The first half of the 2019 Greenwich Real Estate Market has ended inauspiciously, with Single Family Unit Sales down -17.8%, January-June 2019 vs. 2018, Sales Volume down -21.1% and Inventory up +9.1%. The highlight here, however, is sales in the $2-3M range, which has increased this year-to-date versus last year +10.2%. This price segment significantly represents 23.9% of all 2019 sales. There was also an increase in the number of homes sold in the $6-10M range as well.
Another highlight is the Median Sale Price, up +4.6% from $1,865,000, January- June 2018 to $1,950,000 in 2019. The rise in the Median Sale Price can be attributed to the -33.3% decrease in the number of homes sold in the $0-1M price range, January-June 2019 vs. 2018. Since there was a dramatic decrease in the number of the lowest priced homes that sold in Greenwich in the first half of the year, you have to go higher in price to reach the 50% median price. Both median and average sale prices are not complete indicators of your home’s value, however, since they are determined only by what IS selling versus what isn’t selling.
“Homes Under Contract” is the predictor for future sales and, unfortunately contracts are down overall here as well, -19.6% Jan.-June 2019 vs. 2018. While contracts in all lower price ranges are down, the silver lining here is that contracts are UP in the $8M- plus price range. This will be reflected in future sales in this range.
Also of note is that—of all of the price ranges—the $1-2M range represents the highest percentage of all single family homes that have gone under contract in Greenwich so far in 2019 at 31.8%. Since this price range represents 26.4% of the inventory, this shows that demand in this range is higher than supply even though contracts in this range are down -19.8% year-to-year.
You are probably asking yourself: “What has caused this market softness during the first half of 2019?”
The “Leading Economic Indicators” are good, according to the July 5th, 2019, story by Kimberly Amadeo of The Balance, “How is the US Economy Doing?” Amadeo dubs our current economy a “Goldilocks” economy because there has been steady growth, low unemployment and little inflation “because it’s neither too hot nor too cold”.
These positive economic indicators, according to Amadeo, during the first half of 2019 include:
- The 224,000 jobs that were added in June 2019– considered “Strong”
- The 1stquarter 2019 GDP growth at 3.1%– considered “Ideal”
- The Year-to-Year Core Inflation rate was 2.0%– considered “At Target”
- The Stock market emerging from a 6-month correction in August 2018 and interest rates remaining stable– both considered “Healthy”.
Since the economy is faring well nationally, this shines more of a light on our CT State economy. In early June 2019, the CT State Legislature passed a $43 billion state budget that averts a major projected deficit without increasing income tax rates and –notably –avoids the income tax increase on the rich that the new governor, Ned Lamont, opposed during his campaign, according to the June 3, 2019 CT Mirror article by Keith Phaneuf and Maya Moore. It leaves CT with a $2 billion emergency budget reserve—the largest in state history—and with the potential to grow it more over the next two years.
This state budget is not only good news for real estate, since it promotes keeping our seniors “aging in place” instead of relocating to a state with more retirement –friendly taxes but, it also invests additional dollars towards education, healthcare, municipalities and job development. This new budget also waives conveyance taxes on homeowners in eastern CT who are having trouble selling their homes due to crumbling foundations.
The new budget further assumes $455M in labor savings over the next two years and settles a longstanding dispute between the state and its hospital industry. It does not include a resolution on tolls but diverts funds originally intended for transportation and keeps them in the General fund.
The drawbacks include the postponement of billions of dollars in pension debt that will be the responsibility of future generations to pay, according to Phaneuf and Moore. This new budget also places a new “mansion tax” surcharge of 2.5% on the sale of homes of $2.5M or more that will take effect on July 1, 2020. CT’s current conveyance tax is 1% for home sales under $800,000 and 1.5% for homes above $800,000. This new “mansion tax” law, further, gives the increase in the sales tax back if the home buyer stays in the state for three years: another attempt at retaining the state’s population…
The new budget, furthermore, eliminates the business entity tax, a $250 fee that all companies must pay every two years but, instead, will ask more of small businesses by reducing a current income tax credit on owners of LLCs and other small and mid-sized businesses, resulting in an extra $50M per year. It also defers the first stage of property tax relief for low and middle-income families that Lamont pledged during his campaign.
This budget also expands sales tax to many goods and services not previously taxed, such as e-cigarettes and plastic bags and increases taxes on digital downloads and alcoholic beverages.
Critics of the new budget say it makes it more difficult for small businesses to operate in CT by raising taxes on them and “squeezes the middle class” “by extending the sales tax onto a number of products and services that middle-class people pay everyday”, according to the article. In the end, it is the hope that this new budget will serve to retain more of CT’s population than to repel them.
The benefits of living in Greenwich have always been plentiful and will continue to be undeniable regardless of the state budget. Its close proximity to New York City, 40-minute ride to Grand Central terminal and 4 local train stations will always make life easier. Shopping in Greenwich, furthermore, is on par with any major metropolitan area and there are numerous fine and casual dining choices here.
Greenwich also abounds in beautiful parks, beaches, running and hiking paths, marinas, picnic areas and golf courses. The Greenwich Town Party and the Food & Wine Festival are exemplary highlights of our local entertainment. Cultural destinations include the Bruce Museum, Bush-Holley House, Cos Cob Art Colony and Greenwich Historical Society.
The Greenwich Public School System is ranked 14thin the state and Greenwich High School is ranked as the 7thbest high school. We also have several prestigious private schools as well as strongly competitive high school athletic teams.
Taxes will always be a strong point for CT and for Greenwich specifically. CT’s maximum state income tax rate (6.99%) is the lowest in the tri-state area. Real Estate taxes are also the lowest in the tri-state area as well, Greenwich’s taxes in particular. Taxes have become an even bigger deal since the federal 2017 tax reform bill was passed, rendering lower deductibility of property taxes due to state & local tax (SALT) restrictions.
All of these attributes– and more– are what will continue to draw home buyers to Greenwich.