House of the Day: 271 Stratford Road

These homes remind me of the suburbs - really not urban feeling at all, and I mean that as a compliment. But that's a big price increase during a period when prices started to go down.

Posted by: Miss Muffett at November 26, 2008 1:48 PM

househunt - it's called denial. Some sellers just can't believe the party's over, though other are starting, slowly, to accept the new reality. That's why you saw, in yesterday's "last week's biggest sales" a Park Slope house that hit market at 3.2mil and sold for nearly 1million less. If you follow market closely, you will see more and more price cuts, since any seller that's serious pretty much has to cut price these days, sometimes drastically if they were too aggressive at first. This is all classic behavior at the end of a bubble. There is a peak, then a stand-off as sellers don't want to accept the changed reality but buyers refuse to pay the high prices. So for a while transactions really slow down. But eventually the weakest sellers cave, other sellers start to accept new pricing levels, and new comps are established. Everyone agrees prices will readjust soon, and are just starting to.

Posted by: Miss Muffett at November 26, 2008 2:31 PM

Wow, that's a bummer for these sellers then, since they will almost certainly lose money after fees. Unfortunately, I think there will be more and more people in that situation. I truly hope most sellers during this period will be folks who bought earlier and so won't suffer real losses.

Posted by: Miss Muffett at November 26, 2008 2:50 PM

Aussie - what about people who decide to downsize in this climate? So, yeah, you may sell your big house cheaper but you can also buy a smaller apartment cheaper too. Maybe some people, during the good times, thought they could afford a lot more square footage and are now re-evaluating that and trying to make do with less. So many people I know are in nervous mode, wondering if they are going to lose their jobs, and trying to reduce their expenses. Housing is probably the biggest household budget item so maybe it makes sense that some people would decide to just move to smaller quarters?

Posted by: Miss Muffett at November 26, 2008 3:18 PM

Well Aussie, here's an anecdote. We recently placed a low-ball bid on a property in a very prime area. The realtor originally said the owner would not even deign to counter-offer. But recently, we were approached again to renew discussion very close to our lowball. So some prices, even in prime areas, are starting to drop a lot.

Posted by: Miss Muffett at November 26, 2008 4:57 PM

Househunt - we offered a full 20% below ask, for a place that was not priced as insanely as some others, but obviously in our opinion still too high. Honestly, we're not even sure we want to buy this particular house, since we've reduced our budget (to be conservative, in case one of us finds our income takes a hit since anything is possible) and the house needs so much work that I'm a bit a worried about the renovation price wild card (who knows what lurks behind those old walls). But my point is that a seller who initially snubbed us is now asking us to come back to the table, which to me means they are rethinking the price to expect given the acceleration deterioration of economic conditions and confidence in the NYC RE market.

Posted by: Miss Muffett at November 26, 2008 7:19 PM

Aussie - I'm not so sure how quickly I'll be (re)joining the owners camp. Yes, we've put out a bid here and there, but inventory is so slim that we have not found anything we really love. And, whereas this past summer I was prepared to "stretch" to buy the house I love, I've definitely canceled all "stretching" plans. Our goal up to now was to keep our mortgage very similar to what it used to be, or perhaps a bit more. Now, if anything, I'd like it to be smaller than it was previously, just because it would be terrifying to have a larger mortgage and find that our incomes become victim to all that's going on - it's starting to happen to too many people I know. Of course, many people will keep their jobs, but many people will lose them too, or suffer wage stagnation, even income cuts (i.e. less work at same or even lower rate). I sincerely hope we'll luck out and find something sooner rather than later and as I've stated repeatedly, we're not waiting for a bottom per se, but I'm certainly in no rush to buy. The next year or two will see continuing declines that will more than make up for our rental expenses, and I do think that after this initial stand-off/lock-down period, more inventory will hit the market, at adjusted prices.

Posted by: Miss Muffett at November 26, 2008 10:00 PM