Reader IB’R sends along this link to a depressing look at the middle-to-high end market in California by Mark Hanson. Mr. Hanson thinks that market is in for a long slog and I suspect the same can be said for Greenwich. We are seeing a rebound in the $2.5 and up market – 36 have gone to contract in the past 60 days and more are rumored to be almost there, but, as Hanson points out about California’s sales, many of these represent big losses for their sellers. One Ivanhoe, for instance, is rumored to be going to contract, but the owners surely aren’t celebrating. The previous owners paid $2.7 for it in 2001 while these folks paid $3.150 in 2006 and then sunk a bunch of cash into redoing the baths, adding central a/c, etc. The listing price is just $2.795, so they’ll be lucky to get back to 2001 levels and all those improvements? Up in smoke.
So yes, houses are selling again, but for the most part, only when buyers see real value, which usually means the seller is taking a loss. How much this will hurt the sellers depends on their cash position, I suppose. The ones who took out 80% mortgages a few years ago have lost their equity and will probably have to bring cash to the closing table. That hurts. The lucky ones who paid more cash up front will have lost much of it but at least they don’t have to dig into their pockets to undo their purchase. How many in each category? I don’t know, honestly, but I do know there are some painful readjustments occurring daily in town.
By the way, the comments to the New York Times article about price wars, posted below, are mostly negative and one reader makes an interesting observation: the huge number of cash sales in the City are a reflection of the fact that so many banks aren’t lending money. If you can’t pay cash, you can’t buy a house. That’s not true here, but it is certainly true that anyone without rock solid financials isn’t going to get a loan. That may be ultimately all for the good, but it significantly cuts down the number of buyers capable of buying your home.
Maybe this means that in the not-too-distant future Riverside will resemble the Riverside of yore, when my 4th-grade teacher could afford to live on Dialstone, and my catechism instructor on the SOPO side of St. Catherine’s.
‘Twould be loverly.
Agreed. Fathers of my friends (and in those days, most mothers stayed at home) worked at jobs ranging from emptying parking meters on the Avenue, heading American Tobacco, running a major New York law firm and serving as a town policeman, and we all lived within three blocks of each other. Riverside was not improved when the average house price climbed to $1.8 million.
Thx IBer for the link
Agree, the <$10MM house buyers in NYC or CA are usually mediocre financial guys or engineers whose jobs and stock holdings are on thin ice (look at the continuing layoffs in tech industry as well-managed cos. maintain their historically rich profit margins and massive cash balances)
And most of the "economically immune" guys who can easily write a check for a $10MM+ house already live in such a place and tend to be conservative/consistent anyway in their spending vs liquid net worth, whether Bubble or Crash
That all sounds nice, but I dont see that happening in grand fashion. Local government workers and small business owners will have more opportunities to buy into Greenwich going forward, but I think Riverside south of Rte 1 will remain a tall order for this group. NOPO Riverside and Cos Cob are more likely to regenerate as more balanced communities in the coming decade which will indeed be nice (not that they are far out of balance now, but it is true that every old timer that leaves is replaced by a young family on the up and up with non-govt a prof. career). I think we would have a healthier public school system if more staff could sleep here too. Same with the local businesses.
The horse has left the barn on OG and Riverside south of rte 1 however. House prices are unlikely to dip so low is create many, if any, opportunities.
CF you have been grandfathered into elistist RE. You ____!
Grandmothered, actually.