So why aren’t houses selling?

Following up on the  previous post, I was thinking: I’d guess that buyers (and I) consider the houses currently for sale to be, on average, 20% overpriced. Sellers probably think their own house is just 5% off the true value, and that 15% difference is keeping buyers and sellers apart. You wouldn’t think that such a relatively small spread would prevent sales from happening, but it is, especially because the sellers respond with venom when presented with a “low” offer.

So I am showing distressed sales almost exclusively these days. They take months to consummate because of the convoluted structure of our banking system, but at least the sellers – banks – realize that the game is up. The ordinary Greenwich homeowner does not, and is still insisting on cashing the paper profits he thought he’d accumulated in the past decades.

4 Comments

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4 responses to “So why aren’t houses selling?

  1. Anonymous

    So much for those homeless GS bonus kids buying houses in Greenwich to create a bid in ’10…

    Many on this board had predicted in ’09 that most who have ample cash/credit in Manhattan/Greenwich already own some primary shelter

    Newly cash-rich traders can easily rent some new condo in NYC or house in Greenwich and watch how luxury RE prices change…and, more importantly, how their own liquid net worth and job security changes over next 2-3yrs as China and Europe “unwind”

    Sept08 reconfirmed for those left standing the immense, deadly risk of illiquidity…and luxury RE is incredibly illiquid, esp at the worst times when one’s other investments, job security and cash flow are in jeopardy

    And global debt markets have many ominous signs of storms ahead, unlike the usually clueless equity markets (consider Fall07…and the false dawn of Summer08)

  2. Wandering Through

    I submit that 15% isn’t such a relatively small spread anymore, especially with Greenwich prices…even with some of the salaries involved amongst the buyers.

    IMHO, the reason the 1.5 mil and under properties are moving is because of buyers that finally see an opportunity to buy in town that but a couple of years ago, would have been an impossibility. Those are the ones that the 15% makes a huge difference to. They can and will only go a certain amount to get their chance to live in a community they want to call home.

    On the other hand, I think that even the multi-million dollar capable buyers are also watching the manuvering in Washington and know that their “fortunes” (literally) may change (WILL be changing) at the drop of a hat and they can’t afford to be frivolous. Well, not with houses anyway, gadgets, cars, 1000 count sheets and overpriced designer labels are another matter, of course. THOSE things are necessities.

    A lot of time, these buyers are not looking to stay in one place longer than a few years, reap a profit, then move up or on…so the houses never really become a home to them in the never-ending quest for upward mobility.

    Some are finally starting to realize those
    glory days are probably over. Some however, will never get it. They are in a constant state of polly-anna-ism and have fallen down the rabbit hole.

    Including a some broker friends I know there. Truthfully, it’s quite frustrating and starts to wear on one’s nerves to see those in a constant “Fiddle dee dee, I’ll worry about it tomorrow” state of mind.

  3. G'wich Transplant

    Saw 13 Ivanhoe recently. Listed at $3.4M and one of the few houses that I think will sell within 5% of ask.

  4. foobar

    Agree, reason houses are not moving is that at least half the inventory is way overpriced. Stuff that is priced at around 500-800 per square foot (location dependent of course) seems to move quickly.