State of Real Estate

Up until last December, the Greenwich real estate market didn’t have much in the way of bragging rights. Total sales had dropped slightly (575 versus 601 in 2015). Prices were trending lower. But then something happened. Around the holidays, telephones started ringing. Customers had questions.

“We had our best December in years,” says Robert Sisca, whose Greenwich law office was crammed with transactions. “There was a huge uptick. We’re hiring, we’re going around the clock. There’s a much more optimistic view in the real estate market.” Sisca is pretty sure that the promise of relaxed regulations ahead gave a boost to people in our market.

Perhaps it was just the pent-up demand, suggets Tamar Lurie of Coldwell Banker. “Because 2016 was so quiet. And it was so quiet because the world was in turmoil. Things were happening that made people stop and think.”

One of the things buyers might be thinking of now is the possibility of interest rates rising again. Rates have been so low for so long that many have forgotten the fact that they can in fact rise significantly. From its present position, hovering around 4 percent, rates might well rise, predicts Forbes, to near 6 percent by the end of 2018. That alone should give buyers a sense of urgency.

All this activity, says Halstead’s Rob Johnson, “forced a few people in the $2 million range who need to finance on an 80-20 basis to do something rather than sit and watch the market. In 2016, people were unsure. I think there’s a bit more confidence now. No matter who’s president, people know who they’re dealing with.”

Things do happen. In conversations with the town’s real estate authorities, it became evident that many changes have surfaced in just the past two years.


A TALE OF TWO MARKETS

The $2 million range referenced by Johnson is actually where a lot of the action is. “We continue to have this tale of the two markets,” says David Haffenreffer of Houlihan Lawrence. “Two-and-a-half million and down is a fairly vibrant market with multiple-bid situations and short days on the market. It was kind of hard to buy a house in the market in 2016. But as you began to drift to higher prices, the slower it got.”

It’s no secret that Greenwich’s famed backcountry palazzos have been moving slowly. But for sellers, the closer you get to town, the better cards you’re holding. “We all want to be close to town,” says Vicki D’Agostino of Raveis. “That’s what everybody wants, to be close to the train, close to the restaurants. There has been a total shift and now I’m seeing tons of building close to town.”

Francine Ehrlich of Sotheby’s International Realty agrees: “More people are wanting condos. There had been a lot of talk about it but now it’s happening. People want one-level, simpler living such as you see at the Edgewood, Waterford or the Cotswolds.”

Indeed, the new action can be seen in the streets branching off Milbank, where the new crop of townhomes demonstrate the new ideal—spacious and luxurious possibilities, no yard to maintain, and a short stroll to meet-up places on Greenwich Avenue.

The recent stepped-up pace of sales in the million-dollar range has people wondering if the buyers are really just snapping up plots of land. “The competition is fierce for teardowns,” says Berkshire Hathaway’s Eric Bjork, who has bid on a number of properties himself only to be outbid by that end user with a rebuilder on call.


WHAT ABOUT THE HIGH END?

People who had a beautiful backcountry estate might well have wondered: Where did the customers go? It has been scary enough to get everyone calling up the soothsayers and reaching for sociology texts. Was it part of the broad generational shift wherein today’s successful strivers are just in no mood to care for a massive lawn and garden? Or host big parties?

Whatever the domestic reasons, it’s clear that our high-end market was affected by changes in the international market. “From the start of 2016, we had 6 percent of our buyers come from international addresses,” says David Haffenreffer. “And midyear we ran the numbers again and found that it shrank to 2 percent. That kind of echoes what I was hearing from New York City agents who thought that Chinese and Russian money had all but washed out of town.”

China actually began enforcing rules in the spring of 2016 that made it more difficult for its citizens to move vast sums out of the country. The troubled Russian economy faces its own plate of problems.

In years past, the purchases by those Russians and Chinese did have the effect of driving up prices, notes Tamar Lurie. “Those that had money were buying in droves. But that has stopped. Where we’re seeing customers coming from now is Turkey, the Emirates and Europe in general.”

Greenwich, it should be noted, is a place where outsiders arrive: Only 54 percent of home buyers are local. Not but a generation ago, that number was 65 percent. This compares to someplace like Darien, where almost all sales are between Darien customers.

Meanwhile, there are some extraordinary deals to be found among the larger estates. If it’s near the water, all the better. Sales on very high end remain becalmed. In 2014 there were fifteen houses sold in the $10 million-plus strata. This dropped to five sales in 2015 and five in 2016. Four of those five were overlooking the Sound. “The luxury dollars continue to flow to the water,” notes Haffenreffer. Tamar Lurie sold an empty acre of land on Field Point Circle for $11 million. She also helped the sale of a four-acre waterfront at 107 Indian Head Road for $16.5 million. A big sale, to be sure, but the sale came at the end of a two-year process, which saw the price gradually drop from $28 million.

But some people are very confident about the future. “There is a lot in the pipeline,” says Francine Ehrlich, “and it’s new construction by the top, well-regarded builders in town. There will be a number in the $10 million-and-above range. There will be three on Lake Avenue that will be state of the art.”


WHAT PRICE GLORY

Realtors are unanimous in one of the great truths: Correct pricing has never been more important. And that leads us up to an even higher great truth: Buyers work in the present while home sellers live in the past.

When someone puts their house up for sale, they know what they paid for it ten years ago and, damn it, they want to see some profits. Alas, that is not always possible, what with prices still lingering below the boom-year prices of a decade ago. As one agent notes: “The whole appreciation thing can’t be counted on anymore.”

Last year, Eric Bjork moved a fine, 5,000-square-footer on North Street that needed only a little work for $3 million. But it was a sobering sale. “We sold the house to that individual in 2008 for $5.2 million. I don’t care how much you have, a $2 million hit stings. But we’ve seen that across the board.”

Sellers are advised to keep these numbers in mind. “You don’t get a second chance in pricing it right,” says David Haffenreffer. “And the market is very finicky about mispriced homes. Part of strategic pricing is to catch the surprise when it first comes on the market. If you come on at the wrong number, then the first thirty days are a lost opportunity.”

With today’s buyers, a lengthy time on the market seems to give a house an unfortunate aroma of desperation. Even the old ploy of putting it on the market with an inflated, “let’s take a chance” number, and then taking it off the market later, will be found out by today’s web-researching customers. “There’s no hiding the days it was off the market,” Haffenreffer says. “The counter is always on.”


TODAY’S FUSSIER BUYER

Nothing puts a seller’s teeth on edge worse than the potential buyer who confidently demands everything short of having the sink plated in gold. But even in cases not so extreme, today’s buyers are just generally a fussy crowd. Sellers have to know about this before opening their doors. “They all want turnkey,” says Vicki D’Agostino. “They want updated, fresh and clean.”

“They’re more particular about things being in good working order,” says Barbara Zaccagnini of Coldwell Banker. “Are the C.O.s in place? Maybe the towns are getting tougher, so the customers are expecting all that work to be done. A couple of years ago, if there was radon, they’d work it out, perhaps get a little money. It wasn’t that big a deal. But now the mortgage companies are a lot stricter about all that.”

While home-renovation shows on HGTV might be the rage, do not expect today’s shopper to walk into a Greenwich house armed with tape measures. “Spruce it up,” says Haffenreffer. “Even the easy things a junior-varsity do-it-your-selfer can do are things buyers today don’t want to do.”

That sought-after buyer—the urban professional who prepares to leave Manhattan shortly after examining the costs of private kindergarten in the city—is invariably wired for research. They will have spent months canvassing Greenwich properties on the internet.

Thus it’s important not just to stage one’s house, but also to prepare a good video. “It could cost $575,” says D’Agostino, “it could be $3,000. But the videos get more and more response.”

Staging, which could cost as much as $20,000, is still a critical element, says Bjork. Even with a new house. “A couple of years ago, builders might have said, ‘Why do I need to stage a house? It’s new.’ But now with a more open floor plan, buyers have less of a sense on how to live in the house. They need a little guidance.

“Even virtual staging is getting popular. They’ll take a photo of an existing room and digitally insert furniture and artwork. Also, for the house that hasn’t been touched in twenty years and still has the green shag carpeting, they can do a refresh digitally and show you what it could look like.”

A home’s condition, Bjork believes, might now be more important than its location. “When I started my career, if it was a good location, people would overlook a lot of things. Now that’s not the case. You can have a house in a fabulous location, but if it’s not move-in ready, it’s going to take a lot longer.”

The verdict? “Take down Aunt Milly’s drapes!” he says with a laugh. “The big word is delete, delete, delete. Because people remember stuff when they walk out of a place.” In brief, sellers should make sure their houses look like… well, you know, those you see in this magazine.


DESIGN FOR LOVING

Now that we’ve portrayed the average buyer as cold-blooded fussbudgets, it should be remembered that customers do fall in love with houses, and sometimes with the swiftness of teenagers. Barbara Zaccagnini is just one realtor who has seen it happen. “Sometimes the buyers know when they’re still outside, before they even walk inside. That’s why you really want to show your house in the best light from the street.”

Designing an awesome approach for a house depends on more than good landscaping. Architect Doug Vanderhorn thinks the threshold itself should be designed for love. “I encourage clients to spend a little extra on the front door and the entry,” he says. “You want to wow people at the front of the house.”

But even if the façade of one of his more splendid estates is an imposing French Norman style, the rear of today’s houses are now to a different purpose. Where you’d find a symmetrical garden a century ago, today it’s all about family fun. “Today’s family wants to be connected to the landscape in an outdoor-lifestyle direction. So people have outdoor fire pits and outdoor kitchens,” says Vanderhorn. “The backs of houses now are far more open than older ones. There is more glass. They’re more whimsical.”


HOW SMART IS YOUR HOUSE?

In matters of interior design, we still haven’t shaken loose from what is referred to as the Transitional Style that’s been perfected over the past few years. “Traditional on the outside,” notes Francine Ehrlich, “but with a cleaner, contemporized interior.” While the big, wide-open interior had been popular for years, “now I’m seeing some interest in a return to the old-fashioned segmented interior.” Today’s buyer is totally wired, and they expect their houses to be the same. “If your house is a ‘smart’ house,” says D’Agostino, “that definitely makes a difference.”

“The homes now are extremely high-tech,” adds Vanderhorn. “The people who can afford these homes aren’t feeding coal-fired boilers. They want to turn their lights on from their iPads. So most of these houses have smart-house systems.

“The biggest trend is energy. People really want to do the right thing and they’re willing to spend a little extra to be more green. They know they’re building a large home and want to make sure they’re not using a tremendous amount of energy. All the permanent lighting is LED, which uses 70 percent less electricity. And spray-foam insulation. And ERVs—energy recovery ventilators. I don’t want to use the word ‘guilt,’ but people ask, ‘How can I be green while building my beautiful new home?’” Solar panels on the roof are, for appearance’s sake, presently not in demand, but as Elon Musk and others continue to develop panels that resemble standard roof shingles, that might change. And as we all know, in today’s world, change is the one thing we can count on.

 

 

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