State of Real Estate

Photograph: Chris Meech & Dan Millstein/Sotheby’s

Every year in America, about 6 million people buy a house. Of that, according to a Harvard study, 1.8 million are first-time buyers. These innocents (not so young, really, with a median age of thirty-four) face a sometimes bewildering world of choices, not to mention the collective willpower of millions of sellers with very high hopes.

Figuring out the rules in this game of four-dimensional chess is not for the unprepared. So we did what anyone dipping his or her toe in the market would do: We consulted the brokers, lawyers, swamis and soothsayers to see what’s really going on in this changing marketplace.

WINDS OF CHANGE
First, after a year of often unpredictable market dynamics, there have been recent positive notes. “This January has been unseasonably busy so far,” says Alex Glazer of Douglas Elliman: “The buyers are out there and have been patient. A mostly mild [winter] has led to a willingness of people to get out and look. The one to four million dollar range has been busy, and so has the three million-plus.”

“We’ve been very busy,” says Pam Pagnani of Sotheby’s International Realty. “We had fifty million dollars in contracts just in January. That’s a good January. Why? Buyers are seeing the values of a lot of homes. And last year was a fickle market—there was a lot of uncertainty. The biggest was the threat of a trade war with China and Mexico. Once that went away, corporations felt better.”

Why the new pickup in the marketplace?

“The mortgage rates are good” says Jen Danzi of the Tamar Lurie Group at Coldwell Banker Global Luxury. “And there’s a pent-up demand from buyers who have been waiting.”

“Sellers are willing to understand the new value structure,” notes Eric Bjork of Berkshire Hathaway. “I don’t want to say capitulating, but accepting the new reality. My agents are describing it as a different level of engagement. Buyers seem more reluctant to commit, but when they see a good deal they jump on it.”

The Greenwich market covers, shall we say, a lot of bandwidth. And while house-sellers still put out the welcome mat for the three groups who’ve always boosted our market—migrants from Manhattan, the international buyers and Wall Street folks flush with bonus checks—it is with the knowledge that various changes have happened.

“You don’t have as many hedge fund people in the market,” notes Janet Milligan of Raveis. “There are some. Once you looked for Wall Street people to get their bonuses at the end of January and then they’d be out looking for houses, but that’s gone.” Explanation? More firms have turned to forms of deferred compensation.

Among the transitions is the desire by both downsizing Boomers and younger buyers to live close to town.

“Several cultural changes have affected the market,” says Michael Cacase, a lawyer specializing in real estate. “Younger people are less inclined to buy houses. This is the first generation that saw property values come down. And when they buy, they want smaller houses. Partly it’s the maintenance issue. But smaller parcels with low maintenance tend to be closer to urban areas, which is the new preference.”

BIGGEST OF THE BIG
The dramatic price reductions seen around town have gained some notoriety. But there were sales where the owner managed a giant profit. This happened with the sale of a four-acre waterfront mansion. The $48 million deal, brokered by Halstead, was for a heavily remodeled house that went for $17.5 million only a decade ago.

The sale created enough excitement to put a number of houses in the Belle Haven enclave up for sale. “For years there was nothing on the market,” reports Tamar Lurie of Coldwell Banker Global Luxury, “and now four are for sale. Three are on the waterfront. One property across the street came on the market and it sold in fifteen minutes. The buyer was smart to pull the trigger right away.” The price was $11.25 million.

“Even at that price, these are people who are clever on spending money. They’re moving money from all over the world, so they are smart. They’re still looking for a fair deal.”

Up in the backcountry, there was cause for clinking champagne glasses. Four of the town’s “big ten” sales occurred up there among the grand spreads. “The backcountry saw an increase of 40 percent in unit sales,” notes David Haffenreffer of Houlihan Lawrence, “but it was all on the back of price reductions.”

“One nice trend is that the backcountry is coming back into vogue,” says Robin Kencel of Compass. “I think it’s a reflection of two things. People have discovered us as a weekend retreat. Having a little acreage and the birds singing, that’s nice. Part two, that old kneejerk phrase, ‘It’s too far from town’, is now seen differently. There’s been a change of perception. If it’s twelve minutes further out, then that’s twelve more minutes to talk with your child in the car.”

Her partner at Compass, Shelly Tretter Lynch, also noted the arrival of buyers looking for a weekend escape (perhaps now deserting the frantic Hamptons traffic). She calls them “family and friends” compounds, naturally equipped with pool, tennis court, a larger home and lots of land to accommodate family and guests.

Not every compound is going for top dollar. Perhaps the showpiece of the bargains was the seventy-five-acre estate that will always be known as “the Mel Gibson house” (even though he lammed out in 2010). “The house he sold for twenty-six million just sold for thirteen million,” notes David Haffenreffer, acknowledging that such price reductions “are helping pull value-oriented buyers into transactions.”

Alas, one unfortunate side-effect of this market change is the snarky schadenfreude taken in some news reports about the price declines. (The giveaway is the word “tony.” A reference to our “tony neighborhood” means the writer is sure to take a certain, ahem, tone.)

“I shake my head every time I see one of these articles,” says Jen Danzi, laughing. “It gives buyers more fuel for their fight. Even buyers from the UK have seen these articles. There was one the other day on Bloomberg, and the headline was, ‘No one buying a home in Greenwich pays sticker price.’ The annoying part of it is that almost nobody pays sticker price anywhere.”

Still, the big sales happen. “The negative press has been a plus, actually,” adds Lesley McElwreath of Sotheby’s International. “The stories about pricing have piqued people’s interest. They thought Greenwich was out of their reach, and when they hear that prices have adjusted, they want to see. And as you know, we have prices that cover a very wide range.”

David Haffenreffer has also seen the sarcastic articles. “Those stories never get that the size of our town is fifty-four square miles,” he says. “They never understand the diversity of our town. The outward reputation of Greenwich is a total disconnect to the experience of living here as a resident.”

Speaking of residents, the other excitement in the air involves the swirling reports that quarterback Tom Brady and Gisele Bündchen have set up home here. Only none of the brokers we spoke with know for sure, or at least would not go on record confirming the rumor. It’s a situation reminiscent of the late Paul Newman’s position in Westport—for half a century it was just understood in the community that you never, ever bothered Paul. It may well be that Brady would also enjoy such safety here…that is, if he has moved here.

KNOWLEDGE IS POWER
With three years of inventory in some neighborhoods, it is a buyer’s market. So what’s a seller to do these days?

Today’s sellers not only have to prepare the house for sale, they have to brace themselves for today’s buyer, an increasingly sophisticated form of house-hunter. For a seller who has been sitting pretty in their house for decades, there will be some
surprises.

“Today’s prospective buyer knows just as much about your house as you do,” says Jen Danzi. “They know the history of the house, they know if the mortgage has been released, if you owe back taxes. And they want all the information, the service records, who services the pool, when was the last time the flue was cleaned.”

She adds: “And they’re demanding a lot more after inspection. In the past, buyers knew what they were buying and went with it, but now they want every little thing fixed and replaced. Today’s buyers are so discriminating.”

“They’re smarter and more data-driven,” amends David Haffenreffer. “And they very much value their own time.”

“Everyone’s afraid of paying too much,” says Joann Erb of Halstead. “They know people who lost money. So the buyer might accept an offer, but if something scares them in the inspection process, they’ll walk. They might come back later to say they want an allowance, but sometimes the seller won’t do it. Buyers need to lose a few before they realize this might be the bottom of the market.”

Into this situation has stepped a new firm called Prevu that only deals with the buyers’ side of the transaction. Figuring that a lot of consumers today prefer to shop online, they present customers the data, then step in to negotiate for them. According to Chase Marsh, this technology platform could save 2 percent on the realtor commissions.

For sellers these days, the offerings of free advice are plentiful. The first order of business is to paint everything some variation of white, even those lovely cabinets.

“It’s TV!” says Janet Milligan of Raveis. “Now everyone is renovating before going to market. I had a stager come to a house
I was selling, and then I got an eighteen-page report on what I needed to do.”

“You’ve got to update all the furniture and do everything to help buyers imagine themselves in that home,” says David Haffenreffer. “You’re unlocking their imagination.” Only a few years ago, sellers were replacing their tired sofas with new but admittedly budget-line furniture. Not anymore. Those substitute furnishings better be top quality.

So staging is not cheap, with some people paying upwards of $30,000 for an epic job. But it does lead to quicker home sales. “And a lot of buyers want to buy furniture directly from the stager,” notes Jen.

THE EYE OF THE BEHOLDER
What to do with the house, besides paint it white?

“There’s a little more interest in contemporary, but not the stark contemporary,” says Joann Erb. “People like it when you take a traditional home and give it a contemporary twist. People love open rooms with a lot of detail; they don’t like fussiness, knickknacks. Hopefully, antiques are coming back—a few pieces here and there, so the house doesn’t feel like it just came out of a catalog. They add warmth.”

Observes Shelly Tretter Lynch: “Architecturally, the new builds are embracing modern farmhouse aesthetics. The main exterior elements of this style are a bright white ‘board and batten’ or shiplap siding; black exterior window trim and standing seam metal roofs. This light, minimalist style is carried into the interior with light-colored wood floors and ceiling beams, white cabinetry and a mix of white marble or light-stained wood countertops.

“What is turning people off are older, heavier-feeling homes; stone, dark woods, overly ornate homes do not appeal to new buyers.”

“Everyone wants black window trim,” adds Janet Milligan. “It’s OK with Tudor houses where it’s stone. But in new construction now they all have it. Everybody wants simple and flat; they don’t want extra stuff. If your kitchen is not all white it takes so much longer to sell a house. We’re photoshopping now to show what a house might look like if it were changed. We’re changing green walls to beige.”

“People like an open floor plan—they like flow in a house,” amends Alex Glazer of Douglas Elliman. “In new construction, people are scaling down on formal living space. The living room, the dining room, the once-traditional large areas are now smaller, and builders are allocating that space to large family rooms.”

Because buyers now do massive amounts of online research before ever showing up in town, it stands to reason that a house’s web presence be beautiful. “We’re selling luxury assets,” says Robin Kencel at Compass. “We have designers in our marketing department who come from Vogue.”

Video clips have been de rigueur for big houses for a while but now are made for nearly everything. “We only use professionally made videos,” adds Joann Erb. “You can’t go in and shoot it with an iPhone. Because people are buying it [based]on the Internet.”

Soaring drone videos are taken, not just to show landscaping but the house’s proximity to the beach and town.

Many agents have noted the diminishing popularity of vast land holdings. Partly it’s a maintenance issue. “And the kids aren’t playing in the backyard,” maintains Joann Erb. “They’re going off to soccer and lacrosse, so they don’t need four acres at home to run around in.”

While swimming pools are still mandatory in the upper strata of homes, it has been observed that younger buyers might be wary of pools. Robin Kencel also notes the rising trend toward saltwater pools.

So what is an absolute must? “Wine cellars are extremely important,” says David Wilk of Raveis.

But even bigger is the office.

“Everybody’s working at home these days,” says Janet Milligan. “And a lot of people have their own companies now, I’ve noticed. So everyone looking at a house has to have two home offices.”

This would serve as a hint for a seller whose house might have an extra rec room: Consider turning it into double offices.

ADD A DASH OF SALT
After the massive national tax cuts enacted in 2017, one tactic for recovering some of the missing revenue was what is now referred to simply as SALT (for state and local taxes). It reduces the tax deductions normally given for property taxes and state income taxes by capping deductions at $10,000. It also reduced mortgage-interest reductions. Added to this are fears of coming so-called “mansion taxes” and increased conveyance fees.

A widely shared opinion is that the SALT thing has not spiced up the market. “It’s hard to quantify,” suggests Eric Bjork, “but it seems definite that it has dampened the idea of buying over renting. We still have an active rental market, by the way, but partly it’s a function of people not being able to sell their houses.

“My other question about SALT is, how much money does it actually make? What does it add to the coffers?”

Attorney Michael Cacase does not think it’s worrisome: “The cap on deductions on real estate taxes and interest paid on mortgages certainly had an impact, but the marketplace has adjusted. There is the question, of course, of whether this law mostly affects blue states, and was that the intention? We’ll have to see what comes out of the sausage makers from Hartford and Washington.”

Mark Pruner of Berkshire Hathaway thinks that SALT probably has the deepest effects on the lower end of the market.

Anyway, the entire tristate region is similarly affected, says Shelly Tretter Lynch. “What differentiates Connecticut is that overall our taxes are lower than New Jersey or Westchester.”

CITY MOUSE, COUNTRY HOUSE
As many as 20 percent of Greenwich buyers come from New York City. It has long been a familiar drama for refugees from Manhattan: The arrival of children suddenly makes the expense of living in New York untenable. Ivy League prices on the kindergartens will do that.

For a while it seemed that Brooklyn was pulling people away. But the combination of Brooklyn’s rising prices and a rocky market all over New York City made people start eyeing Connecticut again. The one difference is that people seem to be starting families later.

“What we’ve learned is that the New York buyer is staying there longer,” says David Haffenreffer, “and then coming out here with a larger family. So they’re not just looking for a three-bedroom, now it’s a four-or-five bedroom.”

When they do arrive, notes Jen Danzi, they like Greenwich’s ready supply of urban amenities. “Younger buyers are looking to live closer to downtown,” she says. “They don’t even want to be in mid-country—they want to walk to downtown. That’s what has made Old Greenwich so popular, too. It’s the closeness of a downtown and the ability to walk to a beach.”

Thus the popularity of “the Golden Triangle”—that area south of the Post Road, flanked by Round Hill and North Street.

Condos saw a slight drop in unit sales last year, but some believe that is owed to inventory. Certainly the rising popularity of high-end condos has the city on notice.

“The new condos are one of the biggest successes we’ve had this past year,” says Tamar Lurie, who backed the high-luxe Modern on Field Point development. “The reason is so obvious. The same people who are selling in backcountry are looking to be closer to town in a space that is flat. We sold half of the twelve units before it was even built. This is also the direction of young people moving into town. ‘Let’s live close to town; let’s not have a big house and big yard to take care of.’”

David Haffenreffer agrees, having watched the success of the new Beacon Hill II townhouses close to Town Hall. “The attractiveness of being in walking distance to Greenwich Avenue is still a constant.”

STILL THE CHOICE
The perceived migration to Florida is worth the attention it’s getting, says Michael Cacase. “But by the same token,” he says, “a number of industries have chosen to locate in lower Fairfield County: Vineyard Vines, Indeed, Frontier Communications, Charter Communications. We have a very educated population, and that remains attractive to employers. We also have a great school system here.”

And it is still a prestigious address. When executives go to NBC’s new studios in Stamford, they may not want to hike back to the city at night. They want Greenwich.

Just as Connecticut’s property taxes are the lowest in the tristate region, Greenwich’s taxes are among the lowest in the state. Its tax mill rate of 11.68 is somewhat better than, say, New Canaan’s (18.24), and noticeably better than Hartford’s (74.29).

So, yes. People do leave this state for tax-free environs to the south. But one thing noted over and over is the number of “bounce backs.” Sometimes it’s for medical reasons, says Michael Cacase. “They relocate to Florida, have health issues and then they return for the caretakers. Their family is up here.”

Equally important in the minds of many who have “bounced back” is the strength of enduring friendships made here. You can’t quantify friendships. But there is something about the Connecticut way of living that makes for good fellowship. Realtors hear this all the time from people desiring a weekend place, a downtown condo or maybe that sprawling compound. They want once more to be among that good community.

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