Build in Greenwich? If only

Working to alleviate suffering in Greenwich, Ct

Working to alleviate suffering in Greenwich, Ct

There is just about a complete dearth of new construction in mid country priced in the $3-$3.5 range and that’s too bad, because demand for an acre or two and a new house south of the Merritt is huge and unslaked. You’d think that if builders can pay $1.4 for lots on Hearthstone and Bramble in Riverside and build new homes there that sell for $3.4, that same thing could be accomplished in mid-country, but it’s not happening – why not?

Basically, because there’s little good land available at a price that would make such a house profitable to build and sell. I ran the inventory right now from $975-$2,500,000 and of 26 properties, there were six that might have potential, by which I mean an existing home that hasn’t been expensively redone by the owners, who will expect someone to pay for those improvements, a good lot and a good address. And even those six aren’t sure-fire home runs, to mix metaphors.

An end user who didn’t need to realize a profit might go up to $2, even $2.5 million for land and could probably find something but for now, there’s not much out there. Which is too bad, because if there’s an average mid-country buyer it’s a young couple, two kids and planning a third, looking for 1-2 acres, newish construction, south of Merritt, Greenwich address, Central Middle School district and a yard with at least room for a pool, all for $3 million. They aren’t going to find much of that – I believe I just sold the last one, but $3.5 can find them “newish”, not new. A builder who can provide new at $3.5 will sell before he’s even done.

If I were a spec builder I suppose I’d be willing to come to the market with a product as described above at $4.5 million, tops, but I’d sleep better at night if I could get out with a profit at $3.5 – there are so many more buyers in that lower price range. Above $4.5 and you’ll want a patient lender with pockets deep enough to hold on for a while.

So for now, mid country buyers should focus on homes that can swallow $500,000 in improvements and yield an almost-new house. And builders should be knocking on doors of older homes, wearing a persuasive smile and toting a checkbook. There’s business to be had.

Or that’s how I see it, anyway.

22 Comments

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22 responses to “Build in Greenwich? If only

  1. Publius

    Mr. Fountain,

    At the rate we are going we should be there in about 1 year. It is difficult to be patient, but if you are thinking about spending $3mm+ and actually inetrested in raising a family, that $4mm+ home will be yours for a 3 handle late next year. You may want to follow Roy Ochigrosso tweets as a current market indicator

    • I agree, Publius. What’s happening now is that the weakest of the herd are falling out and predators are gobbling them up. Next year, watch for the feeding frenzy to begin.

  2. Anonymous

    Chris – I think you’ve nailed it. Except, the days of the young couple with 2 kids looking in the $3M range are gone. There is not the same liquidity among the young couples emanating out of the financial services sector, as there was a few years back.

  3. Anonymous

    i could give a hoot about helping builders make a living selling spec houses at that price point. i want a house to live in and own for many years. let the prices crash for all i care!

  4. Anonymous

    Given that recent new construction on Cornelia and Rockwood sold for $6.4MM and $6MM respectively it would be hard to imagine a builder settling at $3.5MM, espcially if 2 acre land parcels are more like $1.8MM to $2.5MM.

  5. InfoDiva

    I think there are a couple of teardowns on 1+ acre lots for sale in the Calhoun Association under $1.4M.

    • Guest

      Calhoun has the best values for now, along with Cos Cob. In Calhoun, you get Glenville, WJS district for the faint of heart. Cos Cob North Street School is probably the better value but less convenient than Calhoun.

      Cos Cob North Street School has big lots for half of price central Greenwich. This is not a rational market.

    • are you sure?

      A maze. Terrible roads in winter. Very confusing bunch of roads. They do not believe in chain saws. Even scraggle trees are protected.

      • Guest

        Go right off Stanwich, and you have roads no worse than in Central Greenwich – The few streets at the top of Stanwich below the Merrit before you get to Cognewaugh are discounted relative to Central Greenwich and do not have the access problems of Cos Cob and have flat cleared lots..

        The Cottontail/ Pin Oak Lane subdivision is heavily discounted but has the Cos Cob zip code (the rest are Greenwich zip codes). This subdivision has some tiny homes that are relics of the 1950s, but the land looks the same as the rest of Central Greenwich. With a price tag of under a million for the lot, it should be possible to build 4500 square feet for an end user at a price well under $2 million.

        Perkins has had some really good buys in the mid one millions. It is a beautiful street but is accessible through Dingletown, which is a little tough. Perkins itself is easily to navigate.

        I would think that with a million dollar lot and a prefab home, one could build a really beautiful place using Home Depot finishes and make a nice profit. Maybe you could build and buy for $1.8 million and then sell for more when the market gets a little better in a year. You don’t need the Woodmode kitchen, Waterworks bath, etc. to make a profit from a million dollar lot.

        The problem is finding someone in those little or smaller houses on discounted lots who are willing to sell right now or in the spring.. Some of these heavily discounted homes sat on the market for months a few months ago with no takers. I wonder if the market has changed.

    • Guest

      Also a few good prices now just a little north of the Merritt. As long as one avoids the highway noise, these are probably quite good areas for new homes or rebuilds. You get the beauty of 4 acres, and some of these are where the Merritt dips south, so they are not all that far north. We took a walk on Hunting Ridge and Sky Ridge and it is very beautiful, not so far from town and has lots of tear downs or build ups that are waiting for families. Central Greenwich is overpriced for what you get, so these areas, which are attractively priced, are going to do better in the recovery.

      I have lived in this town for years, and can smell the bargains when I see them.

  6. Riverside Chick

    What about the 2 new houses on Marks that have been just sitting there ? Any activity there? A builder just knocked down the house next door to them last week. They couldn’t be too happy unless that new construction is going for 4 m. Any thoughts?

  7. Guest

    Chris, you did not like 12 Cottontail at under a million asking, North Street School and flat acre south of the Merritt right off Stanwich in an expensive looking area. If one were to go up to the 4500 square foot allowance, you can still have a good new house, without getting any variance. Also has potential to build up. The house is a tear down or maybe build up with a good architect, but why not a value?

    • I thought Cottontail had gone to contract? In any event, it didn’t kick up in the brief search I did or I missed it. Nice property and indeed a worthwhile building site.

  8. Guest

    There is actually a map available of what areas went down the most in the 2010 Greenwich revaluation relative to 2005. Almost all of Cos Cob went down substantially. Central Greenwich stayed the same more or less.

    When we bought in Central Greenwich and looked at Cos Cob years ago, there was not a price differential that really struck us. Now it is almost double for a lot in Central Greenwich. My take as one who lives in Central Greenwich – NOT WORTH IT – unless you want a Taj Mahal. Better off at a lower price point in the same school district and travel a few minutes more or to the Cos Cob rather than Greenwich train station. I think you can get a really nice house in the mid one’s in the Stanwich/Cos Cob area.

    That being said, I see a few recent bargains in Central Greenwich in the mid one million dollar range. These would have been swallowed in a second in a good market. They have decent houses and are also undervalued.

    There is still opportunity in this market. I am surprised with a high stock market and low interest rates that there is not more activity. Manhattan is booming so it shows people have money to spend. It is like the lemming theory, and the people who travel in advance of the lemmings make the money.

    I am also surprised that people are sinking so much money into such big houses. A 3,000 or 4,000 square foot that is new or almost new is plenty big for a big family.

  9. 3G

    CF, don’t forget when comparing mid-country to Riverside you have the septic to contend with in mid-country. Not only do you need an area to put it but you need reserve space for “just in case”. Once you pinpoint where all the area septic takes up there goes the pool and possible tennis court out the window. Cost of Engineering and construction for a septic can be far more than trenching to town sewer in Riverside.

  10. Guest

    Not everything has septic. A house on the market on Birch has sewer but is asking almost 2. To the right are two new houses. To the left is a partial redo and then two complete redos. Wonder if this will be a teardown, rebuild or leave as is.

    You would think the broker would advertise SEWER SEWER SEWER to attract builders.

    • Anonymous

      Did u notice the tombstones in the backyard here for $2MM?

      • Perhaps it’s the hedge funders’ equivalent of the slave who rode beside Roman generals during their Triumph, whispering, “all will pass”.

      • Guest

        They should have planted tall evergreens there a long time ago to screen off the cemetery. Poor choice not to.

        Would be easier sale if you could not see the cemetery.

    • Septic Peptic ulcers

      It is wet there so septic is not allowed

      • Guest

        Presumably not too wet for tall evergreen trees. If it is, I would make a deal with the cemetery to put them on the hill before you get to the cleared portion of the cemetery and pay for the trees and watering.