We broke the record for the most number of single family unit sales ever, with 1,007. We grossed the highest sales volume ever, a little over $3B, which was +30.7% above our record-breaking 2020 sales volume of $2.3B. And, we topped (by +1%) our highest average sale price that was attained during the housing bubble in 2007, with an average sale price in 2021 of $2,995,026.* (although some real estate firms are reporting that the average sales price has actually topped $3M after this report was published).
And—ironically— these record numbers were attained with most likely the lowest available inventory ever!! (160 single family homes for sale as of the end of December 2021) Because of this low inventory, our Days on Market dropped -35.9% year-to-year, from 170 to 109 days. Homes that were presented well and priced at market value were being snapped up quickly all year.
Also, because of this low inventory, prices have gone up. Not only has the average sale price risen +12.3% from $2,667,708 to almost $3M in the last year, the median sale price has risen +10.8%, from $2,075,000 to $2.3M. (This means that half of the homes in Greenwich sold for more than $2.3M and half sold for less.) Additionally, % Sale Price/List Price has risen +3.2%, from 94.4% last year to 97.4% this year. It is great to be a seller right now in Greenwich, getting on average over 97% of their asking prices!!
It is also no surprise that, since unit sales are up +16.5% year-to-year, 2021 beat 2020 with the total number of contracts, 977 versus 913, an increase of +7%.
Greenwich residential real estate had an amazingly successful year, considering its low inventory levels.
Overall single family home sales in many other towns in Fairfield County suffered this year due to lack of inventory. Sales in the lower end of the Greenwich market— the $0-2M range— underperformed as compared to last year. The $0-1M range was down -6% year-to-year and the $1-2M range dropped -3.3%. It is not surprising that this “entry level” of the Greenwich market was struggling since the demand for these homes was so great and there was tremendous strain on the supply side.
Another factor that influenced depressed sales in the $0-1M range was price. Only one home sold for less than $500K all year. Rising prices resulted in less inventory in the lower end of our market. Since prices are going up in Greenwich, many entry level homebuyers are being priced out of our market. Yet, even with depressed sale levels, the $0-2M range represented 39.7% of all single family home sales in 2021 and the $0-4M range represented an astounding 79.8% of all 2021 sales. The $2-3M range was the strongest performer, with an increase of +32%, from 194 single family home sales in 2020 versus 256 in 2021.
What helped sales in the lower half of the market was that many homeowners were “trading up” to purchase larger homes with more home office space for parents and study space for kids and more property for outdoor kitchens, patios, fire pits and fireplaces and swimming pools. This freed up inventory in the lower price rages for entry level buyers who were coming from New York City or who had rented here and decided to buy.
Meanwhile, sales in the higher end of the market in Greenwich exploded in 2021. Sales in the $4-10M range were up year-to-year between +52.2% and +93.3%. The most impressive increase of +93.3% was in the $6-8M range, from 30 sales in 2020 to 58 sales in 2021. This is a big reason we have attained our highest-ever average sale price of about $3M in 2021. And this is a significant contributing factor to Greenwich’s financial windfall in conveyance taxes collected for the 2020-2021 fiscal year: $10,172,839, more than double the amount projected by the town.
What can we expect in 2022?
According to an article, “What to watch in 2022 in the real estate market” by Ginny Monk in the Greenwich Time on 1/9/22, “…several Connecticut experts agreed that inventory will likely be one of the most important indicators to watch in the new year” in regard to the health of the single family home real estate market. Other factors such as “interest rates, supply chain issues and the spread of COVID-19 could impact demand, construction and the type of houses that people are interested in” Monk added. Because of global supply chain issues, for example, it is very difficult to build a new home right now or do a major renovation because of delays in being able to acquire items like lumber, other building materials and appliances. The high cost of labor has also been an impediment.
Monk pointed out in her article that the Connecticut market typically has about 6 months supply of inventory” that has “shrunk to two in recent months”. “Months of supply” is the number of months it would take to sell the current amount of houses for sale in a market. Monk quoted Berkshire Hathaway President and CEO of Berkshire Hathaway HomeServices New England Candace Adams: “Interest rates will affect demand but not absorption. There’s twice the demand than there is inventory right now.”
Speaking of interest rates, this is another main factor that will influence the real estate market this year, according to a 1/6/22 article in The Washington Post by Mark Zandi, chief economist at Moodys.com, “No, the housing market isn’t in a bubble. But there are still many things to worry about in 2022.”. The federal government has kept interest rates attractively low throughout the pandemic to bolster the economy and, hence, mortgage rates have been equally as attractive. The “Fed” instituted a “foreclosure moratorium and forbearance on payments on government-backed mortgages”, which have prevented distressed home sales, he said. “House prices have also been supercharged as mortgage rates declined to record lows,” Zandi added. But the Fed has indicated its intention to raise interest rates to fight inflation and, therefore, mortgage rates will rise as well.
The housing shortage that we are experiencing now took root in the recession that began in 2008, “in the bursting housing bubble and collapse in new home building,” according to Zandi. “The vacancy rate for homes for sale has never been lower and continues to decline,” he added. Lower-end homes are especially impacted because of the considerably higher cost of building materials and labor due to the “chaos in global supply chains”.
When combined with the bursting housing bubble, the effects of the pandemic have intensified housing demand, with urban dwellers fleeing to the safety and fresh air of the suburbs. In New York City alone, “well over half a million more people have moved out than have moved in since the pandemic began”, Zandi pointed out. And, because these urban dwellers have been indoctrinated by the exorbitant real estate values in the city, lower priced homes in the suburbs look like a really good deal, even though they are paying more for them than ever before and driving prices up!
Another factor influencing this intensified housing demand is the mobilization of the millennial generation, the largest adult cohort worldwide. In 2019, the millennial generation “surpassed baby boomers to become the largest living adult generation in the US” and have “reached a housing milestone, accounting for more than half of all home- purchase loan applications last year,” according to a 12/14/21 article, “Millennials Are Supercharging the Housing Market,” by Nicole Friedman in The Wall Street Journal.
As of 2022, millennials will be turning 26-41 years of age. Typically, people become first time homebuyers in their early 30s and the “largest cohort of millennials turned 30” in 2021, according to Friedman. While millennials have been slow to leave the womb due to student debt burdens and career paths interrupted by “the 2008 financial crisis and housing-market collapse”, the trend towards home buying among them was accelerated by the pandemic and the expanding opportunities for remote work. This “generation’s growing appetite for homeownership is a major reason why many economists forecast home-buying demand is likely to remain strong for years to come,” she added.
If you are thinking of buying or selling in 2022, you need to assemble a team of experts now, with the help of your Realtor or, “navigator-in-chief”—at the helm. If you are a buyer, you will need your “navigator in chief” as well as a mortgage broker, attorney and home inspector in order to be competitive in this seller’s market. Realtors have intimate knowledge of the neighborhoods in your search area, often know about listings before they are listed and can help you to prepare a bulletproof offer. In addition, many mortgage brokers offer the opportunity now to obtain a fully underwritten pre-approval for a loan before you even find the home that you want to buy. This will put you in the driver’s seat when it comes to multiple-bid situations—which you are likely to encounter with such low inventory levels— since it is just like making an all cash offer with no mortgage contingency at all.
If you are a seller, you will need the expertise of your “navigator-in-chief” along with a real estate attorney and possibly a home stager and/or interior designer that your realtor can recommend. Your realtor can help guide you through one of the greatest financial and emotional commitments of your life. As of this writing, we have 153 homes for sale in Greenwich and are in desperate need of new inventory. Please call me at 203 273-3668 for a complimentary home valuation. I am happy to help.
(* This is based on the “Summary of Greenwich Home Sales” 1976-2020, started in 1976 by Doug Stevens, founder and managing broker of Greenwich Fine Properties in Greenwich, CT, and continued until 2013 when he sold Greenwich Fine Properties to Coldwell Banker in Greenwich. Russell Pruner, now a licensed real estate broker at Compass Real Estate in Greenwich, CT, has continued this Summary of Greenwich Home Sales and publishes it on his website.)