Can Greenwich get its groove back?

Metrics are mixed, with price chops for estate-style homes steep but demand for condos booming

Feb.February 19, 2019 11:00 AM

The Beacon Hill 2 luxury condominiums on Sound View Drive in Greenwich

The Greenwich real estate market — home to some of the most expensive residential real estate in the country — is emitting some seriously mixed signals.

While the luxury residential sector in the tony Connecticut town has spent most of the post-2008 recession years in the real estate doldrums, 2018 brought some improvement.

According to data from Houlihan Lawrence, the Greenwich market saw a 25 percent jump in sales of $10 million-plus homes between 2017 and 2018 — the third annual gain in that category for an area with a population of 60,000. There were also bright spots for other price points on the annual front, as Greenwich performed far better than many of its neighbors in Connecticut and adjacent Westchester.

But those facts and figures don’t tell the full story: There’s still a significant amount of tumult below the surface, and the high-end residential market is nowhere near where it once was.

According to a 2018 fourth-quarter report from Douglas Elliman, average sales prices were down nearly 19 percent year over year, to $2.3 million, while total sales in Greenwich dropped 2.2 percent year over year. Brokers said demand for over-the-top homes — such as lavish waterfront or “backcountry” estates — is generally waning and that moving trophy properties usually requires steep price cuts.

For example, Greenwich’s most expensive residential sale of 2018 — a nearly 16,900-square-foot Georgian mansion at 110 Clapboard Road — was for $17.5 million. While that set a record for the year, it was 50 percent below what hedge fund executive Ara Cohen and his wife originally listed the 27-room property for in 2015.

The second most expensive single-family sale in Greenwich last year — the $17 million, 12,800-square-foot waterfront estate at 207 Byram Shore Road that belonged to Hollywood producer Robert Weinstein — was also almost half off its initial 2013 listing price.

“I figured this grand house all done should certainly [sell for] $32 million, and it didn’t happen,” said Coldwell Banker sales associate Tamar Lurie, who is based in Greenwich and heads the Tamar Lurie Group at the firm.

In addition, new federal tax rules supported by the Trump administration have made it more expensive to own luxury real estate, capping deductions for local property taxes — a fact that sources said has prompted some buyers to scale back their megamansion purchases and go after smaller homes or even luxury condos. Elliman’s market report noted that there’s been a “shift away from the top of the market.”

Meanwhile, Barry Sternlicht’s Starwood Capital Group, which is headquartered in Greenwich, told employees in late 2018 that it would be moving its operations to Miami Beach by 2021 due to Connecticut’s high taxes, according to Bloomberg.

Sternlicht made headlines back in 2016 when he bashed the residential market in the region, stating at a conference that you “can’t give away a house in Greenwich.”

A looming course correction?

While Greenwich came out ahead last year, the home stretch of the year did it no favors.

For all of 2018, the number of homes sold in the town rose 3.7 percent, to 593, according to data from Houlihan Lawrence. (By comparison, nearby Rye, New
York, saw a 14.5 percent drop during the same period).

In addition to a 25 percent jump in sales of $10 million-plus, the $1 million-and-under segment was up 22.4 percent, while the $2 million-to-$3 million category saw a 13.3 percent increase, according to Houlihan Lawrence. The $6 million-to-$8 million market tanked, however, declining 41.7 percent in 2018. And any market strength came in the beginning of the year.

By the end of 2018 — as the stock market’s record-setting bull run took a beating in the worst financial fourth-quarter performance since the Great Depression — that progress also faded.

Sources said the drop in the Manhattan condo market had a ripple effect in Greenwich. Many luxury sellers in the city feed into Greenwich’s pool of deep-pocketed buyers.

All those economic and political factors undermined buyers’ confidence, as did geopolitical uncertainty, talk of international trade wars and Trump administration tariffs on everything from steel to solar panels.

As if those headwinds weren’t enough, the late-2017 tax law cut the limit on deductions for interest payments on mortgage debt to $750,000, down from $1 million, and capped the amount of property tax deductions at $10,000.

“That put a freeze on everything,” said Sally Slater, an associate broker at Elliman in Greenwich. “It was just awful.”

Slater noted that Greenwich’s market had previously gotten too frothy, potentially setting the stage for a drop.

“Could this be a correction because prices have gotten so out of hand?” she asked. “Maybe.”

Scaling back on size

While outsiders undoubtedly associate Greenwich with sprawling estates, there’s a new reality playing out on its manicured ground.

Size — as in the square footage of properties and their sprawling, gated gardens — doesn’t matter, at least as much as it once did.

In 2018, there was an increase in the number of luxury buyers seeking smaller homes, brokers said. And prices are showing that drop in demand. Elliman, for example, found that average pricing in Greenwich’s luxury market did worse than the overall market, dropping more than 28 percent year over year, to $6.4 million, in the fourth quarter. Inventory in that category was up, suggesting that more owners at the top of the market were looking to unload properties.

“People just don’t want these huge houses,” Slater said. “People want to feel more in control. Their style of living has changed. That has affected the market tremendously.”

Slater’s listing for 44 Mead Road, a 6,000-square-foot lakefront home on a 33.5-acre lot in Greenwich’s Conyers Farm neighborhood, part of which is located across the state border in Armonk, New York, hit the market in early 2018 seeking only $11.5 million.

In some ways, Greenwich is becoming more like Manhattan.

Condo sales were up 23.1 percent in 2018 year over year, according to Houlihan Lawrence data.

A short walk up the hill from Greenwich’s downtown train station sits Beacon Hill 2, a high-end condo that is being marketed as “New York-style living.” Nine units are spread over three floors, each with at least one private outdoor space, ranging in size from 2,058 square feet to 2,278 square feet.

Prices range from $2.5 million to $3.4 million, and the units come with all the prerequisite luxury amenities. Six of the nine have already been sold.
That’s unlike a string of less wealthy towns in nearby Westchester, which are seeing a wave of new development rental buildings come on the market and winning over young millennial renters who are being priced out of the city.

Houlihan Lawrence’s Joanne Mancuso, who is handling the Beacon Hill listings, said most of the current residents own their Greenwich condo as part of a portfolio of properties.

Uber-luxury laggards

While it’s unclear how 2019 will play out for Greenwich, there are plenty of pricey listings still available for any interested buyers.

The most expensive property on the market is listed with Coldwell Banker’s Lurie for $45 million — 2.5 times more than what the priciest Greenwich property fetched in 2018.

That 19,800-square-foot home at 21 Vista Drive — located on a 6-acre peninsula at the mouth of Greenwich Harbor — was owned by President Donald Trump and his ex-wife Ivana in the 1980s. Ivana was awarded the property in the couple’s 1991 divorce and sold it to its current owners in 1998 for $15 million. Those owners added a 4,000-square-foot guest wing and have sought to sell periodically in recent years, seeking as much as $54 million in 2014. It went back on the market last year at its current price.

Meanwhile, Leona Helmsley’s former backcountry estate at 521 Round Hill Road remains on the market. That late Queen of Mean’s mansion has a $22.5 million price tag — down from nearly $50 million in 2016.

Lurie said despite the unnerving market statistics, luxury residential sales have actually picked up and that publicly listed properties don’t fully reflect the size of deals happening behind the scenes.

“There are some really big sales happening … that are not being recorded, and I am not even allowed to talk about them because they are very quiet and private,” said Lurie, declining to go into detail about the alleged secret sales. “The multimillionaires and billionaires that are coming looking to buy in Greenwich are actually buying.”

David Haffenreffer, head of Houlihan Lawrence’s Greenwich office, said big discounts should serve as a warning to other sellers.

“It’s important that sellers get their home priced [right],” he said. “That will [get] them a higher selling price and limit the number of days on the market.”

But sellers must be sensible.

“I caution everybody we talk to that this is not the type of market where it is a great time to fish for an unrealistic price,” Haffenreffer said.


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