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Starved for Inventory, Connecticut Takes a Turn. The Market Report for October 2020

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A Very Special Estate Comes to the Market for the First Time in 53 Years. Click to experience the *videoof Westerly in New Canaan, built in 1927 on 10.18 acres
This is a strange market, both in New York and in the suburbs, defying so many of the norms and patterns we have come to expect. Its not enough to explain away the change as a pandemic-fueled exodus from New York accruing to the benefit of her suburbs. To discuss this further we've decided the best way to deliver a market report is to talk it out through a ZOOM call with top experts in the New York and Connecticut markets. Tomorrow, Thursday at 4pm I will be joined by Louise Phillips Forbes and Roberto Cabrera from New York City as we discuss the market report. Here's the link. Watch for the invitation.
 
Governor Lamont said "When New York sneezes, Connecticut catches cold" trying to explain the ripple effects of the New York economy on her neighbors. Indeed, when he said that in April things could have gone either way. Unemployment in New York is typically very bad for Connecticut. Uncertainty in New York is bad for Connecticut. But, as it happens, Connecticut, Westchester, New Jersey and Long Island did benefit from a pandemic-fueled, summer migration. Now we are all asking will it last? How long does a crisis have to last before New Yorkers move their primary residence and what drives that decision? 

We look to the commercial market for one clue to whether the move out of the city is temporary. A flood of new sublease space hit the market in New York over the summer, suggesting a more permanent change was in the making. People are working from home and businesses are reevaluating the need for space. When the pandemic is over not only will New York City wrestle with an oversupply of office space, bu  

Prices typically rise after elections. Historically we see a pause in the months leading up to a Presidential election and those declines are more than made up in December and months following. As you'll see in the detailed analysis of the last 3 months across all 16 towns there is record low inventory levels. To find similar levels I had to go back at least 15 years. And yet pending transactions remain strong. How is it possible that transactions and dollar volume remains strong amid too little inventory? Something has to give and we believe it is price.

Price discovery is happening in real-time. Houses we priced a month ago are selling for 10% more than we predicted, and in some cases 20% more than Zillow, a lagging indicator, was predicting. 

I thought maybe the decrease in NYC prices might negatively affect Connecticut prices. But we know that 2/3 of the residents coming out of NYC are currently renters and they are not feeling the decrease in buying-power. 

I thought maybe the worst of the pandemic was over and that a recovering NYC confidence might affect Connecticut negatively. But when I read this week that large sections of Queens and Brooklyn were locked down by New York City's Mayor it occurred to me that for many New Yorkers there remains great uncertainty.

I thought the start of the school year might take away the sense of urgency to move to Connecticut and demand might soften. Many agents tell me they feel demand softened after the start of the school year. To test this we looked at the July, August and September "Pending Sales" and see that they remained strong right up into October. Despite decreasing inventory levels we see sales volumes are constant or going up in almost every town. Prices will rise. 

Three externalities that might have a negative affect on prices: taxes, interest rates and the election. First I am wondering if a new tax of .5% on mortgages after Dec. 1, 2020 will have an effect. But there seems to be such little awareness of this new tax that it hasn't had much impact on prices. Second, interest rates do not seem to be going up (and banks do not seem to be tightening lending restrictions) Thirdly, there is always uncertainty around the election. Historically prices will rise after the election is over. According to the Homelight survey  What we know is Connecticut is experiencing an inefficient market in 2020 Asking prices are covering a wider range than usual. Some sellers are pricing too low based on (older) assessment and sales data; many are pricing too high based on a handful of eye-popping recent sales, and still others are pricing on what their existing mortgage tells them they need, not based on any recent comps at all. This all makes for a topsy-turvey market.

I am going to repeat a quote from an earlier market report: Rich Barton, CEO of Zillow said "We are at the dawn of a great reshuffling....Zoom meetings are changing the way families think about space and privacy. Home offices are in high demand. Backyards are more desirable than parks and gyms. Work-from-home policies are eliminating the commute for many...a lot of people want a new living space, whether they want to remodel it or move. And that is driving real estate demand for all, everywhere, not just in the suburbs, everywhere.” Obviously Rich Barton is bullish about the prospects in New York City, not just her suburbs.

Comments? I'd like to hear from you. I'm John Engel at jengel@bhsusa.com
Cos Cob - +57% strong, flattening 2016 and 2018 were better. Total dollar volume of houses and condos was up +10.5% through July, +24.7% through August. Now, 7 pending sales instead of 5 shows that buyers are still active after schools opened. Average price flat at $1.532 million. Inventory levels are flat. They were down -13% and now they are flat at 52 houses. Condo sales are actually down this year from 15 to 13. Condo inventory has followed, down 32% to 15. Reports for Oct, Sept, Aug.

Darien - +90% strong, strengthening. Second quarter was flat but the magic returned in July, (+37%) August (+28%) and Q3 (+90%). Now sales are up +45% for the year. Pending sales of 42 houses instead of 20 is atypical for this time of year. House inventory is down -29% to only 164 Condo inventory is down -53% to only 9 Through 9 months house prices have strengthened 8% to $1.62 million. The average condo price fell 6% to $892,208.  The lack of inventory will result in flattening sales and strengthening prices. Reports for Oct, Sept, Aug

Easton - +97% strong, strengthening. Snapped back from down -8% to up +13% for the first 7 months then continued to accelerate. Closings in the third quarter are up +97% to 65 and for the year up +29%. Inventory is now down -41% to 57 and the number of pending sales is up 100% to 16. No inventory and continued demand will result in price appreciation. Reports for Oct, Sept, Aug

Fairfield - +85% strong, strengtheningClosings after 7 months closings were up 8.2% and after a Q3 up +85% the year to date is up +30% Prices are also up +25% for the quarter and +19% for the year. Pending sales are strengthening, up +175%  House inventory is down -43% to only 286 houses. Despite a -45% drop in condo inventory those prices are flat and it has led to a -13% decrease in condo closings. Fairfield reports for Oct., Sept. and Aug.

Greenwich - +82.8% strong, strengthening. July was up +18% and so was the first 7 months, up +18% Greenwich continued to strengthen this quarter. Through 9 months we are up +46% Pending sales are up +300% to 60 houses. Condo prices are flat despite an increase in the number of transactions, up +34% and a decrease in condo inventory, -21% to 112.  The 331 home sales is significantly higher than records of 253 homes set in 2014 and 2018. Greenwich Reports for Oct, Sept and August.

New Canaan - +74.4% strong, strengthening. 272 houses is a record, beating 222 in 2013. Closings were up at the half +10% and through 7 months up +17% and after 9 months +38%. What is more astonishing is the rise in average price from $1.37 million to $1.74 million. Inventory fell to 204 from 266, down -23%. Pending sales are 55 houses, +175% from 20. Another surprise is the condo market. 47 sales represents an 81% increase, prices up 5.5% to $703,476 amid flat inventory levels of 41 units. Reports for October, September, and August.

Norwalk - +34.9% strong, uneven. A strong July with 94 closings, up +24%, was followed by a flat August 71, up only 1.4%, and a strong September to bring the quarter in up +34.9% and the year to date up +14%. This is the most sales for houses (560) and condos (287). The 111 pending house sales is up +109% and is an accelerating trend despite inventory being down -30.4%. The condo market is up +14.8% and prices climbed +5% from $298k to $313k. Norwalk Reports for October, Sept and August

Old Greenwich - strong sales, weak prices. In July we reported 62 sales this year was worse than 2013, 2014 and 2015 but Old Greenwich activity has recovered. The 95 sales beats the 2013 previous high of 87. We saw the strong second quarter momentum continue with July sales up +80%, August up +54% and 3Q sales up 59% to bring in the year up +30%. But, average prices tumbled -8.5% for the quarter and -8.5% for the year to $2.195 million. Inventory is down -25% and pending up +64%. Reports for October, September, and August.

Redding - +182%  strong, strengthening. Despite a poor second quarter, down -29%, sales surged in July +133%, August +189%, 3Q +182% and for the year +56%. Prices climbed +12.7% this year to $611,306 partly due to decreases in inventory -31.3% to 90 houses.  Reports for October, September, and August.

Ridgefield - +88% strong, strengthening. Closings in July were up +70%, August +58% Q3 is up +88% and for the year transactions up +40% This is the best year in 8 years, 360 sales versus 314 in 2013. Prices have risen +11.4% and have climbed 3 consecutive months to $785,233. The number of pending sales is holding steady at 82, now up +242%  amid a 29.6% decrease in inventory to 197 houses. Prices have risen +11.4% The condo market is also way up +45% and prices too, up +8.5% to $339,066. Reports Oct, Sept, August

Riverside - +54.5% strong sales, weakening prices. Like her sister, Old Greenwich, we have mixed signals in Riverside, the two most expensive neighborhoods of Connecticut's most expensive town, Greenwich. Despite a flat second quarter we saw a rebound up +45% in July, up only +6% in August, and a solid September to bring the 3Q in up +54% and the yearly totals up +37% to 96 sales. Average price rose 28% to $2.44 million but that is down from average of $2.6 million through July.  Total dollar volume in Riverside is up +67% this year, but its 61 sales pales in comparison to 92 in 2013. Riverside reports for October, September, Aug.

Rowayton. +64% strong, strengthening. Sales in July were up +50%, in August +42% and Q3 up +64% making up for a flat first half and bringing in 9 month totals up +28%. Prices are flat at $1,219,027 but the pending sales are up a whopping +118% to 24 houses. Remember, Rowayton is TINY TOWN where inventory is only 31 houses so to have 24 pending is crazy. Rowayton reports for October, Sept. and August

Stamford - was flat, is strong and strengthening. The first half ended quietly but a strong July, up +28%, strong August +26% and strong 3Q up +36.7% brought Stamford up +12% over 2019. The report breaks down the 12 neighborhoods where the 30% price increase in Shippan Point is exceptional. Condo sales were down -4% and now up +6% for the year. while condo prices rose +8%  A very very detailed Stamford report for October complements September and Aug.

Weston - +70% strong, strengthening. a strong first quarter improving in the second quarter, up +73% in sales to average +44% for the half we saw July slow a bit +13%, then August BANG up +115%, and up +70% for the quarter means +57% for the year. Pending sales are up from 16 to 35 and that number has increased for 3 months so we see the trend continuing. Prices have risen +8% to $862,015. Finally, 201 sales beats a previous record of 138 in 2013. Weston Reports for October, September and August

Westport - +139% wow and strengthening. Westport is in a different category entirely. Closings in July improved +197%, from 32 to 95 and continued in August +114% The Q3 is up +139% and for the year to date +72% to 465. Consider that inventory is only 236 houses and they sold 266 in the quarter. Pending sales had improved +118% in August and continue to accelerate, up +164% now from 28 to 74.  Average price has improved +14% to $1.57 million based on an average of $1.71 in the quarter. This is the best year in a decade, 465 sales versus 362 in 2013.  Wow, Westport!
Reports for October, September, and August.

Wilton - strong, strengthening. Closings in July were up +78%, August +80% and the quarter is up +103%. For the year Wilton is up +47.5% while prices have risen +9.3%. Pending sales are up from 10 to 49, up +390%. Wilton Reports for October, September and August.
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Louise Phillips Forbes sells 372 Central Park West. Louise joined me Thursday 4pm-5pm to Zoom on the changing market.
Click here to link to the podcast.

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Roberto Cabrera writes an amazing NYC Market Report. Roberto is joining me every Thursday 4pm on Zoom talking real estate
Click here to see the second episode, and the third episode.

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John Engel hosts the first real estate "Boroughs to the Burbs" now archived here, the second episode with Louise Phillips Forbes and Scott Hobbs, and the third episode with Ari Harkov and Eileen Hanford. Next week we will be joined by Chief Economist Greg Heym. Here is the link: https://zoom.us/j/2032474700

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Scott Hobbs of Hobbs Inc on the first "Boroughs to the Burbs"  Scott joined us in the second episode to bring us current on the ultra-luxury home market in NY and CT
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Arnold Karp of Karp Associates joined in the first "Boroughs to Burbs" zoom call. Arnold is building 105 luxury condominiums in New Canaan and we want to get him back on a future episode to find out how that is going.

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Licensed in Connecticut. 183 Elm Street, New Canaan, CT 06840
203.966.7772
203.247.4700
jengelteam@halstead.com 
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