Market developments today, Feb. 25th

As of 2:30, 0 contracts, 25 price reductions, and one sale from a contract several months ago. The sale was for land at 25 Richmond Hill Road, priced at $2.195 and on the market since July, 2007. It finally sold for $1.6, which really isn’t so bad for the seller. Its time on the market is more a reflection of the dearth of home-building buyers these days, I think, rather than a crazy original price.

Reductions include 16 Dingletown Road, new construction, $8.995 million when first listed. Today it’s $7.850 million. 

502 Cognewaugh, listed at $6.995 since June, 2007 finally dropped a million and is now $5.995.

27 Vineyard Lane, land off of Zaccheus Mead, started at $4.995 million and is now $3.495

15 Old Orchard, a new spec house abandoned by its owner to the banks has dropped from $1.995 million to $1.295. It’s unfinished and even its builder estimates it will cost $300-$400,000 to finish, so I don’t think buyers will find this new price attractive.

8 Tulip, on the other hand, is a newish house, originally $835,000, now marked down to $699. With a little negotiation, this might be an attractive deal.

And finally, just for a reality check, there is 31 North Porchuck Road, which sold as new construction in August, 2007 for $7.850 million. It’s back on the market today for just $6.995 million. That was an expensive rent for 18 months.

10 Comments

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10 responses to “Market developments today, Feb. 25th

  1. anonymous

    Sellers will only become more desperate over next 6-12mos

    Will have more new, unemployed sellers adding inventory later this year

    Buyers can easily just rent some new house for a yr or two of interim shelter while they build what they want, using their choice of land and builder, all available at discounted, current-mkt prices

    Buy vs build is prob more relevant value analysis than buy vs rent

  2. CEA

    Why on EARTH would you want to spend 12-36 months building new, going through P&Z, permitting, etc. – when you can get brand spanking new RIGHT NOW, at a discount?

    Anonymous@3:19 – my hunch is you’re a builder. You seem to post a bunch saying that building is better than buying in Greenwich, and right now – that idea is laughable.

    CEA

    • christopherfountain

      I only half agree, CEA. No question that there are houses out there marked down low enough that you’re probably getting a million bucks of free construction, but that’s only a good deal if you like the house and the land at least enough that, coupled with the low price, you’re happy. If I had unlimited money, however, I’d buy those 4 1/2 acres at 228 Round Hill Road for, say, 3.5-$4 million, stay religiouslyt within zoning regs so as to avoid the Board of Appeals, etc. and have a house built by a good architect and builder, all at a discounted price. I’d spend more than I would buying someone elses’ project, and I’d lose at least a year, probably 2, but I’d have exactly what I wanted at a price millions less than it would have cost me in 2006.
      Since I don’t have such funds, I’ll look into a used pueblo in Taos.

  3. CEA

    Chris, you are talking the exception to the rule (an extraordinary piece of land).

    Anonymous@3:19 says it is the rule. “Buy vs build is prob more relevant value analysis than buy vs rent”.

    So…. I’d say it will be the case 90% of the time that buying is better than building, for the vast majority of your customers.

    I hear many, many people make the argument that they can get “exactly what they want” if they build their own – but I have yet to see what needs are unique to certain people, that necessitate building your own. The huge majority of houses I have seen (custom and just ready-bought) all seem to have the same things:

    fancy-pants kitchen
    large family room
    exercise room
    “media room” and wine cellars in larger homes
    En-suite bedrooms/bathrooms
    Guest wing or separate cottage/pool house

    “Exactly what you want” is never (or so it seems to me, when I am forced to ‘oooh’ and ‘aaaahhh’ at someone’s build-to-suit) so off the mark that it is necessary to spend “millions more” and “2 years longer” doing it (or so it seems to me).

    CEA

  4. CRB

    The problem in Greenwich is that all the new homes are huge or they are on marginal lots like Chris has said. We want a new house, in the 4-5 k sq ft range on a nice piece of property (1-2 acre)… show me something like that in the 06830 zip. All the spec houses are on “marginal” pieces of property and/or are well over 7k sq ft. We will probably build so we can get exactly what we want because it isn’t what builders are building.

  5. anonymous

    Only opinion that matters is that of guy writing the check….

    If in market today, I’d buy the land at 228 RH (or similar quality/quantity) and build a 5K sf house…probably $10MM all-in costs

    Would plan to live in house for >10yrs, so would want stuff to my tastes, not adapting to some builder’s cookie-cutter spec tastes/sizes

  6. CEA

    That may be. But there are $8 mil sq ft houses, on nice land, that you can have.

    I guess I have a hard time believing that, in reality, someone would rather wait 2 years and go through the hell that is construction, and pay $10 mil, when for millions less you can have a perfectly fine, brand spanking new house.

    (and – Chris, correct me if I’m wrong – but is there that much difference between “spec” design and someone’s “custom” design? $2 mil [or 25% of whatever value] worth?)

    CEA

    • christopherfountain

      CEA – interesting question because, right now, when builders are knocking a million bucks off their price before they even begin negotiating, the premium between new custom and new spec is probably much larger than its been in a long time. The trouble is, so many of these spec houses are too big (say, 12,000 sf) or on bad streets or bad land that many buyers don’t want them at any price – well, any price short of the builder going bankrupt, at which point you encounter a different set of problems dealing with a bank. I do think, and I haven’t checked with my builder friends to confirm this but I’m pretty sure it’s true, that you can, in this market, get a very well built, reasonably sized (say 6,000 sft?) house built for around $500 sft. Maybe not all the exotic woods and coffered ceilings and whatnot that spec builders were putting into their houses to justify their hoped for $1,000 sft, but very nice all the same – I’m not talking Home Depot cabinets. All of that said and I want to post on this tomorrow, there are some spec houses on the market now that will probably never be seen again, or not for a long time. You can buy them today at cost or even below cost and if, God willing, the market recovers, you’ll do okay. If it doesn’t recover, as I say, no one will be able to afford to build anything like it as a spec home and if you do want such an elaborate house, it will cost so much more than the current crop that even Bill Gates might wince. Assuming, of course, someone does want such a house. I think some people do – certainly a lot of very elaborate homes were sold during the glory years. Ah well, more on all this tomorrow. It’s too late at night for my brain to function.

  7. Riverside Dog Walker

    Chris, while you develop this thread, I am interested in if there are beginning to be opportunities for investors.

    I don’t know that an investor would buy any spec house (who is going to buy or rent from them at something that makes an investor money?), except at a steep discount from the bank lender, and this scenario is still probably about a year out.

    However, the good land you mentioned in back country, don’t remember the exact address, but the builder paid I think $1.2m and put in septic system, could be a good deal around this price.

    Catching a falling knife is always tricky and almost never works out the way you think, but for a patient investor looking for a good price entry point, what strategy, if any, would you advise?

    • christopherfountain

      Dog Walker, land is pretty cheap to let lie fallow and doesn’t deteriorate the way a vacant spec house does. This is why, in better times, the successful builders bought land and kept it in inventory. They’re selling it now, I suspect, not because they no longer believe in its value but because they have unsold houses to keep away from the wolves and need the cash.
      Without pretending to know his motives, the builder who’s selling the land at the end of Langhorne (38?) is indeed offering value. He paid, as you noted, $1.2 million for the land and spent a fortune grading it, building a septic system and otherwise preparing it for building. If someone can get it for even close to its original purchase price (and I’m saying he can, although the price has already dropped $1 million or so), that would be a deal, I think. Maybe not so apparent today, but a few years from now, yes.
      I think now’s a good time to try to pick off builders’ inventory. A lot of them need cash and while you might not want to take one of their spec homes off their hands, buying their land makes sense. heck, if the market recovers and they survive, maybe you can sell it back to them in 2012 for a tidy profit!