Something’s got to give

I have a good selection of clients spread through the bulk of the Greenwich price ranges ($1 – $4.5 million) and I’ve grown as frustrated as they are by the lack of what we perceive to be reasonable prices. For instance, there are houses perfect for my $1, or perhaps $1.2 clients, but they’re all priced at $1.695 and above. Their owners may think that’s an appropriate price but comparing them to houses that have sold for $1.3, for instance, these are clearly worth just around a million. But we won’t bid.

It’s the same situation all the way up the price scale. $4.5 houses still asking $5.9, $2.5 asking $3.75 and on and on. People like Mad Monkey and my brother Gideon are positive that it’s the buyers who are wrong but I disagree. More important, the buyers are the ones with the checkbooks and theydisagree. It’s all reminiscent of the Antares fiasco; many of us saw it coming but they kept staying alive, year after year, proving us wrong, until we were right.

29 Comments

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29 responses to “Something’s got to give

  1. xyzzy

    rumor has it Glen Avon house in Riverside has agreed upon a price.

    • christopherfountain

      Which one, Xyzzy, the $18 million waterfront or the $5 million water view? I wouldn’t be hugely surprised if it’s the latter – Riverside and the Club Road area seems to be doing very well, but I do think the $18 million house has a pretty stiff price for any economy, let alone our present one. But hey …

  2. Anonymousse

    There are few one way roads in life. Greenwich buyers are now trained like Pavlov’s dogs to expect huge, and often unrealistic, discounts. Sellers, equally stubborn, fight back, damn the torpedoes, to fend off bottom feeders. I would think a good realtor would find a happy medium for both sides. No?
    Totally off the thread, why does your WordPress clock seem to post our comments on Central Time?

    • christopherfountain

      Anonymousse, for reasons known only to WordPress, it runs on “universal time” or some such oddity and everything is posted according to what time it is in the Land of Oz.

  3. shoeless

    Chris,

    As you know, I’m one of those cashed-up people waiting to buy. As you also know, I just rented a 4-bedroom, 2500 sq ft, 7-year-old house in Havemeyer for the equivalent price of $750,000 (assuming 20% down, applicable propery taxes and a 5.5% 30-year mortgage rate).

    Why, in God’s name, would I pay 20-30% more for the privelege of owning a similar house in this environment? Equalibrium will come from the sellers’ side, not from me or other potential buyers.

  4. Not a Believer

    The market can stay irrational longer than you can remain solvent. Words to live by when you are a Bear.

    • christopherfountain

      True, Not, but would-be buyers aren’t bears in a short position – they can wait, rent, stay where they are or move to New Canaan.

  5. xyzzy

    the lower priced one.

  6. Accolay

    Why move to New Canaan? Farther from NYC, no action, and isn’t any cheaper, unless I’m mistaken, than Greenwich. Don’t think NC homeowners are any different than the Greenwich sellers who think we’re still in 2006.

    • christopherfountain

      Accolay, a client of mine who is also looking up there reports that prices are much cheaper. In good times, there’s only a slight premium but in bad times, New Canaan is known as the first to feel them and the last to recover. But yes, we do have a shorter commute in our favor and, in my opinion, a much more interesting, divers community.

  7. HG

    Everywhere else in the country, the logjam broke when sellers (including banks) dropped asking prices a lot. A rational seller (if any) has to be basing their optimism on the improved economy, but even so, I assume in the last real bear market for Greenwich in the late 80s / early 90s–even after the stock market & economy improved in the early 90s, the real estate market was flattish for a while, no?

  8. Anonymousse

    Shoeless, re “Equilibrium will come from the sellers’ side, not from me or other potential buyers.”…… If buyers like you are waiting for sellers to make all the concessions, then CF is going to have to change HIS name to Shoeless! Let a seller chip in two cents here and I bet he/she would say “equilibrium should come from the buyers”. It all depends on which side your bread is buttered….or something like that.

  9. time expert

    We live in the -5hr offset to universal time (west longitude 75 degrees/15 degrees per hour), but in summer our laws make this -4 hours by decree. Doesn’t change the universe one bit – just moves us from Lima to LaPaz (if you’re in SA, or looks like Central Time from here in the US)

  10. Retired IB'er

    The fundamental question that needs to be answered to determine who is closer to being correct: is the economy rebounding and will feed on itself creating new growth or are the “green shoots” a result of trillions of dollars of stimuli spent by the FED and Treasury causing a onetime boost?

    Clearly there are deep and divergent views on the question. All you have to do is look to the “debate” the bond market (not real growth) and stock market (green shoots a plenty and future significant growth in earnings) is currently having. Both cannot be correct: one is right and one is wrong, meaning there is either a bubble in the equity markets or the bond markets.

    My money is on the bond market being correct, which does not bode well for expensive housing. All we are seeing is at best an arrest of the slide to oblivion with anemic growth as our future.

  11. shoeless

    Mousse,

    At the price I’m paying in rent, I have no need/desire to buy anything. Ergo, I can rent until a) sale prices come down to make it attractive or b) rents go up to make buying more attractive. Right now, I’ve got things in my favor. If scenario “b” happens, then equalibrium will be at a higher price point. If not, then sellers must make it attractive for me to jump.

    When a the REO’s and short sales begin to crop up, we’ll get a better handle on where prices really are, much to the chagrin of the NAR.

  12. Anonymousse

    IB’er: You obviously know your stuff. You write well, you say it succinctly besides, make us non-IBers sit back and be in awe. Wherever you retired from, it’s their loss. How about lending your expertise to the FED, no matter your political persuasion. CF could write you a letter of recommendation.

  13. Anonymousse

    Shoeless: You lost me at “ergo”. PS: it’s equilibrium, not equalibrium. There’s one thing in MY favor.

  14. CTBuyer

    Almost every sell side wall street firm is paying 7 figure guarantees for most credit desks and some equity positions. As a buyer waiting in the wings I’m a bit nervous the sellers are right, and I better pay up.

    • christopherfountain

      No questiion its a gamble. My advice is, if you find a house you like at a reasonable price, go for it and dont worry about trying to time the market. A decade or two from now, if its served your family well, will it matter if you “over paid”? I think not. But that still means finding a location you like, and the right house, and a seller who is reasonable. Its that last part im having difficulty locating.

  15. Anonymous

    IB’er,

    I think 1% is probably the new 3% as far as GDP is concerned. According to Helicopter Ben, we need > 2% growth just to stay even in terms of employment. I’m not so good at math (or spelling, it seems), but I don’t think our economy is on the road to prosperity.

  16. shoeless

    The above comment was from me, not that old anonymous fella.

  17. Anonymous

    Shoeless,
    There’s no shame in being an ‘old anonymous fella’.

    The shame is being Anonymousse, having morphed from Greenwich Gal, or at least having her philiosphy of being ‘dismissive’. If the argument is not to the liking, humiliate and criticise the eloquence, don’t even attempt to decipher plain English.

  18. anon 2

    The comments about the direction of the markets, GDP, etc. miss a significant point. The macro-level economic stats are misleading. What matters are total people on payroll (not the unemployment rate) and personal income/wealth. GDP can grow nicely and still have a so-called jobless-recovery. The green shoots nonsense and nice appreciation in the equity markets distract people from the very bad underlying data on what’s going on with individuals. And as for the NYC area, for every guarantee being offered on the Street, I can give you 50 resumes of people who can’t find work and are running out of their rainy-day funds and starting to get desperate.

    Wait until interest rates start going back up. And the headwinds of the demographic shift in the NE with an aging population no longer needing large homes. Prices for single family homes in the ‘burbs face huge headwinds.

  19. Martha

    Again, thanks for this kind of commentary! I’ll definitely be paying attention, as this seems to be the best place to start my due diligence for now, as we’re living abroad, so I can’t go sneak peaks at various neighborhoods easily!

  20. Anonymousse

    Apologies all around if I hurt Shoeless’s feelings and offended Anon. It was not my intent. I was a jerk. Sorry.

  21. shoeless

    Anyone know if Option-ARM’s were used widely in Fairfield County, or was that a west coast phenomenon?

    Mousse, no worries. It’s all good.

  22. Anonymous

    Dear Shoeless,

    Washington Mutual had a large wholesale and retail operation in Fairfield County, many Option ARMs written. From an interest rate perspective
    the fully indexed rate (index + margin) is quite
    low because the index is tied to short term interest rates and they are at historic lows. Many of the Option ARMs were no income verified loans. No income loans are difficult to find now and have more stringent underwriting guidelines.

    REF