A Glance: Single Family and Market Unit Volume Analysis, Half Year and 2Q

Good news: properties sold and to contract in Q2 (April 1 - June 30) are not falling as fast as they have been since the start of the market correction.

Bad news: there was a significant and rapid increase in inventory in the second quarter of 2009 just as sales began to pick-up, or at least not fall as rapidly as they had since 2007.

Click on a chart to enlarge
































Data source: Greenwich Multiple Listing Service

Take My Breath Away - 9 Sales and 3 Contracts

It may not seem like much, but the sales volume reported today nearly matches the monthly sales in each of December, January and February, which were 13, 9, and 10 respectively. Its been a long time since we've seen this amount of sales in one day.

After that moment of surprise, I looked at single family inventory that has come on the market since the beginning of the year and what has happened to it (see tables below). I'm trying to get some insight into the inventory build-up. The abundance and increasing amount of inventory combined with the sparse sale and contract volume indicates a deteriorating market and I would think continued price depreciation across the board. I'll look at the half year data in more detail over the next weeks and post accordingly.











Note: Data below the "Brought to Market" numbers relate specifically to sales, contracts, withdrawn, etc. of single family properties listed on or after January 1 or April 1 as the case may be.

Glenville T-Mobile Cell Towers

Here's a public service announcement related to the proposed new cell towers in Glenville from a District 9 RTM and Pemberwick/Glenville Neighborhood Association member, and one who diligently works to mobilize the Western side of town to participate in public affairs.

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Neighbors,

My apologies for failing to include in the news blast yesterday the clearly understood concern about the T-Mobile proposal to install a "Cell Tower" (actually 2 antennas) in a potentially dangerous location in Glenville.

Glenville School PTA co-presidents Donna Curtis and Gina Furano have a good job of informing all residents of the concern that this installation is much too close to Glenville School. And Schools PTA Council President, Glenville resident Sue Rodgers has led the global charge against cellphone transmission installations in close proximity to any schools.

The point of this message is the same as for other concerns - Public input can make difference. Our citizen-based Town government provides opportunity for the public to be heard, and in fact, to guide decisions. Reportedly, the last two P&Z hearings on the Cell Town proposed near No. Mianus School produced SRO crowds, and the P&Z voted unanimously to recommend another location be sought for that one.

Unlike the No. Mianus proposal, the Glenville installation can actually be killed by a P&Z decision. However, P&Z has an obligation to consider the proposal fairly, so it is critical that they are faced again by a packed house. The public hearing is on the P&Z agenda for Tues. July 7, beginning at 7 pm.

Please attend if you can, and if you can't I will record email comments and pass them on to the P&Z.

[text removed by editor]

Pasted below for convenience is the "calendar" (including one date correction) for PGA Citizen input.

Great day :)

Vin


Glenville T-Mobile installation - P&Z Public Hearing, Tues. July 7, 7 pm - Town Hall Meeting Room

Variances for CVS/Bank/Office at Holly Hill Hole - PZBA Public Hearing, Weds. July 8, 8 pm - Town Hall Cone Room

Sale of Town land parcel along Holly Hill Hole - Board of Selectmen, Thurs. July 9, 10 am - Town Hall Meeting Room

Sneak Peak at Lolita Restaurant, Byram

Here are some pictures of the soon to be opened Lolita, Cocina & Tequila Bar in Byram. This is one of the CB5 restaurant group's ventures; they run Baang Cafe locally. Jody Pennette, the group's chief executive, says it will be a trendy Mexican restaurant. I hope they manage to provide good food and value as well. We'll see.

The restaurant is in the space formerly occupied by That Little Italian Restaurant; its a good space with an offstreet brick patio. The painter I bumped into while taking these pictures said Lolita may open within a week.

Entry and dining area

Tequila Bar

Facade & Street View

It looks like the corridor from the corner of North Main and Mill Street in Port Chester along Delavan Avenue, Byram is becoming food alley: The Kneaded Bread, Mario Batali and Joe Bastianich's trattoria down the street at the Tarry Lodge and now Lolita.

I think the improvement of services along this corridor will help real estate values in Byram as the gentrification process continues.

15 North Crossway: Valuation Watch

I'll watch this property to determine what has happened with property values in prime Old Greenwich waterfront locations.

The property was bought new in May 2004 for $3,925,000 and listed for sale today at $7,195,000 or 83% above last sale. At 5,334 sqft, according to the list sheet, the property sold at $736/sqft while the current ask is $1,349/sqft.

ht: forwhatitsworth for 2004 photo.

Foreclosure Watch: 46 Bowman Drive

This property was forclosed upon in January 2009. The outstanding mortgage then was $688,000. The purchasor and current owner paid Washington Mutual Bank $860,000 for the property in February.

This history is indicative of what is happening throughout town though not captured in the GMLS database, by many agents or the local newspaper. As a sidebar kudos to Zillow and other sites that manage to capture this data and make it publicly available (I, on the other hand, rummaged through Town Hall records to find it). For a property buyer or seller this type of data is relevant for determing market value and useful for establishing list or offer pricing. I expect that a property appraiser would look at these distressed sales comps in determing an appraisal value to support Bank financing, so I figure a real estate agent should also.

This 4bedroom, 3 bath, 3,266sqft modified Cape was listed for $1.295mln in April '04 and went to contract less than a month later. The sale closed in July 2004 for $1.280 (see house as it was in 2004 to the left).

After upgrades which included a new septic, driveway, hardwood floors, Kitchen countertop and appliances, and new baths, according to the list sheet, the property was relisted in July 2007 for $2.475mln. The listing expired in October 2008 asking $1.495mln.

The party that purchased the property in 2004 secured a Pay-Option-ARM to finance the purchase. The loan principal was $1.15mln or 90% of purchase price. In this type of mortgage the borrow could roll the interest payment into the loan principal up to a cap, which in this case was 115% of the original principal or $1,322,500 before they had to start paying. The same party secured a Personal Line of Credit for $150,000. So no wonder the borrower didn't want to sell for less than $1,472,500 (the total of the Maximum principal plus the line of credit).

Salute to Veterans: June 27th, 11am

Real Estate Agents Own 6% of SF Homes For Sale

I have been wondering what amount of the real estate inventory for sale is owned by real estate agents. It turns out to be around 6% in Greenwich.

June 18th total single family inventory = 765;
Units owned by Agents = 44
Percent total owned by Agents = 5.75%

I wonder what would happen if 6% of the market adjusted its price to clear? How would that impact the rest of the market? But then there is no one motivating factor for the parts of that group.

In a future post, I'll check to see if RE Agent pricing on their own respective places differs in any substantial way from pricing in the rest of the market.

Picture of the Day: 4 Sherwood Farm Ln

We have some very creative agents in town. Or what is fauvism when applied to residential real estate?

Welcome Back 2001: 126 Cat Rock

This property sold new in June 2001 for $3.595mln. It closed today for $3.20mln after almost one year on the market. It was listed in July 2008 for $4.15mln.

I expect one of the reason this house did not sell for more is the proximity of the house on the back lot. In my experience any hair on a project will be discounted heavily in a declining market, in the same way issues were disregarded on the way up. So the market is functioning just fine.

Le Pain Quotidien, 382 Greenwich Avenue

It looks like the communal table, good espresso, and dark chocolate of this Belgian chain of franchised bakeries/restaurants may grace the Avenue in the not too distant future. I understand that plans for the space are making their way through Town Hall now.

382 Greenwich Avenue on a rainy day.

The bistro says it sources organic ingredients whenever it can, both to develop long lasting relationships with organic farmers, and crucially to ensure the highest quality ingredients. That sounds like a practical approach that will go over well in Greenwich. And you can bring the kids too.

18 Bowman Drive: Another Market Opportunity

If you don't mind living beside a 114 foot high and 50 foot in diameter water storage tank, here is a market opportunity:



18 Bowman Drive in King Merritt Acres (1 acre zoning) was built new in 2006/07; has never been occupied; and remains unsold. It will be going to highest and best bid on June 29th. The builder likely has over $2.2mln into the property. The land was purchased on Oct 2005 for $975,000 and 4,300sqft (per tax card) of living space was built, which, at $300/sqft, equals $1.29ml or all-in cost of $2.265ml. The house itself offers much: 5bd/4.1ba, in approximately 5,000sqft (builder #) of "new construction" and a wrap-around porch. There is even land to build a pool. But again, there is that water tower.


The property is currently listed at $1,688,995, which is down from the original list of $2,695,000 in Feb 2007. The property will go to highest and best bid over a minimum that the list agent will announce. Summary, tough location; nice house. What will it clear for in this market?

20 Corrigan Lane Progress & Pictures

I posted this in the wrong place and have recomposed the post here:
http://20corriganlane.blogspot.com/

Pemberwick Sale & What you get for $500k In Greenwich

10 Pemberwick Rd closed yesterday for $500,000 after a mere 35 days on the market. Kudos to the seller and the List Agent, Patti Meyer. These parties were not playing around. The property was listed at $545,000 and the agent noted in the list sheet that the property was priced for "quick sale."

This sale gives us our third sale in the Pemberwick area and the Hamilton Avenue School district this year and establishes a decent benchmark for what to expect for $500k. Based on the sales data (see table below) one gets a two bedroom, two bathroom, 1,400sqft house on 0.14 acres. Based on my viewings of these properties, the appliances and fixtures are functional, but dated. Two of the three sales are located on double yellow line streets, which means moderate to high traffic flow (or at least more traffic than on single or no line streets).

Not long ago, there were no single-family properties for sale under $500k. A client and I looked and waited for two years (2005-2007) to find one. We had no no luck. The client finally bought a multi-family, where she could offset the higher cost with rental income. Now there have been three sales in Pemberwick and at least two others in Byram. Greenwich is becoming more affordable.

Foreclosure Watch: 30 Curt Terrace

I wasn't surprised to see the foreclosure sale notice in the local paper for this property in Glenville (Western Greenwich). The house sits on 0.36acre at the end of a cul-de-sac. The property itself slopes gently down from the road grade until it drops-offs a cliff near its rear boundary. I'm not sure if the drop off is part of this property or the neighbors, and while a simple fence will protect little ones from going down the hill, this is not all usable, kid-friendly land.

This is one of those houses that sticks with me after what seems like a couple years since I saw it. The house offers 4 bedrooms, 4 bathrooms and over 3,800sqft according to the builder. My recollection is that the house layout is choppy and flow through the rooms is poor. The space is inefficient and poorly designed. Is this what happens when non-pros get into the real estate development business and get caught on the downside of a correction?

Either way, the property will have to sell at less than the $1.289mln that the owner was asking back in December '08. After the house at 35 Glenville St (see picture #2) sold for $1.025mln in Dec. '08, you would have thought this guy would have lowered his price into the 9s. But it may have been too late by then.

According to the notice in the Greenwich Time, the foreclose sale is May 30, at noon.

49 Hillside Dr. vs 477 Riversville Rd.: Comparing $4+mln Sales

Table 1.

These two properties closed within $300,000 of each other a day apart.

Table 1 contains selected data from the purchase, build and sales of the properties.

If I assume no change in the land values, the two properties sold around +/- $310/sqft plus the original land cost. Its a safe bet that the land values dropped.

If I take a different tack and assume a $350/sqft price (and assume lower level finished space sells for half of above grade living area), the land value for Hillside and Riversville drop to $1.52ml and $1.64ml respectively, or -23% and -9% of purchase price. It seems odd that the Riversville land would decline less than the Hillside property. But maybe the nearly 5 1/2 acres at Riversville buoyed the price, because I don't think the house did.

'

I consider the layout and configuration of the Riversville house poor to middling--shallow room depth on main floor; confusing and inefficient space layout in master; non-practical/functional elements--a fireplace in master bedroom seems to be inches from what looked like the only place the master bed could go. Greenwich has enough hot heads without builders trying to create more. Hillside is better designed and built structure, while Riversville has better piece of land.

Table 2.

Another point of interest, at least to me, and contributing factor to sale price is that the list agent for Riversville was not local and she represented both sides of the sale. In Greenwich Non-local agents frequently bring buyers who overpay for property. Second, if an agent represents both sides of a sale, there is always a chance that the property owner will get a discount on RE commision and net greater proceeds.

6 Irvine Sells for $1.14ml OR 3 years waiting and a 33% price reduction

I saw this sale notice on the MLS this morning and wondered if the wait was worth it for the owner. This shore colonial, that's what the list agent calls it, came on the market June 15, 2006. After nearly 3 years and 4 price reductions, from $1.699mln to a last list of $1.347mln, the property closed today at $1,143,500.

And talk about commitment, the owner stayed with the same agent over the whole period! I'm sure both parties are glad to move on.

98 Bottles of Beer, Houses for Sale and Rent, on the Wall

Below are details of the 98 single-family properties both for sale and rent in Greenwich at the end of March 2009 (of 660 single-family for sale). The properties are grouped by section of town and ranked by their Rent/Sale ratio (the annualized rent rate divided by the asking sale price, or what I like to call, a modified cap rate). The average rent/sale ratio for a given section is marked by a dotted line.

If I were looking to buy, I'd pay some attention to the properties with the higher Rent/Sale ratio and determine if there was a mispricing issue. If the rents are credible, these properties could offer a good value buying opportunity.

If I were looking to rent, I'd look at properties at the lower end of the scale for good rental value. Of course there are a number of reasons that a high value property might rent at a relatively low rate. Three reasons that quickly come to mind: 1. a collapsing real estate market; 2. a property that has additional developable land, which adds sale value, but less rental value; and 3. property management expenses passed-on to tenant outside the rent rate.

Greenwich single-family properties both for sale and rent:

Old Greenwich single-family properties both for sale and rent:

Riverside single-family properties both for sale and rent:

Cos Cob single-family properties for both sale and rent:

Analysis of Homes both for Sales and Rent, and Future Prices

Many people are struggling with determining value and sale prices of properties in the current market. So I figured I would take a look at single-family homes, which have been or are currently listed both for sale and rent, and see if the rent and sale information and the relation between the two can tell me anything about future single-family prices.

Based on my analysis, the average price of single-family active listings in Greenwich has to drop between 30% to 38% to match the rent and sale ratios of single-family properties sold this year through the end of March. The median price of active single-family properties has to drop 23%.

98 of more than 660 single-family properties were listed as both for sale and rent at the end of March or about 1 in 6 1/2 properties. A summary of the average asking rents and list prices of the 98 properties, broken down by section of town, is found in Table 1 (note that the Grand Averages are calculated by column and do not add-up across rows).

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Eight of twenty-six single-family sales this year through the end of March were listed as both for sale and rent. A summary of the eight properties is in Table 1a.

'

While the 98 active listings are a decent sample, the 8 sales are less so. But it is the best available; so I'll work with it. The results of applying the number of years rent for which a property sold (the "Sale/Rent" ratio) and the modified capitalization rate ("Rent/Sale" ratio where gross rents are divided by sale price) of the sold properties to the active listings are in Table 1b.

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The total average asking rent for all active single-family listings here is $130,779 per year. The average single-family home sold at 19.63 times its annual rent (those rents are a combination of either last ask rent, actual rent in place immediately prior to sale, or new ask rent rate in cases where property sold in '09 and was put back on market for rent). At 19.63 times the total average asking rent, the average active single-family listing would sell at 30% less than the current average ask price, or $2.57mln rather than $3.65mln.

The properties that sold year to date have an average 5.75% modified capitalization rate. Applying this average modified cap rate to the average active rent of $130,779, we get a $2.28mln value. This amount is 38% lower than the $3.65mln current average active list price. Active listings would have to drop 38% to achieve the same capitalization rate as year-to-March sales (for these exercises that rents are kept constant).

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As a check, I present an analysis of the median data below. Median active asking rent for single-family houses for both sale and rent is $107,100 per year or $8,925 per month. Single-family properties sold this year through March closed at a median price of $1.81mln, at 19.17 times annual rent and at a median modified cap rate of 5.22%. The median active listing price would have to come down 23% to match year-to-date sale and rent ratios.

While I focus the analysis on single-family prices here, the rent to sale numbers above seem to indicate that renting may be a good financial decision for a while longer. I mean is it a wise financial decision to buy a property that sells at 28 times current ask rents? I'll look into rents in a future post.

Byram Shubert Library Opens

This is great news for the Western side of town as well as for all Greenwichites who take advantage of this resource. Here is the article from the local paper announcing the opening.

Greenwich has one of the best library systems in the country and my family and I are happy to have access to it.

6 Ernel Dr - Sale Under $1.0mln

This well maintained and presented property on a cul-de-sac off Sound Beach Avenue Ext in Riverside sold for $750,000 Friday. This sale is a good pointer to value below the $1.0mln mark.

The property previously sold for $792,000 in June 2005. It was relisted for sale in March '08 for $850,000. The owner lowered the list price to $770,000 in Feb '09 and it went to contract shortly after.

I like Ernel Drive. Its a cul-de-sac of 7 houses and offers a low-traffic environment for residents with young children to stroll safely. The street has not been overbuilt and maintains a scale and balance that I find attractive. The 50s-era Capes sit well on their sites and from the several houses I've been in, the houses have been upgraded over the years and well maintained. It makes a difference when all houses on a street are in the same good condition.

The house itself sits on a flat 0.14acres and has a nice backyard enclosed by a decorative fence. It is not a large house, but at nearly 1,500sqft with 3bedrooms and 2 baths, it offers more than an apartment in the City or most condos in town. Plus it gets good light, has new appliances and infrastructure. It is a skip to the Post Road, I-95 and two skips to the Old Greenwich train station. Overall the property offers much.