Last Week's Biggest Sales

Old news, indeed. The current market will only start to be reflected in 2009 closings - anything that went into contract Oct 08 onwards...Declines are just starting!

Posted by: Miss Muffett at December 16, 2008 12:34 PM

Wrong, Biff. I've said many times we're not trying to time the market bottom. I am very aware that we may buy while prices are still going down but if we find the place we love, at a reasonable price we can afford, we will buy even if the market has further down to go. It may take many years for this market to bottom out (last NYC downturn lasted many years too). I won't worry about that too much since we intend to stay in next place for life - but at the same time, no way will I pay today's ridiculous prices when it's so clear that cuts are coming in the future.

Posted by: Miss Muffett at December 16, 2008 1:09 PM

I pick cereal very quickly thank you very much. Just don't want to pay a crazy price when I am literally seeing price cuts in the hundreds of thousands for some properties we've looked at (but rejected for other criteria). There is basically unanimity that prices will go down in 2009, and possibly through to 2010 and beyond. We only sold a few months ago, and the meltdown happened, so we're just actively looking, but not rushing. We have a list of flexible criteria for the property we're seeking, of which price is just one element - but since price impacts so many other parts of our lives - esp time spent with our kids! (big mortgage = more hours working to pay the bills), price is a major criteria, esp in an environment when prices are headed down.

Posted by: Miss Muffett at December 16, 2008 1:36 PM

I should add that I only started to see real price cuts on some properties (probably with more serious sellers) in the last few weeks but the vast majority of properties are still wildly overpriced and thus not moving. Suburbandude is right - it's very hard to renegotiate after you've signed a contrct so main recourse for buyers who went into contract pre-meltdown and got cold feet is to back out and lose deposit. Some are starting to do that (figuring they will do better waiting out price declines) but for many people, that's too bitter a pill to swallow. But yes, contracts signed after Nov 1 will be a much better barometer than things that went into contract pre-meltdown. Just look at how drastically and suddenly other assets have lost value - who knows what's going to happen to NY RE?

Posted by: Miss Muffett at December 16, 2008 1:53 PM

Ledbury is spot on. Walking away is very difficult. As someone in that price range, I can tell you that the idea of losing a 10% deposit would be a major problem to me and indeed, would have eaten a very big chunk out of our budget to buy something else, even at a 20% discount. Precisely since we intend to stay for life, had we gone into contract pre-meltdown, we would have just sucked it up and moved on. But I would have been very bummed to see values go down another 20%+ after buying (and some say they could go down as much as 50%). Now that it's clear prices are heading south, and that the economy is so scary, I've recalibrated my budget and tolerance for ridiculous prices.

Posted by: Miss Muffett at December 16, 2008 2:15 PM

Sebb - every time I house I looked at gets a price cut, I save money. This is what is happening more and more, and will accelerate next year.

Posted by: Miss Muffett at December 16, 2008 2:41 PM

I'm not sure at all that the market is going to drop 50% - only that some think that's certainly possible. If it were only to drop 20%, then I'd probably have stayed in my contract and have overpaid rather than deal with all headaches Ledbury cites which make markets inefficient. No one knows for sure where the market is going so in some respects, everyone is gambling (that's the nature of the marketplace). But there is way more evidence supporting large price declines than any other scenario right now. In fact, it seems certain (and not a gamble at all) that prices are going down. The only gamble is how much, how long.

Posted by: Miss Muffett at December 16, 2008 2:57 PM

"Sure prices will drop on some houses" - and I will buy one.

Posted by: Miss Muffett at December 16, 2008 3:18 PM

Our mortgage will be low (mostly cash purchase - don't want to be a slave to my mortgage) so I don't care that much about rates - low purchase price is more important to me, and prices are still way too high on most places. That is indeed starting to change, but only *just* starting. Looking forward to 2009.

Posted by: Miss Muffett at December 16, 2008 3:26 PM

BG - cash spread out in FDIC insured accts is very safe, and while interest rates are low, it's growing a bit - probably the only place where money is growing right now!

Posted by: Miss Muffett at December 16, 2008 5:47 PM

squaredrive - hard to say what a "reasonable $/sf is for a pslope house/brownstone" since houses vary a lot in terms of what kind of condition they are in. Many homes, even if in good condition on the surface, still need some renovation since the chances are good that the electric/plumbing is old, exterior may need some touch-ups, etc. Plus, many of the homes we've looked at still have funky layouts that are inefficient, and rejiggering is costly. That said, I think $500/sf is generous for most houses, with a discount if it needs more than the typical amount of work.

As for my criteria, wine lover, we are not seeking anything very grand - just a decent amount of space for us (ideally about 2000 sf) with or without rental income, depending on dimensions, price, etc. We love old detail but could forgo it if necessary. Location is important to us since we have a child in school and don't want to move too far, plus we want the house to be in a good school zone for our other child in case sibling variances go out the window with the crowding problems plaguing our schools. We'd love to stay under 1.5 mil all in, though given scary economy, closer to the 1 mil end than the 1.5 would be more comfortable, but we'll see where prices go...

And Bolder, if you've been following this blog, you'll see that on 1st Street in Park Slope alone, many houses have recently hit the market that are hardly troubled properties. In fact, inventory is starting to creep up even in prime areas (and some houses have started aggressively slashing prices from ridiculous starting points), and I suspect this trend will grow next year.

Posted by: Miss Muffett at December 16, 2008 10:22 PM