Column: “The Greenwich residential real estate outlook: boom or bust?”

RMA presents: “The Greenwich residential real estate outlook: boom or bust?”

Mortgage rates are historically low, but rising rapidly, and therefore likely to cool the real estate market in the fourth quarter.

By Av Rivel

At the July 20 meeting of the Retired Men’s Association, Tim Brooks introduced the speaker, David Michonski, a national authority on residential real estate. Mr. Michonski has been responsible for some of America’s largest and most famous estate sales for some of America’s most notable families. For the past 30 years he has lectured, marketed, taught and consulted on real estate sales and marketing around the world. He was President of International Operations for the National Association of Realtors (the largest business organization in the United States), a member of the board of directors of FIABCI, the international real estate federation, and currently serves on the board of directors of IHC Global, the successor organization to the International Real Property Foundation which he helped found in 1991. He served as a real estate consultant for the US State Department. He also ran the Greenwich office of Coldwell Banker.

Michonski is the founder, president and CEO of Quigler, Inc., which offers a free real estate app for consumers. He is the author of three award-winning real estate books, including Get Your Highest Price, a guide for consumers on what to expect from their agent to get the highest price for their home, which inspired Quigler. He graduated from Colgate University and studied at Harvard, Boston College and the Wharton School.

David promised not to present his opinions, but to provide us with facts and analysis in his speech. He divided his presentation into three parts.
1) Short and long term statistics on the housing market in Greenwich.
2) Statistics comparing the Greenwich real estate market to the national real estate market.
3) Short and long term influencing factors.
The short term was pegged to the year to date, the long term since 2007 (just before the great recession of 2008).

In the short term, prices are up slightly, unit sales and new listings are down. The only encouraging sign is the number of days on the market, which is falling. Over the long term, there is general stability with no significant upward or downward trend, even with the 2008 recession and the pandemic causing the statistics to shift temporarily.

Looking at Greenwich versus national statistics, national data is more volatile than local numbers. Part of this can be attributed to the fact that the national statistics include homes in all price ranges, which is not the case in Greenwich.

Factors that affect the real estate market include mortgage rates, which are tied to the Fed’s interest rate (government policy). The Fed says a 1% increase in mortgage rates leads to a 10.4% drop in demand. Another factor is the cost of replacing housing (timber and other building materials). The fastest way to cool the economy is to cool the real estate market, which accounts for 20-25% of GDP.

Despite his initial promise, Michonski offered speculation on the fourth quarter of 2022. Mortgage rates will continue to rise; more houses will enter the market; unit sales will decline. An election is less than four months away, so the stock market will rise, buyers on the close will rush, and voters will feel the worst is over.

Ahead of RMA’s lively Q&A, he offered two big questions for 2023:
Will raising interest rates work?
Will the dollar remain the world’s reserve currency?

For those who want to see the full presentation, head over to the RMA website and click on the video at https://vimeo.com/732075407.

RMA’s next presentation “Fred Camillo, A Champion of Progress in Greenwich” by Fred Camillo is scheduled for 11 a.m. on Wednesday, August 3. Mr. Camillo will discuss the multiple challenges facing the City of Greenwich and the progress his administration has made in addressing them. He will talk about the development of public-private partnerships, public safety improvements, pedestrian-friendly business districts, environmental initiatives and a host of quality-of-life policies, ranging from increasing opportunities educational and recreational activities to reduce noise pollution. He will update us on the measures put in place by the Greenwich police to protect the city’s business district. Fred will also discuss his recent appointment to the Connecticut Conference of Municipalities (CCM) and his role as Vice Chair of the Land Use, Transportation, Infrastructure and Economic Development Policy Committee, which plays a vital role in influencing our quality of life.

Fred was elected the first draft pick for Greenwich, Connecticut in 2019. He previously served in the Connecticut House of Representatives for the 151st district from 2009 to 2019. He is a lifelong resident of Greenwich, graduating from Greenwich High School. He graduated summa cum laude from Manhattanville College with a Bachelor of Arts in Political Science and History. As a former member of the Representative Municipal Assembly, he served as Chairman of the Parks and Recreation Board and the Republican City Committee. His legislative and community work has earned him awards from Professional Uniformed Firefighters, Cos Cob Fire Patrol, Greenwich Council of Boy Scouts, United States Humane Society, and CT Votes for Animals’ Legislator of the Year.

An experienced businessman, he was a founding member and former director of Greenwich Recycling. He also taught high school and worked as a baseball coach and mortgage banker. His community service includes serving on numerous Greenwich local councils.

To stream Mr. Camillo’s presentation at 11 a.m. on Wednesday, August 3, click here (https://bit.ly/30IBj21). This presentation will also be available on local public access television channels, Verizon FIOS channel 24 and Optimum (Cablevision) channel 79.

RMA speaker presentations are presented as a community service at no cost to in-person or Zoom attendees. The RMA urges all eligible individuals to consider becoming a member of our great organization, and thereby take advantage of all available fellowship, volunteer, and community service opportunities that the RMA offers its members. For more information, visit www.greenwichrma.org or contact our Membership Manager (mailto:[email protected]).

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