We have 638 single family houses for sale right now, of which 70 were built in 2008, 26 in 2007, 17 in 2006 and 13 in 2005. Not all of those 113 houses are spec houses, but it’s reasonable to assume that most are – certainly, 2008 homes are.
What’s going to happen to these, in a market that’s seen three houses go to contract all month (and, although twenty 2008 -built houses sold or went to contract in the past year, only six did in the past six months)? I am guessing that we’ll have a mixed bag. Financially weak builders will lose everything and some of these will go for forty – twenty cents on the dollar. Those builders with the wherewithal to stay the course might lop a few million off their asking price but should, maybe, be able to eventually find buyers with the ability to pay millions of dollars for a house they like.
Long range, I think the best hope for builders is the realization that the houses they’ve erected won’t be available again for a long, time. No lender will ever again risk $6 million on a spec house until this crisis is long forgotten. Land values will fall to reflect the lower asking prices of new homes – let’s say, just for an example, Havemeyer drops back to the $950,000 range. A building lot then, will be worth something like $350,000, at best. The luxurious baths and kitchens buyers like so much just won’t be available in spec houses: the price of those homes won’t support them.
So I think we’ll see a new batch of modest homes with the occasional splendid, custom built mansion to accommodate the wants and tastes of, say, under-bosses from Queens or Ukraine. And a few heads of industry, perhaps. If you want a taste of what I think is our future, drive out Sherwood Avenue from Riversville to King Street, and cast an eye on what was built there during the seventies. I’m sure the houses are adequate to raise a family and enjoy a nice life, but they aren’t inspiring examples of the builder’s craft.
So if you think you may want something “special”, however you interpret that term, you may want to keep an eye out now for houses going under and houses selling for 70% of what they might have fetched two years ago. I have a feeling we won’t see their likes again. Which will come as a relief to many people but, judging from the way these things sold in their heyday, lots of folks liked them.