OPP Floats Some 'Limited Availability Pricing'

Smart move by the developer. This is how to move units in this market. Lower prices far enough so people can see enough value that they are worried they might miss out if they don't jump on it (I assume some people will have this reaction to these particular units even if I don't). I doubt this is "limited availability" pricing. Maybe there is enough interest in these units that they sell at a slightly higher price point than what is currently advertised, but then the new market will be set and other pricing will fall in line.

There is a big gap between bid and ask in the market right now, and nothing is selling. The bid sure as hell isn't going up, so the ask has to come down for any sales to take place. Smart sellers will bridge the gap quickly by chopping prices like this. They will sell their inventory and move on while sellers who don't cut prices keep carrying overpriced properties.

Posted by: lechacal at April 23, 2009 9:47 AM

Another thought: It's really good to see some sellers finally realizing that only meaningfully lower prices will move inventory. Let's get this done. Chop the prices and the market starts back up. It's the only way.

I went to an open house recently for a 3 br coop not too far from OPP. The seller had just cut the price by an almost meaningless amount (something like $20k on a price around a millionish). The realtor clearly was still trying to play the same game that worked during the bubble. She called me up the next morning to tell me that she had "several offers in hand" and asked whether I was ready to bid. It was almost pathetically obvious that the offers were imaginary. I was pretty pissed that she would have the gall to lie to me like that, but I didn't have the energy to give her a speech about how unprofessional it is to do business like that. I just told her congratulations on finding potential buyers and wished her luck. The point of the story is that someone like that will fail. She will chase the market down with tiny price cuts and try to pretend the entire time that the seller is holding all the cards. Sellers who just chop now, rip off the band-aid and sell will be able to stop worrying about the market and will probably get out at higher prices than the people who chase the market all the way down to the bottom before finally selling.

Posted by: lechacal at April 23, 2009 9:55 AM

I won't make an offer if I am dealing with a realtor who is clearly going to act like it's 2007. Most realtors I deal with these days clearly understand where the market is heading and signal flexibility and willingness to deal. But when someone makes up competing offers to try to make it sound like I had just better jump on this right now or else it's going to sell like hotcakes, I'm gone. (to be clear I don't know for a fact that the offers were made up, but I think I have a pretty good bullshit detector and I had a strong suspicion)

And as I have said many times, I can't be bothered to run around lowballing people. I will wait for the market to come down more before starting to make offers. Offering 40% less than ask is not particularly pleasant for either side. I will let the market do my work for me.

Posted by: lechacal at April 23, 2009 10:23 AM

joe, I have been perplexed by the OPP closing prices for some time and am wondering the same thing. I just can't imagine who would have bought the places that have closed recently, but it's a big world and there are a lot of things I don't understand.

I wonder about "painting the tape" often. But I just don't have the resources to actually track this down. If someone did a investigative piece on this I would find it very interesting. Mr. B?

Posted by: lechacal at April 23, 2009 11:39 AM

joe, I wouldn't jump to too many conclusions without having done some research first.

Posted by: lechacal at April 23, 2009 12:10 PM

OK, here is why we should not be speculating about people painting the tape without doing research first. About 5 minutes on the Internet got me the following information about the buyer of the $4mm plus OPP unit that was one of the recent biggest sales of the week. He's an MD at Goldman Sachs and I would guess was able to pay cash for the place (should he so choose). The price is real and the buyer is real. The only thing that is obviously just wrong is the contract date. No way in hell did this guy go into contract at that price in 2009. Just no way in hell. This is not a dumb rich foreigner we're talking about. Maybe the contract was renegotiated to a lower price in 2009? That I can believe.

Anyways, unless someone can point to good evidence of someone submitting fraudulent prices to ACRIS I'm not throw around accusations. Do your research people.

Posted by: lechacal at April 23, 2009 12:42 PM

More about the buyer: made about $1mm buying a dumbo property (one of the best dumbo addresses) in 2005 and selling in 2008. Partially financed the OPP purchase.

Real people, real money, real sale.

Posted by: lechacal at April 23, 2009 12:53 PM

understood, joe - but a few careless comments can get the wrong people convinced that there is a big conspiracy out there

Posted by: lechacal at April 23, 2009 12:57 PM