Perusing tomorrow’s broker open house list I notice that sellers are still holding firm, God bless them. 63 N. Maple, a house large enough to accommodate a family but on a road unfit for same, has dropped from $5.1 million in May, 2008 to $4.995 today. Further up the road on North Maple that spec house built sideways to the road is still asking over $6 million and an older house on Pheasant is touting its “huge price reduction”, from $4.295 to $3.994.
Sellers can do what they want and that’s what they’re doing, but just for the record, here are some numbers to consider:
Houses for sale priced over $4.795 million: 183
Sold this year: 18
Sold this month: 3
And for builders:
Spec houses for sale above $5 million: 57
Sold this year: 10
Sold this June: 2
- 44 Husted
This is an okay house on Husted – dated, but nicely maintained and in a good location. It sold for $2.5 million back in 2000 and that buyer, perhaps a bit too exuberant over the march of prices here in Greenwich, tried to get $4.395 for it in 2006. When that didn’t work, he did some modest work on it and finally sold it for $3.1 million in April 2007. The next owner, clearly delusional, listed it for $4.595 million in August that same year. Now, several price cuts and brokers later, it’s asking $3.795 million. Well, it’s better – priced than it was.
I toured a house yesterday that was nice enough: renovated within the past few years, pool, decent, if small yard, etc. But I was struck that its price, in the mid-threes, was what I would have expected to see in 2005 or 2006, when it would have probably produced a buyer in the low threes. Today, I’d have priced it for a million less. I’ll be curious to see how far off I am.
556 Riversville Road is reported as under contract today, after it dropped from $5.295 million to $3.695 – I assume the contract price was lower, which is interesting, because in 2003 the sellers paid $3.5 million for the place and then poured in lots of money renovating it. If this price is typical of today’s market, and I think it is, then when pricing your renovated house, forget anything you spent on it and figure out what it was worth in 2002 – 2003 and there’s your price.
Jim Foote of Raveis listed this house on Gregory Road in Cos Cob April 6 for $969,000. Eleven days later, Nancy Healy (Shore & Country) had a buyer. That’s how this process is supposed to work. What happens more often is that the seller lists it at, say, $1.075 million, waits 320 days and sells it at $925,000. This way’s less painful and far more productive.
A house showed up today with a new, lower price and because I’ve seen it for sale seemingly forever I thought I’d look up its history. Interesting. Built in 1996, it was put up for sale in 1998 for $1.2. It didn’t sell and the builder either moved in or rented it out for awhile and then brought it back in 2003 at $2.475. That didn’t fly so he gradually dropped the price to $1.950 but it expired unsold in 2004. After another hiatus he tried again last year and it’s been for sale ever since, starting at $2.5 and now down to just about $2 million. According to the town, it was worth $2.1 million in 2005, so today’s value would be, if you play the game I’ve been playing with these numbers, 70 % of that, or $1.470,000. That seems about right to me – I hope the owner perseveres this time and finally sells the place because I’m curious to see how the 70% rule works out on this one.
5 Station Drive
This Cos Cob listing illustrates the difficulty in even attempting to calculate current values from old asking prices. Built in 1999, the owner renovated it in 2005 and tried to sell it for $1.850, eventually dropping it to $1.565 before it expired unsold near the end of the year. In 2008 he tried again, listing it at $2.2 million. he’s now dropped it all the way down to $1.479 which, compared to it’s ask of over $2 million, looks like a significant reduction – about a third, I believe. But since it didn’t sell at $1.565 in 2005, it’s a fair assumption that it wasn’t worth that then, so its new price, while decent, doesn’t really tell us anything about what’s happening to prices.
So why bring it up? Because there are hundreds of houses in inventory with similar price histories right now and, looking over all the reductions one is tempted to think that we’ve really dropped our prices. I’m not sure we have, if I look at actual sales prices, not asking prices, and compare those to the current price. Keep dropping, is, I suppose, my point.
10 Shelter Drive, Cos Cob, was listed for $2,993,100 (?) in September, 2006. It finally sold today for $1,762,500. That’s a hideously long time to have your life disrupted, your house kept in showing condition and your move to a preferred location delayed, all to get such a small percentage of your first asking price. Why do it?
Yet sellers are still at it. A house came on today for $3.595 million, quite a bit more than the $1.895 million the seller paid for it in 1999. Other than two new water heaters and the passage of time, there’s no indication on the listing that anything of value has been added to this house.
If the pricing isn’t completely blind to current market conditions, how about trying to go cheap? Another listing today seeks $2.850 million, less than two years after the seller paid $2.675 for it. That’s fine, but if you’re reaching for a couple of hundred thousand dollars, must you really exclude the dining room chandelier or, worse still, insist that “flat screen TV in Fm Rm is negotiable”? My advice in this market is to install flat screen TVs and chandeliers in every room a buyer wants them and give them to him free. I suppose a chandelier can be expensive (though someone just told me of paying $1,100 for one in a going out of business sale on the Avenue, marked down from $11,000) but how much can a TV cost? Don’t be silly.
74 Upper Cross Rd
This cottage in Conyers Farm (in the association but not behind the gate) was last purchased in 2000 for an even $10,000,000. The owner spiffed it up in 2003 and listed it with Tamar Lurie in May, 2006 for $14,975,000, a price he reduced to $13,650,000 in September of that year and has stuck to ever since, even when he dumped Tamar and brought in David Ogilvy to work his magic. Something went awry and the listing expired today, the house unsold. So over two years, seven months, two of the most successful brokers in town were unable to convince a buyer that this house was worth its asking price. It’s so sad to see top producers slipping like this.
According to this article in Forbes, “experts” predict a further 25% drop in prices for NYC area real estate. I believe that includes the stretch from northern New Jersey to Bridgeport, so obviously, your results may vary, but that’s good news for renters who want to become buyers. Not so good for any of us who’d like to be sellers. The problem with a report like this is that, even if the prediction is wrong, what buyer, reading it, is going to rush out and buy a house at today’s price? I don’t think I would.
With apologies to Dr. Johnson. Business Sheets reports that a mega mansion in LA finally sold for $8,000,000, wich is a tad less than its original asking price of $15 million but still, an $8 million sale is an $8 million sale. Some folks still have money and a few of them are willing to spend it. I haven’t seen this phenomenon in Greenwich in the past month but some waterfront did sell in November and it won’t leave me gobsmacked if we see properties in this price range going to contract soon. But notice the difference between asked and bid – buyers want bargains.
Update: Same phenomenon in New York City and same conclusion.
I agree. All the propping up efforts advocated by the NAR, home builders and banks won’t solve the underlying problem which, as Blodget points out, is the inability of some homeowners to pay their mortgage. Falling prices don’t cause foreclosures, no income does. If we “hold the line” on prices through massive subsidies paid by one group of taxpayers to another, what have we accomplished?
I don’t really foresee a wave of foreclosures coming to Greenwich – or I hope one doesn’t – but the philosophy is the same: if you want to sell your house, you’re better off adjusting to reality than clinging to a 2006 price and hoping it will return. That may well be a very long wait.
Update: And here’s exactly what we don’t need – Congress expected to authorize bankruptcy judges to cram down mortgages. That’s great news for deadbeats, pad news, in the form of higher interest rates, for those who pay their bills.