All real estate is local but …

Nationally, these guys say we have at least another 20% to drop. If California and Nevada are close to bottoming it’s because their prices have already dropped so far. Late bloomers, like Greenwich and New York City, were the last to feel the housing collapse and I, at least, think we’re still falling. You may disagree, in which case I invite you to come shopping for a new house with me. We’ll offer 95% of asking price, the (manipulated and deceptive) “historical” selling percentage in Greenwich, according to the realtor board, and I guarantee you’ll have your choice of every house out there, including Mad Monkey’s.

UPDATE: Miami isn’t Greenwich, although many of Greenwich’s more prominent felons end up there, but the logic of prices falling until buyers and sellers reach a balance would seem applicable here, too. And in both Miami and Greenwich, there is still a gross imbalance. Here in the land of Leona, we’re looking at at least a three-year inventory and as for $5,000,000 + houses, well, what are you doing in 2050?


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25 responses to “All real estate is local but …

  1. anonymous

    Can’t rely upon macro-stats, CF…esp in illiquid high-end mkts which behave like FPC waterfront land, not dubious, $5MM+ ask spec houses

    Beverly Hills land was ~$10MM/ac (premium location/seismically sound land) at peak; already down to $5MM/ac ask…could easily be $3MM/ac by end of ’09…who knows? (Most in BH build on an acre or two)

    SF’s Woodside is illiquid; was a mere $1.5MM/ac at peak (most built on >4 acs)…problem (?) of high-IQ places like Woodside, with little spec building (b/c of onerous permit processes, unlike Greenwich) is desirable land will not appreciate (or depreciate) much

  2. Retired IB'er

    FL has one thing going for it that CT does not.

    Homestead exemptions under bankruptcy in CT are limited to $75,000 while in FL there is no limit. So anyone looking at bankruptcy heads to FL and puts ALL their net worth into their home. Thus, protecting their net worth from creditors (subject to timing/fraudulent conveyance issues).

    The downside, of course, for FL is it attracts a lot of financial scumbags. But in times like these, it augments demand for expensive properties!

  3. Paco

    The compelling thing about the referenced analysis at Clusterstock is that it looks at several measures of house values – price-to-income, price-to-rentals, etc. – and all of them imply that not only was the recent bubble unprecedented in scope but that it still has a ways to fall before reverting to the mean. That’s in contrast to the ambiguity regarding data coming from U.S. and worldwide financial markets.

    In addition, as the Clusterstock analyst points out, bubbles have a tendency to overcorrect on the downside before settling back to the long term mean, a tendency which, if true in this instance, implies the possibility of additional house price declines.

    One market segment for which I haven’t seen any data – outside Florida and Arizona – is the market for second homes in recreational and retirement locales apart from major urban/suburban markets. Such markets clearly offer amenities (generally a good thing for maintaining value) but represent totally discretionary purchases for most people (generally a bad thing in recessions).

    In the small Western mountain recreational/retirement region where I live both resale and spec house sales activity seems to be close to nonexistent while new construction – generally started before the downturn became evident – continues at a slower pace. The sales activity is too small to get a good measure of price declines but some nice houses with good views, etc., have seen 25-30% price drops from initial listing prices to no avail.

  4. Reader

    I have seen most of what’s available in the high end of Greenwich market and with two exceptions, the quality and design are pretty poor. Most of the builders aren’t real builders, they are speculators. They can get away with it when the market is strong, but when the market is weak these deficiencies become more obvious. It also seems that many of today’s buyers are so concerned about getting a “steal of a deal” that the become blind to these issues.

  5. New Buyer

    I am unsure of the math here and wonder if you could explain. Greenwich may or may not have another 20% to drop in prices, but drop from what number? Are you talking about a 20% drop from current asking prices, recent sales (very few), peak 2006 prices, or some other mysterious number? You have put forth a logical formula in prior posts, but I can’t seem to find any semblance of a “current price” from which we might drop. I find the current pricing process amorphous and confusing. Ugh.

    • christopherfountain

      I’m talking about a completely undefined number, New Buyer, because you’re right – prices are all over the place. But I have an idea of what I think the values of various houses are today and for those few that are priced “correctly”, I see another 15-20% drop coming. Those that aren’t are overpriced by half. But that’s just my opinion – not entirely made up from whole cloth but it’s obvious that most agents and sellers disagree with my prediction and I can’t say they’re wrong. The market can, but it won’t speak for awhile. I’d guess that six months from now we’ll either still be falling, in which I’ll claim credit for being right, or we’ll be climbing, and the sellers can sneer at me.

  6. Philm

    This real estate comic would be a perfect logo for you, or at least a worthy image for a blog post that lists Greenwich houses that match the criteria specified:

  7. Enzo

    Agreed market feels like it should head much lower but I have a house for sale on my block and I’m amazed at the number of viewings. It seems like there are a lot of buyers out there but not a lot of people willing to pull the trigger. Am I wrong?

  8. Sambone

    FYI, I wonder if Walt is living with them, or will be soon?

  9. Cos Cobber

    One of my numerous gauges for real estate activity is the frequency of the CF’s posts.

    Over the past week activity on this blog is down, so perhaps some contracts are coming closing to fruition. Or it just could be the doings of GAR!

    • christopherfountain

      Ha! You’re right, Cos Cobber, that I have been busy but that’s because I’m showing houses and digging around the Town Hall vault to see exactly how much trouble some of these sellers are in (a lot). But bids designed to get sellers out of trou7ble without enough to earn them a profit are, so far, being resisted so no done deals yet. Time, and foreclosing creditors are on my clients’ side.

  10. Inagua


    Sun Valley, Idaho has a 91 month inventory.

  11. anonymous

    California down 40% but everybody knows that great locations in Marin and OC are only down 20%. The bubble in Greenwich is isolated to the unestablished streets, and the spec builders telling buyers that it costs $300-$500 per foot to build a house. Anywhere else in America you can build an elaborate custom mansion for 1/2 of that range. If you want to know where the bubble is, look at where the spec builders found available space to build…

    • christopherfountain

      Cos Cobber has a point, Anonymous. Empty spec houses on North Street,Round Hill Road, Khakum Wood, Zaccheus Mead, Doverton, Dairy Road, Meadowcroft, Wooddale, etc. etc. These are hardly the far, unexplored regions of Greenwich.

    • christopherfountain

      Cos Cobber has a point, Anonymous. Empty spec houses on North Street,Round Hill Road, Khakum Wood, Zaccheus Mead, Doverton, Dairy Road, Meadowcroft, Wooddale, etc. etc. These are hardly the far, unexplored regions of Greenwich.

  12. Cos Cobber

    North Street is unestablished?

  13. Xyzzy

    Oh no where did todays post go????

  14. anonymous

    Those streets are all established and prestigious, but obsolete. Analogy would be the established streets in Philly’s mainline suburbs. They are obsolete because nobody in the new era wants 16 bathrooms in a flat, grassy suburban mcmansion. What people want is 1) urban convenience or 2) waterfront resort living. “Good locations” in the tri-state area are Manhattan, Old Greenwich, Southampton (village, not town), etc. The obsolescence of suburban mcmansions should not be confused with the housing correction in “good locations.” Put another way: Orange County and Marin County are far more beautiful than North Street. No offense intended to anyone.

    • christopherfountain

      Well if Khakum Wood, Round Hill Road and the others are obsolete, what’s left? Weaver Street doesn’t seem like a candidate for the next hot spot, nor does South Water Street.

  15. anonymous


  16. Cos Cobber

    Well, I confess I don’t know much about Marin County, so lets try to keep in more local, say in the tri-state region so I can follow along. If you want to argue that the Northeast has nothing on CA, thats a whole other thread.

    So back to the NE. If your arguement is that homes in more walkable, centrally located addresses with less land and more modest, but yet ample sq footage of say thirty-five hundred to six thousand ft are in vogue and 10,000 sq ft homes on Round Hill are out, then why is Greenwich proper and even, OG south of the village fairing so poorly? There are plenty of fabulous new homes in both locales and nothing is doing.

    Another local example would be Manhattan. Nothing more central then Manhattan, yet sales have completely tanked.

    I think there is some merit to your point that long term trends point to more interest in central locations, but I think your are a little strong in your assessment that its over for 5 acre housing.

    In part, there is less interest in 5 acre housing because it cost to darn much.

  17. Cos Cobber

    What’s going on at Keofferham is not unique to the market. Its slower there, just like everywhere else.

  18. anonymous

    Manhattan Price/SF in the 1Q 2009 are only down single digits year over year according to all sales recorded by Halstead, Pru, and Corcoran for this quarter. These reports are on their websites. Case-Shiller NYC Condo index tells the same story.

    In Riverside, 30 Owenoke sold for $2.3 million or 22% below its peak sale price in 2006. That’s not too bad, and certainly not 40% down as many bloggers may have wanted. That’s also higher than its full 2005 market value assessment of $2.2 million. So going back to 2005 prices from 2006 prices ain’t so bad after all (there was a thread on this earlier).

    In south of village, I am not aware of any recent sales of good conforming lots/decent houses at 40% discounts to the peak of the bubble. It’s honestly more like 15-20% or back to 2005 levels.

    Greenwich has only 2 unique qualities: low taxes and marine lifestyle close to NYC. The true bubble in Greenwich is not in “location properties” but rather in “mansion” properties. The mansions are not only obsolete, but the implied cost/sf charged by builders to build in the bubble is double what is long run sustainable in a competitive market. If you pay a builder more than $300/sf to build a home, you have immediately and permanently lost a good chunk of value the day it’s completed. Because in the future they will be built for much less. The CT license requirement protected Greenwich builders in the bubble, but now competition will come from all over the state and don’t forget They’ll build that ugly mid-country spec mansion for $175 / foot if you push them.

  19. Cos Cobber

    I appreciate you taking the time to expand your hypothesis. My opinion is that is premature to rest on the notion that central locations are going to perform far better than outer locations. Better, yes, far better, maybe. But hasn’t that been the case with many RE declines..sans inner cities and centrally located working class neighborhoods.

    While I see some merit to your point, the data is just too thin and too short in time frame to reach any conclusion yet. The mega mansion market suffers as much from plain terrible lot location and pure glut than from a sea change in the taste of prospective buyers.

    Lets keep watching to see how it plays out. Glut is killing the backcountry. And to your earlier point, lack of product should help…lessen the decline for south of the og village (“SOOGV”). Maybe.

  20. anonymous

    thanks cos cobber – your points are very well taken