900 – mark@bhhsne.com

GREENWICH REAL ESTATE – LOOKING GOOD & GETTING BETTER

In July 2014 we saw something we never see, July sales exceeding. August looked even better as we matched sales in August 2013, the best August we have seen in the last nine years. Then sales took a big drop in September 2014 as uncertainty about the future scared homebuyers just as the government shutdown hurt sales in 2013.

Sales rebounded nicely in October and the GMLS only sales figures for November show that November is continuing this recovery with 41 sales reported so far. We normally see an additional 13% of non-GMLS sales if that happens then the 46 sales will match the sales in a very good 2013.

GREENWICH PRICE APPRECIATION IN 2014

So far this year our median sales price has been $1,881,350 this compares to a median price of $1,640,000 last year. This 15% increase in median price looks very good, particularly at a time when inflation is in the low single digits, but it is a little deceptive. Most of this price increase in the median is due to an increase in sales in the higher price range.

An equally mathematically accurate but even more deceptive year over year comparison is the 34% increase in the 2014 average price to $2,736,683 for a single family home in Greenwich. This average price jump includes the $120 million sale of 120 acres on Long Island Sound.

A better way to estimate the average price increase in Greenwich houses is to compare the change in the ratio of the sales price to the town’s assessed value. This ratio is up 7.1% so far in 2014, but any way you calculate it Greenwich houses are beating inflation.

INVENTORY, YTD SALES, NOV. 2014 SALES & CONTRACTS

Over $4 million dollars our present inventory significantly exceeds our first 11 months of sales meaning we are looking at much more than a year’s supply of listings at present sales rates. You can also see that most of our sales year to date have been between $1 million and $3 million dollars. In fact over $2 million we have seen much better sales in 2014 than we have seen in any post-recession year to date.

Sales in the ultra-high end market over $10 million market have been extraordinary this year. Fifteen houses have been sold in Greenwich over $10 million including one property for $120 million. Greenwich has actually sold more properties over $10 million than San Francisco and Palm Beach combined. New York City, whose population is 130 times Greenwich’s population, has sales over $10 million properties that are only about 4 times Greenwich sales. On a per capita basis Greenwich outsells New York City 33 times over in the $10 million range.

INVENTORY & SALES STATISTICS FOR GREENWICH

To see the sales, inventory and months of supply table go to GreenwichStreets.com.

As of Friday, 12/5/14, we had only 458 single family homes on the market in Greenwich down 60 listings in only one month. The majority of this drop was between $1.5 and $4 million where inventory is down 39 units.

Overall sales for the 2014 are up from 2012, but down about 5% from 2013, which was a stellar year for sales. All of this drop is due to lower sales under $1 million. If we had more inventory in this price range we would have more sales.

While overall sales are down slightly, all of the price ranges above $3 million are up a lot. Over $10 million sales are up from last year with 14 sales compared to 6 sales last year at this time. The increase in over $10 million sales started in September last year and still continues. Greenwich is looking like a good alternative to many New Yorkers in this price range. In total above $3 million we have already sold 6% more houses than we did all of last year.

When you add up the value of all the homes sold so far this year on the GMLS you have total volume of $ 1,444,968,796 and there are another 83 Greenwich houses that have been sold outside the GMLS that are not included in this figure. Given that overall sales are down 5%, this again shows the impact that the increase in high-end sales have had on the market.

GREENWICH MONTHS OF SUPPLY AND MARKET COMPETITIVENESS

We get a bunch of new listings in September as part of the fall market. By November inventory drops as the number of sales and listing withdrawals greatly outnumber new listings. The result is the months of supply curve that you see here where we have tight supply all the way up to $3 million. The current sales rate from annualized November sales (white bars) shows the same thing.

Under $2 Million

Everything under $1 million dollars is a sellers market if the property is priced correctly. Even in this very competitve price range, over-priced properties sit on the market. In this post-recession market buyers at all price ranges, and particularly below $1.5 million insist on value. It doesn’t have to be a bargain, but buyers will not pay more than what they perceive market value is no matter how much they love the house. The average sales price to list price percentage has stayed around 93% for the last several years.

We only had 6 sales between $1 and 2 million in November so the annualized months of supply jumped in this category. December should be a better month as we have 33 of our 85 pending contracts in this one price range.

$2 Millon to $5 Million

Sales from $2 to $5 million have been steady and as inventory has dropped this market has tightened significantly as sales have continued at a good pace. In November we had 17 sales in this price range while our inventory dropped by 35 listings as 18 other listings expired or were withdrawn.

From $2 – 3 million we saw a big drop in months of supply as listings declined by 20 due to 10 sales in November and withdrawals. In addition to the 10 sales we have 19 contracts pending. The result is that months of supply dropped to only 7 months of supply a low number for such a pricey range.

We also had drops in months of supply from $3 – 5 million. We were down 1.6 months of supply from $3 - 4 million and 1.3 months from $4 – 5 million, but we still have an inventory of 106 listings from $3 – 5 million, so there are still plenty of choices.

Over $5 Million

The over $10 million price range has been active since September 2013, with very high end buyers looking and buying. Over $5 million dollars is still a buyer’s market, but the momentum for the past 12 months is clearly towards the sellers. Indicative of this is a drop 5 months in months of supply from $5 – 7.5 million and a huge 10 months from $7.5 – 10 million.

The market is even a better than this huge drop in months of supply indicates. The $5 – 10 million price has by far the largest number of private sales in Greenwich. In the $5 -10 M price range 10 houses sold outside the GMLS while 39 have been sold through the GMLS. There is no good way to calculate months of supply for these private sales, since you can’t know how many houses are offered privately. Bottom line this segment is improving quickly and the raw numbers don’t tell the whole story.

GREENWICH REAL ESTATE – SUPPLY AND DEMAND

Our median sales price in Greenwich YTD is $1,881,350 while our median list price is $3,495,000. You can see this graphically in the pie charts below with less than half of our inventory under $3,000,000 while nearly three-quarters of our sales are under $3,000,000.

An interesting thing to do is to proceed around the pie charts from top and compare the size of the inventory and the sales for each pie slice. The under $1 million inventory makes of up only 8% of our inventory, but represents 22% of our sales.

Conversely, the over $5 million inventory is 34% of our inventory, but only 10% of our sales. The thing to note is that while the number of sales may be much smaller at the high end, the total dollar amount is huge. The 123 sales under $1,000,000 total $90 million dollars while the most expensive single property sold for $120 million. Even if you exclude that one extraordinary sale the next 7 houses total $97 million dollars. .

The robust part of the market is the $1.5 to $4 million market where we have plenty of inventory and plenty of sales. This was not the case last year. Sales activity slowed down over $2 million, but this year $2 – 4 million has been looking good.