Where are the buyers?

Renting, it turns out. I was astonished to see today that 64 Sound Beach Avenue, a house unlikely to sell for its asking price of $2.195 million, rented via a bidding war (!) for $6,000 per month (up from $5,900 asking). Intrigued, I looked up rental activity for the year and discovered that there have been 84 transactions since January 1st. Many of those are multi-family and condos but that’s still a heck of a lot more activity than we’re seeing in sales. 64 Sound Beach, by the way, seems atypical. More common is the fate of 22 Indian Head Road in Riverside whose owners were asking an improbable $3.399 million for an oddly renovated house backing up to a grave yard. That rented for $8,700 per month, down from an asked-for $11,000.

The owners of 64 Sound Beach paid just $1.050 million for the their house in 2000 so a $6,000 per month rent probably eases the pain of not being able to sell it. The Indian Head folks paid $2.4 million for theirs in 2004 and may not be so happy with that $8,700. I don’t know how many renters would have been buyers in better times but it wouldn’t surprise me to learn they were a lot of potential buyers who have decided to sit this one out.

UPDATE: Just for kicks, I ran this equation through the rent vs. buy calculator (also linked to on the right side of this blog). $6,000 per month rent on a $2 million house, assuming 0% appreciation and a 3% annual rent increase yields the conclusion that you are never better off buying the place  than renting it. Someone asked, “what are these sellers going to do in 2011?” I guess they’re going to drop their prices, a whole heck of a lot.

3 Comments

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3 responses to “Where are the buyers?

  1. j

    What is going to happen to the 2010-2011 Greenwich market when the owners try to once again, unload these homes? More saturation?

  2. Kidding Really??

    If I was a seller in this market… 1. Make it obvious to everyone the house is priced to sell. 2. Price it to sell. 3. Accept highest offer as people will perceive the price too cheap.

    #2. Seems to be the problem for so many people.

    The world has changed. Those that figure that out first will find some buyers. So your house that is marginal (plenty of those) should be priced down.

  3. cjw

    I find it interesting and informative when you recount the sales history of particular listings (e.g., sold for $x in May 2005, brought on the market for $y in April 2007 but sold for $z). What’s remarkable, however, is how frequently so many of these houses sold in the last 7 years. Perhaps this is explained by an appreciating market, because it’s hard to believe that anyone would buy a $1 million plus house–or any house for that matter–thinking that there’s a good chance he’ll move in 3 or even 5 years. Maybe everyone counts on a re-lo perk, in which case I’d wonder why the corporations that offer this perk don’t encourage their employees who are subject to transfer to rent rather than buy. There is such a fetish of home ownership in this country!