BL: Greenwich ‘Move-Up’ Homes Don’t Sell as New Yorkers Stay Put
By Oshrat Carmiel
March 1 (Bloomberg) -- Bryan Roddy says it seemed a smart investment in April 2007 when he and his partners bought a $1.2 million home in Greenwich, Connecticut, added two bedrooms and baths and priced it at $2.9 million to lure Manhattan buyers.
They listed the Havemeyer Place property in October 2008, a month after Lehman Brothers Holdings Inc. went bankrupt and sent markets tumbling. The house is still for sale. The so-called move-up market in Greenwich, known as the hedge-fund capital of the U.S., has dried up as the lingering effects of the financial crisis strand potential buyers in their current homes.
“There was no one in that price range looking,” said Roddy, 48, a principal of Roddy Construction LLC, a residential building and renovation firm in Norwalk, Connecticut.
Greenwich home sales from $2 million to $2.99 million fell 45 percent last year, more than any other price category and the most since broker Russell Pruner began tracking the data in 1976. Fifty-two such properties in town changed hands, compared with 94 in 2008.
“That’s in many cases a trade-up, or entry level,” said Pruner, also the owner of Shore & Country Properties in Riverside, Connecticut. Move-up sales are largely driven by locals looking for bigger homes and New York apartment owners seeking their first place in the suburbs, he said.
Buyers who can afford to pay $2 million to $3 million still rely on mortgage financing, said Alan Rosenbaum, principal of GuardHill Financial Corp., a New York-based mortgage brokerage with Greenwich clients. Lenders have curbed financing at that level to between 50 percent and 70 percent of the purchase price, he said.
Financing Obstacle
At the same time, declining real estate prices mean people who need to sell their existing homes before buying another may have less cash for the purchase.
“In the past, when you sold one home to buy another, you normally reaped a nice profit and you used that profit as a down payment for your new home,” Rosenbaum said. “Many people who are trading up from the smaller home don’t have enough equity.”
Manhattan apartment prices fell 21 percent from their market peak in 2008, according to data from New York appraiser Miller Samuel Inc. and broker Prudential Douglas Elliman Real Estate. The median price of co-operatives and condominiums slid 10 percent to $810,000 in the fourth quarter from a year earlier, the companies said in a Jan. 5 report. The median price hit $1.03 million at the top of the Manhattan market in the second quarter of 2008.
Wall Street Cutbacks
Wall Street firms paid about $20 billion in bonuses in 2009, down about a third from 2007, New York State Comptroller Thomas DiNapoli said Feb. 23. The average industry bonus was $123,000, excluding stock options or other deferred pay.
The financial industry cut 26,300 jobs in New York last year, contributing to the decline in the Connecticut real estate market.
The median price of a single-family home in Greenwich, which lies about 30 miles (48 kilometers) northeast of midtown Manhattan, dropped a record 18 percent to $1.6 million, according to Pruner. Sales fell 20 percent to 370, with declines in all price ranges of more than $1 million.
Transactions of $3 million to $3.99 million dropped 30 percent to 37, according to Shore & Country data. There were 21 sales between $4 million and $4.99 million, a 16 percent decline. Forty-three properties changed hands for $5 million or more, a 19 percent decrease.
Sternlicht Can’t Sell
Real estate investor Barry Sternlicht, chairman and chief executive officer of Starwood Capital Group LLC., has been trying to sell his 5.8-acre Greenwich property since June 2008. The gated estate, with tennis and shuffleboard courts and a swimming pool, was on the market for $5.95 million. The listing is no longer active on the Greenwich Multiple Listing Service. Starwood is based in Greenwich, which is also home to about 100 hedge funds.
Of 514 homes for sale in town at the beginning of February, 20 percent were priced between $2 million and $3 million, according to Shore & Country. Of 98 new listings between Jan. 10 and Feb. 10, more than half had previously failed to attract a buyer, according to data compiled by Jeanne Howell, a broker forGreenwich Fine Properties.
The owners of 17 Tomac Avenue, in the waterfront neighborhood of Old Greenwich, are among those trying again. They have been seeking to sell the five-bedroom, five-bath, cul- de-sac property since 2008.
Cutting the Price
After attracting no buyers at $3.5 million, the property, which features a stone terrace and hand-painted wood floors, was relisted in October and is priced at $3.075 million, said Julianne C. Ward, the owners’ broker at Prudential Connecticut Realty in Greenwich.
Gary Disher, a co-investor with Roddy on the Havemeyer Place home, was unable to sell it last year after reducing the price to $2.5 million, so he took it off the market in December. The house dates to 1911 and was gutted and renovated to include amenities such as centralized stereo and light controls.
Disher, a broker with William Raveis in Greenwich, relisted the residence in January for $3 million in a bid to grab attention from buyers in a different price bracket, he said.
“We wanted to make sure that we weren’t missing people that would be potential buyers in the $3 million-to-$4 million category,” he said. “We let it soak in that range so we could at least give it a shot and capture anyone who was there.”
On Feb. 18, he dropped the price to $2.49 million.
To contact the reporter on this story: Oshrat Carmiel in New York atocarmiel1@bloomberg.net.
Last Updated: March 1, 2010 00:01 EST
