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The 2020 Greenwich Real Estate Market Year in Review

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By Mark Pruner 

As of this week, we have 846 sales of single-family homes compared to 527 sales last year. This makes 2020 the highest sales year going back to 1999 which is as far back as the Greenwich MLS data goes. In that time, we only had two prior years with sales over 800 houses; 1999 with 832 sales and 2004 with 835 sales. We still have a week and half to go so our record will just keep getting better.

Contracts start to fall due to year-end deals

With 142 contracts waiting to close, next week will be one of the busiest for sales this year even with a short wee. These are the weeks, that you do not want to be a real estate attorney. At the end of last year, we only had 72 contracts, so contracts are up 97% from last year. Last month we had 171 contracts, so contracts have dropped 29 deals in three weeks. We have signed 67 new contracts in those last three weeks, it’s just that for this month closings are happening faster than contract signings so total contracts are shrinking, which they always do in December.

Greenwich single family homes sales and contracts in 2020

Low inventory hurting sales

Another reason that contracts are down this month is that we are running out of houses to sell. At the present time we only have 322 home listings compared to 432 house listings at the end of 2019. This 25.5% drop is actually more dramatic than that if you looking to buy. Of the 322 listing only 29 have come on the market in the last 30 days while 115 have been on the market for more than 6 months. The result is that only 9% of our market is fresh and 36% of our market is stale. As these long timers sell, our days on market goes up, the opposite of what you would think would happen in a busy market.

With sales continuing at a busy pace and inventory continuing to drop now is actually a good time to list your house. It will be interesting to see how many people decide to list in early January 2021 rather than early March 2021.

COVID is one of several factors driving sales

What is driving all this activity? The obvious answer is the rush of young families from New York City, but this is only one of several significant reasons. One reason that doesn’t get enough emphasis is our extraordinarily low interest rates. With mortgage rates for 30-year jumbo loans around 2.75%, monthly payments have gone down for many buyers.

Reallocating bonds and capturing stock gains

Another effect of low interest rates is that bondholders are seeing very low interest payments. Globally, less than 10% of bonds yield more than 3% according to Jim Reid at Deutsche Bank. High yield bonds are now those that pay 4.9% or more, a number which used to be called low yield. These low bond rates are helping our market over $3 million where the majority of deals are done for cash. The opportunity cost to put reallocate some bonds to Greenwich real estate doesn’t look that high.

The record stock market prices also many that many people have more money to spend. With folks staying home they have less to spend these gains on. One result is big jumps in sales of our high-end houses.

The Greenwich upsizer returns

The other thing that doesn’t get as much attention as it deserves is that a large number of the sales in Greenwich are Greenwich people buying bigger houses. Many of the people that lived in those 846 houses that have sold this year have moved north to the 2-acre and 4-acres zones and a bunch of people that had been renting in Greenwich are now buying houses.

At the high-end we have Covid refugees, but for many of the people, the increasing chaos in NYC has pushed people to buy either their primary home or a secondary home in Greenwich. Shootings and murders have taken dramatic jumps in NYC. NYC also saw increases in drug overdoses, as did Connecticut, but we still look safer than NYC.

NYC and Greenwich real estate markets redefined

All of this resulted in a redefining of the two real estate market in the media. Sales and rental prices are down in NYC while they are up substantially in Greenwich and a series of articles have documented and shaped people’s view of the two real estate markets. This reshaping market reputations started back in March with a Bloomberg article about sales increase in Greenwich. This was followed by several Hearst Media articles, a major New York Times article and a bunch articles in other publications from the New York Post to Forbes.

The crescendo came in the last two weeks with articles in CNN, the Wall Street Journal and a Yahoo Finance article naming Greenwich the real estate market of the year. Now these stories don’t just happen, however, one of my rules is not to talk about story ideas I’ve pitched in an effort to redefine our market. (It’s like Fight Club, the second rule of Fight Club is not to talk about Fight Club, it’s also the first rule.)

What can you do to help?

Lots of people have helped to shape the narrative about the Greenwich real estate and its comeback in 2020 and more are needed. What can you personally do to help cement this new market reputation and help your home values? With our New England reserve, we often let newcomers have their privacy, but you might take a moment and say hi to your new neighbors and help them get acclimated to what for many is a very different, but pretty nice world. A neighborhood Zoom is a good way to meet new and old neighbors.
Social media is the co-equal of national media in shaping opinions these days. So, if you are a resident keep posting pictures of the beautiful sunsets, the bald eagle over the Mianus river, the whale in Long Island Sound and all those kid’s activities. For our new residents with lots of friends in New York City these can be even more effective in shaping the view of Greenwich for prospective buyers feeling left behind.

New York City starting recovery, a good sign for Greenwich

We all wish NYC a speedy post-Covid recovery. A good sign for New York City’s recovery is that this November’s number of leases signed in NYC was the highest November rentals in over a decade. New York City has the opposite of our inventory problems with record amounts of inventory at substantially lower rents than last year. Lower prices have generated higher demand. Speaking of rentals, commercial office leases are up 31% in Fairfield County as lots of company are looking to open satellite offices in this area.

What we are seeing is a paradigm shift in the way people live and work and much of this shift is in Greenwich’s favor. We need a strong New York City, but we won’t see the concentration of offices in the City that we have seen before. The concept of an “office” is going multi-location.

Looking ahead to 2021

For 2021, sales in Greenwich may slip a little compared to our red hot 2020, but we will still probably blow away our anemic 2019 market. I also expect that we will start to see some significant price increases in $/sf as inventory will stay below traditional levels with demand higher than our post-recession average.
The pandemic will continue to have major effects on our world for years to come. Next week we will look at the final numbers for 2020 by price and neighborhood. And, stay tuned to see what happens next year.

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