By Mark Pruner
Dashboard Editor
These multi-million dollar homes sit on beautiful multiple acre lots with rolling lawns, pools, tennis courts and often views of Long Island Sound. This is the image from outside of Greenwich of our residential market.
There is another Greenwich where houses sell for under $1 million and even under $500,000, mostly located in the R-6 and R-7 zones of Greenwich.
The R-6 and R-7 zones actually have the same minimum lot size, 7,500 s.f. with the principal difference being that R-6 zone allows for multi-family. So if you want a single family home in a single family zone the place to look is the R-7 zone and if you want Eastern Middle School and the associated elementary schools then you are looking at the four R-7 zones on the east side of town on both sides of the Post Rd.
The shape of these zones make little logical sense without a lot of history and are even hard to see in the jumble of different zone types so here is a map of solds since our last tax reevaluation on 10/1/10.
In the map below, the blue squares are properties that have sold since 10/1/10 when our last revaluation was done. The green squares are actives and the yellow squares are non-contingent contracts. The three Old Greenwich R-7 zones are (1) Havemeyer Park, just north of the Post Road and west of the Stamford town line, (2) an area south of the Post Road and west of Laddins Rock and (3) an area just north of the OG railroad station. The other R-7 zone is in Riverside just north of the Post Road from the Mianus River over to Old Greenwich.
The overall area is not large, but it is a highly popular area particularly with young families looking to move into Greenwich, DINKs (Dual Income No Kids) and also some downsizers looking to escape Westchester County’s high taxes. Investors also like this area for the nice rental returns and appreciation. These investors include not only deep pocketed locals, but also homeowners that have retired down south and are holding on to their old homes for the income, appreciation and portfolio diversification.
From 2011 to 2015 the lowest priced home for the year varied from $$325,000 to $455,000. So far in 2016 our lowest sale has been $550,000 and lowest active listing price is $670,000.
The top prices in the R-7 zone have been over $2,000,000. Last year a house sold for $2,400,000 in the OG/RV R-7 zone. This year we have a sale for $1,855,000 and a listing for $2,890,000. These higher prices are supported not only by more square footage, but all attractive features of the area; near to shopping and transportation, smaller/lower maintenance cost properties, a sense of community, excellent schools and all the public utilities.
From 2011 to 2015 the average sales price in the OG/RV R-7 zone has gone up from $843,744 to $1,112,623. This is an increase of 32% in four years or about 7% per year when you take in to account compounding. This is a nice return when you consider that the inflation rate for the CPI has been around 1% for the last three years.
In that same period of time the average house size in this zone has gone from 1,988 sf to 2,297 sf or an increase of about 15% so part of the increase may be due to larger houses from new construction and additions, but average house size in this zone jumps around depending on the houses that are sold each year. For example, so far this year the average house based on the 14 sales in the OG/RV R-7 zone is only 1,980 s.f. or essentially no change from 2011. (Anytime a figure goes up one year and down the next it is usually not a significant factor and clearly shows little of the “trend”.)
To factor out some of the chatter from the changing annual mix of house sales you can look at the change in price per square foot in the area. There we have gone from $409/sf in 2011 to $498/sf in 2015 or an appreciation of 27% or a compounded 6.2% for that four-year period. This number has shown a steady trend upward.
An even better way to my mind is to compare the sales price to the Tax Assessor’s 2010 value. This ratio doesn’t depend on the size of the house, acreage or what’s selling. The Tax Assessor’s assessment ratio is 70% of the FMV, so no change in value should show a ratio of 1.42 (1/70%). In 2011 this ratio actually went down to 1.34 or a 6% decline indicating this R-7 zone was either seeing falling prices or that it was slightly over-assessed in 2010 revaluation. After the initial 2011 assessment ratio decline that ratio has steadily risen and now stands at 27% higher than the October 1, 2010 assessment date. This works out to a compounded 4.9% rate for that five-year period.
Bottom line: prices in this area are up significantly in the last few years and well in excess of inflation.
The OG/RV R-7 zone is hotter than the rest of the market. The sales to list price ratio is 93.1% versus 90.6% so sellers are getting closer to list price in this R-7 zone. Houses also sell faster 108 days versus an average of 164 days for the rest of the Greenwich market. The demand is there and sales are primarily controlled by limited supply.
What the rest of the year will be has yet to be seen, but given the demand for affordable housing in a friendly community with good schools this area will continue to do well.
By Mark Pruner
Douglas Elliman – Greenwich
mark.pruner@elliman.com
203-969-7900
