A spec house moves out of inventory

268 Palmer Hill Road

268 Palmer Hill Road

This was a well constructed house that came up for sale in September for $3.195 million, which in this market was probably too aggressive for Palmer Hill. No takers, so yesterday it was rented for $9,500 per month. I can’t tell you whether that represents a sum sufficient to carry the place but certainly it’s not going to return great profits to the builder, and I assume he’s just waiting for better times.

I’ll be back in a minute with an exact count of new spec houses currently for sale but I do know that we have over 50 priced over $5 million and 22 priced at $8 million and above. In that latter class, we sold four in the pst six months and zero this year. If they all end up being rented, and many of them are also listed for sale or rent, we’re going to see a further attack on rental prices – these are very luxurious homes, compared to most of our older stock – and a rather miserable year for builders. We have too many houses for the quantity we’re selling, if you hadn’t heard.

4 Comments

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4 responses to “A spec house moves out of inventory

  1. Cos Cobber

    Chris, Even in the 2006 market, isn’t a house of this price and caliber a bit of a stretch for this location?

  2. christopherfountain

    I would have thought so and, in retrospect, its builder probably thinks so too, now. But it was 2006, houses were selling before completion and expectations ran high. Oops.

  3. CEA

    It’s still in for-sale inventory, right? I assume the builder would gladly sell it.

    It’s now been added, however, to the rental inventory.

    So, inventory +1, sale/rental 0

  4. Paco

    This looks like another case study for the rent vs. buy file.

    If this house were an investment in the stock market the $3,195,000 asking price divided by the annual $114,000 rent imputes a 28.0 P/E ratio which works out to only a 3.6% annual ROI. And that’s before subtracting taxes, insurance and maintenance.