It appeared that a new normal had set in during the tumultuous year of 2017. The prices seen back in the rosy days of pre-2008 had become a distant memory. Customers in the real estate market stopped using those old numbers as a barometer and got around to thinking of a property’s value right now.
The result? A new era of realistic pricing and some very interesting sales.
“It was sort of a sideways year,” says David Haffenreffer, a Houlihan Lawrence Realtor, reflecting on the intriguing mix of market actions. “Sale prices rose in 2017—both median and average—but almost exclusively due to the high end of the marketplace. It was interesting to see that part of the market escalate. I see so many stories about wealth leaving the state, but here were people dropping down a great deal of money for houses.”
While our annual real estate report is generally topped by some screaming huge deal on a waterfront mansion, this year our collective eyebrows were raised by a return to Greenwich’s backcountry with ten properties in the $20-million range going to contract.
The biggest question right now, of course, is how Wall Street’s massive throat-clearing at the beginning of 2018 will affect long-term plans. As Bloomberg notes, the new tax law will pile on to the national debt. The new Fed chairman, Jerome Powell, will likely have to keep bumping up the prime rate. Our market is, of course, comprised of people who study these details at a subatomic level and there seems to be a widespread confidence that the conditions that led to the bruising mortgage rates of thirty years ago are unlikely to return anytime soon.
In the 13,000 square miles that make up the Tristate Area, Connecticut’s tax profile is probably the best. From evidence gathered by Eric Bjork of Berkshire Hathaway, we see that the classic New York City searcher is “now just skipping over Westchester completely and coming straight to Greenwich.”
“When people put it on a spreadsheet,” says Pam Pagnani of Sotheby’s International Realty, “they see the difference.”
Here, then, is our annual look at key factors that are impacting the always-interesting ride of the real estate market.
FIRST, SOME BIG NUMBERS
There was a big kick in the local market in the last quarter of 2017. November sales last year, for instance, numbered forty-three, a healthy bump over the twenty-four sold in November 2016. Folks evidently felt it was safe to start buying again and the boomlet of deals pushed total sales for the year to 570. This turned out to be nearly the same number of sales as 2016, but the big-dog sales made the total $204 million richer.
In January of 2017, the median sale price was $1.6 million and after a number of ups and downs, settled slightly higher in January of this year at $1.87 million. The average sale prices in the same period, according to Russell Pruner of Houlihan Lawrence, remained about the same: $2.4 million.
Those sales in the last quarter were not all attributable to major price reductions, although some homes definitely showed a trimming of the price tag. One $13 million sale had started life on the market a few years ago for $26 million. On Old Mill Road, a glorious house sold for $24 million; three years ago the asking price was $39 million. And the most astonishing sale, an eighty-acre spread in Conyers Farms, was sold by David Ogilvy for $21 million. A regal amount, to be sure, but the asking price three years ago was $65 million.
Changing market conditions or timing? The buyers circulating through our towns do know a thing or two. “Greenwich buyers are very patient,” says Eric Bjork. “They will wait a year if they have to to get the deal they think is fair.”
“I don’t think there’s ever a shortage of buyers,” says David Haffenreffer. “They are ardent about getting a value and they are not going to budge until they get that.”
Indeed, the average number of days a house spent on the market rose to 267 last year, up from 197 in 2016.
But many big sales went for a premium over asking. “Look at 560 North Street,” says Pam Pagnani. “It’s a glorious, 1930-vintage brick Tudor situated on 3.7 acres, and it did $2 million better than its $20 million asking price. People saw the value and understood the history.”
The trend has been so subtle some people might not have even noticed, but over the years there has been a growing urbanization of Fairfield County. Our sleepy villages and towns now seem to be as vibrant and energized as some outer boroughs of New York City. Accordingly, there is a new interest in urban-style living quarters.
“Greenwich has done well with condos,” says Pam Pagnani. “It follows a trend we’ve seen on the West Coast: More people want to be within walking distance of a vibrant downtown. It was once said that this would never happen in Connecticut—after all, we have our beautiful terrain and woods and the stone walls. But it did happen. Condos have become popular.”
“Everyone wants to live near downtown or close to Cos Cob,” says Vicki D’Agostino of William Raveis. New construction is always preferred, of course. She points out that the historic Old Harbor House Inn on Shore Road was totally reimagined and rebuilt. “It was turned into six condos and they are beautiful, oh my gosh.”
Other prize properties can be found on those streets branching off from Town Hall and up Millbank. That area features new townhouses with lots of floor space and no lawn, and they are fetching up to $4 million. Being a short hike from the station—and a short stroll to Starbucks—is the new ideal.
It turned out that the yen to tear down houses and put up multi-unit condos got a little too strong for some residents, and last June the Planning & Zoning Commission passed new rules in R-6 zone putting a two-unit limit on the new subdivisions.
The last project to get approval under the old limit is an impressive new construction at 125 Hill Point Road, featuring twelve grand units in two buildings. “These are super-luxury flats, the equivalent of what you would see in Manhattan,” says Tamar Lurie of Coldwell Banker, who put this together with her team, including Laurie Smith and Jen Danzi. “These are very much a rarity in Greenwich and very much in demand.” Prices start at $2.9 million on the ground floor, up to $3.5 million for the penthouses, some of which have water views. “Maybe the most important thing is that it’s walking distance to downtown and the train. That’s special today,” says Lurie.
The ability to walk around the neighborhood is the major reason that Riverside and Old Greenwich have turned into hot little hamlets. In one year, the average price jumped half a million, going to $2.4 million last year, up from $1.9 million in 2016. Price leaps like this are probably attributable to the classic human urge to keep up with the Joneses. (As in, “If the Joneses got $2 million for that shack, we’re going for $3 million for our adorable home.”) These price speculations do, however, affect sales, which totaled seventy-seven last year, a fall-off from ninety-eight in 2016.
“When one sells quickly, someone else thinks it might be worth it to raise their price a little,” says Barbara Zaccagnini of Coldwell Banker.
But not everyone wants a village. “When we have clients in the car,” says Joann Erb of Halstead, “they’re not sure where they want to be, so you go down through Old Greenwich. They either get claustrophobia—‘The small houses, you can reach out and touch your neighbor’s house.’ Or they’ll fall in love. You tend to get one reaction or the other.”
What’s the next hot neighborhood? Erb thinks it might be Byram. “Now that they’re getting the new New Lebanon elementary school, the new pool and park, it may be time for Byram to change. It might appeal to new families who can get into Greenwich reasonably.” Cos Cob, she adds, was also off the map until its school was replaced with the nicest in town, and suddenly Cos Cob was a magnet for New York searchers beleaguered by city schools.
Regarding buyers, don’t make assumptions. In an earlier era, it was just understood that Greenwich buyers were all from the financial sector. “After the hiccups in the market,” says Pam Pagnani, “the three largest employers were hospitals, universities and tech companies. We are not yet seeing that bearded tech type who skateboards home in Brooklyn, but many others from tech are coming here.”
Several brokers have also noted a number of sales of big Greenwich places intended only for use as weekend getaways. “The buyers for the $20 million properties are getting younger and younger,” says Joann Erb. “People come out here wanting a certain kind of life. The Hamptons is so difficult to get to now. Getting to Greenwich is a comparative breeze.”
David Ogilvy also points to desire to be close to extended family. “Another thing we’re seeing is people buying here so they can be close to their children who work in New York City, but the parents don’t want to live in New York.”
In years past, the Greenwich market was buoyed by Russian and Chinese buyers looking to park their holdings in a safe neighborhood. Those nations acted to stop that fast flow of outgoing money, but couldn’t stop it completely. “It’s not as easy to get money here,” notes Barbara Zaccagnini, “but it’s not impossible.”
Otherwise, it was seen that some of the bigger sales were rung up by buyers from Britain, South America and the Middle East. This sort of United Nations appeal of Greenwich is well known at a firm like Berkshire Hathaway. “Of our ninety agents,” notes Eric Bjork, “fifteen come from outside the U.S.”
Wherever they come from, they’ve been studying up. “Buyers are all now very savvy and have lots of information at their fingertips,” says Pam Pagnani. “Thanks to the web, they arrived armed with an arsenal of information.”
The market, all brokers note, has changed greatly over the past decade. “It’s all about online now,” says Vicki D’Agostino. “Buyers and sellers are finding their agents via websites, social media and online presence. The buyers are way more informed because there’s so much more out there. Now everyone understands the process. Nothing is a secret.”
In a sense, a house is staged twice. Once is the physical beautifying, the other is the lush video capture presented on the realty firm’s web page. You’ll want to bring in an expert to do this.
THE HGTV EFFECT
For as long as anyone can remember, brokers have been pleading with clients to please, please declutter the house before putting it on the market. Out with those drapes and be sure to toss out Uncle Harvey’s carved-duck collection. In recent years, these pleas have amped up considerably. When today’s homebuyer waltzes into prospective quarters, they want to see what essentially amounts to brand-clean-new—and white as a cloud bank.
The new influencer in the neighborhood might well be a TV channel, the HGTV network and its endless rotation of shows depicting hammer-swinging crews tearing into shabby old dumps and turning them into gleaming showplaces that win the heart.
Barbara Zaccagnini acknowledges that HGTV has helped people learn to have more vision. “They watch those shows and can see what’s possible. And it’s helped Realtors.”
But it’s not like fickle buyers are ready to put down their Starbucks cup and don the carpenter’s apron. “They want the job already done!” says Joann Erb with a laugh. “They want HGTV to come in and do it for them. The strongest part of the market now are houses that are newer, freshly painted, pristine. People don’t want to do anything. We just had one fall apart today because the client realized he’d have to do something and he pulled out.”
“The appetite for renovation is not what it used to be,” Bjork laments. “The appetite for new construction persists.”
The sweet spot of the Greenwich market, says Joann Erb, would actually be new construction in the $2- to $4- million range, but the high price of land makes that a hard find and inventory here is low. Thus, sellers who are not offering that prized new property should strive to make it at least look as new as possible. “I don’t mind if buyers smell a little fresh paint,” says Haffenreffer.
And that fresh paint is likely to be white, the go-to color these days. Haffenreffer recalls some sellers who were horrified at the idea of having their cherry-wood kitchen cabinets covered in white paint. But they did it, and were gratified at the quick sale.
Are today’s buyers just not into rich color schemes? Realtors get an extra bit of intelligence when they sell a house that they had sold just five years earlier. What changes were made in the interim?
Not all that much, it turns out. The whites and grays are still there and not a lot of personality was added to the house.
“We’re not seeing the knickknacks” says Erb. “The art tends to be modern, which is fine but it’s been picked out by a designer. Young customers don’t want their parents’ antiquities, the Persian rugs.”
But that might be changing. “Buyers overall are more savvy about architecture,” says Robin Kencel at Douglas Elliman. “They know the value of design. And recently, I’m seeing some Millennials who understand antiques and design principles. A few years ago, they’d just want to blast out the dining room. But now they’re appreciating the traditional, conservative look. People even come here from Australia wanting the classic New England home out of White Christmas. They’re looking for a feel-good experience.”
Just as long as it seems, uh, new. Bjork reflects on what might be called The New Rule: “It used to be location-location-location,” he says, “but now it’s condition-price-location.”
David Ogilvy agrees. “Condition is everything,” he says. No matter the house or location, if it’s in less than A-prime condition, he says, “you’re in for a long wait.”
As we saw in Old Greenwich, it takes only a few great sales to get the neighbors revved up. Haffenreffer refers to these as “the headliney deals,” that filter into the marketplace and give people confidence to come out and buy.
Thus it is with some sadness when firms have to work sub rosa on a sale. There has always been our “deep state” market—properties that are never listed and sold in discreet silence. Even if the buyer is an LLC with the address being of a lawyer’s office. The transaction is not part of the official stats—it might as well have happened on Pluto.
Tamar Lurie of Coldwell Banker was one of the top producing agents who worked on deals done in confidence. “I have six listings that are not on MLS. The buyers need this because they don’t want anyone to know they’re buying, especially when it’s a very expensive property. There are those of us,” she laughs, “who want to tell the world, and not just for the credit. It would add some pizzazz to the market, because there are some very big names.”
Of course, she won’t name these big names. We’re just going to have to wait till we see them shopping. “These people could live anywhere but they chose here.”
David Ogilvy, who is very familiar with the transfer of castles, knows about this. “In my opinion you won’t get as good a price, but some people don’t mind that. I’ve done a few. If you have the perfect clients, it’ll work.”
But whether the deal is strictly hush-hush or accomplished with streamers and Champagne corks, people just want to be here. Of the four $20 million deals he swung, one was from out of state, the others from out of country. “The value of living in Greenwich is seen every year. The livability of the town is amazing. And buying a house is an emotional deal—it’s more than a transaction. You need to feel it. You need to feel yourself in the home.
“Sometimes you hear people express the opinion that Connecticut is now a bad place to live.” Then Ogilvy laughs, because he’s seen the large investments of people who know it’s actually very, very good.