Open House Picks

Re: 1st Street - lack of inventory is helping sellers right now, but credit problems and overall pessimism are hurting them. I agree with IronBalls that 1.5 would be a good price for 1st Street. While it looks to be in good condition, I suspect the electrical/plumbing are due for an update, and the configuration of top floor rental (instead of garden rental) is problematic for some potential buyers, but reconfiguring is expensive. 6 months-1 year from now, I would not be surprised if houses of this kind returned to 2004-2005 levels, which was not so long ago - making this house worth closer to 1.2-1.3. Still a pretty good price for an owner who probably paid a tiny fraction of this.

Posted by: Miss Muffett at November 14, 2008 2:24 PM

11217 - I don't think the exact number of Citigroup layoffs really matters. We're in a financial tsunami and no one can deny that. To think that NYC, and the astronomical prices of its real estate, won't be affected in a *major way*, is sticking your head in the sand. The unprecedented bubble of the last few years will pop. Low inventory will help for a while but that will start to change as it invariably does in bust cycles such as the one we're now heading into.

Posted by: Miss Muffett at November 14, 2008 3:20 PM

11217 and I disagree - my, what vitriol! Look, I'm not the only person repeating myself since we are all coming at this topic with a distinct point of view - for example 11217 I've also seem remarkable consistency in your posts. If I repeat myself, it's to counter the repetition by other posters that the prices that remain **insane** are somehow reasonable even though most prices still do not reflect a correction. And I'm NOT saying that the ONLY people who will be hurt are those who speculated or overreached - this is twisting my words. What I DO say is that yes, there will be some people who bought in the last 5 years thinking they could afford something and suddenly finding they cannot due to unforseen circumstances (job loss, divorce, etc.). People in his category who will be forced to sell might indeed feel very real pain. But let's look at the numbers. A bigger house directly across the street from the PS house featured here sold in Dec 04, less than 4 years ago, for 1.2. So, let's say that person had to sell now. Chances are they would still make a tidy profit, and even 6 months-1 year from now, they would probably at the worst break even. So, that probably leaves mostly people who bought within the last 3 years who are really vulnerable. I DO feel compassion for these people. But really, what percentage of current sellers are in this boat? Of course, it's impossible to know, but I suspect there are many sellers who are NOT in this boat. Also, I realize that the broader economic conditions leading to the housing downturn in NYC will cause broader pain for many NYers (and I'm as nervous as anyone else that I'll be among them since job security is much more fragile for just about everyone). So I'm not denying that either. I just find there remains a level of denial among market bulls about NYC real estate. Sure, there's a concession that prices will dip in some way, but I do remain incredulous when a HOTD (like the one yesterday) seems "well-priced" at 2.5 when it sold also just a few years ago for about half that. As long as others repeat their justifications about the currently still sky-high prices, I will continue to repeat why I think these prices are no longer justified.

Posted by: Miss Muffett at November 14, 2008 9:40 PM

The Chicken - re: your logic of who can afford a $2mil house right now - the people in category c you mention, who have to sell a property at a similarly inflated house, are probably NOT good candidates to buy a $2mil house. Chances are they will be selling an apartment and the apt market has already started to suffer more than the townhouse market, so they may find they either can't sell (this is happening to people I know) or have to significantly reduce their price. Re: the "a" category - people with ready cash - well, there are some out there, who either sold at what is now unquestionably the peak (which is behind us), or saved a lot (I'm in this category, not c as you placed me). These, the a's (not the c's), are the people who will probably be buying at first since there is, for sure, pent-up demand due to lack of inventory. But it's really this group who are going to dwindle quickly, and even those who remain (like me) will start to become much more conservative with their budgets since, whereas, at the peak, they have been inclined to "stretch" to buy the right place, I think "stretching" seems imprudent to say the least right now, since who knows whose income will take a hit in this climate (not to mention our vastly shrunken retirement/college savings). Suddenly, paying 1.5 mil for an 18' 3-story townhouse in Park Slope that needs work does not seem like the deal of a century, and in fact, seems expensive - I think that deal will be coming soon, but the current prices have not yet adjusted.

Posted by: Miss Muffett at November 14, 2008 9:57 PM

Sorry, I have to add one more thing to respond to "I Disagree". Why is it "delusional" to suggest the owner of PS house paid a fraction of the asking price when the ad for this house says it's been in the same family for 50 years? I am not saying *every* owner in PS paid a fraction, but plenty did. Most buyers who bought before 2004 probably paid about 50% or less than what the current prices are - I know **plenty** of people in this boat, who paid 700, 800, 900K, maybe a million tops for PS houses within the last 10 years that up until recently were asking 2-2.5million. So please, do not call me delusional. I'm sorry my calling the market like it is annoys you, but I'm equally annoyed by those who somehow think today's prices are justified, or should only see a modest dip.

Posted by: Miss Muffett at November 14, 2008 10:24 PM

11217 and I Disagree - please see TraditionalMod's post in the "open house picks 6 months later" to see why I feel compelled to repeat myself. She, like other people on this list who cannot believe that the market can go down a lot, also keeps repeating the same arguments over and over - why is that not annoying and delusional? I'm not saying I find her annoying and delusional, just pointing out that I'm not the only one repeating myself, and honestly, I think the facts support my argument (and others predicting major declines) rather than hers, which implies only a modest dip.

Posted by: Miss Muffett at November 15, 2008 11:37 AM

11217 - the difference between what happens on your block - someone paying 40K 30 years ago and 3 million last year - is that their incomes were probably scaled to the time that they bought. The problem in the last few years is that house prices rose way beyond the growth of incomes for most people, and traditional metrics of home prices in relation to other factors got way out of whack. The current possibility of lowering incomes is one more reason that home prices are set to experience a significant reduction.

Posted by: Miss Muffett at November 15, 2008 2:20 PM

Chicken - anyone with cash right now should make their mission keeping the cash safe, period. I think inflation is the least of our worries at the moment. If anything, there are very real fears of deflation (think Japan, lost decade).

Posted by: Miss Muffett at November 15, 2008 5:00 PM