Owners Of Luxury Greenwich Homes Are Pulling From The Market As Sales Plunge

Tyler Durden's picture

Once upon a time, a nonexistent income tax (Connecticut became the last state in the US to adopt an income tax in the early 1990s) and low property taxes - not to mention the gold coast tableau of beautiful beaches and lush greenery - made Greenwich, CT - just over the state line from Westchester - a haven for hedge fund bazillionaires and other wealthy finance types.

But since the financial crisis, sales of megamansions and other high-end homes in the city have tapered off as taxes have inexorably risen and trends have shifted to favor urban environments. As we reported back in June, there were only five sales of homes for $10 million or more in 2015 and 2016, less than half the historical average.

At the time, there were 38 properties listed for $10 million in and around Greenwich, meaning it would take at least seven years to sell them all.

And of course, the state’s looming fiscal crisis - and the prospect of still more tax hikes on top of the two that lame-duck Democratic Gov. Dannel Malloy has pushed through in recent years - isn’t doing the real estate market any favors.

Amid the market washout, owners of many of the luxury homes mentioned above are finally throwing in the towel, as Bloomberg reports. Listings of luxury homes in the Connecticut town plunged more than 31% from a year earlier.

Luxury-home listings in the Connecticut town plunged 31 percent from a year earlier, according to a report Thursday by appraiser Miller Samuel Inc. and brokerage Douglas Elliman Real Estate. That’s largely because sellers who failed to get their hoped-for price quit trying to find buyers and took their properties off the market to wait for a better day.

 

“Inventory is declining but sales aren’t rising,” Jonathan Miller, president of Miller Samuel, said in an interview. “It’s mostly listings being pulled off the market."

To be sure, part of the drop off in sales of mansions and other large, out-of-the-way homes is due to a shift in preferences. Buyers today are favoring smaller homes closer to the center of town - where they can easily catch a the New Haven line train for the 50 minute ride into Grand Central Terminal.

As one broker put it: “Small is the new big."

...kind of like how 30 is the new 20.

Tastes are changing in Greenwich, home to many Wall Street executives who take the 50-minute train ride to Manhattan. Lavish mansions on several acres have languished, while smaller homes closer to downtown get scooped up. In the third quarter, sales of luxury homes - the top 10 percent of deals by price - fell 13 percent from a year earlier to 21, the firms said. Condo purchases, meanwhile, jumped 35 percent to 58 transactions, the most for a quarter in data going back to 1999.

 

“Small is the new big,” said Scott Durkin, chief operating officer of Douglas Elliman. “Millennial buyers, they want to be in town, they want to be close to services, they don’t need 5,000 to 10,000 square feet -- they’re OK with 1,600 to 2,200.

 

“We really don’t have enough of those listings to sell,” he said. “We need more."

 

The closer that homes are to Greenwich’s commercial district or waterfront, the faster they’re selling. At the current pace of deals, it would take 7.8 months to sell all the listed properties south of Post Road, an area that includes the train station and tony shops of Greenwich Avenue, Miller Samuel and Douglas Elliman said. In the Back Country section - north of the Merritt Parkway, featuring oversized estates set back from winding, two-lane roads - it would take more than three years to clear the listed inventory.

The owners of one property located on Greenwich’s iconic Old Mill Road agreed to three price cuts in the two years the 11,000 square foot property has been on the market. The property, on 5.3 acres that include a 2,329-square-foot guest house, was first listed in May 2015 for $17.35 million, and eventually lowered to $11.45 million. But was eventually pulled off the market in September, before brokers tried a different tactic: relisting it under a different address - 781 Lake Ave. - at the low, low price of $10.95 million.

Heavy discounts helped encourage a pickup in sales earlier this year. And with more sellers pulling homes off the market, brokers are hoping the drop in listings revives a “sense of urgency” that’s been missing from the market for years.

High-end sales had picked up earlier this year, largely because of price cuts, helping to clear some of the backlog. Sellers were still discounting this quarter, offering an average of 6.7 percent off the last listed price. The reductions drew in buyers for some costlier homes, pushing the median sale price in the luxury category up 34 percent to $6.5 million, Miller Samuel and Douglas Elliman said. That’s the upside to having so many fatigued sellers giving up, according to Durkin. It clears the distractions and boosts confidence for those who want to commit to a high-end purchase in town.

 

“When there’s too much to choose from it takes off the intensity of the buying process,” Durkin said. “It doesn’t give you any sense of urgency and it doesn’t get you off the fence."

 

Brokerage Houlihan Lawrence, in its own Greenwich report, said that luxury sales did best at the top, with homes priced at $5 million and above. There were 18 such deals in the quarter, compared with 11 a year earlier. Two were for more than $10 million.

Given the state’s fiscal dysfunction, we’d be surprised if sales saw a meaningful acceleration any time soon.

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LawsofPhysics's picture

This is where most of the Wall Street scum lives, so what?

Jump you fuckers!

shizzledizzle's picture

I always refered to a half million in building materials on a 1 acre lot as a liability. 

Arnold's picture

Location, location, location.

My twelve gauge keeps those blood sucking realtors (and some neighbors too) away from our new construction.

JoeTurner's picture

The rich are trying to sell at the top of the current mega real estate bubble becuse they know when the market crashes again they will be toast...

Buck Johnson's picture

Exactly, they don't want to be holding this albatross around their neck when it implodes.  They know that they will not see prices again like that for decades and want out at the top.

 

 

 

Arnold's picture

Some one here was talking their purchase of 1/12 share of a condo at Myrtle Beach.

Financed, no doubt.

FringeImaginigs's picture

And how does "trying to sell at the top of the bubble" correspond with taking a listing OFF the market. If you want to sell you put in ON the market.  

Omen IV's picture

not just that - the property taxes are going thru the ....roof!

i had a property that was sold in 01' with $24k property taxes and today that same home is $42k -  but the value on zillow and surrounding is only 4% higher in 16 years!

Property encumbered by useless - Education for Idiots or high cost baby sitting - is now the enemy - public education will go away very soon in favor of Tuition paid for by those who have FUN - recreation or procreation is no one elses business -  other than those participating in the FUN!

marathonman's picture

$42k in property taxes???!!!! Per freaking year? You've got to be kidding. No wonder the states are hosed. Ben Bernanke should be flayed on the National Mall for this travesty.

Yog Soggoth's picture

What made Connecticut great has been taken away by the grinch. This would be one of those, 'lets start over, go back to 1970 rules without the river pollution.' Oh, and find out who was responsible for this outrage and jail them.

yogibear's picture

Bullish, buy more stocks!

shizzledizzle's picture

"Trying to sell at the top of the current mega real estate bubble" is what starts the ball rolling.

Arrest Hillary's picture

"Imagine some of the beautiful crawl space in those homes ?" AT&T Anti-Monopoly Victim

wisebastard's picture

thats because they did not have gender neutral bathrooms

A. Boaty's picture

Even there retail has yet to recover. Half a dozen closed shops on Greenwich Ave. probably doesn't help much.

a Smudge by any other name's picture

Wow. Closed shops on Greenwich Ave. It's hard to imagine. I knew the town well 20 years ago.

Delving Eye's picture

I called the Hermes store on Greenwich Avenue and asked if they had an end-of-season sale. "No," came the stiff reply. I believe I also detected an eye-roll from the saleswoman on the other end, along with a discernible European accent.

No one in Greenwich wants to budge from their high horse -- or their price. Too bad. I grew up there (Riverside/Old Greenwich in the '60s), when there was still a Woolworth's on the Avenue. The town has changed dramatically since then, and not for the better.

Buckaroo Banzai's picture

Those Fairfield County towns used to be mainly composed of generic upper-middle-class commuters to NYC, Stamford, or Armonk/White Plains, i.e., corporate managers, executives and lawyers. But there was also plenty of room for middle-class tradesmen and shopkeepers, or even lower-middle-class hourly workers. There was a thin crust of extreme upper class wealth largely confined to mansions on the coastline.

Sometime in the late 90s the bankers started to move into Fairfield County towns en masse. By 2007 the takeover was complete, bankers everywhere, and simply no room for anybody else.

Now the place is just one huge disgusting caricature of itself. Manhattan isn't sending their best, although some of them, I assume, are good people.

Offthebeach's picture

Bridgeport is still very authentic , even with the loss of colorful Father Panik Village. 

markt415's picture

“Fear is the path to the dark side. Fear leads to anger. Anger leads to hate. ... ". -  yoda

Giant Meteor's picture

Well the little bastard had a good point or two now and then   ..

Wondering what was his take on the FED, crap shack inflation, and financialization of every other fooking thing   ..

wmbz's picture

"That’s largely because sellers who failed to get their hoped-for price quit trying to find buyers and took their properties off the market to wait for a better day"

"Hoped-for price"  "Now they wait for a better day" Should read...hope for a better day!

lincolnsteffens's picture

Hopium; noun- 1. a hazy state of of thought process. 2. a state of being in which one or more humans create in their minds  a  pleasant euphoria which prevents critical sober thinking. 3. a mass delusional state in which humans hope someone else will satisfy their desires while feeling warm and semi-oblivious to reality.

ipso_facto's picture

'Hopium; noun- ...'

4. Someone else pays for whatever expenses you have incurred

east of eden's picture

The end of the age of 'financialization' writ large.

The Carbonator's picture

So Sad.  Millionaire liberals just can't catch a break.

 

Good F them.

Cardinal Fang's picture

Greenwich existed because there was no income tax and it was just over the state line from NY.

Then it became THE place because all the big wigs were there to socialize with.

Now that Malloy has chased out the big wigs, Greenwich has no reason to be.

It's that simple.

a Smudge by any other name's picture

Still probably a great place to raise children.

Omen IV's picture

NYC was animal land in the transition 60-70-80's - so CT got the benefit - now all downside with the government debt looming better to have the VC / HF in Florida and keep the money

any_mouse's picture

Boo hoo.

Long rope and trees/lamposts.

idontcare's picture

Less cleanup than machetes and pitchforks, eh?!

roddy6667's picture

The rich are the canaries in the coal mine. Their part of the market crashes first. I was a Realtor in CT in 1988 when the Go Go Eighties started to wind down. The first sign was an increase of Days On Market in the Greenwich area. I was a True Believer and thought it was an aberration. Not so. The market spiraled down to less than 50% of its value in some towns. It took 10 years for it to hit bottom and retrace to its February 1988 levels. I had sold everybody I knew and was related to a home. Now most of them were underwater in their mortgage. They couldn't even move to a new area to take a better job or further their careers. Their home was a millstone around their necks. I went under also. Home ownership is great when the market is going up. 

Honest Sam's picture

The problem was not buying a house. The problem was no foresight in thinking that maybe they should buy a house that they could easily afford, paying 3/4 to 1/2 less for their houses.  Banking a better part of their incomes to handle a job loss of a long duration.

Most people today all around me are buying up new condos, Townhouses, and separate homes at prices they can afford now, but cutting their saving to the bone or not having any at all just to have a 'luxury' unit believing that some other sucker will come along a year or two from now, to pay them even more than they did. 

They will deserve what they get when the economy heads south or their employers are bought out.  This profligacy simultaneously drives up the price of these units, which cost about $150,000 to build, drives the prices of these things into the $400,000- $600,000 range.

Ridiculous. No value for the money for these stick construction tower blocks. 

If these people were more judicious in their spending they wouldn't cause another bubble to build. 

 

idontcare's picture

Almost 20 years ago, I downsized to a "normal" sized home (2000+/- sq ft) on a large lot thinking that this would be it.  Now I daydream about "tiny homes" (or super decorated RV's) on a regular basis (the idea of "small" & "mobility" has great appeal).  This all started decades ago with 6200 sq ft on H2O - it would be nice to end things in 200-300 sq ft in the mountains somewhere.

Honest Sam's picture

Yer nuts.

The prospect of living in 300 sq ft is like camping.  Only gypsies, boy scouts, and Jeremiah Johnsons would find that preferable to 2000 sq ft., especially if there is more than one person in the househild. 

Nearly every demographer knows that crowding and narrow small areas breed more crime than dispersed populations.

You are a maverick, to live in an RV.  Good lord.

And truly well off could care less about their homes. If they don't have at least 3 around the world, they are not well off at all, but in debt up to their eyeballs.  The wealthy are not the same as the highly compensated. 

a Smudge by any other name's picture

Like camping he says. Like that's a negative...

Tinyhousing, boondocking, vagabonding, these get you out of the house and into the world. You can be in just about any kind of environment you want to be in.

HRH Feant2's picture

Hey, I grew up camping! My father preferred flying or road trips. My stepfather liked camping. Bad weather? Too bad! We went anyway. Not into sleeping on the ground these days (I did go camping in February a few years ago. Tent camping. That was my last time. Not gonna do that again).

Boondocking and motoring around in a small Class C (23 foot, no name, used) has a lot of appeal for me. I am accepting BTC donations. Check my bio for my BTC address. Cheers and bon voyage!

a Smudge by any other name's picture

Donations?

OOOOOOOOOOOOOOOPS!

wrong place amigo.

DaveA's picture

"Nearly every demographer knows that crowding and narrow small areas breed more crime than dispersed populations."

100 years ago, when most ghettos in America were called "Chinatown", demographers thought their high population density suppressed crime. Ghettos didn't breed crime when Jews lived in them either.

In other demographic news, living on an Indian reservation makes men drink too much and beat their wives!

ipso_facto's picture

'it would be nice to end things in 200-300 sq ft...'

Most like things will end with a 8'x3'x3'.

marathonman's picture

Well stated my man. Right on.

HRH Feant2's picture

The idea of an RV appeals to me, as well. I thought about a smaller one that was more expensive too. Imagine being in a small town and you break down and pull up in a Mercedes all decked out. You may as well tattoo dollar signs to your forehead and sew a yellow "kick me hard" sign to your butt.

There are good people in rural areas but the green eyed monster lurks in the hearts of many. Hard to take advantage of people you know. A stranger? Not so much.

shimmy's picture

I just don't get the whole monster mansion thing other than it being a "look at me" possession. Sure, when I was a teenager and in my early 20s it was appealing but now in my late 30s I have zero interest in owning some monster house and find them silly, especially when most don't have a lot of the space being used for unique things but rather just huge rooms and hallways where most of the space is empty and also a zillion bathrooms that don't even get used. Just too much in running costs, upkeep and having to go buy more furniture and other shit to fill the rooms that I wouldn't use. 

The only way I'd ever have a huge house based on square footage is if I had a regular say 2000-2500 sq ft 3-4 bedroom, 3-4 bathroom home and had attachments to it like a nice home theater, bowling alley, indoor basketball court/gym, indoor woodworking shop, and indoor pool. Stuff like that would make the square footage skyrocket yet the core house would be modest unlike most of these mansions where you have bathrooms and closets that are the size of master bedrooms in most houses. Such a waste.

Berspankme's picture

I was making over $500k a year in my working days. Never owned a home bigger than 1800 sq ft. Wife and I never needed. Always drove toyota too, low cost of ownership and dependable. Have a brother worth $20 m and just downsized to a chrysler 200 from a 300. Said the 300 used too much gas. No need to impress, happy with what I have.

As the great Joe Walsh says, All those wishing well fools with their fortunes, someone should send them a rose.

armageddon addahere's picture

There was a floor trader in Chicago in the 80s who built himself a 10,000 square foot showplace. He was proudly showing it off to a friend when the friend said "you have 3000 square feet of house and 7000 square feet of ego". He was right.

Pernicious Gold Phallusy's picture

The beauty is your wife can be fucking the tennis pro at one end of the house and you won't even know they're there.

Able Ape's picture

Is the doormat included in the price?  If so, I'm interested!...

Internet-is-Beast's picture

Greenwich has the most expensive asphalt shingle roofs and hollowcore interior doors in the country, but the prestige doesn't stop there....