Last Week's Biggest Sales

1) As I've said before, things don't fall off a cliff in RE on a dime, esp in NYC where much cash (witness, bonuses last winter) was still in system following Fall 08 crash.
2) Cash will dry up more and more in 2009, hence real declines will show themselves as time goes on
3) These properties suffered price cuts, and then further declines in final cost relative to ask.
4) "Biggest sales" are just that - somewhat of a statistical blip.

Bulls are desperate for good news, but lechacal is right that a glimmer here and there does not reverse the inevitable course of prices moving further downward.

Posted by: Miss Muffett at March 24, 2009 1:00 PM

Oh Sebb - why do you insist on saying I'm losing money? By having sold before the crash, I made more than I would have had I waited. The modest rent I'm paying now is more than offset (including mortgage deduction) by the price declines my previous property has already suffered, and the declines I am seeing on properties we've looked at. Please don't waste time making nonsensical comments.

Posted by: Miss Muffett at March 24, 2009 2:11 PM

Lechacal - also, remember that given how slowly RE moves, you have little to lose by waiting. The days of a sudden, brisk run up are probably behind us for years to come, so that is not a risk. In other words, time is on your side. I too am impatient in that I would love to just buy my new place and be done with it, but there is too much at stake financially now to act precipitously and I really am certain that by waiting, we will get a much better deal. Severl properties we were considering months ago have had several price cuts and are already cheaper now than what we had thought would have been a reasonable price months ago. In fact, "reasonable" values are clearly being re-defined, as is clear by all that's happening in our economy.

Posted by: Miss Muffett at March 24, 2009 2:24 PM

Parkedslope: I agree with you that values are in a state of transition, and that's why we are seeing reduced transactions, buyer-seller stalemates, and price cuts. Basically, the selling side (including owners, brokers, and perhaps some of the banks? look at the larger bank-balance sheet stalemate nationally) refuse to believe that values have gone down. Buyers, on the other hand, refuse to buy at prices which have skyrocketed in recent years to unsustainable highs. So, we are seeing things like buyers walking away from large deposits since the expectations are that, with values set to go down more than 10%, buyers will still do better cutting these losses and waiting for price declines. And part of the reason that buyers are waiting on the sidelines is precisely because asking prices have not come down enough, since too many sellers/brokers insist that properties are worth more than what buyers want to pay. The only way to break the cycle is for sellers to cut prices, which the most serious sellers are indeed starting to do, sometimes dramatically. Then sales prices start to go down. This in turn, affects comps, which in turn affects "values". It's a process, and it does not happen quickly so that's why individual properties may still recently have been "valued" relatively high (if that value was based on earlier comps, when values were higher).

Posted by: Miss Muffett at March 24, 2009 2:48 PM

Brooklyn Greene - Exactly. Prices ARE still spectacular, and would still be even at 50% off peak. Anyone who bought in 1980, or even before 2001, could say that with confidence, even if/when prices go way down.

Posted by: Miss Muffett at March 24, 2009 3:02 PM

But Sebb, what you don't get - and I can't fathom why not, other than you don't *want* to get it since you are in such deep denial - is that by waiting, I'm **saving** money. And lots of it. There was a house that we were interested in last fall that came on the market at what we thought was a high price. We offered 20% below, and the owner would not deign to counter-offer. But since then, not only have they begged us to buy at our original low offer, but they have reduced the price several times, and we now hear the owner is considering an offer way below what we offered. Because the house needs so much work, and because we've lowered our budget period (due to losses in our retirement and college savings, which now need injections from our "house cash") we no longer want this particular house. But had we still been interested, then by now, this house would be hundreds of thousands of dollars less than what we would have been required to pay mere months ago. That said, this house is the exception, not the rule, as the seller is clearly motivated, whereas many sellers right now seem to be in denial (perhaps they are like you).

But with every week that passes, I see more properties getting price cuts - although so far, we have not found anything we love at a price we think makes sense. Given that the market is only going down further, we are convinced that we have nothing to lose, and everything to gain, by being patient and waiting. For the hundredth time, the rent and tax savings we are "throwing out the window" are dwarfed by the price cuts we are only starting to see and that we will continue to see. Even if we spend 100-200K on rent/"lost" tax savings, we will surely save much more than that for the kinds of properties we are looking at.

Posted by: Miss Muffett at March 24, 2009 9:20 PM

P.S. Sebb - the house I was referring to was in prime Brownstone Brooklyn, as are the other properties I'm seeing price cuts on. You must have blinders on not to see this starting to happen or to think that it won't continue.

Posted by: Miss Muffett at March 24, 2009 9:22 PM

Sebb - all we need is ONE house and we are sure we will find it at a big discount sometime in the not-too-distant future, but if it takes 1-2 years, that's fine by us too. Your assertions are as gravity defying as the prices of the last few years, and you are in a crowd of one, it seems. Even the bullest of the bulls on this are resigned to significant price cuts. I too could regale you with a huge list of homes that have had price cuts lately. I wish you luck.

Posted by: Miss Muffett at March 24, 2009 9:34 PM