By Mark Pruner
If you want to build a house, you need some land to build it on. This week you have a choice of 19 land listings and most of them are in the northern section of town. We have 7 listings in backcountry and 5 listings mid-country. We have one listing each in Byram, Cos Cob, Riverside and 2 in Old Greenwich.
Most of those “land” listings aren’t really land listings. Only 10 of the 19 are actually raw land listings. The other 9 properties actually have a house on them; They have just been dually listed as both residential and land listings, since the agent thinks that the house is likely a teardown.
On the sales side we have had 29 “land” sales this year. These land sales are where the land listings are with 15 of the 29 land sales being in backcountry and mid-country. We have also had 5 sales in central Greenwich and Chickahominy. Most other sections of town only have 1 or 2 sales.
Curiously, in a market this hot with such limited inventory, we have had 13 land listings expire. Of those, 4 were South of the Post Road, 3 were in backcountry and 2 were in Glenville. Price didn’t seem to be a factor with 3 expired listings under $1 million, 4 between $1 million and $2 million, 3 in the $2 – 5 million price and 3 over $8 million.
Less than 1% is available for sale as land
As you can see there is not much land for sale in Greenwich, which is interesting given that Greenwich is the second largest town in Fairfield County after Newtown. Curiously, it’s hard to put an exact number on just how much land we have. Lots of websites use 47.83 square miles as the area of Greenwich, but a town annual report says 50.6 square miles. Wikipedia says 67.2 miles, but this includes the water. Luckily, the Realtors in town don’t sell much water, though for many years, the lowest priced listing in Greenwich was for a boat slip on the Mianus estuary, though it was listed as condominium.
As of this week we only have 19 land listings in Greenwich compared with 134 listings for single family homes. The land listings total 71.7 acres, while the residential listings total 534 acres.
If we take the 47.83 square miles number and multiply it by 640 acres per square mile, we come up with 30,611 acres which is quite a bit of land. Divide that by the 71.7 acres that we have sale and only 0.23% of the total land in Greenwich is available for sale as land.
Interestingly, our land listings are very evenly spread throughout town from Banksville to Byram and Backcountry to Belle Haven. the average price for a land listing is lower, $2.69 million versus a single family home listing of $7.24 million. (Now if you’re like me, you probably asked yourself, how could our average list price be so high for a house. It’s because we have so little to sell at the low end. Our median/midpoint list price for a house is $4.7 million. This means that half of our house listings are above that with many way above that price, pulling the average house list price up to $7.24 million.)
Never developed land in Greenwich is a particularly rare commodity. In the last 384 years since Greenwich’s founding, just about every lot worth building on has been built on. We get most of our raw land listings from subdivisions of oversized lots where the house is on one lot and the formerly empty extra acreage becomes another lot or lots.
Fire, unfortunately, is also another source of “raw” land as it doesn’t take much of a fire to condemn a whole house. The smoke damage, and the water damage from putting out the fire, often mean that the total cost to clean up the house, eliminate the smoke smell from carpets, walls and ceilings as well as to reconstruct the actual fire and water damaged areas can quickly exceed the costs of building a new house.
Land sales appear artificially low
So how do land sales compare to house sales? If you look at the raw numbers, the answer would be not well. This year we only had 29 sales of land that were 2.7 acres on average. On the single-family home sales side, we have had 445 sales that totaled 501 acres or 1.24 acres per sale. Land listings are larger and don’t seem to sell as well.
The poorer sales are actually an artifact of the way that sales are reported on the Greenwich MLS. As mentioned, most land listings actually have a house on the land and are usually also listed as a residential listing also. When the property sells, the agent has to change the status on one listing to “sold” and the other listing to “cancelled”. Most agents pick the residential listing to be the sold listing and cancel the land listing. The result is that sales of listings for land are significantly under-reported.
Tips on working with developers on land sales
I’m part of the Greenwich Streets Team at Compass and we deal with a lot of builders and developers. To their credit, none of the builders that I know of, want to be known for building cheap houses. Cheap construction doesn’t sell in Greenwich. (An out of town builder tried to do that in Pemberwick using lots of plastic; on the front porch, on the siding and in the windows. It was a tough sale. The house hung around for a long time and sold well below its original list price.)
Builders are interested in getting the land for as cheap as possible as every dollar they save is an extra dollar of profit. Agents who work with developers know what they are looking for and will often contact owners of developable land directly, often by letter, to see if they might want to sell. (Owners should be a little cautious as a few agents have been known to exaggerate just how active the buyer is to get a listing.) A developer/buyer needs a low price if they are to make a profit with the rise in the cost of materials and labor in the last few years.
When we represent developers, we have several non-monetary incentives that can make a developer’s lower price more appealing. For example, the closing date can be flexible. Some buyers want a quick close and no mortgage contingency and our more well-financed sellers can do that.
I had a seller in Riverside who was older and was downsizing. She needed a longer closing time to arrange for her children to take the furniture they wanted, arrange a tag sale and sign a contract with the place where she wanted to move.
In that case I asked that the seller be allowed to leave whatever they wanted in the house that is being torn down. This not only saves the seller money, but it is also a major time saver and stress reliever. A lower price from a developer does not necessarily mean a lower value to the seller.
Custom building your own home
Land listings are unique and need to be looked at carefully. If you plan on building a custom house in a new development, it really helps to know what the neighbors are going to build. If you have two large, beautiful, newly built houses on each side of the land you are buying it certainly makes the property more valuable.
If you want to build a house, it helps to have an agent and an architect who is familiar with the requirements at planning and zoning, wetlands, floor area ratios and setbacks, green areas, wells or town water, and septic or sewers. When you are building your dream house, you have lots of options, but also lots of rules to follow, but in the end, you have a house built just the way you want.
Mark Pruner is a principal of the Greenwich Streets Team at Compass. He can be reached at at 203-817-2871 or mark.pruner@compass.com.
