Lackluster 1st Quarter Sales in the $5M-Plus Greenwich Real Estate Market

The sales of Greenwich homes in the plus-$5 million range have been slow for the last few years with much greater inventory than sales. In 2011 we had a nice recovery going and then talk in Congress of letting the U.S. default on its debt killed the nascent high-end recovery. In 2012 the high-end market once again started to recover in  May and did reasonably well for the rest of the year. We had a surprise jump in December 2012 deals as sellers dropped prices to avoid the Obamacare tax and the expected new capital gains tax.

In the 2013 first quarter we are once again slow. Part of this is seasonal and part of it may be the shifting of sales from 2013 to December 2012. The problem however, is that we are not seeing a turn up in contracts in the high-end price brackets. Right now we have 129 listings on the GMLS over $5 million which represents 28% of our inventory. So far this year we have had 8 sales in this price category, all but one of which has been under $7.5 million. We also only have 7 contracts pending in the over $5 million price range.

Over $5 million, you don't talk months of supply, you talk years of supply. As of the end of the first quarter we have 4 years of supply in this price category. Even when you throw in the 7 pending contracts you still have 3.2 years of supply. The good news for this category is that you only need a few more sales for the months of supply to drop significantly, because we have such a small number of sales. One or two sales will bring down the months of supply a lot, but you are stilll talking many years of supply.

Greenwich's $5 - 7.5 Million Inventory, Sales & Contracts

In the $5 - 7.5 million price range we have 59 homes. Nine of these are in Belle Haven, seven are in Old Greenwich and Riverside and the rest are in mid-country and backcountry. Of the sales and contracts two each are in Belle Haven and OG/Riverside. Nine sales and contracts are in mid-country and backcountry. Proportionally, front country sales and contracts are doing better than md-country and back country.

Greenwich's $7.5 - 10 Million Inventory, Sale & Contracts

Most of the inventory in this price range is in backcountry and just south of the Merritt Parkway. We do have 4 listings in the Belle Haven, 3 in Mead Point and 4 more in the golden triangle. We only have one sale and two contracts in this price range leaving us with an inventory of 27 homes between $7.5 and $10 million.

Greenwich's Over $10 Million Inventory & Contract

The over $10 million dollar price range is our biggest problem right now. We have 43 listings on Long Island Sound, in the golden triangle and in backcountry, but no sales in the first three months of this year. Last year we had 14 sales in this price category. To be fair only one of the 2012 sales was in the first quarter, but the economy wasn't doing as well then and contracts were looking better. Nine of the 14 sales last year were along Long Island Sound.

Outlook for the Over $5 Million Real Estate Market in Greenwich

The $5 - 7.5 million market should do better this year. We have buyers who are looking and many sellers have adjusted their house price to the new market reality. Over $7.5 million the market is more problematic. We have 70 houses listed for over $7.5MM and only 4 transactions so far this year.

Joanne Edwards, a veteran fellow agent here at Prudential, had a good list of reasons that I agreed with including:

• Buyers' desire for the perfect house in move-in condition
• Greater demand for newer houses and a corresponding lessening in desire for "historic" homes with great stories
• Less desire to have large and expensively groomed grounds
• A continuing concern about the economy and more husbanding of their money

The result is that many homes are not a match for today's buyers. To this I would also add that buyers who have a great year on Wall Street no longer believe that the following year will be as good or even better. Many people who can afford this price range are maintaining much larger rainy day funds.

Having said this I believe that 2013 will be better than 2012 with high-end sales picking up noticable in the backcountry as people start buying further out and also buying weekend and summer homes. In Greenwich many sellers are pricing to the new reality and are finding that when they lower prices, buyers start looking at their house. The stock market is hitting record highs and sellers are looking at those big rainy day investments and wondering if now isn't the time to redeploy some of their investments. The short answer is "Yes it is."