I’ve said this before
But perhaps you’d like to hear it again, this time from a real estate professor at Columbia, quoted in the New York Times. Professor Christopher Meyer, who studied loss aversion by (would-be) sellers in Boston when the market dropped 30% noticed that sellers refused to drop their price to match market conditions. They didn’t do well, naturally, and the professor says that he now counsels his own family, “If you want to sell your house then you list it at the market price and you sell it,” he said. “If you don’t really want to sell then don’t put it on the market. But don’t say you want to sell and then set the price so high that you spend the year cleaning up every morning, having people walk through your living room and look in your medicine cabinets and reject you. That’s just painful — and expensive.”
I’ve been saying this for the five years I’ve written this column but I don’t teach at Columbia – if you won’t listen to me, perhaps you’ll listen to Professor Meyer.
On the other hand
There’s still an active market here for houses priced right. B.K. Bates listed 144 Riverside Avenue, a wonderful 1860 Federalist on 1.4 acres, for $3.7 million last Thursday and it was gone in a bidding war by Friday. This house, one of the few landmarks we have in Riverside needed, to put it gently, a good bit of work – I’d estimate $1 million, minimum – to bring it into the 21st Century, but there’s nothing like it around here, and certainly no comparable land. I think that we’ve reached a new stage in land sales here in eastern Greenwich, where sellers can now get a premium for over-sized lots. If you own an acre or more in Old Greenwich or Riverside, you may want to eschew sub-dividing it and instead offer it as a whole. Or hold onto it, and pay those college tuitions down the road. Or, better yet, call me!
Interesting article, again in the New York Times, concerning the increasing use of “standard” deductibles of 2% or 3% in home insurance policies for storm damage. As the article points out, many homeowners gloss over this amount, thinking it doesn’t amount to much, but a $1,000,000 loss could mean a $30,000 out-of-pocket expense. Not the end of the world for you hedge fund folks, assuming your bonus comes through this year, but for older people on fixed income living near the water, that’s a chunk of change. As always, it pays to review your policy and see what’s in there. If you can’t understand the language, that’s probably a bad sign.
Stone and clapboard multimillion houses
About three years ago I suggested that the shingle-style house was probably reaching a saturation point. No one who counts listened, and we’re still seeing new ones, some of which are selling. With that record of prognistication failure, here’s my latest prediction: there are too many houses being built, all alike, with stone facing in the middle and clapboard wings to either side. They look identical and, other than price, there’s very little to differentiate one from the other. And, if price is the only factor, won’t the cheaper ones sell faster than their more expensive sisters?
Even a blind squirrel finds the occasional acorn
(Thanks to my brother Gideon for that bit of wisdom). I rarely read New York Times editorials (and never agree with those I do) so I was astonished to read their editors denouncing the entire corn-to-ethanol project as the national boondoggle that it is. It consumes more energy than it produces, drives up the cost of food, encourages the destruction of farmland and, in short, profits no one but the farmers who grow corn and vote in the Iowa primary. If ethanol is to make economic sense, it will be because we import sugarcane ethanol from Brazil but of course, we’re presently taxing it 50 cents per gallon and adding a 50 cent subsidy to American-grown corn ethanol – duh. It’s discouraging, putting it mildly, that a program so flawed that even the New York Times editorial board can see its disadvantages is praised by every politician, of both national parties, running for president. Just wait till they fix medical care and Social Security.