Greenwich single Family Home sales are up 27% in the 3rdquarter of 2018, fueled primarily by a strong September, with 182 units sold versus 143 in the 3rdquarter of 2017. This defies the odds that critics had given Greenwich, sure that sales would be down due to the new federal tax laws.
Looking at year-to-date figures for 2018 versus 2017, sales are up 5.8%. According to the Berkshire Hathaway HomeServices report attached, there has been a 33% decrease in contracts signed in Manhattan this quarter. Not only Greenwich but, other Fairfield and Westchester County towns saw increased sales across all price points. Despite predictions, buyers are still putting their money on Greenwich and other towns that offer a similar lifestyle.
A major contributor to this overall increase in sales is the doubling of the number of sales in the over $10M range, from 4 in 2017 to 8 in 2018, plus an additional contract that is pending to close. Another major factor is the increased sales in our “ heart of the market”, in the $800,000 to $4M range, with the notable exception of the $1-1.5M range. Sales in this range have been slower this year, likely due to the impact of the change in the tax laws and the interest rate increase.
As you may recall from my “First Half” blog, the new tax laws enforced a $10,000 limit on the deductibility of state and local taxes, including local property taxes. This has caused the true cost of property taxes to go up since any amount over $10,000 must be paid with after-tax dollars. Critics thought that real estate sales would decline in states that have both high property taxes and high income taxes.
This $10,000 property tax mark hits right around homes that are valued between $1.2-$1.5M in Greenwich. Hence, these homeowners are the ones that are realizing for the first time that they now must pay at least part of their taxes with after-tax dollars, unlike before. And, young families who are looking to trade up into this range are having trouble finding the right house because deductibility on new home mortgages is limited under the new tax plan while interest rates are going up! Meanwhile, the rental market is still booming!
Out of the 762 transactions that have closed by the end of 3rdquarter this year, 304 of them have been rentals. This means that 4 out of every 10 transactions this year have been rentals!! While inventory has been decreasing steadily over the course of this year due to increased sales, we are still seeing a new trend of “fence sitters” who are serial renters.
I– and many of my associates– have seen young families who resist buying for many years so that, when they finally decide to enter the market, they enter at a much higher price point than they would have if they had entered the market 5-10 years ago. Hence, we are now seeing first time home buyers who are entering the market at the $2-3M level or, even higher. And, while they build this equity, they rent!
Another byproduct that has emerged since the recession is the rise of non-bank lenders for mortgage loan originations, like Quicken Loans. Banks have re-directed their focus, according to the Wall Street Journal, away from mortgage loan origination to consumers who have good credit. The non-bank lenders are meanwhile, taking care of the first-time home buyers and those who are less credit-worthy.
Note: As you may notice from the attached Market Report, I have switched firms and am now a Berkshire Hathaway HomeServices agent. Of course, please let me know if you have any questions about my blog or, if you would like a complimentary home valuation! Debbie (203 273-3668)
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