Greenwich Residential Market Review: Unit Volume 2000 - 2009

The pinch, or returning to a more stable, well functioning real estate market.

I like the pinch!

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Note: Data below the "Brought to Market" numbers relate specifically to sales, contracts, withdrawn, etc.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.

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?

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/

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.

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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.

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:

154 Cognewaugh Rd - One Down (almost)

Looks like Greenwich will have one less spec house on the market. This property in Cos Cob went to contract today. The last list price was $3.150mln, which is down 36% from the original asking price of $4.895mln back in July 2007.

Crunching the numbers, the developer bought the property for $1.4mln (3 years ago) and then built 5,234sqft above grade (7,743sqft including finished space below grade). If I assume $300sqft build cost on above grade area, we get $1,570,200 build cost. When we add land cost, we get $2,970,200 or pretty much breakeven at this point (considering RE commissions and fees). When we add in 3 years of financing costs, it would seem the developer walks away with a loss.

By the way, the property was developed by Santora Brothers LLC and built by Pecora Brothers. These guys have been in the business a while and do a solid job.

80 Perkins Rd and Yankee Baseball

Sounds like the recently hired NY Yankee first baseman, Mark Teixeira purchased this property.

The team website also notes that, "By committing to a eight-year, $180 million contract, Teixeira is in New York for the long haul. His wife, Leigh, is busily moving into a new home in Greenwich, Conn.,...".

Congratulations to the family and welcome to Greenwich.

17 Marshall: Hmmmm?

I'm stumped. After undergoing what sounds like a major renovation in 2007, this property came on the market in February '08 for $895,000. It didn't sell. Today, a year later, the property is back on the market and voila, the price is $995,000. As far as I can tell from the property listing, nothing has been done to upgrade the property since the last listing.

So, help me. How does one rationalize a $100,000 price increase during one of the worst years in Greenwich real estate in decades? I know, I'm getting on thin ice when I start asking about a rationale for pricing, but someone has to do it. Maybe after I see the property at the Broker open house, I can shed some light on this puzzle. Who knows, maybe the property was severely under priced last go round and the market missed this opportunity.

80 Perkins Rd

Word on the street is that this property sold to a professional baseball player fresh from signing a $180mln contract. Nice house by a good builder. Sale price was $6.70mln or +/-16% off the list of $7.95mln. The property sold yesterday, but went to contract in Jan '09 about 2 1/2 months after being listed for sale--that's darn good! For background, the developer purchased the property in Nov '07 for $2.695mln.

Continuing Tale of Woe on Greenwich Avenue

I posted on this subject on March 3, and today there is this article from Bloomberg detailing the sorry state of affairs on Greenwich Avenue.

As Queen would say, another one bites the dust, or so it looks with commercial property in town.

21 Bobolink Ln: What it takes to sell

The owner of this property figured how to deal with the market: sell at 28% off your last list price and 44% off your first list price in May 2007. The $5.0mln sale price would allow you to downsize into an attractive townhouse or condominium in the center of town, in the event those are your plans, and you would still have some change left over.

I find it noteworthy that the seller is a professional real estate owner and investor. I expect this experience helped him close at a price significantly lower than he originally anticipated.

Greenwich Single Family Sales Under $500,000

Given the nose-dive the local market is taking, I would have thought we'ld have seen some sales below $500,000. 7 Windy Knolls sold today and it turns out this 2 bed/2 bath Cape is the first. Then again there have been only 16 sales year to date.

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If my recollection is correct, the house is a real fixer-upper or in other times a teardown. The land is flat to gently sloping to the street level, which means easy access and easy to build on.

Here is some perspective on single family sales below $500,000.

(Click on image to enlarge)

880 Jobs Lost = How Many Houses for Sale?

The local paper writes that 880 Greenwich residents lost their jobs during 2008. The prospects are that the worst is ahead and the town will see accelerating unemployment through the end of the year, according to a Yale economist and CT Dept of Labor researcher quoted in the article.

So how many properties will be put on the market to be sold as residents deal with these new financial constraints? And who will buy them? Who knows, but more inventory will certainly increase leverage for buyers and reduce it for sellers.

So far this year, 25 residential properties (single family and condominiums) sold. That leaves about 600 single family homes and the 200-odd condominium units on the market. Talk about a growing imbalance in supply and demand. I expect the rate of property price declines will pick-up dramatically over the coming months.

Approaching 1999 Prices: 7 Gisborne Place

This sale caught my attention today; it closed closer to its sale in 1999 than to anything more recent.

The history is that the property sold in April 1999 for $1.81mln. It was then significantly renovated in 2006 and sold in Jan 2007 for $2.86mln. It went to contract in the end of Feb '09 and closed yesterday at $2.2mln.

It looks like a relo company took position of the property since the 2007 sale, but sheesh and in Old Greenwich too!

Summer Rentals Going Down: 181 Clapboard Ridge

I wonder what happened to the Spring Market? Today the rent rate for this property was dropped nearly 50% from $15,000 to $8,000 p.m.. The list price was reduced 20% from $ 7,995,000 to 6,395,000, but that isn't all that startlingly now is it.