Renting, it turns out. I was astonished to see today that 64 Sound Beach Avenue, a house unlikely to sell for its asking price of $2.195 million, rented via a bidding war (!) for $6,000 per month (up from $5,900 asking). Intrigued, I looked up rental activity for the year and discovered that there have been 84 transactions since January 1st. Many of those are multi-family and condos but that’s still a heck of a lot more activity than we’re seeing in sales. 64 Sound Beach, by the way, seems atypical. More common is the fate of 22 Indian Head Road in Riverside whose owners were asking an improbable $3.399 million for an oddly renovated house backing up to a grave yard. That rented for $8,700 per month, down from an asked-for $11,000.
The owners of 64 Sound Beach paid just $1.050 million for the their house in 2000 so a $6,000 per month rent probably eases the pain of not being able to sell it. The Indian Head folks paid $2.4 million for theirs in 2004 and may not be so happy with that $8,700. I don’t know how many renters would have been buyers in better times but it wouldn’t surprise me to learn they were a lot of potential buyers who have decided to sit this one out.
UPDATE: Just for kicks, I ran this equation through the rent vs. buy calculator (also linked to on the right side of this blog). $6,000 per month rent on a $2 million house, assuming 0% appreciation and a 3% annual rent increase yields the conclusion that you are never better off buying the place than renting it. Someone asked, “what are these sellers going to do in 2011?” I guess they’re going to drop their prices, a whole heck of a lot.