Despite 4thquarter Single Family Home Sales in the Greenwich Market ending slightly down, -3.62%, the good news is that sales 2017-to-2018 overall ended up +4.4%. Ordinarily this increase would not be remarkable but, when considering that early indicators show that the number of sales dropped in New York City, Westchester County and in other towns in Fairfield County, this is something to applaud. The new tax laws impacted sales this year.
The Tax Cut and Jobs Act that was passed by Congress in December 2017 eliminated the deductibility of state and local taxes that exceed $10,000. This—in turn— triggered an early retirement by many CT residents who decided to liquidate their accumulated appreciation in the value of their home and make the exodus to another state (perhaps warmer?) early.
One of the price ranges that was greatly affected by this exodus was the $800,000-$1M segment where sales rose +59% compared to 2017. This is because many of the residents who decided to make an early move happened to own homes in this range, prompting a dramatic increase in inventory. And, as has been the case for the past several years, when Greenwich has inventory in this price range, it sells. Seventy-three homes sold in the $800,000-$1M range in 2018, representing an increase of 27 homes as compared to 2017.
Another range that saw a dramatic increase in sales is the $2-4M segment, where 16 more homes sold this year versus last for a total of 171 properties. My esteemed colleague at Berkshire Hathaway, Mark Pruner, an expert in Greenwich market statistics, attributes this rise to early downsizers who are still actively involved in the workforce in the New York City metro area who have chosen to live in Greenwich because of the low property taxes here. Property taxes here are often about one-third of the taxes in some neighboring Westchester County towns for similar properties. The Town of Greenwich further enhanced this tax benefit this year by keeping the mill rate the same as the comparatively low property tax rate for 2017.
Unfortunately, early downsizers do not seem to be pursuing homes in the $5-10M range in Greenwich, as sales dropped from 39 units in 2017 to 13 in 2018. On the other hand, 25% more homes above $10M sold this year versus last year, from 8 homes in 2017 to 10 in 2018.
It is always important to consider contracts since they are predictors of future sales. The Greenwich Market had 32 Pending Contracts as of the end of 2018, down 6% from the 34 contracts at the end of 2017 and 12% down from the 36- contract average for 2007-2017.
It is not surprising that our contracts are down since, just like the current state of our federal government, buyers become paralyzed when there is uncertainty. Even if the certainty isn’t particularly positive, buyers are more willing to make a significant financial commitment when they feel more confident about the future.
The Months of Supply of Inventory figures usually drop significantly at this time of year because so many listings expire as of the end of the year. As of the end of December, Months of Supply for the Greenwich market overall was about 14 months but was down to 9.2 months of supply as of the beginning of January.
I have for sale right now an immaculate, generously-scaled, center hall colonial– near town and the Old Greenwich train station– at 138 Lockwood Road in Riverside for $3,050,000. Months of Supply of Inventory in Riverside specifically ended 2018 at 5 months. This places my listing and others that did NOT expire, at a distinct advantage since it is currently a seller’s market.
In terms of price, our Average Sales Price in Greenwich went down -7% to $2,396,448 in 2018 as compared to 2017 and our Median Sales Price descended a slight -2% to $1,765,000 year-to-year. This is not a reflection of your home’s value, rather, due to the increase in sales in the lowest end of the market and a decrease in sales in the upper end of the market.
Mortgage rates rose in 2018, causing a stall in the real estate market, according to Len Kiefer, Deputy Chief Economist for Fannie Mae and Freddie Mac. If rates stabilize, however, and the economy holds with lower unemployment and a rise in wages, according to Kiefer, the future of the U.S. housing market looks good over the next few years.
Why? Because the home ownership rate has been rising for 3 reasons, he said. 1) Our aging population of “Baby Boomers” (those aged 55+) continue to be homeowners longer since they are a healthier generation and live longer. 2) Because the labor market has been heating up and there has been job growth, the economy has been providing for people with good credit to buy a home. 3) With the Millennial generation (born between 1981-1996; ages 23-38 in 2019), we have a rising group of first-time homebuyers. Since Millennials are getting married later, we are starting to see peak demand now and this will maintain for the next couple of years.
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