I rather suspect this is happening in Greenwich

So many Seattle homes are underwater that it’s turning into a sellers market, due to low inventory. If you can’t afford to sell your home, why list it?

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26 responses to “I rather suspect this is happening in Greenwich

  1. The New Normal

    buying a house makes sense from every aspect at this point in time: economical vs renting, once in a lifetime financing (low rates), no other alternatives

    • Mortgage rates are indeed rock bottom, and it makes sense, to me, to pay higher Greenwich prices and have the money go into a house than higher taxes to Westchester County. Taxes, like mortgage rates, are going up, while a fixed rate mortgage will not.
      The problem remains inventory. Take a tour, Normie, at what’s being offered these days and I think you’ll see what I’m talking about and why buyers are not keen to pull the trigger. Relatively new homes in good repair are so rare that they sell immediately, unless they’re wildly overpriced, but much of what’s for sale didn’t sell last year for a reason: it really sucks.

      • The New Normal

        sounds like a quality of inventory problem….higher prices to follow shortly

        • D

          Higher prices will attract more listings – that’s a free market. Really just means limited growth for many years to come as we kick the debt can down the road…

        • Normie, I wrote my last reply as I was going out the door and left something unsaid by implying that none of the current inventory is any good – that’s not so, and I didn’t mean to leave that impression. I know of several, if not many homes that I think are well priced and very attractive but have yet to sell. And that, in their case, is because buyers’ needs and financial capacity are so individual. One buyer might need a ground floor bedroom/bath for elderly parents, another might not be able to afford more than, say, $1.250 and a house well priced at $1.5 is out of reach (I never, ever pressure my clients to stretch beyond their comfort zone because I like to sleep at night), maybe the school district doesn’t work for them, and so on. These houses will sell, probably sooner rather than later, at close to what they’re asking because they’re good homes – they just need the right buyer. But – and again, this is just one man’s opinion, there are a ton of houses out there now that won’t sell until their prices come down. At least so far, I’m not seeing many buyers holding their noses and paying more than they think a home’s worth. That may change, especially if inventory remains so thin, but I’m not seeing it happen now.

      • Anonymous

        What this town needs is to get the word out to would-be sellers.
        Because its a reallly, really good time to list if you aren’t underwater.

        Insufficient Inventory for current demand (I know because I want to buy)…and I will buy nearly anything that I can spend about 100k after close just to make liveable, not fancy, just liveable.)

        Wildly low interest rates (my realtor told me 2 years ago I was crazy)
        I said just you wait…we are going lower, and I was right, but if I don’t pull the trigger this time, my mortgage payment will only go up from here.

        Schools (yes we have two kids) and they aren’t getting any younger … This has completely changed my mindset… And has literally thrown me off the sidelines ready to buy.

        And I’m tired of renting…just did the math on the tax deductions for mortgage interest and property tax..and I want a refund next year!

        I’m ready people and I am not alone….
        I have 3 very good friends I went to GHS with a few years back, we all have small families and we are all ready to return.

        Chris,
        You should do an interview with local press.
        Somehow the would be sellers need to get clued into what’s happening.
        They should take a poll of the top realtors in town….so you, Gideon, and Joey B at Sotheby’s …

        Schools are open again, and everyone (all the mommies at pre-k drop off ) are to ready to yip and yap about something new…
        I bet they would love to brag that their home is appreciating by the minute.

    • Anon

      Congress stopped allowing unlimited carryovers of capital gains to another more expensive house in 1986. Before that a family could keep trading up in Greenwich without capital gains tax. The capital gains tax reduced inventory before the recent tax increases, and this will be worse now, with much higher capital gains tax rates. Many expensive houses will be held until they become estate sales.

  2. Chimney

    It’s true, that financing rates are at record lows, but 8 of 10 people I talk to say the banks won’t give them a mortgage. Even though the banks have a ton of money, they are using it to trade, not lending it.

  3. Anonymous

    Chris-What’s your opinion on the fair market values of 26 and 24 Marks? I am surprised that given the low inventories and Riverside bubble that they are still on the market…Would love to hear your thoughts on what they are worth, and where you think they should trade? Thanks!

  4. Atticus

    Prices are set to fall further as low inventory is a mirage as you observed. If they let foreclosures happen and cleared the market, prices would drop dramatically as it cleared. Policy won’t let that happen, so recovery will take at least generation.

    Have you every noticed that the media reports so-called higher prices as good news. Wow, gov’t. policy to rig prices higher to make homes unaffordable. Good for insolvent banks but bad for people looking to buy.

    • Anon

      There are not that many foreclosures in high end areas like Greenwich. Most foreclosures are in poorer areas. If a desirable house is foreclosed on, a bank will hold on until they get market for it. I looked at a foreclosure in Greenwich. Liked the house. So did other people. It sold at market. Just not so many of these, so foreclosures do not have a big affect on the market here.

    • The New Normal

      if house prices drop you are better off shorting stocks at these high levels, as equities are completely dependent on household formation coming back to life and driving the economy

      house prices have barely recovered from the lows – it is too late to be bearish

  5. Riverside Chick

    And if you are going to make a profit, the new capital gains tax will take a bigger chunk of your profit so why sell now unless you absolutely have to. Instead of selling, maybe people now are taking a line of credit on their house if they can.

  6. Riverside Dude

    Thoughts on the 24/26 Marks situation?

    • I did suggest, back in the beginning of that property’s saga, that one large house on an 0.6 acre of land would be more attractive to buyers than two small houses crammed onto tiny lots, but builders just hate to leave a building lot unutilized. Worse, in my opinion, was initially pricing these at $4 million back at a time when the market was still cool. That number killed them and even though they’ve subsequently dropped, the stigma of being so long on the market has attached and now buyers wonder what’s wrong with them.
      i’d say there isn’t anything wrong with them, essentially – well built, nicely finished, decent, if a little busy street, they should have sold long ago and I think they would have had they come on at $3.4. As it is, maybe they have to drop further although more likely is that the ever rising (I use the term ironically) Riverside market will catch up to them and make them look like bargains, number of days on market notwithstanding.

      • Riverside Dude

        Thanks Chris. I’m just using 8 Bradbury as a comp. Sold slightly above Ask in 4 days. Same size as the Marks twins and 550k cheaper….seems like they are still wildly overpriced, even for Kali-Nagy product ……?

  7. Anonymous

    Maybe people know the 0.6acre of land was sold for $1.6mm in ’11. I think the builders took risk and should be rewarded.

    • Hearthstone 0.3 lots are selling for $1.4 – $1.7. Risk can produce reward, but not always. That’s why it’s called risk. But as I say, my hunch is that Riverside prices will bail him out.

  8. Anonymous

    Banks are lending. As long as you have no debt, credit scores 750+, and 30 % down, steady income, and cash leftover for a years worth of expenses, you will get the loan.

  9. Anonymous

    CF- i think you may be right about rising tide -i heard whispers that a deal was forming on one of the marks homes

  10. Publius

    This is basically what happens when you limit your choices. People want to live in Greenwich and will not consider other areas in close proximity to live. Yes Greenwich is a very nice town and it is close to NYC. The school district is mediocre which then pushes families into private schools adding to the cost of living in this town.

    A house is a place to live, period. It is not an investment and people should have learned this lesson either in the early 1990’s residential real estate bust or the 2007/2008 implosion. Over longer time frames a house will match the rise in inflation but will require resources, including property taxes, maintenance and replacement/upgrade. Homeowners seem to be prone to ignoring the opportunity costs of owning a house.

    As for the economics of rent versus buy, the often overlooked part of that analysis is the opportunity cost of the down payment. If you assume the investment returns on that down payment that you can generate by renting versus owning approximates the risk free rate of return (T-Bills) then the buy analysis works better because the risk free rate is now essentially 0%. If however you view the opportunity cost as the return on a basket of financial assets then the opportunity costs rise sharply, particularly over the past 3 years when both the equity and bond markets have produced high single digit/low double digit returns. Granted that is a pure Econ analysis and most people with a family want to own versus rent, but it does beg the question of why buy a $3.5mm home when there are other choices that may provide a nice house for a 50% haircut? You make the choice, you bear the consequences.

    As for buying something because interest rates are low, it would appear that no lessons have been learned from the pre 2008 debt build up and subsequent explosion. Overpaying for a house because interest rates are low is the kind of relative value argument that leads most people astray and is why many folks, while earning a handsome living, don’t have many assets other then their homes.

    Economics favor sellers in Greenwich, because potential homeowners are not willing to look elsewhere. It is a want versus need issue. People want to live in Greenwich, in most cases they don’t need to. If you are not willing to get up and walk away, you will end up paying a very, very full price.

    • The New Normal

      so we shouldn’t buy houses because interest rates are low, but we should instead rent and buy some basket of financial assets, which in reality are inflated and only performing because interest rates are low (from Fed ZIRP and QE)?

      a fixed rate mortgage is the best instrument in the world to short bonds, which will at some point in the next few years be the greatest trade over the next generation

      • Anonymous

        can you expand on this? am curious as to what you mean.

        “a fixed rate mortgage is the best instrument in the world to short bonds, which will at some point in the next few years be the greatest trade over the next generation”

  11. GreenITCH

    Kali-Nagy must have some instinct he essentially doubled down on 20 Marks rd , it will be interesting to see if lay out of house is any more friendly or if he builds a lesser house ..( which i doubt ) . interesting 20 marks rd is as well .3 of an acre and odd pie shaped lot