It's complicated. But good things are happening in our markets. We're finally seeing some fantastic movement in our higher priced properties. Sales of homes priced at more than $5 million increased more than 50 percent compared to 2016. Homes priced above $3 million rose 11 percent. Those price points have been challenging and so the significance should not be underestimated in assessing shifting market conditions. Overall, average home prices rose 21 percent. 

The key for us is to understand what is driving the changes so we can continue to deliver the best results for you, our friends and clients. 

Front and center is the increase in wealth driven by the stock market. The third quarter continued a remarkably consistent trend of market gains. The S&P 500 rose nearly 4 percent. The Dow moved up close to 5 percent. It was the 8th quarter in a row of gains for both indexes. Investors are getting strong and consistent returns. While no one can predict market performance going forward, the reality is that wealth has increased and the mindset of the buyer is better for it. 

Fears of the demise of low interest rates were premature. Rates are still at extremely affordable levels. Wages continue to gradually move higher, and the job market remains tight despite a weaker-than-expected September employment report. The Fed may raise rates as soon as December. But the rate hikes in this cycle have been few and far between. The downside is that without the expected urgency of higher borrowing rates, buyers may still feel time is on their side and may feel they have more freedom to be cautious about locking in a deal. 

We are also closely monitoring the impact of rising New York City prices on demand for Greenwich properties. As new families form and look for homes, that movement amplifies the value offered in our community. 

Here are some trends we are seeing this fall: 

The stark difference between average and median home prices tell us a lot. Average home prices, as mentioned above, rose 19 percent. The average home price was $2,670,809. Contrast that with a gain of just 5.2 percent in median home prices at $1,795,000. This indicates increasing demand at higher price points. 

Overall, single-family home sales dropped sharply by 24 percent in Q3. Total dollar volume declined 7.9 percent. Fewer deals are being made, putting pressure on sellers to be extremely thoughtful in how they initially market their home. Buyers are quick to judge, and don't usually circle back if they passed on a home from the get go. 

Nationally, the number of adjustable rate mortgages is on the rise, likely in response to higher home prices. That points to rate sensitivity, even at the slow pace that mortgage rates have been rising. Risk-averse buyers tend to favor the security of a 30-year fixed rate mortgage. But when affordability becomes an issue, they will often take a closer look at ARMs, because of the significantly lower rate. That's a red flag to sellers who may be tempted to price their home too aggressively. Many buyers are already feeling stretched. 

High prices are holding millennials back. Recent data from Zillow showed that only 39 percent of millennials are able to put down the standard recommended 20 percent or higher down payment. The majority of millennials shopping to buy a home, 62 percent, are also looking at rentals. Sellers are not just competing against other sellers, they are also competing against landlords. The price has to be right.

Some regional statistics we'd like to share: 

Greenwich North of the Parkway follows the trend of higher prices, with an average rise of 57 percent. But the area was also on-trend with fewer sales. Of note: the homes that sold, sold faster. Those homes also sold at a greater discount to their listing price. This is another indication that sellers need to be extremely strategic with pricing right out of the gate. 

The numbers weren't as dramatic in Greenwich South of the Highway but the area remains on trend as well. 

Fewer homes were sold, but average prices were higher. By far the most activity year-to-date and year-over-year was seen in entry level homes priced under a million dollars. 

There has been some pickup in demand for high-end homes South of Post Road. The numbers are small at this point, but it is an area we are closely watching. Days on market has moved up, and sales overall are sluggish. A similar sales picture in Cos Cob. Despite average sales prices jumping 25 percent compared to the third quarter of 2016, the number of sales is down. 

The most demand in Riverside remains for homes priced below a million dollars. Average days on market is a concern with an increase of 62 percent. When homes sold, it was at lower prices. The average sale price in the area fell more than 16 percent. That is something sellers must be mindful of when setting prices. Deals don't get done if homes are priced incorrectly. Small tweaks can be very meaningful at these lower price points. 

Old Greenwich continues to benefit from its appeal to buyers leaving New York City. The average sale price skyrocketed 67 percent. But once again, the number of sales fell. The best buyers will remain selective, especially at perceived lofty price levels. 

We can't stress it enough: deals happen with homes priced correctly on day one. This is not a high volume market, and buyers are still often in the driver's seat when it comes to home selection. They can often simply wait for the right deal. 

We look forward to a productive season, and to celebrating a successful 2017 serving our community. 

Stephen Meyers  CEO

Chris Meyers President