Condo glut?

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California’s cold market is doing well, which just shows that it’s scarcity, not design, that drives sale

California’s cold market is doing well, which just shows that it’s scarcity, not design, that drives sale

I received the following letter from a reader last week, and though a quick check of our MLS numbers produced slightly different numbers, they were close to the reader’s. While I was at it, I looked at our inventory of single family homes compared to last year’s sales, and if I were the owner of a house priced at $4 million and above, I’d settle in for a long wait.

Hi Chris,

I know you do not dabble in condo/townhouses but there is an incredible phenomenon going on in Greenwich.  

I counted 50 condos/townhouses listed in Greenwich from $1,950,000 and above on Realtor.com.  Now according to Houlihan Lawrence data, only 15 condos sold in 2018 for $2 million or above.  In 2017, the number was 19.  In theory, we have over three years of inventory.  

Much of the supply is new developments.  

125 Filed Point Road has nine listings or 60% of the total volume in 2018.  The units came on the market in March 2018.  

62-68 Soundview Road has four units listed.  They came on the market in March 2019.  

141 Milbank Avenue has three units listed.  They came on the market in December 2018.  

165 Shore Road has 2 units listed.  They came on the market in May 2018.  One unit saw its price drop from $2,495,000 to $2,095,000.  Another from $2,925,000 to $2,050,000.     

These are just the ones listed.  Each community has more units than listed so some were either pre-sold or being held till the first batch of units are sold.  

There is another big development being constructed near 62-68 Soundview Road, closer to town hall.  May be it will be ready for the 2020 season.   

It does not take an economics degree to figure out that the market for these condos are in trouble.  Just the new construction listed above is as great as all units sold at that price in a year.  

You really have to ask who is lending to these developers?  Money is cheap and plentiful but banks expect to receive their money plus interest back.  

Interesting times.  You can publish this if you wish.