Greenwich, an affluent town on Connecticut's coast about an hour from New York City, may have experienced the 'last hurrah' of a red hot housing market since city dwellers fled to the town after the coronavirus outbreak, according to Bloomberg.
Miller Samuel Inc. and brokerage Douglas Elliman Real Estate's second quarter report shows single-family home purchases topped a median of $2.5 million and exceeded the previous record from the first quarterly by 2%. Nearly half (45%) of sales in one of America's wealthiest zip codes were locked in a fierce bidding war. Buyers paid on average 7.54% over the list for homes in the last quarter.
The report provides evidence that a slowdown for Greenwich real estate is underway, and a turning point could be imminent.
"Greenwich is returning to Earth," said Jonathan Miller, president of Miller Samuel. "The intensity is not what it was."
Pruner, a broker with Compass Inc., wrote in a recent blog post about Greenwich, "it's not the market that we had in March ... there is a fair amount of uncertainty, and most buyers need a reason to move when such uncertainty is present. Smart buyers see this as an opportunity."
Only 193 single-family homes closed last quarter, down a whopping 40% a year earlier, signifying the panic buying of last year is fizzling out. The number of homes going under contract also declined during the quarter to 63 in June, about half of the June 2021 level.
However, there's good news for Greenwich homeowners: the lack of inventory that could keep a bid under prices. There were 214 single-family homes listed in the second quarter, down 70% from the 724 available in the same quarter in 2019.
Still, the Greenwich housing market appears to be stalling as the overall US housing market has cooled amid a Federal Reserve aggressively hiking interest rates to quell inflation in a downturn (some say imminent recession).
Soaring mortgage rates over the year's first half have unleashed a housing affordability crisis. Market competition is noticeably lower, and homebuyers have more room to negotiate and/or back out of deals. Some buyers are sidelined as they wait for a housing correction.
Since wealthy individuals have the most significant exposure to financial assets, the recent turmoil in stocks, bonds, and crypto markets adds even more uncertainty to wealthy homebuyers.