A reader has sent me a very thoughtful letter about Greenwich real estate prices and our expectations, which I will post below. Before I do, I thought it would be useful to post some statistics compiled by Shore & Country Real Estate, culled from, a private service that mines our MLS data. These don’t reflect non MLS sales but they do capture about 95% of the market.


I’m hopeful that clicking on the image will enlarge it. But here’s the scoop:

1999: average price, $1,330,518; median: $861,125

2003: average price, $1,757,020; median: $1,175,000

2005: average price, $2,470,118; median: $1,750,000

2007: average price, $2,973,201; median: $2,100,000

First 9 months of 2008: average price $2,824,166 (-4%), median: $1,962,800 (-7%). The last quarter will show a larger decline, but so few sales that it may not be useful.

So where are we headed: 2005, 2003, 1999? Jury’s still out, I think. Now to my reader’s letter:



I am of the opinion (and have been for some time) that the news coverage of economic events will start to improve on Wednesday of next week. Yes, I believe that the media that helped elect Mr. Obama has a huge vested interest in his performance, particularly in first 100 days. Thus, I think we will begin to see some modestly more positive coverage and spin on statistics than we have seen over the past eight years. The item linked below is just one example of the media piling on the negativity. Perception sometimes become reality but if you can move the perception a bit more toward the positive, the reality may follow on as well.


As much as you may not want to see it, I think your blog runs the risk of doing similar things to Greenwich RE. No, I am not saying you are a god nor that you are making potential homeowners list their homes at unrealistic prices. However, in a market that has been hurt economically and is experiencing a very serious “buyers’ strike”, focusing on the misguided home sellers only makes potential buyers think that they would be chumps to come into the market. Or, if they are ready to buy, that they come to any home thinking that any price that is not down 40%+ from the original asking price is mispriced. However, when there are no transactions, there is no price discovery, so sellers can only work with anecdotal evidence provided by presumed experts, etc. In case you don’t realize, you are one of those experts (real) and your commenters, irrespective of knowledge or seriousness, gain a sense of legitimacy by commenting on your site.


As in other markets, feedback loops are created and, with no information or transactions to the contrary, a consensus can build and the loop can begin to feed upon itself. It happens in the financial markets all the time, both on the way up as well as on the way down. Thus, markets get overbought and oversold with regularity when the market starts really moving. As we have seen, this happened in real estate and risk assets over the past decade (on the way up) and is now operative on the way down.


I am not blaming you and I am not suggesting that your observations about the market receding to levels of a number of years ago are neither correct nor misguided. However, have you noticed that you are starting to draw commenters who seem to subscribe to the Rubini/Schiff/Faber/Whitney world view and wish doom upon the world. Several comments lately (mostly anonymous or with silly names) have not only been downbeat, but I would characterize them as mean as they seem to relish the collapse of the Greenwich RE market. I have seen this before and it usually starts on blogs when an entry is linked on another popular site and draws new viewers (as you have of late). These permanently negative basement dwellers see an opportunity to be heard and become regular visitors/commenters. I see them all the time on other blogs like Clusterstock, Dealbreaker and others and, when they become regular visitors, they can really skew a site’s view to the perpetually negative. Le cages aux folles, even vultures.


No, I am not suggesting that the messenger should be shot for delivering bad news or pointing out inconvenient or uncomfortable facts. However, without transactions, current musings about the floor are simply conjecture as a lack of buyers and realistic sellers prevents proper price discovery. Sure, one can drag out the home affordability index and point out how overbought real estate became and assume that reversion to the mean is necessary. However, that works mostly in liquid financial markets where the transactions costs are low, transaction speed is high and the participants don’t have to live in the traded good. It works for tulips but I am not sure it works for 4-bedroom colonials. That said, yes, I am a homeowner and I have a view, a bias and, maybe, delusions.


Finally, in my opinion, anyone wishing/hoping that Greenwich RE prices revert to mid-90’s levels is unlikely to be a current homeowner nor someone who really wants to live in the Greenwich that implies. That is, if you are hoping that the Grand List shrinks to 50% or less of its 2007 peak, you have not given much thought to the impact on the Town vis-à-vis its tax base and budget nor the impact on the quality of life, services and mil rate that such a compression implies. Yes, we all happily lived in Town in the mid-90s and never thought we were not blessed. However, the contraction such price levels suggests, along with a changed tax burden that has relied more heavily on commercial and office properties, would come very quickly rather compared to the 15 years that has brought us to this point. The deflation in services and/or increase in taxes will leave many of us shell-shocked which will then have an impact on housing turnover, etc. Another feedback loop of sorts.


Of course, it is your blog at the end of the day and you are entitled to write what you want, how you want and publish comments as you see fit. However, as a relatively long-time reader, I felt the need to share my observations with you.


Chris, feel free to post or quote this in part or whole or not at all. I would be interested in the comments it draws. However, be mindful of attribution to me specifically. Thanks.



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12 responses to “Statistics

  1. sessions

    all bubbles burst eventually and greenwich is not immune to it, the amount of appreciation homes have had over the last 35 years in this area is astonishing and we will be paying the piper over the next 5 to 10 years.

  2. Pangloss

    Mr. Fountain, one sincerely hopes that letters like the one above do not discourage you (and regular commentators like CEA and Retired IB’r) from continuing in what this reader perceives as honest efforts to provide a useful counterpoint to the self-serving nonsense that is deceitfully presented as objective information by, among others, the NAR, homebuilders and, until recently, those in charge of US monetary and fiscal policy.

    The point of view represented by your correspondent has in fact been all-too-effectively expressed for years now to the detriment of many who would have been well advised to bow to the larger forces of the economy and price their homes to sell. Instead, they have wasted time and money holding out in the belief that home prices always go up.

    Now that that illusion has been shattered, it simply won’t do to pretend otherwise. Keep up the good work–those who take your advice and price to sell now will thank you for it in the years to come.

  3. gideonfountain

    Long, but useful observations. Reminds me how the problem of “homelessness” disappeared from the New York Times for eight years, the day Clinton got elected President.
    Similarly, as your letter writer predicts, the press will begin reporting a “remarkable improvement” in the economy as soon as The Messiah is inaugurated.
    For all its antiquated methods, main-stream media still exerts HUGE influence because of its size and reach but also because our education system reinforces their big-government-approving agenda. BUT, does Chris Fountain’s blog inhibit Greenwich buyers from making decent offers? I think not.
    P.S. Regarding that chart, it indicates a little dip in prices between 2002 and 2003…not sure I agree.

  4. pulled up in OG

    If the grand list did shrink, to any level, so what. The relative burden is unchanged. (A drop in conveyance tax receipts doesn’t amount to much, really.)

    And as for “a changed tax burden that has relied more heavily on commercial and office properties”, do the numbers bear that out? Doesn’t seem to me that that’s been the case in recent revaluations.

  5. Retired IB'er

    Let me get this straight: if the sky is falling as long as no one says it is, then the sky isn’t really falling.


    The reason real estate and the stock market and anything else of value is falling has nothing, let me repeat that, nothing, NADA, ZILCH, to do with the press or blogs or carrier pigeons. It has to do with the fact, and ONLY THE FACT, that people spent money they didn’t have through leverage provided by a lax, flush with cash courteous of Alan Greenspan, system.

    Profits for many companies, certainly financial firms, were illusionary. Merrill Lynch, for example, lost more money in the last two years than it made cumulatively since it went public fifty odd years ago. Now the system is extracting its pound a flesh for past follies. The capitalist system is self-correcting and that is exactly what is occurring now despite the mighty, and misguided, efforts of the world’s central banks to the contrary.

    The outsize gains in assets (real estate, stocks, commodities) were based on leverage and what these same asset classes are now experiencing is the unwinding of that leverage. No more, no less.

    The press has got nothing of substance to do with the correction occuring now nor equally does the hopes or wishes people express for any given outcome. The only “one” speaking is the market.

  6. anonymous

    Supply and demand

    No one has ever seen an economy and credit crisis like today’s, esp in a modern, highly leveraged, globalized, virtual economy w/so many smart guys in the financial industry (and a financial industry much more massive/leveraged than back in ’80s or in TechBubble era)…and it’s a science experiment we’re witnessing to figure out how prices of any assets will behave in this setting vs deep global recession and government intervention

    Smartest financiers in world largely live in either Greenwich or UpperEastSide or 15 CPW….and few of these guys will claim to have an accurate view on this complex situation….smartest hedgies in world are struggling to profitably understand and place bets in today’s environment…let alone merely typical real estate sellers/investors, who tend to be the slow kids of the financial world

    Greenwich was a sleepy, upscale bedroom suburb >10-15yrs ago….today, perhaps 40% of the major hedge funds in NYC region are based in Greenwich area, so it’s a financial epicenter as well

    Greenwich land is cheap and plentiful and has easy permit approval for teardown/new construction, so housing supply is fairly commoditized

    Demand is largely a function of psychology of 30-40yo financial industry buyers who have young families and are figuring out where to establish a family home….Manhattan vs Greenwich…Greenwich is far cheaper than Manhattan…and Greenwich is ~50-70% cheaper than comparable suburbs of SiliconValley (Woodside) or BeverlyHills, when one compares cost per acre of desirable land

    Upside forces for Greenwich include the increasing income tax rates in NYC/NY (in addition to the current ~10% vs 5% NY/CT arbitrage); likely secular, Darwinian growth of hedge funds (which often prefer Greenwich over NYC for lower taxes and less regulation)….and likely increased street crime and QOL issues in Manhattan in a deep recession w/a severely damaged tax base (recall big cities of the ’70s and ’80s)

    Will be fascinating to observe how high-end real estate pricing adjusts across US over next 2-3yrs in both primary home mkts and popular wkend home mkts like Hamptons, PalmBch, Montecito, Aspen, etc…suspect there will be many cascading pricing effects (along w/demand for NetJets shares), as lifestyles are re-calibrated vs compensation/net worth of financial industry executives in a more challenging, more regulated, poss less leveraged world….at least for a few yrs, until the next Bubble….

  7. Limestoner

    I’m sorry but the writer is living in LaLa Land. He sounds like one of the architects of the credit bubble. “Only if the press would stop talking about the falling value of CDOs and MBSs all would be well.” The same nonsense was espoused after the internet/tech bubble exploded – blame the media. Are you kidding me? The real estate bubble burst for fundamental economic reasons. No sort of wishful thinking and positive thinking will change this fact. We need to get back to being a free market oriented society again. No more propping. If banks got fat by taking too much risk and are now imploding, let them fail! If home owners bit more than they could chew and relied on easy credit to live a lifestyle that they truly could not afford, then let them lose their homes and file for bankruptcy!

    Why should anyone be remotely concerned with propping up real estate values today? What the heck do you think we were doing for the past 15 years, e.g., “times are different”, “not creating anymore land”, “you can’t live in a stock”, “foreign investors”, “the home is the modern trophy piece”? Where did that get us? I’m sure the writer didn’t mind the “irrational exuberance” on the way up. However, the fat lady stops singing for legitimate reasons and he blows a gasket! Unbelievable! Did he think that the gravy train would never end, e.g., home as principal investment and personal piggy bank. Did he expect 20% annual appreciation to exist in perpetuity? Get a life.

    The real estate market, even after a 30% drop, is still drastically out of sync, especially when you consider the deviation from historical measures, i.e., imputed rental value, income ratios and appreciation metrics, etc. As a result, there will be a continued downward shift in real estate values for the foreseeable future. Greenwich is no less acceptable to market forces then Manhattan, Boston, San Fran or the Hamptons. Housing sales and prices are down for legitimate reason. I say let the free market work and stop all this intervention/marxist mumbo jumbo!

    I’m a homeowner but I’m not worried about the decline in property prices. Why? Because I didn’t view my home as a pure investment and I’m under no pressure to sell in a down market. On the other hand, I welcome a return to normalcy – where one spent $4 million and didn’t feel like he was moving into a starter home.

  8. gideonfountain

    “Demand is largely a function of psychology of 30-40yo financial industry buyers who have young families and are figuring out where to establish a family home….Manhattan vs Greenwich”.

    The above quote may SOUND reasonable but it was definitely not written by anyone who has spent years working with Greenwich buyers and sellers who are much more diverse than that. What the quote mainly illustrates, though, is the ease with which non-real estate agents feel they can sum up the business. Our industry has an extremely low barrier-to-entry level so the assumption is that anyone can, and often does, sell real estate. But just as you would, on a fishing vacation, be wise to listen to the advice of a guide with 10 or 20 years of experience catching the fish you seek, it makes sense to listen to your “stupid” broker who’s been working in the trenches year after year.

  9. anonymous

    Any way to strip mix effects out of price stats? IOW, I suspect typical Greenwich home sale over past 10+yrs has involved a newer, larger, more elaborate home than in past….if strip out these effects, price increases may be less impressive

    Tend to think of residential real estate anywhere in terms of land costs….in any place w/easily available land and seamless permits for new construction, would guess many (esp in a non-Bubble climate) would price used houses in terms of land value, rather than structure value, esp when bespoke-spec houses are easy to build w/latest tech and aesthetics and one’s own choice of competent architect and builder

  10. kidding really?

    Chris – this global asset bubble which is bursting – from real estate to stocks/bonds to modern art has been fueled by cheap money leverered up to unprecidented levels. People who are in denial learn that one should sell when they can, not when they have to. Greenwich real estate will not be immune from the liquidation trade. As the brokers in the Greenwich Post article said “People want to move on…” Implying those people are buyers is incorrect. People want liquidity and that means selling assets. Greenwich may not be as bad as other areas since the population is generally still wealthy by relative standards but could be bad considering the carnage in the jobs market. With all the banks, brokers, and funds under severe stress layoffs are unprecidented. Year end bonuses from banks and brokers are being paid in stock for the past couple years which are clearly way out of the money. Funds are shutting down as capital flees and high water marks are historically 2-3 years (if lucky) away. Obama has no power to help this situation and his plans might actually hurt the rebuilding efforts on Wall Street and with hedge funds due to nationalization of the banks as well higher regulation to hedge funds. It’s impossible to me to find a way for Greenwich real estate to not go down at least 20% from today’s prices. Sorry to say the Roubini group has been spot on…

  11. FlyAngler

    Kidding Really conjectures (I can’t assume he knows more than anyone else) that Greenwich RE has to fall “at least 20% from today’s prices” but what actually are today’s prices? With little to no real sales activity, how do we know what that price is? As CF has pointed out regularly, we know what today’s prices are NOT by the prices at which listings expire.

    CF: The chart above is interesting but I can’t help but wonder about the changes in the quality and scale of the housing stock over the years. That is, with all of the renovation and knock-down-rebuild activity we have seen over the past dozen years or more, is the Greenwich housing stock today not intrinsically more valuable than that of 2000, 1995 or 1989? Put another way, if a particular house traded hands ten years ago for X, was renovated with an investment of 0.25X, is not the intrinsic base value of that house 1.25X? Or, what of the value of a knockdown bought for Y with a rebuild investment of equal amount?

    So, do we need to consider the improved value of the housing stock when looking at statistics from earlier periods and pondering whether the current market is at “unimproved” 2004, 2001, 1998 or earlier levels?

    We know that a dollar of renovation will not usually result in a dollar of incremental market value, but there is an additive effect, is there not?

    BTW, for those commenters scoffing at the letter writer’s suggestion that the media can have an impact on perceptions, did not the media help fuel this housing bubble on the way up? I am sure we can all recall countless magazine covers about getting rich through flipping homes, etc. Or the HGTV shows about flipping homes with only modest improvements. Are we suggesting that more than a consumers of such drivel did not become convinced they had to get on the bandwagon? That is not really a Greenwich phenomena but it was operative elsewhere. Then again, more than a few out-of-town spec builders seemed to be viewing the same stuff.

  12. FlyAngler

    Last thought: John Maynard Keynes said “The existing situation enters, in a sense disproportionately, into the formation of our long-term expectations; our usual practice being to take the existing situation and to project it into the future.”

    Anyone who has spent any time in the markets has seen multiple examples of this (recall recent forecasts of$200 oil in 2009). This happens in bubbles as well as in the collapse of bubbles.

    Need a current example? Right now the US Treasury/TIPS markets are suggesting the US will not experience any measurable inflation for the next decade. Do you believe that? Or, is the current view of deflating prices entering (“disproportionately”) into the Treasury market’s current pricing? Up through mid-2007, was not every buyer of a home convinced that home would be worth far more 12 months hence?

    Are we doing the same today, especially lacking any real data? As Gideon pointed out, does our current situation make it easier for seemingly sensible generalizations to take on the credence of fact if it support the current narrative? For the first half of this decade, people pumping Florida real estate had reams of demographic data to support ever escalating prices which worked, until it didn’t.

    Yes, deflation is here and Greenwich will not escape it. However, we should all keep Keynes’ admonishment in the back of our minds, both buyers (prices will come down 50%) and buyers (my house is worth more than I paid two years ago).