Greenwich Single Family Real Estate Sales are up 39.2% year-to-year, from 74 sales in 2019 to 103 as of the end of first quarter 2020. Home sales in all price ranges are up or even with last year, with the exception of homes in the over $10M range. The average number of units sold over the past 5 years, as of the end of first quarter, is 98 so, this is an above average year for us so far.
Fear applies to all price points. Even so, we still sold more homes this March—when the coronavirus really started to have an impact here in Greenwich– versus last March, 35 versus 27. Yet, despite the coronavirus pandemic—or, maybe, because of it—the Greenwich real estate market looks a lot like a classic competitive seller’s market right now.
We don’t have a lot to compare this first quarter’s statistics to, since we got off to a disappointing start last year. With overall sales ending down 11.3% for the year in 2019, many believe that this was a delayed reaction to the Tax Cut and Jobs Act that was passed in December 2017. This law eliminated the deductibility of State & Local Taxes (SALT) over $10,000 and, thereby, weakened the lower end of our market last year. First-time homebuyers and downsizers in the $600K-2M range were negatively affected by this loss of SALT deductibility and still are.
Meanwhile, single family home inventory is down -18.4% year-to-year and, in mostly all price ranges. As of the end of March this year, we had 505 homes actively listed versus 619 last year. Many sellers have withdrawn their homes temporarily from the market to ride out this pandemic, resulting in below average inventory. The average inventory over the past 5 years is 569. So, those sellers who are keeping their homes on the market have a better chance of selling this year than average. And, the buyers who are willing to brave the risk of going out during a pandemic to look at homes, are serious.
Likewise, non- contingent or pending contracts are up +24.4% as of the end of March this year versus last year. As of the end of first quarter this year, we had 107 pending contracts waiting to close versus 86 contracts last year. Here, too, contracts are up in most price ranges or, even with last year in several ranges. This is a marked improvement over last year and, is close to the average number of pending contracts at the end of first quarter over the past 5 years–111.
With contracts up, sales up and inventory down, this environment strongly favors sellers. In addition, sales volume is up +29.1%; the % Sale Price/ List Price ratio is up +1.4%; and Days on Market are down -22.4%: all signs of a viable sellers’ market.
Even in this competitive market, home sales and contracts at the high end (over $8M) have been quiet. We have seen for a number of years since the recession a shift in the time of year that high end home sales peak. The spring market used to start in February in Greenwich, pre-recession, due to Wall Street and hedge fund employees receiving large cash bonuses at the end of the preceding year. Between 2003-2008, the top month for the average number of properties going to contract was March.
Following the financial crisis of 2008, the Dodd-Frank Wall Street Reform & Consumer Protection Act of 2010 was passed by Congress to regulate compensation for finance professionals. As a result, investment bank and hedge fund employees were limited on the size of their year-end bonuses. Since 2009, the top month for the average number of properties going to contract is May. We are now seeing high end home sales peak more towards the end of the year.
What happened??
With the advent of the pandemic, New York City residents have been flocking out of the city to the suburbs and, Greenwich is one of the closest. Associates at Berkshire Hathaway have received numerous requests from New York clients for short term rentals. Any furnished home that has gone up for rent in the past month has been snapped up, with little regard for the price tag. Not surprisingly, rentals in Greenwich have jumped +48% year-to-year as of the end of March, with 99 this year versus 67 last year.
An associate of mine just received multiple offers on a fully furnished 12,900 sqft, 2-month rental in Westport. This includes a 3,100 sqft lower level, complete with pool table, ping pong table, video gaming center, bar and TVs connected to multiple streaming services. It just went for $25,000/ month. In many cases, snowbirds who were already nestled in Florida when this crisis started, put their homes in Fairfield County on the market as short term furnished rentals. They are now making a nice profit on homes that would have otherwise sat empty…
Both public and broker’s open houses are prohibited right now but, the State of CT is considering real estate sales an “essential business” and private showings are still allowed. Photo slideshows, virtual tours, virtual open houses and immersive 3-D experiences are all a part of the listing agent’s arsenal of techniques to enable buyers to see their listings without physically being there. Agents can also attach documentation and display floor plans on their listings as well.
But, when a showing actually takes place, there are numerous precautions that the listing agent should take. Prospective buyers should be questioned prior to setting up the appointment as to recent travel and potential exposure. The listing agent should arrive ahead of time to disinfect all surfaces. All closet doors and primary cabinet doors and drawers should be opened so that buyers can see inside without touching them. Only the primary decisions maker(s) should be allowed inside the house. Personal protective gear should be worn such as gloves, facemasks and foot covers. Everyone should maintain a distance of at least 6 feet of each other, preferably more. And, when the showing is over, the agent should disinfect all surfaces again.
Realtors are seeing a silver lining, however, in our current set of unfortunate circumstances: many New York City clients who have been putting off a move out of the city, now want to move out of the city. When their short term rental in South Hampton ends in the late spring/ early summer, for example, we are predicting that we will see many of them on our doorstep in Greenwich looking for permanent homes. If this comes to fruition, we expect to see a delayed spring market once this all settles down. As we have already experienced in March, there aren’t as many buyers out there looking now and, there aren’t as many homes to choose from as usual but, the buyers who are out now are serious. If this trend continues into second quarter, we will have the foundation for a strong spring market.
Another variable besides the coronavirus that may fuel this exodus out of the city and contribute to a stronger spring market in Greenwich this year is that the oldest millennials are now 39. This was bound to happen sooner or later. There are approximately 83.1 million people who are currently millennials, according to Lizz Schumer in her Good Housekeeping article in January 2020, “Let’s Break Down Who Really Qualifies as a Millennial”.
Prior to this, the typical millennial would rather remain as a tenant in the city than move to the suburbs and commute. I heard from an avid reader of mine last year that his 38-year old millennial son prioritizes the “convenience” of his and his wife’s “commute over home ownership”. He said that his son “would rather pay $10,000 a month in rent and childcare” than move to the suburbs and commute! My reader lamented, “I commuted 30 years without a thought while my son can’t get over the fact that he would have to commute to Wall Street everyday!!”
Most millennials graduated college at the pinnacle of the economic recession and—if they were lucky—found a job. But, many didn’t find a job for a while and this economic backdrop seriously impacted the psyche of these young adults. It had a “serious impact on life choices, future earning and even how/when we entered adulthood,” Schumer said. It’s no wonder, then, that this group has been “the last decade’s scapegoat for a slew of social ills, economic trends and the embodiment of unflattering traits like selfishness, sensitivity and whatever personal failing that society doesn’t like to recognize in ourselves,” Schumer opined.
She quoted a 2018 Federal Reserve Study that said: “millennials are less well-off than earlier generations when they were young, with lower earnings, fewer assets, less wealth.” It’s not surprising then, that millennials are more likely to live with their parents than previous generations. But, now that many of them are nearing the age of 40 with families of their own, this pandemic may be just the catalyst to push them towards the suburbs and more space. It’s much easier to social distance on 4 acres in back country than it is in an apartment building in NYC!! And, if my reader’s son needs a good real estate agent, I would be happy to help!
I personally know of no one who is still alive today who survived the 1918 influenza pandemic that infected 500 million people or, one-third of the world’s population and killed an estimated 50 million people worldwide. It was responsible for 675,000 deaths in the U.S. alone. I am hopeful that pandemics occur only every 100 years because I can’t imagine having to live through two of them in my lifetime!
But, one thing that I know will endure is Greenwich: with the immense beauty of the waterfront and public parks, top-notch schools and excellent sport programs, remarkably lower taxes, high caliber restaurants and shopping and a wide variety of cultural events. There is something for everyone here. I think that we can all agree that Greenwich is a pretty great place to shelter at home. And, we will get through this together.
