Inventory clearance

In addition to 54 Highview Avenue, discussed below, another long time denizen of our multiple listing service, 18 Sandy Lane has gone to contract. I liked this house, off of Round Hill Road on four acres but with some exposure to Merritt Parkway noise, but I never thought it was worth its original asking price of $2.995 million. It eventually dropped, over the course of 18 months, to $1.825, which seemed closer to its real value. What did it actually sell for? I’ll let you know as soon as that is reported.

Old Greenwich woes?

I thought that 54 Highview Avenue was fairly priced back in August, 2007  when it was first listed at $1.695. The owners had paid $975 for it in 2001 and completely renovated it so that, while it remained an unprepossessing builder’s special on the outside inside it was a comfortable, well laid out house, all up to date.

But the market was beginning its decline then and it didn’t sell, even as its price dropped and dropped again until it finally reached $1.295 this November. Today it was reported as under contract but “sold direct” meaning that the owners found a friend or neighbor to buy it, presumably for less than its last asking price. So it’s selling for at best 76% of its first asking price and probably less. Considering the improvements put into it in the past years, I wouldn’t be surprised if they lost money on this deal.

I make fun of a lot of houses that sell for far less than their first asking price and point out how ridiculous that price was. That isn’t the case in this instance, so we’re seeing a real market decline, rather than just a overly-optimistic seller finally accepting reality.

Here’s a poser

5 Meadow Wood Drive is a relatively new renovation on a back lot in Belle Haven. Unfortunately for its developer, that back lot backs all the way up to I-95 and the backyard is pretty much a green, pressure-treated wall of sound barrier. That no doubt contributed to its failure to reach its asking price of $7.950 million when it came up for sale in September 2006 and in the months since.

It’s been withdrawn as a sale and is now offered for rent, originally $25,000 per month ($300,000 per year, if your calculator isn’t handy) and, as of today, $15,000 ($180,000). That still seems stiff to me.

So here’s the question, or two questions: is it not offered for sale any longer because more is owed on the place than can reasonably be expected to be produced by a sale?; and how large is that building loan, and what does it cost to service it every month? I don’t know the answers but this house does seem to be one of the ill-advised projects begun in the go-go years and now coming back to haunt the participants.

Drive a bargain home?

It’s starting to look like a good time for it, maybe. There’s a lis pendens filed against 14 South Baldwin for something like $6 million, for instance, and I assume that foreclosure is on the way. This house will never sell for its hoped for $9 and I’m pretty sure the builder would be glad to accept an offer that would allow it to walk away. The complication here is that maybe the house isn’t worth $6 million. The front yard’s a swamp, the back yard’s tiny and the house, while nice enough, isn’t finished. Empty elevator shafts are just awful things to discover late at night, just to cite one example. How do you get the builder and, more important, the lender, to take a haircut? I’m not sure, but it’s probably worth the effort to try, at the right price.

The builder of 11 Lindsay Drive is, so far as I know, under no such financial pressure and certainly he hasn’t dropped his price much since April 2007 when he first offered it for sale at $13,750,000. It’s down to $12.9 million, not a price that will excite many buyers but probably not an unfair one – this is a huge, expensive project. What do you do with the knowledge, though, that the same builder has another project for sale on Ridge Street for $7.450 million? The builder and his agent will disagree vehemently but I don’t see how a view of the Honda dealership’s parking lot, no matter how luxurious the house hosting that view is, will support a price of $7 1/2 million. Do you, can you, use that opinion against the price of the house on Lindsay? I’d certainly try, especially because there is no lender threatening foreclosure. That relieves some of the pressure to sell but it also should make negotiations simpler. Even in this market,  though, you may just tick the seller off and poison the well; then again, it might work. And if it doesn’t, there are going to be a lot of other projects to try your method on.

Dreaming of a bleak Christmas

12 Grigg Street is a 1900 single family house just off Greenwich Avenue on a 1/10 of an acre. It sold for $260,000 in 1994 and, although the owner made no improvements during the next 13 years, she listed it for $3 million in December, 2007 as a potential commercial opportunity (zoning allows it). I thought that was a steep price to pay for something off the Avenue with no parking and said so at the time. No doubt that was the reason it didn’t sell (ha!) as its price dropped down through the 2′s finally coming to rest at $2.349. It expired yesterday, unsold. If the seller tries again, I’d suggest she use a commercial broker and get a better grasp of its value.

Don’t they know

It’s  The End of the World? (click)

Picture this:

“So many hedge funds have moved to Greenwich in the past five years (mostly from Manhattan) that they now occupy about a third of the town’s relatively scarce office space. Another third is occupied by companies that work with hedge-fund companies, according to commercial-real-estate brokers….

“One day in January, shivering in the cold, I found myself staring at the skeleton of a mammoth, 19,000-square-foot house rising on [40] Zaccheus Meade Lane. Like so many big new houses in Greenwich, it was a spec house—financed in this case by two retired Goldman Sachs partners.

“Only a few months earlier, the lot had featured a gigantic granite boulder, 135 feet long and 35 feet high, and deeply embedded. It’s gone now, that massive rock; in its place we find an ordinary driveway and terrain that’s nearly flat. “We only blasted for three days,” boasted Frank Spoto, the spec builder who, backed by the men from Goldman Sachs, is putting up the house with his business partners, Steve LoParco and Frank Napolitano.

“In the old days, no one would have bothered to destroy that rock; financially it wouldn’t have made sense, for one thing. But these days, even the least desirable piece of land in Greenwich can attract a speculator who, if he knows what he’s doing, can make a quick fortune. For example: Mark Mariani, one spec builder I interviewed for this story, has done so well for himself he owns a Gulfstream IV and a Falcon 900.

“For their two irregular acres of land on Zaccheus Meade Lane, Spoto and his partners, or their backers, paid $2.5 million. After spending about $5 million to build the 19,000-square-foot house (and dynamite the rock), they anticipate selling it for around $12 million. Who will buy this big-ticket house? I asked. “A lot of people think this is a home for the hedge-fund guys,” replied LoParco. “That’s probably a good guess.”

Both quotes, of course, are taken from the now infamous 2006 article on Greenwich in Vanity Fair and, for 2006, I think the author did a credible, if venomous job of depicting the current condition of our fair town. But that was then, this is now. If we really are going to lose 1/3 of the hedge funds, what will that do to the commercial space in town, 2/3 of which is filled by hedge funds or related companies? Nothing good, I shouldn’t think. 

And we’re already seeing the affects of Wall Street’s retrenchment on our residential real estate market (duh). That Zaccheus Mead house that Steve LoParco and his ex-Goldman partners spent $7.5 million building is a (huge) white elephant that remains unsold. Instead of the anticipated price of $12.0 million (they actually put it on for more than that) it has dropped to $7.9 million and still no one wants it. That’s not entirely the fault of the market; the author states that “even the least desirable piece of land …can attract a speculator who, if he knows what he’s doing, can make a quick fortune”. [emphasis added]

40 Zaccheus Mead was and remains an undesirable lot that no one would ever pay $12 million to live on – LoParco’s “good guess” was just dead wrong. But the house might have found a buyer by now, at some price, if the market were better. It isn’t, so it hasn’t, and I wonder if it ever will.

There are plenty of other unsold spec houses sitting on equally undesirable pieces of land, all erected by builders who were convinced that some hedge funder with more money than brains would come along and snap up. The builders’ estimation of their would-be customers’ brain power may have been accurate – or at least, the last 12 months haven’t proved it wrong – but selling gullible people over-priced items requires that those people have money. It’s beginning to look as though that essential ingredient may have gone missing. At least until the next bubble, which may not arise for some little time. Hang on.

 

 

Not a creature was stirring …

We’ve seen 4 single family contracts reported these first two weeks of December all in the 2′s or lower. This compares with 12 in the same period last year, with prices ranging up to the high 7′s, 30 in those two weeks in 2006 and 28 in 2005 (prices $17 million on down). People are waiting for your prices to drop. Other people are waiting for your offers to rise. It’s a conundrum.

here’s an interesting price concession

187 Stanwich Road – that very nice antique pressed close to the road – sold for $2.615 million in August 2007. It came back on just this past October for $2.750 which seemed ambitious to me, given our market conditions. The seller must have agreed because today he dropped it all the way down to $2.740 – a full $10,000. I’m curious at the thinking that underlies these token reductions. Does the seller really think that he’s scared off buyers’ offers by asking $10,000 too much? Is he trying to signal that he’ll accept a little less than he’s asking but don’t bother presenting anything realistic? Did he inadvertently drop a zero from the change form?

Inquiring minds want to know.

Here’s another one

2 Old Stone Bridge, which we’ve written about before, sold Monday for $1.775 million, 68% of its original $2.595 asking price. It was last sold in 2000 for $1.150 million but the new owners did a ton of work modernizing it so I’d guess that they, or the relocation company that handled the sale, broke even, at best. Nice house, too.

So much for sale to ask ratio

79 West Brother (Milbrook) was listed October 6 of this year for $2.495. Once upon a time that would have been considered a fair price for this address and this house, even if it was an untouched-since -1929 project in waiting. But the seller must have recognized what was happening to the market because on October 31 he accepted an offer and the house sold yesterday for $2.060 million – not chump change, by any means, but only 82.5% of the asking price. Time was, that kind of reduction took years to achieve. These owners were smarter and got out when the going was still (relatively) good. Remember that old statistic that realtors used to show a purported 96% of asking price sales ratio? It was always nonsense, because realtors used the last asking price, not the first (a practice I’ve railed about here before, so don’t tell me you’re surprised) but until this year, it was at least a vaguely-in-the-ballpark figure. I’m seeing 20% and 30% off now, and that’s where I think the market is.

See, I got this theory …

39 Boulder Brook, the house we all love to hate, or at least love to follow its progess, has bounced around the market since April, starting at $8 million something, dropping dropping dropping until it hit $4.998 and finally withdrawn from the market last week. But now it’s back, better and more expensive than before. That’s right, the builder has raised the price back to $5.498, the same price it wouldn’t sell for all summer. Why? Well, the stress could have gotten to him and that was the only number he could scratch out with a crayon before they hauled him away or, perhaps, he felt that his own effort looked shabby when the two other new houses on the street are asking $6.5 million. “What’s wrong with yours?” buyers might have asked, “that it’s so much cheaper?”

The answer, according to some people, is,”plenty”, but rather than address that issue, why not close the gap a little?

That’s just my guess and you are free to come up with your own theory. I will point out that, although they are asking $6.5 million, the other two houses haven’t sold. Nor has this one, come to that, even at its old price. This is getting to be fun in a horrified bystander kind of fashion. Soooee!

Another project going nowhere?

Twelve Twelve Doubling Road sits on 3.75 acres spun off from an original yard of 7+. Three of those acres were sold for $4.0 million in 2006 and this property, complete with an old mansion, went for $7.575 in 2005. The house has been beautifully restored and was put back on the market this fall for $13.5 million. Despite its location, grounds and the quality of the restoration it found no takers and was taken off the market yesterday. Maybe it will sell in the spring. Spring of what year is to be determined.

Condos on Valley Road

340 Valley Road is a project of 10 units built in 2007. They’re nice enough, but they aren’t doing so well. One, unit 3, sold for $2.3 million back in July – the buyer must be feeling lonely by now because with the exception of Unit 8 which has been rented, he has no neighbors. I can only sympathise with that buyer – it is no doubt a crummy feeling to look around and realize that, probably unwittingly, you’ve become a pioneer. I hope his contract had a price protection clause because otherwise, unless this developer is remarkably well financed, I’d expect some dramatic price drops in the coming months. Nothing’s happened yet but then again, “nothing” is a broad term – these condos don’t seem to be going anywhere.

UPDATE:  The same builder put up what I thought a teriffic house on 83 Howard Road but it, too never sold. I blame that on trying to sell a house in Northeastern Greenwich, always a tough sell, on 0.5 acres in a 4 acre zone. Not even room for a pool and this was a weekend house, in my opinion. You come out to the country for the weekend, you want a pool. The asking price of $4.2 million didn’t help matters an, either. Too bad – nice house.

It’s my house and I’ll cry if I want to

15 Knollwood has expired after 18 months, still at its original price of $10.750 million. It looks like a nice house, set on two acres in a one-acre zone and encompassing either 12,000 or 13,000 sf, depending on which listing you look at. It has an interesting history: built in 1999, it was first sold for $5.5 million in February 2000, put back on the market in June of 2001 for $8.750 and found a buyer in July 2002 for $6,49,900 – it went in a bidding war, after all that time.

The current owners did some renovation in 2007 and have had it up for sale since April of that year. I don’t know whether they’ve pulled it for the holidays or just grew discouraged but clearly they’re not in the mood to lower their price. That’s fine, as long as they’re happy living where they are.

Another big price reduction

49 Pecksland Rd

This house was purchased as a renovation project back in November, 2004 for $1.650 which, if memory serves, didn’t strike me as a crazy price, even though it needed everything replaced or updated and even though it bordered on a swamp (I think it did – I’ll see if my memory is accurate tomorrow). My, how times have changed, or maybe I’ve just gotten smarter over the ensuing years. In either event, the owners did all the work, lived in it awhile and put it back on the market this past February for $3.850, which was crazy. Today it dropped to $2.450 million, 36% off that first price, which means that, after commissions and taxes, the sellers must be getting perilously close to what they’ve put into this place and it’s still sitting. That must be discouraging.

Here’s an alarming thought

The Michael Lewis article linked to below mentions that, nationally, the ratio of median house price to median income has historically been 3:1. This man’s  blog suggests that a ratio of 4 or even 5 to 1 might be more typical for metropolitan areas and that makes sense to me – we’re not in Kansas, after all.

So I looked up our town’s median income and gosh! Greenwich median (family) income was $121,853 in 2007. The median price for a single family home was $2.150 million in 2007. That median has now dropped $200,000 to $1.950 but we were at a 17: 1 ratio last year and, assuming income did not go up, we’re still at 16:1.

If a 5:1 ratio is in fact the appropriate figure for our town, we can either look forward to a significant increase in our income soon or a drop in the median price to $609,000. Wouldn’t that be a kick in the seat of our pants!

Chieftans

20 Chieftans

We’ve mentioned this property before but it was just reduced again today to $3.1 million, which is 29% less than when it started back in February 2007 at $4.350. It’s bound to sell eventually, but at what price?

How do you solve a problem like Maria?

This eleven-acre spread at217 Taconic Road was custom built in 1998 on land purchased for $3.3 million in 1997. It’s really a great piece of property and a wonderful house if you like 17,000 sf edifices – not for me, thank you, but for the right sort of guy ….

It’s been on the market for 2 1/2 years now and has dropped 31% to $16.5 million from its original price of $24 million. So far, no takers. You wouldn’t expect a house in this price range to be snapped up overnight but I’d have thought someone would have stepped up to the plate by now. We’ve had four sales over $15 million this year but none since September, when things were looking more promising. Has this one missed that market or will someone who still has money want to spend some of it? Darned if I know.

Withdrawn listings

Back from showing a house so I pulled up, as promised, the statistics on houses that have been withdrawn from the market. It’s hard to draw useful information from this category because there are so many unknown factors: removed for the holidays and coming back?; removed so as to get a fresh start on pricing?; removed because it was rented?; or just plain giving up, for now?

But there is a trend here, attributable either to market conditions or the upcoming holiday, take your pick. Four houses were withdrawn 60-90 days ago, 8 59-30 days ago, 9  29- 14 days ago and 11 this month.

One withdrawal of interest (to me) is 39 Boulder Brook, the new construction that was listed in May for $8.595 and plummeted to $4.998 before being yanked last week. It’s still available for rent at $19,980 per month which at least is not as silly as its first price of $29,950. I personally don’t think anyone is more likely to pay $240,000 to rent this place for a year than he was to pay $360,000, but perhaps a generous employer looking for a home to stash a chief executive while he’s hiding from a Senate inquiry panel ….

Harbinger?

154 North Street asking $2.995 million, was just withdrawn from the market. It has been for sale since October 2007, started at $3.5 million and had only one price reduction. Is this a case of a seller who can afford to wait until he gets his price and, seeing that the market won’t give him that price, has decided to stay put until things improve, or is it just a desire not to be disturbed during the Christmas holidays? We’ll find out in January, I suppose. In the meantime, I think I’ll pull the statistics on how many houses have been withdrawn this year and not returned to the market. It might be interesting.