Oh my gosh, it says here Greenwich sales are down

By the time Greenwich Time discovers something it’s old news, but nontheless, they’ve learned that our real estate market sucks, and good for them. You’ve got the obilgatory quotes from agents saying all is good, but I thought Russ Pruner was pretty objective:

“I think our numbers are definitely going to exceed last year’s numbers in the second half of the year, just for the pure fact that we had no market at all from Sept. 15 through the end of the year,” Pruner said.

There may be more buyers next year, too, as more people jump into the market. But, Pruner said, “the prices are anybody’s guess.”

No wonder papers are getting thinner

From Greenwich-Post’s “Off the Market” section:

Feb. 10 to Feb. 19

Thursday, February 26, 2009

There were no property transfers recorded in the office of the Assessor between Feb. 10 and Feb. 19.

The New York Times sends bad news from Greenwich and didn’t interview me!

Greenwich: Where are the buyers?

LORY GAMBRILL put her colonial-style house here on the market in September, the day after the government announced its takeover of the mortgage finance companies Fannie Mae and Freddie Mac. At $1.75 million, it was considered well priced for the neighborhood, which boasts newer, larger homes — and Carlos Delgado of the New York Mets among the neighbors.

She expected it to be snapped up. “My broker told me it wouldn’t even make it to the open house,” Ms. Gambrill said.

Seventy real estate agents attended the open house in October, but over the next five months it was shown only seven or eight times, she said. She rejected an offer of about $400,000 below asking price. “It’s impossible — no one is buying anything,” she said recently. This month, Ms. Gambrill asked her broker to take the house off the market temporarily.

The article’s chock full of my optimistic colleagues like Bill Andruss, who sees a rush of buyers flooding the market. The only flood I’m seeing is would-be buyers peeing on our inventory, but perhaps Bill has a different clientele. An economist quoted says that “adjusted for deflation, prices haven’t dropped as badly as in other areas of the country.” Adjusted for deflation? Other than that, Mrs. Lincoln, how was the play?

UPDATE: Ms. Gambrill’s property may be this home on 34 Thunder Mountain Road, bought in 2000 for $1.125 million. If someone really offered $1.350 for it, rejecting that bid might have been a mistake.

Train wreck coming or just a rest stop?

That difference of opinion seems to be what’s making some home owners and real estate agents so angry with this blog. I think I’m watching a train wreck and am reporting from the caboose as we head off the trestle. Other’s think that we’ve pulled onto a siding and, once something (unspecified) good happens we’ll get back on to the mainline and chug into Happy Valley. Either way, it may help temper that anger to remember that no one, and certainly not a solitary blogger, can tell a 200 ton engine where to go, where to stop or whether to jump the tracks.

And, although my late real estate column may have been somewhat gloomy about the prospects of a steady 20% price increase year after year, the market kept soaring despite that pessimism. This blog only got going in July, 2008. By that time, just to cite an example, 21 Cornelia Drive, listed for $11,750,000 in September, 2005, had already dropped to $7.4 million. That it dropped still further in November to $6.950 million was not due to my blog – I don’t recall mentioning the house at all, come to think of it. The house didn’t sell originally because it was overpriced. It still hasn’t sold because the market has collapsed. The house’s prospects aren’t helped by the presence of a building lot, empty except for an abandoned bulldoze, lying fallow next door with its promise of disruption to come, but that, again, has nothing to do with my cheerleading or lack thereof.

Many of my colleagues who berate me for my “negativism” will, if pressed even a little bit, readily admit that the Greenwich housing market is in the toilet, and why shouldn’t they? That’s the truth. And here’s another truth: for at least the eight years I’ve been touring other people’s houses, I’ve walked out and had other agents ask me what the listing agent was drinking. It has never been a secret, among agents, that many, many houses for sale were grossly over-priced. Some houses sold anyway, due to either an entirely different opinion of their value by an experienced real estate agent who successfully convinced her client of that view or by shills who did their clients a disservice by not telling them the truth. Most overpriced houses, though, sold after the pressure of the market place reduced their asking price to a reasonable level. We’re seeing that same phenomenon now, but the market pressure is more intense.

There are 102 new spec houses (built between 2007 and 2008) currently for sale in Greenwich, priced from $1.350 million to $25 million. Of that number, 53 are priced over $4.5 million and 23 are asking more than $7.5 million. Figure it out: if the market doesn’t pick up, at least some of these builders won’t be able to hang on and either they or their lenders will have to dump them at a bargain price. And that, in turn, will bring down the price of all houses.

The alternative view is that the builders will be able to hang on, or those that can’t will be too few to affect the market, and sales will pick up again at the same price level they were at when the market dies last September.

One or the other. I won’t be gloating if the former scenario plays out, although I will certainly be busy with buyers. And, since I’m on the same train as every other homeowner in town, I will certainly not be disappointed if a full recovery occurs. Surprised, but not disappointed.

Overpricing is not new to this town

I see that 58 Parsonage Road, a good house on an acre and complete with an indoor ice rink so that your kid can eschew a career in investment banking and instead become a toothless sports star, is holding another open house tomorrow. Its price is $4.1 million now, down from $4.750 last April, but its stay on the market reminded me that this is at least the second time around for the place – both times, the owners have thought more of their house and its value than have buyers.

In September, 2003 this was listed for $5.995 million and slowly (well,  almost immediately) became an albatross around the neck of its succession of listing brokers and a source of amusement on open house day as we agents would drive by, see the open house sign and say, “my gosh, that place is still around!”. After three years it sold for 62% of its original price: $3.7 million. So as far back as 2003, some agents and owners were smoking dope – someone alert the DEA.

The new owner is not so obtuse and had the market not collapsed might be out from under his unwanted house by now with something perhaps approaching his desired price. But the market did collapse and now …? It’s a good house in a good location and there is that hockey thing going on, so someone will come along for this one. It just may take awhile, like every other house in town.

Talking down the local market

46 Terrace Ave. Rvsd

This house was sold as a shell for $902,000 in December 2003. The buyer gutted it, renovated it and resold it seven months later in July, 2004 for $1.775 million. That buyer sold it in August ’07 for $1.925 and now it’s been placed back up for sale, first at $1.850 and, today, for $1.745 – below its 2004 price. I, of course, take full responsibility for this unhappy result. If only I didn’t write about falling prices buyers would not only be paying 2007 prices they’d be happy to pay even more, all for the privilege of living in Greenwich.

I knew about the power of this blog, naturally, but even I was surprised to see that I’ve infected our new president with my pessimism. Here is what he said yesterday,which should do nothing to help the current climate of fear. Had he not read this blog, we could have expected a sunny prediction of good times to come:

And if there’s anyone out there who still doesn’t believe this constitutes a full-blown crisis, I suggest speaking to one of the millions of Americans whose lives have been turned upside-down because they don’t know where their next paycheck is coming from.

That’s scary enough but the man continued with this bit of economic wisdom that really alarmed me.

It is only government that can break the vicious cycle, where lost jobs lead to people spending less money, which leads to even more layoffs. And breaking that cycle is exactly what the plan that’s moving through Congress is designed to do.

I know that I attended the University of Connecticut Law School while our president’s degree is from Harvard, but somehow I seemed to have learned a little economics along the way while his career as a community organizer seems to have closed off that path of learning. Too bad for all of us. Would you go out and buy a house today with an expectation that its value would remain steady or increase in the coming year? I wouldn’t.

2001 pricing on North Street

718 North is what I suppose I’d call a tired old house on great property with water views of the water company’s “lake”. You can’t use that lake – it’s a reservoir – but no one else can, either, so your privacy is assured. The present owners paid $3.583 million for the house and land in 2001 and have been trying sporadically to sell it since 2004. It’s back on the market today with a new broker and a new, lower price of $3.5 million. If we fall back to 1997 prices, you’ll be able to buy this place for $2.635 million. I hate to tell you this, but that number doesn’t strike me as impossible.

Here’s an eye-opening price drop

317 Stanwich Road sold in 1995 for $1.8 million. The new owners did extensive renovations over the years and put it up for sale in January 2008 for $3.850 million. I thought at the time that they might have trouble getting their price because, although I liked the house, it has a quirky layout and there are two unbuilt-on lots next to it that, one day, will cause some construction havoc. Not fatal, but enough to affect its price. The market agreed with my assessment and the house didn’t sell despite a number of price reductions. But today it was marked down to just $2.250 million. Even ignoring the inflation of the past 14 years, that’s a remarkable price, in my opinion. Shape of things to come?

UPDATE: A reader asked about the owners applying for a sub-division of this land and wondered whether that accounted for the price drop. In fact (I just checked, I didn’t notice this before) the land has always been listed as:

“2.9 ACRES IN 2 ACRE ZONE SURROUNDED BY LAND TRUST. TAXES ARE AN ESTIMATE BASED ON DONATION OF 1 ACRE OF ORIGINAL 3.9 ACRES TO GREENWICH LAND TRUST.”

Assuming that the donation has not yet been made, I interpret that to mean that you can keep all 4 acres and pay higher taxes or go with the plan and sit on 2.9. Either way, that donation has not played a part in the reduction in asking price.