Good article in Greenwich Post

My old paper, Greenwich Post, has a good article today written by Sara Poirier on what’s happening in our local real estate market. Once you get past the silly and misleading headline (Market Resurgent!) you’ll see that Poirier interviewed two knowledgeable people and got intelligent quotes from both of them. With the exception of some “I’m a professional realtor so I have to sound optimistic here” lines, the two agents present a cautious view of what may happen this year. One quibble is Poirier’s invention of the word “influxing” – or at least, I don’t think that’s a word.

The Post hasn’t figured out permalinks yet so there’s no way to link to the article. So here it is:

Thursday, January 08, 2009
Last year, 2008, was an emotional roller coaster for Americans, many of whom rang in the new year with lighter wallets and a grim outlook on 2009’s economic future.Real estate experts say even though it’s “just like somebody slammed the door” on the Greenwich market this fall when the economy took a nosedive, the new year will usher in a new wave of interest and consumer confidence sure to spark a fire in town.“I’m really a firm believer that people can only wait so long before they buy a house,” said Nancy Healy, partner at Shore and Country Properties in Riverside and president of the Greenwich Multiple Listing Service (GMLS).Ms. Healy said there is “pent-up demand” for housing in Greenwich and “people want to get on with their lives.”

According to John W.M. Cooke, a licensed broker with Prudential Connecticut Realty, single-family home sales in Greenwich went from 44 in January 2008 to 11 in November, taking the biggest monthly hit in September, when 26 houses were sold compared to 56 in August. That happened while inventory seesawed from 428 homes on the market in January to 623 in June and then 588 as of Dec. 1, according to GMLS statistics.

By the end of the year, said Eric Bjork, vice president of Prudential Connecticut Realty in Greenwich and Old Greenwich, inventory in town was up 26% from 2007, with 536 single-family homes on the market Dec. 31 compared to 426 the previous year. That means the market’s good for buyers and more competitive for sellers, he added.

Mr. Bjork’s advice in today’s market: If you see a home you absolutely love, buy it.

Mr. Bjork told the Post he’s seeing more first-time homebuyers walk through his firm’s doors. A lower median single-family home price — at about $1.85 million (down by about 8% to 12%), and a 5.75% jumbo mortgage rate for 20% down — is allowing those buyers to put less down than when the median price was $2.1 million, and keep monthly payments lower than they would have been had the house been more money.

Ms. Healy said with President Barack Obama taking the lead later this month, she hopes the country will move in “a more positive way” and have the confidence and security she said has not been had in a while.

“People are ready,” she said about potential buyers. “There are some fabulous buys out there.”

She added, “You can’t live in the stock market. You can live in what I consider pretty good value right now.”

Mr. Bjork and Ms. Healy agreed that when it comes to pricing, it’s hard to tell how homes in Greenwich will go.

“Greenwich is a blue-chip town,” Ms. Healy said. “It has so much to offer. It’s an expensive town but it’s always been.”

She added that the market is returning to a “more normal” state, and while houses are now staying a bit longer on the market before they sell, it’s no time to panic.

“People need to feel secure in their purchase and it takes time,” she said.

For sellers, “the news looks bleak, but it’s not,” Ms. Healy said, adding that when buyers get their confidence back, more houses will be sold.

“Nobody can time the bottom,” Mr. Bjork said, “and if we’re not there we’re really close.”

He added, “One of the benefits of Greenwich is it’s very stable. People can afford not to sell their homes. They take them off the market and wait.”

He said doing this may make the market freeze, but it means buyers are likely to have their investment be safe when they buy it.

“They look at it less as a financial play but as a quality of life opportunity,” he added.

With the government influxing money to stimulate the economy, Mr. Bjork said inflation cannot be far behind, making the case for owning property stronger.

“You can’t put a trillion dollars into the economy and not have inflation,” he said, “and at times of inflation, you want to own hard assets because they appreciate.”


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11 responses to “Good article in Greenwich Post

  1. kidding really?

    Articles like this typically occur right before another leg down. “You can’t live in the stock market”. This is totally comical since a vast majority of people invest in the stock market to fund home purchases as well the majority of Greenwich is financial sector based. So who cares about the stock market?!

    Greenwich real estate has a lot more downside. I recall a real estate broker telling me… “never in my career (since 2001) has Greenwich real estate ever gone down”. Supply and demand everyone… too much supply with more coming this Spring and too little demand at the current prices. Throw in funding issues, lack of cash bonuses this year (and for some last year too), rising unemployment – Bear, AIG, LEH, MER/BofA and a lot of hedge funds closing. The brokers you quote must be living on Planet Hope. House prices in Greenwich will drop in the 3-10 million range by 20% this year… or more. Stocks have given back 5-10 years on average – These real estate brokers should not be surprised when houses give back equal amounts.

    • christopherfountain

      I don’t disagree and if you read between the lines, I don’t think the brokers quoted do, either. Then again, I’m considered a poor sport by many agents because I think we’re still falling off the cliff and aren’t even close to the bottom, so …

  2. kidding really?

    I read this blog because you’re the only one that says what everyone knows. It was hard for me to read between the lines in that article and see anything other than the typical Pollyanna real estate broker. Rationalizing oversupply with this gem:

    “…while houses are now staying a bit longer on the market before they sell, it’s no time to panic.

    “People need to feel secure in their purchase and it takes time,” she said.

    For sellers, “the news looks bleak, but it’s not,” Ms. Healy said, adding that when buyers get their confidence back, more houses will be sold.”

    Nancy, people have watched the stock market get sliced in half (S&P 500) and entire financial firms go under or merge resulting in massive layoffs. How are people going to exactly get that confidence back without a job and declining assets? The world has changed and so will real estate prices. My suggestion is to lower prices to meet that “pent up demand”.

    • christopherfountain

      I’ll have to go back and reread the article – it’s possible I was giving them too much credit and supplying material between the lines that wasn’t there.

  3. Anonymous

    I think sellers (brokers too) need to wake up. The bubble has burst and homeowners are no longer willing to sleep in half their net worth (especially since the other half just went up in smoke in the S&P 500 ’08). Sellers need to lower their expectations accordingly. The days of $12mm McMansion spec houses on 2 acres with multiple offers above asking are over. Luxury housing in Greenwich will go the way of the luxury art market – dead south! As homeowners who bought at the top of the market begin to lose their shirts and their stories spread, many prospective will become even more reluctant to catch a falling knife. IMHO, multiple million dollar price reductions will become the norm (e.g., 11 Quail Rd).

    With the collapse of Wall Street, where will the demand come from? Wall Street is dead. Half of the bulge bracket investment banks are gone as are inflated Wall Street compensation packages (e.g.,the winners, the commercial banks, don’t pay squat). Seats all over the street are being repriced significantly lower – “Take it or leave it. Don’t like it? There’s the door!”. Hedgies imploded left and right in 2008; down 30-40% most would rather close shop then work for nothing over the next two to three years while the market trades sideways (i.e., high water marks are unattainable in foreseeable future).

    I think that the economy will slide into a deep recession, if not depression, that will last for at least two years. At the end of this cycle, home prices in Greenwich will eventually retreat to 2002 levels or down 3/8 from high 2006 comps. If you just blew a fortune in ’07-’08, the last thing you’re shopping for is a bigger and more expensive home; rather you’ll be looking to invest your capital in ways to rebuild your war chest. The era of “Show” is over….at least momentarily…..

  4. Retired IB'er

    “Ms. Healy said there is “pent-up demand” for housing in Greenwich and “people want to get on with their lives.””

    Seems to me that comment cuts both ways. To wit, sellers need to get on with their lives as well: meaning there is equal, if not more, pent-up selling demand, which will drive up supply and down prices.

    • christopherfountain

      Absolutely right. I heard exactly that about the owner of 317 Stanwich Road – she’d tried to get a nice high pre-crash price, was tired of the process, didn’t want to rent it out and continue an attachment she no longer needed or wanted so she instructed her agent to cut the price to what would sell it. Jury’s still out on that but at its new price of $2.2 million I know I’ve recommended that two of my clients look at it, and I imagine similar calls are being made all around town. Smart seller.

  5. Retired IB'er

    ““You can’t put a trillion dollars into the economy and not have inflation,” he said, “and at times of inflation, you want to own hard assets because they appreciate.””

    This may or may not be true, and the question still remains where the inflation manifests itself. For it to hold true for housing, the inflation has to manifest itself in wage inflation.

    Today, labor is far more worldwide than in the ’70’s, for example, the last time the US experienced meaningful wage inflation. Given the changed labor landscape (and much of our goods imported from China), it is not clear to me that the FED can generate wage inflation (ie higher incomes), which is the only way inflation can work its way into the housing stock.

  6. Cos Cobber

    I think the era of show is over. Whether you make 100k, 1000k or 10,000k a year, its no longer fashionable to live beyond you respective means.

  7. Flyover Girl

    We in Michigan were at the front of the real estate bubble, and you in Greenwich are at the tail end. Certainly, Greenwich is as blue chip as it gets, but so is La Jolla, California.

    I urge my fellow readers to check out another fabulous real estate blog of a more quantitative stripe. Please take a look at the fabulous graphs Rich Toscano has put together on San Diego County real estate over the past several years.

    Even the most high-end blue chip real estate can lose forty or fifty percent of its value. And Greenwich hasn’t seen *anything* yet! I’m smelling less than $250-$300/sq ft in the weaker spots once you hit bottom, which is perhaps two years from now?

  8. kidding really?

    I wonder if the brokers who were quoted in the article would care to speak up here and defend thoughts? Perhaps fill in between the lines that a lot of us missed? It would certainly make me respect and perhaps understand where they are coming from.