$275 a foot for new construction

Peter the Reader sends this news:

The lakeside chateau in New Canaan that failed to sell by auction a few months ago–and posted a couple of items about– seems to have sold for $5.5M. That’s a 20,000 square foot main house with a lake, separate staff house and over six acres of property in a prime estate area. If it was an arms length transaction, it means that the buyer paid zero for the land and only $275 per square foot for the structure. No way you can reproduce the structure for $275 psf. What does that tell us about high end real estate in Fairfield County?

Before you angry home sellers call my manager to complain that I’m now ruining the New Canaan market, too, remember that, when I wrote about the place, I said I liked it!

42 Comments

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42 responses to “$275 a foot for new construction

  1. Old Coot

    Well, the California market is also in the toilet so would it be OK to blame you for that? It could be your fault…you’re only a few timezones away after all.

  2. Old School Grump

    Methinks this bodes ill for Dunellen Hall, which despite being a finer (and deservedly far more expensive) property in countless ways, is still subject to this particular tide.

    I still think Dunellen is a natural home for one of the following nonprofit ventures:

    1) Institute for healing/spiritual growth/self discovery, founded by dingbat celebrity or socialite

    2) Institute for studies of international relations/ economics, founded by disgraced Russian oligarch in need of reputation rehabilitation and money-laundering opportunity that isn’t based in Brooklyn

    3) New address for some established non-profit entity that will negotiate a deal that reveals itself as breathtakingly savvy fifteen years from now

    CF, if you are party to such a transaction, I will expect a piece of the vig.

    • christopherfountain

      The town assessors have pretty much evaluated Dunellen Hall as worthless and computed the land’s value from the number of four-acre lots than can be carved from it. I hope that doesn’t happen, but if the land’s the only value there, then, until property prices recover, I’d figure roughly $3 million per lot. Can you get as many as ten lots from the land? I’m not sure but if that’s possible, then $30 million is closer to its current value than the $125 million originally asked. Since the money’s just going to cause Trouble, so to speak, it might be fun if the place sold for $25 million which would yield the first, and probably the only $100 million price miscalculation in Greenwich real estate history.

    • christopherfountain

      Old Grump, maybe a writers’ workshop/retreat sort of thing, funded by Walt? We’ll put his name on the place, he can probably shield some assets from creditors while having a chance to work on that screenplay and on all those acres, there’s plenty of grazing for the Fabulous Five!

  3. Old School Grump

    Hey, I worked for Ogilvy Senior’s ad agency a zillion years ago, and am quite willing to believe that excess, um, optimism is a genetic trait.

  4. FlyAngler

    Chris:

    The one thing I see resulting from stories like this is the temptation to extrapolate an singular situation on to the broader market. Unless there are another dozen or two houses of similar dynamics, I don’t think we can say $275/sf is anything other than the operative number in this situation. If there is no other similarly stressed seller situation, it is uncertain that that price will be replicated. Yes, other stressed sellers, spec or otherwise, will come to market and may touch that price. But to take that price level and extrapolate it widely is a bit of a stretch.

    • christopherfountain

      Fly, I think my response is, yes and no. Yes, you can’t extrapolate from one sale but …. I just had a deal fall apart at the last minute (for reasons unrelated to the underlying deal) that would have seen 12,000 sq.ft. new construction, on 6 acres, sell for $3 million. That’s not $275 but its pretty cheap. The question, as yet unanswered, is how many spec houses will sell at fire sale prices – I know of at least one that I think ought to go for $200 a foot, but we’ll see – if a majority of the 97 specs priced at $7 million and up sell for peanuts, that’s going to drag everything else down, I think. If only a few do, then we’ll look at them like this New Canaan sale – a good buy for one person, period. I really don’t think we’ll know for at least another six months and possibly longer.

  5. Old School Grump, those in need of an institution offering “healing/spiritual growth/self discovery, founded by [a] dingbat celebrity or socialite” are already well-served by the inmates housed at this nuthouse over in Rye.

  6. Old School Grump

    Whoa, Bovina, I’d forgotten about Wainwright House! Too much competition, we’ll have to go the Russian oligarch route (more in sync with the spirit of Leona anyway).

  7. Wally

    One thing I gather from all of this is that this is a once-in-a-lifetime buying opportunity, if you are looking for quality. Since prices have come down so much, and probably will not recover to earlier levels, builders will not build anywhere near the level of quality they have in the past. That New Caanan house probably cost $500-800 per sq foot to build, and notwithstanding CF’s assertions, people will not start giving prime Fairfield County land away for nothing – never have and never will. So, much less will be spent on construction, and the quality will be reflective of that.

    • christopherfountain

      That’s what I anticipate, Wally. It will a long time before builders sink the kind of money into spec houses that they did the past few years. Custom they’ll do, but buyers will pay through the nose. So yes, if you can deal with a house larger than you really want, there will be deals coming on (and some are already available, albeit quietly) where buyers will pick up these things at well below builders’ costs. After that, no more.

  8. pfar

    Clearly as the high end homes reprice lower that will lower the market. I’m a interested buyer in New Canaan, Darien and Greenwich in the 2 to 2.5mm range, and you’re now telling me that $3mm might get me 12,000 sqr/ft and 6 acres??? We’ve been looking for 4000 sqr/ft on at least .5 acres but now clearly think we should raise our expectations for the money we’re looking to spend, or expect a lower price for what we’ve been looking at. If you have any inventory let me know.

  9. anonymous

    Location….NC isn’t a $5MM+ zone, for future resale; is it really 20K sf or does that include more cheaply finished lower level?

    Not sure most builders were quality focused in Bubble when anything poorly built sold anyway; skilled labor was scarce and overcommitted; best materials were often on backorder; and most buyers were clueless about quality of land, structural engineering and technical aspects of home mechanicals/networks, etc

    If anything, expect higher quality (and newer tech) at a lower price from today’s less busy, hungrier, surviving custom builders….and many buyers today may prefer a 6K sf brilliantly situated and built new home over a >10K sf house w/many unacceptable compromises (esp poor locale/land), diluted build quality and cartoonish/hotel-size scale (and high maintenance costs for stuff one doesn’t want or use)

  10. Accolay

    If all new construction were going for $275/sq. ft. in the area, I’d buy immediately. Too bad some builders are still greedy. I think this is an anomaly???

    • christopherfountain

      It ain’t greed – builders put more into their projects than $275 a foot (especially when you factor in land costs) and I suspect most of them have given up hope of esrning a profit by now and would be content with saving their shirts. But regardless, charging what the market will bear isn’t greed, as I understand it – just as paying market price now isn’t heartless – just market forces at work.

  11. Walt

    What utter hubris I hear in this room!!!
    And now I will let you in on a secret. About why I love Greenwich so!! And miss you all SO MUCH!!!
    I don’t even know what “utter hubris” means!!! And neither do you!! But when I was at one of those boring society cocktail parties, or at dinner at Round Hill Club, and one of those stick up the ass waspy types – kinda like like Chris, you know what I am saying? – droned on and on and on – I just blurted out – That is UTTER HUBRIS!!!
    And they all shut up. It was like a lucky charm. Magic I tell you.
    Anyway, enough about that.
    I did my PSA.
    OFF TO DINNER,
    Your hubris confused Pal,
    Walt

  12. Accolay

    Speaking of which, Chris, what do you think my chances are for getting a 5,000 sq. ft. new construction on decent land in mid-country for $2M? Am I crazy even in this market?

    • christopherfountain

      Yes, Accolay, because they didn’t build them that small. I’m sure they wish they had, now.

  13. Riversider

    Chris,
    Regarding your comment: “there will be deals coming on (and some are already available, albeit quietly)”, I noticed in the NYT classified section this Sunday a listing from a builder selling 2 homes in Riverside and one in OG. The listing stated “motivated builder is excited to negoitate”.

    • christopherfountain

      Riverside, I bet I know who that builder is and if I’m right, he has every reason to be motivated, and I suppose that if a 50-ton boulder is coming down on your head, “excited” isn’t too far off the mark.

  14. Anonymous

    CF, your post is very misleading. You should call the selling broker and obtain additional info. The house was sold unfinished. Needs about $4mm worth of work to complete.

  15. SizeBuyer

    Accolay,

    for the most part there isn’t any new construction on decent land period at any price. the remaining land that has been built with oversized spec homes is crap (most anyway). All of the good land was and has been built on many many years ago.

    And don’t get fooled into thinking that even if you could by an 8k sqft house for a good price that it is worth it. Unless you have cashflow and lots of it a house that big will bankrupt you, the IBers are slowly finding that out and will soon be putting those monstrosities on the market along with the current lot of unsold white elephants. During the bubble people didn’t stop to think about the crappy land or the cost to maintain such houses and now they wish they had.

  16. New Canaanite

    The chateau was 15,000 square feet, not 20,000. It is unfinished and construction was abandoned long ago. It is totally out of character for the neighborhood – not the typical tasteful New Canaan estate- this home would be perfect in Greenwich- and not an ideal piece of land and the home is wedged sideways so it faces the “lake”. It’s hopeful that this property was able to fetch $5.5MM given the buyer is getting an unfinished home AND how much time has passed since the builders stopped work…..best of luck to the new owners. With significant additional investment to finish this house, the $275 will be blown out of the water. Thanks for including New Canaan on your blog but tell your contributors to get their facts straight before they post.

  17. Anonymous

    AMEN!!!!

  18. Anonymous

    Chris, how about posting a retraction/correction?

  19. FlyAngler

    Chris:

    On other thing for potential buyers to keep in mind as they review these bargains, the carrying cost of a home of this size. Just because a buyer’s bank account can now buy more home if he finds a motivated seller, he should look at the cash flow required to carry a larger home. Electricity, gas/oil heat, systems maintenance, landscaping, painting, housecleaning, etc. All of these costs are basically proportional to the size of a home though the ratios can vary.

    Maybe you should consider a dedicated post on this topic as a “warning” to all those bargain hunters out there who might be tempted to look at purchase price alone with no thought to the carry.

    • christopherfountain

      I have mentioned the problem before, Fly – i.e., by the time some of these white elephants reach the $2 million price level, a $2 million buyer probably won’t want or even be able to afford the $15,000 a month to keep them up – it’s why I think there’s a bulldozer in a lot of these homes’ future. But you raise a good point and I’ll try to assemble some actual costs and post them.

  20. Peter the Reader

    When the property was auctioned, I walked the interior. They were working to finish it. I estimated it needed about $500K to finish. I assume that it was finished. Tell New Canaanite to calm down and take a walk on bittersweet lane and see the size of the houses and whether the chateau fits in the neighborhood. Granted, it’s the biggest house on the block, but it’s not totally out of character for the area.

  21. Anonymous

    $15,000 per month in upkeep? get real.

    how? please provide a breakdown. i don’t see more than 4k per month to maintain a 12,000 sft home on 3 acres.

  22. New Canaanite

    Please tell Peter the Reader that I don’t need to walk the neighborhood – I live in it in an almost as large but much more discrete and hidden estate close by. This is America and I support people being able to build an in-your-face chateau in an area of charming stone and shingle estates, but I am not alone in feeling like it is out of character for the neighborhood. I wish the owners well and think once the property is landscaped it will actually look pretty awesome……I wish them well! There is a similar extremely large castle-like home going up on North Wilton – close by- so on second thought, maybe this style of home IS the next generation of new homes. I know this type of castle-like home is popular in Greenwich.

  23. SizeBuyer

    CF,

    Is Riverside referring to the builder who has one house by the cemetary in OG?

  24. Peter the Reader

    …and New Canaanite’s objections to my comments were? How about the realization that his/her charming, discrete, hidden estate may not be worth as much as he/she thought, if indeed he/she resides near the chateau. If it’s any consolation to him/her, we all have taken a hit to our net worth from the real estate collapse, but that doesn’t mean we should close our eyes to reality. Cheers!

    • christopherfountain

      Yes, Peter, she did seem to have more behind her strenuous complaints than mere objective fact.

  25. New Canaanite

    Peter and Chris- not sure how i was closing my eyes to reality – i actually was pleasantly surprised to see this large estate, which had long ago abandoned construction, then been advertised as being auctioned off since last summer, get $5.5MM, considering costs to complete and upkeep, in this market. Yeah- we’re taking a hit, which may never recover thanks to our new pres. Just thought the $275 was way off but happy to see Chris expanding his coverage to New Canaan, as his Greenwich coverage rocks!

  26. SizeBuyer

    …and the one on buxton.

    any questions??????

  27. hammer

    I was at the auction and got info from the auctioneer. He said the man paid $3.5MM for the property and put $4MM into construction to get it to the drywall stage. They estimated it would take another $2MM to complete it to the blueprint specifications.

    In my estimation it was way too low. They stopped working on the place for at least a year and who knows if mold, pests or mildew got behind the the drywall. Who knows what’s behind the walls anyways? There were no floors, doors, finishings, bathrooms, kitchen, lighting, painting, landscaping and staircase. The buyer is basically buying a shell without unknown risks. It will take at least $4MM to complete it to the standards of the house design. Why spend nearly $10MM for something that could be a major headache when there are new houses just as nice without the headaches?

  28. Realtor1

    As per usual, it is not the freedom of speech you exercise, that any of us professional Realtors object to, it is your negative position/spin, and the fact that you rarely discover the background, information/details before you spout off.
    And unfortunately, a lot of people read your blog relying on it as “truth” and think you are simply remarkable in your honesty.
    Cocky, yes, opinionated, yes, factual….rarely. I find it remarkable that you sign your name to all these entries without taking time to find out the facts. Reading your blog is like watching “Reality television”, mostly scripted and not as it is in real life.
    As stated, the New Canaan house was unfinished and needed about a million dollars worth of finishing work. It will cost millions more if it gets the landscaping work that the neighboring houses enjoy. Right now it is a big beautiful shell with promise.
    Rumor has it, it was also a short sale.
    And last but not least, as most educated people recognize, after a certain point, square footage gets cheaper, not more expensive by the foot to build.
    The house is in keeping with the neighborhood and the prices there, I know because I grew up there, my backyard opened to that property where “Summersweet” was created. Architecturally, brick is not a first choice in New Canaan, although there is a large Brick home, also for sale, just across the street on Lee Lane. And as more and more “new” money has entered the town, so has the architecture become more varied and diverse.
    No doubt this house will be beautiful when it is completed.

  29. Peter the Reader

    Realtor1 rightfully admonishes you. Get factual, will you? He is factual, –“rumor has it, it was also a short sale”.

    One million dollars for landscaping. Wow! Does that include the purchase of the landscapers themselves or just the plants, shrubs, etc?

    Enough of this. Can we all agree that real estate, especially the higher end has taken a beating, with more to go? As you posted today, sales in Greenwich for April, so far, are down 81%. Does that not say anything to your peers?