Condos of the Day: 502 1st Street

Ugh - no character. Crazy to ask this much for a 2 BR. But then, this is the same realtor that is now trying to sell 14th St house for 2.150Mil after it just sold for 1.995 (having gone into contract pre-crisis). Clearly, they are still in a bubble.

Posted by: Miss Muffett at December 8, 2008 2:27 PM

The only thing I can think of is that the buyer of 14th Street bit off more than they could chew - that is, they went into contract pre-crisis, flipped out when things started to tank, but did not want to lose their 200K deposit so decided to gamble. So, they are probably praying that they lose less by turning around and re-selling it immediately than they would have by backing out of the deal. However, it's hard to see how they won't lose some significantmoney. The closing costs alone when they purchased the house must have been around 50K, and the brokers commission were they to sell at 2mil would be about 100K. Since they paid 1,995,000, and they are selling for 2,150,000 that is probably the optimistic ask to recoup costs. It certainly can't be a flip since there is pretty much no profit factored in. Even if they sold for the same price they purchased for, they will probably lose at least 50K. Given the deterioration of the market since they went into contract, they likely will lose a lot more than that.

Posted by: Miss Muffett at December 8, 2008 4:04 PM

I suspect 1st Street is a harbinger of what's to come. Inventory of late has been very slim, but inevitably starts to grow in a housing slump, as sellers cling to old prices, and buyers refuse to give in. Eventually, sellers readjust their expectations, and start cutting prices to get things moving again. We will probably see this start to happen in 2009, and continuing in 2010. During the last NYC downturn, prices peaked in 1988, turned in 1989, then took til 1993 to bottom out, then took many more years to crawl back to the highs of the peak. This is why serious sellers will just cut out the wait and sell at a more realistic price.

Posted by: Miss Muffett at December 8, 2008 9:28 PM

I just realized, in discussing 14th St, I made a math mistake (rushing while posting from work!). If the sellers, who closed at 1.995 just a few weeks ago (!), sold the house for the same price they paid, they would lose around 150K (closing costs when they purchased, plus broker's fee to sell). If they sell at 1.950, they will wind up losing about 200K, or roughly the same as they would have lost had they backed out of deal after they went into contract (which was probably just before financial meltdown hit). Problem is, they will likely have to sell for even less. They probably priced as high as they did, 2.150mil, to factor in the inevitable discount off of ask that sellers expect in this climate. Problem is, any serious buyer now is likely to do their homework, see that the house closed weeks ago for 1.995, do the math to figure out when it went into contract, and expect a significant discount off of the price from this summer. These people must really be in a bad position to be selling again so soon!

Posted by: Miss Muffett at December 8, 2008 10:40 PM

Wishinone - key words: "a few months ago."

Posted by: Miss Muffett at December 9, 2008 12:35 AM