Column: What’s Going on with Greenwich Real Estate?
By Mark Pruner
February is a short month, only 28 days, or 10% shorter than January. February is also traditionally the slowest month for sales, as older inventory overhangs the market and most newer inventory is waiting for warmer weather. In addition, February is known for having bad, discouraging winter weather, that doesn’t make you want to spring out of bed and tour houses.
Now having said all that, over the last 10 years we still have managed to average 31 houses sales in February, but in February 2019 we only had 20 sales. This is down 43% from last February’s 35 sales.
If you read my January report, this drop in sales is somewhat expected as our contracts at the end of this January were down, but I never expected a sales drop of this much. January 2019 was nearly the same as 2018, and we regularly see sales and contracts seesaw from one month to the next. We need the big kid to come sit on the seesaw to get the seesaw moving up. For February, sales were down 43%, contracts are down 39% and inventory is up for most price ranges. At the moment, it is a buyer’s market.
Now it’s not all bad news in sales; our sick child for 2018 appears to have recovered as sales from $1 – 1.5 million are up in February 2019. The $1 – 1.5 million price category also has had an inventory drop with 10 fewer listings than last year. The result is that months of supply in the $1 – 1.5 million price range dropped from 16 months of supply last February to 10 months of supply this February.
The other good-news category is over $10 million where we had two sales, one in backcountry and one on the waterfront in Old Greenwich, both for $11 million dollars. (We also have another ultra-high-end house under contract.) Like our other bright spot, inventory is also down to only 24 options for the very well-heeled. Combine more sales and lower inventory and we are looking at a remarkable 2 years of supply, down from over 9 years of supply not that long ago.
The market just below that, from $5 -10 million, continues to be a difficult market, and it is even more so for the first two months of this year with month of supply literally off the chart (well at least off the chart if the chart tops out at 4 years of supply).
The large sales drop is worrisome, but what is really worrisome is contracts. Contracts tell you where the market is now, not 1 – 3 months ago as sales do. In contracts, we are down in every category from $600,000 to $10 million. In total, we have 35 fewer contracts at this point this year than we had last year. March is also likely to see a sale decline also.
Year-to-date, sales are only down 28% and contracts are down 39%, both over a broad price ranges. You have to ask yourself what’s going on. The government shutdown is over, the China trade situation looks like it’s getting better, unemployment continues low, the stock market is up and interest rates are down from their recent peeks.
Whatever it is has to affect houses over a broad set of price ranges. One thing it could be is the extraordinary Sturm und Drang coming out of Hartford. Right now, we have bills to impose a conveyance tax on buyers, to create a statewide property tax, to place tolls on every major, and even some minor, state highways, to broaden the sales tax to lots of businesses and professions that haven’t paid sales tax before, and to offload part of the teacher pension problem to the town which will have to raise property taxes to pay for this imposition. Now, all of these bills won’t pass, but they all raise the uncertainty level and that tends to freeze buyers. For buyers who are willing to roll the dice, now is good time to negotiate a deal, and for sellers now is a good time to be particularly flexible.
But the crystal ball is foggy; we’ve got just one bad month and things could turn quickly. The murkiness of the situation gives the advantage to the bold buyer.
Mark is an award-winning agent with Berkshire Hathaway. He can be reached at 203-969-7900 and firstname.lastname@example.org