2009 Greenwich Condo Market: 9 to 14 Month Inventory

There was between 14 and 9 months condo inventory on the market in Greenwich at the start of this year depending on whether one uses 2008 or 2007 sales. Either way the numbers are significantly higher than the +/-3 months inventory over the boom years.

Breaking the inventory down by price range, there are over 9 months inventory across all price ranges except the lowest at 2008 sales. There is more than 12 months inventory at all ranges above $800,000. Above $2.5mln there is between 4 to 6 years worth of inventory. Do these higher end units become rentals; sell at steep discounts; become feeding stations and lottery kiosks for real estate agents on Tuesday and Thursdays for years to come; or get bought at asking by groups of Chinese on prepackaged tours of the US looking to take advantage of the local value proposition? Who knows? But based on the inventory levels, I expect prices at the higher end to decline at greater rates than prices in the lower ranges where there is less inventory. I expect price declines across the board in the current year.

Below $299,000 there is 3 months inventory. As the local market continues to correct, I expect more inventory moving into the lower price ranges. Heck with the way the market is correcting, the town may not have to build low-income housing.

In case 2008 sales are an anomaly, we can use 2007 sales, which closely match the median number of units sold during the last 10 years (206 vs 208 units). At 2007 sales, months inventory levels decrease. There remain over six month inventory across all but the two lowest price ranges. More critically there are 21 month inventory in both the $1.5 to 2.49 and $2.5 to $3.49 ranges; and there is 4 years worth of inventory above $5mln.

Granted the top-end of the condo market is minuscule; there were a total of 15 units sold in 2007 for $2.5mln or greater. But we know that a good part of the high-end condo market demand has been driven by empty-nesters seeking to downsize and relocate to central Greenwich. Some of this group is hamstrung by its inability to sell just as fresh inventory has come on line to meet what appeared to be growing demand. Then there is the decline demand from the financial service and hedge fund set. Developers may not be breaking ground on new speculative developments, but inventory will come on the market as part of the natural buy/sell cycle. As far as I can tell, sales continue to decline at a greater rate than new inventory. So how much inventory will pile-up during the bottoming out of the market? More importantly will the market over-correct on the downside in the same way it over-inflated on the upside? Time will tell and I'll keep you posted.

A note on methodology, month inventory is underestimated in this analysis as sales data includes both private/FSBO and broker-assisted sales, while active listings do not include private/FSBO listings.