Hang together or separately

snakeThere are three new houses for sale on Boulder Brook (just off Dingletown): # 9, asking $6.550 million, #33, asking $6.575, and #39, asking $4.998 million. Each is 8,000 sf, each has about the same amount of land and each, according to its builder, is well made (the competing builders would not agree). # 39 has fallen the farthest, fastest: it came on in April of this year at $8.595 million endured eleven price cuts in four months and settled, temporarily, at $4.998. It’s also for rent but that’s doing no better: originally asking $24,000 per month, it dropped $4,000 today.

The other two houses have stuck pretty close to their original asking prices of $6.875 (#33) and $6.750 (#9) respectively.  I would think that, had the builder of #39 shown some solidarity with his fellow builders they might all have come out okay but as it is, I’d expect his $5.0 million house, or whatever he gets for it, to drag down the others. Financial woes can spread far reaching ripples.

7 Comments

Filed under Buying/Selling Greenwich Real Estate, pricing, spec houses

7 responses to “Hang together or separately

  1. CEA

    Chris, to me it sounds like you are saying two things in your blog.

    First, you rail against people who ask too much, and say that “time will tell”, but I know (and agree) with what you really think – that sellers are asking too much and haven’t faced reality.

    But here – you are saying that the spec builder who actually DID face reality and lowered his price is somehow not showing “solidarity”. I think he is being the only rational one in the group!

    I would say #39 isn’t dragging prices down. Prices are already down. He is just at a point where he may actually realize his gain/loss, rather than keeping it unrealized as #9 and #33 are.

  2. christopherfountain

    CEA, you make your point better than I mine, probably because I am of two minds here, just as you say. I never thought 39 Boulder Brook was worth $8.0 million +, but I didn’t think it was only worth $4.98, either (and of course, now that the builder’s there, its actual selling price, if it sells, will be even lower). And I wasn’t shocked by the $6.75 asked for by #9 – in a better market he might have gotten it – not now, certainly but again, I didn’t think it would drop below $5.
    But now that # 39 has done so, he’ll drag the others down with him – as you say, he may have just come to grips with the market earlier than his competitors, in which case, good for him. But if I were one of those competitors and still had hopes of making money on my project, I’d be ticked.
    So I’m not sure what my point is in this post except that the financial weakness of some players is devaluing other properties, perhaps more than pure market conditions would dictate. Or perhaps not – depends on how bad things get.
    Rgeardless, Boulder Brook looks to be in play at $4.5 and at least one of the three houses would offer good value at that price, in my opinion (and at least one probably isn’t even worth that. I’m not sure about the remaining one).

  3. anonymous

    Don’t you understand that ALL HOUSES ARE NOT CREATED EQUAL? Are you that blind, deaf and dumb to realize that just because they are comparable in size and/or location, some houses are just JUNK? Well, the one at the end of the street and lowest in asking price is an absolute abomination! A real blight on the land jut like the other houses this guy “built.” GET REAL AND UNDERSTAND what quality is! Anyone with a trained eye knows the difference. Get an education.

  4. christopherfountain

    Save your venom for the bank appraiser who won’t get inside to see all the colored pictures with arrows and diagrams pointing out the shoddy construction and will instead conclude, “8000 sf is 8000 sf” and value them the same. It is, to quote Arlo, another case of American blind justice.

    From your tone, you sound like a builder hung out to dry in the current market. Sorry to hear it, but cheer up, you could have grown up to be an investment banker.

  5. Anonymous

    Chris, you frequently talk about “good” builders or “quality” construction yet you are throwing that to the wind in this case. Stop being lazy, get your a$$ in those houses and report back! And it wouldn’t hurt to give us more (specific) info about what constitues good construction vs. poor. What are some of the main things you expect in a house of $5m vs. one at $6.5m, if size is the same?

    The crazy anon poster has a point even if you are right about bank appraisers (the least ambitious lot of people I have ever come across).

  6. gideonfountain

    I have to agree with the angry guy, the house at the end is just not in the same league as the other two. Ultimately, in Greenwich, quality gets rewarded. In the meantime, all three sit and wait.

  7. christopherfountain

    No one I know who has seen the houses on Boulder Brook thinks that the one on the end is in the same class as, say, #9. But these things aren’t like McGregor yachts, if you remember them – those were built of chewing gum and snot and sold for next to nothing. People who wanted a big, impressive looking yacht but lacked money bought them and I hope kept them safely at the marina but anyone examining one could tell instantly that they were flimsy craft and barely seaworthy. It’s harder to do with houses but you’re right – just as a boat surveyor examines everything from stem to stern, a bank appraiser could do the same and make some value judgements. But they don’t, usually, and the result is, the lowest house on the street drags down the rest.
    I’ve frequently praised good builders but I’ve also warned that they do great work out of personal pride, not from an expectation that they’ll be rewarded for their efforts (of course eventually, reputation will tell). Distract a buyer with glitz and he’ll probably never notice what short cuts were taken.
    I will call on a friend of mine, Jan Ivarsen, to put together some tips on distinguishing good from bad. Jan builds only the best and he’s the man to tell you about it. So I’ll pester him.