By Michael LaGamma
At the February 14 meeting of the RMA, Bob Meaney introduced David Michonski, who gave us an update on the Greenwich real estate market. David last spoke to the RMA in July 2022. He started by reviewing the market in 2023, then compared the Greenwich market to the national real estate market, and ending with what he termed some “Real Estate News Bites.” In 2023 the average price for a Greenwich single family home hit a record $3,290,012 (excluding the extraordinary $139 million sale of “Copper Beech Farm” on Mead Point). Similarly, the median price was up 2%, also a new record for single-family homes. However, he noted that the number of units sold dropped to 526, a far cry from the 1,000 homes sold in 2021.
For condos and co-ops, the average price rose 2% to a new all-time high of $1,152,000 while the median price also jumped up 6% to $875,000. Condo and co-op unit sales did not drop as much as single family home sales, but still declined from the record of 275 in 2021 to 179 last year.
David showed how the 8% rise in single family homes resulted in a return on equity invested in a single-family Greenwich home of 40%. Taking the typical transaction with 20% down payment of $610,000 for the average priced property in 2022 of $3,050,000, the rise of 8% in 2020 means that the home’s equity rose by $244,005, which when divided into the equity invested results in a 40% gain in one year, a phenomenal return. Despite the remarkable gains for Greenwich, the national figures turned out to be even better. The median price for a single-family home in Greenwich rose 38%, but the national median price rose by 44%, beating Greenwich by six points.
Condo and co-op median prices for the four-year period fared even better. In Greenwich the median price was up 27%, but nationally it was up 40%, a difference of 13%. The result was extraordinary wealth creation during that four-year period.
This astounding increase in wealth helped to fuel the rise in inflation from 2022 to 2023. 68% of Americans became richer during this period, far outpacing the rise in milk, bread, and other staples. But some demographic groups suffered: specifically the poor, college graduates with large student debt, and renters, who saw their rents rise rapidly during this period.
He finished his talk by taking us back to 2020 and reminding everyone of how desperate both the public and our political elite became by March of 2020 when inflation turned into deflation and threatened a worldwide depression or at least a severe recession. That prompted then President Trump to declare a national emergency on Friday the 13th of March 2020 followed by passage of the $1 trillion Cares Act. By May 9, 2020 the US was at 15% unemployment, the highest since the Great Depression. One year later President Biden signed the American Rescue Act for $1.9 trillion. There was extraordinary spending by the federal government, but David noted that in addition to this stimulus, home prices left Americans feeling good about the equity in their home and about getting vaccinated. We felt more comfortable going out and spending more, prompting inflation’s rise.
While the Fed attempted to cure inflation by a record rise in the federal funds rate to 5.5% today, up from 0.25 % in 2020, home prices never dropped, fueled by the stimulus both Presidents provided and by potential sellers who were locked into super low 3.5% mortgages. David concluded that the outlook for a continued rise in home prices depended on the time frame. Long term he noted that rising home prices are likely because the US has suffered an acute housing shortage from 2009 to the present day of between five to six million units and that we are only building about 1.5 million units per year. He also noted that Millennials were at the peak of their “first time homebuyer range,” but restrictive zoning in many towns and an attitude of “not in my backyard” will continue to hinder building the number of homes needed by our population growth.
He finished by noting that in the short term (two years) prices could stall or even fall slightly. Why? Because the pandemic relocation frenzy of people leaving cities to work remotely had decreased for the last three months and employers are far less friendly today toward flexible work from home. He also noted that 2023 saw home prices increase in only three of the 12 months and in October home prices actually declined by 4.1%, suggesting a pause was underway. Lawrence Yun, the chief economist for the National Association of Realtors, has said that “the rapid three-year rise is unsustainable.”
David’s talk was followed by a lively question & answer session, covering such topics as the prevalence of money laundering in real estate, agent commissions and the recent class-action lawsuit to bring them down, and off-market sales.
The talk can be viewed by going to the RMA website at https://greenwichrma.org, and clicking on “Speakers.”
The RMA’s upcoming presentation, “The Story of the Hunley,” by Phil Vitiello, is scheduled for 11 AM on Wednesday, February 28, 2024. Few people know that there were submarines during the American Civil War. They were built by both the North and the South. For the South they were desperate attempts to break the strangle hold of the Union blockade. This presentation is about one very special submarine, the H.L Hunley.
On the night of February 17, 1864 at about 9:00 pm the Confederate H.L Hunley made history by becoming the very first submarine to sink a ship in combat, when sinking the war ship USS Housatonic. This feat was so advanced for its time that it would not occur again for another 50 years! However, after completing this historic mission the Hunley would go missing, never to return back to her home base. This would begin a 140 year search to find this historic submarine.
From the Hunley’s conception to its Connecticut connection, that historic night, the sub’s underwater discovery, conservation, and the historic burial of her last crew—this is her story.
Phillip Vitiello Sr. is a lifelong resident of New Haven, CT, and attended the University of New Haven, majoring in law enforcement administration. He has been employed for the last 25 years as director of marketing for the food broker Northeast Food Marketing, in Stamford, CT. He is a charter member of “Friends of the Hunley,” a Civil War historian and re-enactor, and has studied and visited Civil War eastern theater battlefields. Phil is the current vice president of the Civil War Round Table of South Central Connecticut, a member of the original Titanic Historical Society, and a charter member of “TIGHAR” The International Group for Historical Aircraft Recovery. He has taught a history course at Norwalk Community College Lifetime Learners Institute.
To stream the presentation by Phillip Vitiello at 11 AM on Wednesday, February 28, click on https://bit.ly/30IBj21. This presentation will also be available on local public access TV channels, Verizon FIOS channel 24 and Optimum (Cablevision) channel 79.
Note: The views expressed in these presentations are those of the speakers. They are not intended to represent the views of the RMA or its members.
RMA speaker presentations are presented as a community service at no cost to in-person or Zoom attendees, regardless of gender. Any member of the public who would like to receive a weekly email announcement of future speakers should send a request to members@greenwichrma.org. The RMA urges all eligible individuals to consider becoming a member of our great organization, and thereby enjoy all the available fellowship, volunteer, and community service opportunities which the RMA offers to its members. For further information, go to https://greenwichrma.org/, or contact members@greenwichrma.org.
