In a Webcast last month, The Real Deal’s Jen Benepe spoke to Charles Magyar, managing director at William Raveis Real Estate, as well as Bryan Dinkelacker, managing director at Engel & Völkers, about the real estate market in Greenwich, Conn. The town is known as the hedge fund capital of the country and is home to many corporate CEOs. So it’s no wonder that as the stock market has tumbled, so has the area’s housing market. Magyar and Dinkelacker talked about what kinds of discounts are being offered and who is actually still buying.
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The Real Deal (Voice-over): Greenwich has long been known as an enclave of wealth, but a report this month found that home sales here were down 77 percent compared to the same month last year. And while some brokers say a one-month snapshot may be overstating the problem, they acknowledge that real estate here has been affected.
Charles Magyar:There is no question that the last 12 months have been a very, very difficult time for Greenwich real estate.
TRD: Greenwich is composed of five geographic areas, each with its own reputation. The Golden Triangle is where notables like TV star Judge Judy live. There have been well-publicized price cuts, like the one at the late Leona Helmsley’s estate, which went on the market last year at $125 million and has since been reduced to $75 million. Magyar of William Raveis Real Estate is selling a spec house. He says he now has two interested buyers. But he says spec houses like this one are no longer getting built.
CM: There’s a phenomenon going on in Greenwich right now. There is virtually no new construction being started. This house has been on the market for about a year and a half. We’ve gotten it down to a very, very affordable price, and I think, quite frankly, it’s under market value right now. This house started at $2 million … [it’s now been reduced to] $1.495 million.
TRD: While the Greenwich market is softening and more homes are languishing, its pool of inventory seems to be growing slower than Manhattan’s.
Bryan Dinkelacker, managing director at the German firm Engel & Völkers, which opened in downtown Greenwich less than a year ago, took The Real Deal to see one of his listings, another spec house. With its exposed wooden beams and kitchen fireplace, it feels like an old country home with all of today’s state-of-the-art amenities. The price has been knocked down $900,000, to $3.95 million.
Bryan Dinkelacker: This house is basically designed true to classical architecture. You don’t see those wide, expansive rooms. You don’t see some of that cookie-cutter thing you typically see.
TRD: About 90 of the roughly 750 homes on the market in Greenwich are new construction. Dinkelacker said the new houses will sell quicker because developers have loans coming due and are motivated to lower prices.
BD: The people who live in the older homes, or the existing homes, tend to not have the same motivation as a spec builder.
TRD: Even though there is pent-up demand, consumer confidence has been badly bruised by market events since September. It’s partly being driven by the lack of jumbo loans, which make up the majority of mortgages in an über-wealthy town like Greenwich.
BD: People may not be directly affected by what’s going on — they may have great credit, be able to get a loan and be able to buy — but they’re finding themselves just parking everything on the sidelines until the smoke clears.
TRD: Brokers say the combination of some downsizing by existing owners and price depreciation should help improve the market.
BD: The average price adjustment varies between 20 and 30 percent.
CM: I can tell you this: Greenwich will do much better than any other Fairfield County community, and certainly better than the average community across the country. But whether or not we’ll ever get back to 2005-2006 price levels I’m not sure. Nor do I really think that kind of ‘go-go’ price appreciation was healthy for anyone.
TRD: Jumbo loans, pricing and Wall Street’s recovery — these are all very important factors in the comeback of Greenwich’s real estate market.
Compiled by Sara Polsky