Last Week's Biggest Sales

How's "Team Bull" feel about that 25% haircut on a prime park slope brownstown.

Guess one widget consensus-miss sale price does not a bottom make?

--IT GETS COLD IN WINTER--

Posted by: MoneyForNothing at August 18, 2009 2:07 PM

Park Slope: $556 psf

South Slope: $708 psf

Proof of the greater fool theory.

Posted by: MoneyForNothing at August 18, 2009 2:09 PM

OH, AND THAT"S A NIFTY $800,000 buzz cut off the Fort Green Place since DECEMBER!!!!!!!!!

This, my friends, has a ways to go. As the leaves turn brown, so will any hope of NYRE green shoots...

Posted by: MoneyForNothing at August 18, 2009 2:16 PM

"It's quite obvious he/she does not read the posts."

11217: Yes, let me amend my post by stating the obvious: the 25% would be the $625K off the 2.5 Million asking price from March 2008. I guess you didn't read that in the post? You're concerned about what profit the sellers made? What relevence does that have?

Kris: I'll be sure not to read your posts, nothing of value there. But yes, I do, and believe I've a rep for cogent, albeit bearish, POV on the marco market environment for Brooklyn RE. You know, stuff that goes beyond gushing over finishes or trying to play junior real estate appraiser. God forgive me for saying this in 2009, but you know, "keepin' it real."

Antidope: well, 2nd part of your handle certainly says it all. I got Money for Nothing...meaning, lots of money, lots of desier to purchase a brownstone, and nothing of value out there.

Don't need free, just ain't gonna overpay. Guess you haven't read my posts. Hardly in the BHO/ROTW camp, but I guess you need to lump every bear into one camp because it supports whatever position in this environment you need to defend. Problem is, the numbers don;t lie, and right now, bein' a bear is tres chic!!

See, most macro economic analysis indicates we're a good 20-25% from a bottom in NY for prime RE. So, Dope, once I do find "Something for Money," and that something would be a 2 family prime slope home abt 15-20% below current levels, I'll invite you over for drinks.

I'll even spring for top shelf. With all the scratch I've saved being a sideliner instead of listening to Team Bullsh*t, I should be able to cover coctails for you and about several thousand of your closest friends.

This is the part where I drop the mike on the stage and walk off with my hands raised above my head.

Posted by: MoneyForNothing at August 18, 2009 2:51 PM

The analysis just reinforces the crushing reality, which is too hard to ignore.

Delisting after delisting, price cut after price cut, sale below ask after sale below ask. This market stinks if you're a seller, and it's not priced at a place where buyers are willing to step in. The distance between the ASk/Bid spread is cavernous.

So you tell me, where are the economic tailwinds in NY that are going to propel us higher ANYTIME soon? Just name something, ANYTHING with some real thought behind it other than hope and maybe I'll take you seriously. We're 2.5 years bhind the national curve, our only high-flying industry, finance, jsut got crushed, and retail stores are closing regularly all over manhattan. That foreign buying trade vs the weak doller that resulted in 1/3 condos in Manhattan being purchased by foreigners? Gone.

What I'm getting at here is hammering home to everyone what lies beyond these silly reviews of individual properties.

So gimme something tangible. Somthing insightful. Anything.

I don;t strike you as serious? Right. No, I just refuse to catch a falling knife when the chance of missing the upside is so remote. This is not a small cap stock. Takes months and months to form a bottom.

I'm dead serious. very high 6 figures liquid in cash serious, no debt, no monthly payments on anything and 300K household Income serious.

To someone in my position——very little financial risk, plenty of cash and income, these properties STILL don;t make economic sense. The monthly payments are unnecessarily risky. 15-20% from here, they work.

I'm sure others like me have come to the same conclusion. That, along w/ problems getting financing, is why it's a highly illiquid market.

Posted by: MoneyForNothing at August 18, 2009 3:22 PM

"wonder if some sellers are listing places at prices well beyond what they would have asked in the peak of the boom in order to make it appear they are cutting prices"

This has been a known phenomenon to many for a looooong time. And has been discussed extensively on this site. Still isn't making inventory move.

And Kris, Kris, Kris...

If I'm saying we STILL got a long way to go even with these slashings, which clearly do not impress me as demonstrating value for the buyer, then how exactly is this tactic "working" on me?

Either *you're* not reading my posts, or I'm just going over your head.

Posted by: MoneyForNothing at August 18, 2009 3:27 PM

"There are literally a handful of nice brownstones on the market right now. "

That's because many many many have been delisted 11217. But there's more than a handful, but let me get to that later.

I keep a database of every property I'm interested in, and have seen. been doing for 10 months now. Over 100 buildings, 35 of which I've seen.

I'm not talking anecdotes here. And I got an argument. The number of places that are pulled b/c of seller fatigue is significant.

Delistings galore. Shadow inventory. Call it what you will.

Buyers are not buying, and sellers are giving up.

And I still have at least 30-40 buildings in 4 nabes that are on the market and good properties--and that's just my price range.

More than a handful.

Posted by: MoneyForNothing at August 18, 2009 3:32 PM

"many sellers ain't agreeing to the "low ball offers" buyers are submitting"

Posted by: gemini10 at August 18, 2009 3:59 PM

Buyers are the only people who determine the price of a property. Plain and simple.

If they are not willing to pay ask, and sellers are unwilling to accept the offers they are getting, then there are no buyers. Illiquid market. Delistings. Etc. And THIS is what we are seeing.

That's the big fallacy. That because you own a property, as a seller you somehow control the market. Buyers determine what they feel is fair value based on a lot of factors. A few years ago, they determined the price was way higher than it should be due to cheap credit and no money down. Now, well quite a different set of circumstances.

So, if indeed the prices are low-ball as you're saying, then that's what the market will bear. Because if they were getting better offers, theyd sell. It's the disconnect between the ask/bid spread.

Sellers, however, and there's AMPLE evidence and studies to support this, are deluding themselves. They believed their places were worth more than they are then, and are psychologically attached to them as we are to all things we own.

Now, if you believe that delisting, and sitting on a property for 6 months is somehow going to elevate the offer price when you come back this winter, or next spring, I say good 'effin luck with that.

We are in a secular bear market in real estate (and probably a secular bear financial market with one spectactular cyclical bear market rally). Prices ain't goin up anytime soon. Where are the tailwinds? Where? You think rising interest rates, an inevitability, are going to HELP property prices?

So those people are going to get burned.

If you can wait 5-7 years to sell, yeah, you might make more than if you sold right now. But that's an awful lot of time/market risk to price into holding a 1+ million dollar asset IMHO, when you could have the cash in hand now and deploy it elsewhere.

Look at how it turned out for those folks on Park Place in this thread. Or Fort Greene. Bad move.

We are in a massive deleveraging of the consumer—saving and shedding debt. not overspending on real estate. And psychologically, across the country, people have been scarred by the idea that real estate is a no-brainer investment. It is not. It's consumption. Beautiful consumption, but unless there's a rent roll bringing you income, it's consumption and a liability that must be paid monthly.

Buyers control the market.

Without them, what you have a lot of people, sitting on homes they have to continue to make payments on. Some are in the black, some are in the red with adjustable rate mortgages and about to get effed in the A. But they're all just homeowners of varying levels of financial strength with an illiquid asset until they find a buyer willing to pay a certain price.

Posted by: MoneyForNothing at August 18, 2009 4:25 PM

"...that means your projecting a 55% drop from peak"

Posted by Antiodope

Well, I may not be projecting 55%, but based on affordability metric (40% of median income going to home expenses), 52% peak to trough is exactly what Deutsche Bank's June National MSA report report calculated for New York.

That's why they've deemed NY the least affordable city in America. Not for people w/ Minnesota bucks. For New Yorkers based on median income.

So somebody's predicting it, and someone who's done extensive modeling on the market to determine that number.

Doesn;t mean it's right, but means it isn't ludicrous.

Posted by: MoneyForNothing at August 18, 2009 5:52 PM

Kris Posts:

"if you think asking prices (as opposed to comps) are the metric that counts then you're even dumber than you are douchey"
------------------

Ohhhh, nice.

No. I'll one up you, cuz I may be dumber than a stump, but I'm smart enough to know that jsut because someone was willing to buy a palce today for a certain price, it doesn't mean comparable properties are worth similar.

Comps right now mean very little as well, because we're in a declining market.

If you understood economics or financial markets well, you'd be looking at HISTORICAL comps...and you'd be comparing them to affordability metrics and things like rent vs. buy. And then add where interest rates are going over next 12-18 months.

Most people who buy think they are catching near the bottom. Turns out everyone who bought between September of last year and today in NY was 100% wrong. They have overpaid.

Maybe they love their place and can afford the payments, so the loss of equity short-term doesn't matter. It's a quality of life issue, and if so, that's excellent.

But if you want to play the comps game, I suggest you think a bit bigger than what's selling at what price today. That doen't tell you much more than where we are RIGHT NOW. In a declining market, that isn't a great perspective to take.

History can teach us a lot about the future, you know.

Posted by: MoneyForNothing at August 18, 2009 6:00 PM

Kris Posts:

"I am disagreeing with your insistence that the above sales are evidence of price declines"

WHAT? You tyoped that with a straight face?

Ok, so someone asks for a price in a richly-priced market, has the property sit for a year, and has to ultimately settle for 25% less than their ask, and that's not a decline?

Seriously.

And if you bought in 2006 and were fortunate enough to sell in 2009 at a profit, that phantom "price decline" you don;t believe in comes in the form of a loss of potential profit had you sold a year or two earlier. That's called missing the peak, and thus, a price decline once it passes.

Good lord.

Posted by: MoneyForNothing at August 18, 2009 6:12 PM

Kris:

One last thing:

"are rude and hostile to those who disagree with them."

You're the mo-mo who pulled a "M4N, you don;t even read posts, do you?" as your first response to my post on 25% cuts from asking price.

SO check yourself, honestly. I never come blazing at people until they give a dig like that, and then can't back it up with any real thoughtful posts built on detailed knowledge of the situation.

Seems your tact has been to bury your head in the sand and say no one can predict the future while calling me out for "not reading the posts" in your introduction to me.

Posted by: MoneyForNothing at August 18, 2009 6:16 PM

Posted by: 1842 at August 18, 2009 5:26 PM

but I don't get the following comment from MFN:

"Look at how it turned out for those folks on Park Place in this thread. Or Fort Greene. Bad move."

Not to be rude, but this is getting tiring.

My point was in response to someone saying "places are getting delisted b/c people are not accepting low-ball offers"

If you read what I wrote, I said, if you want to sell, and delist, or turn down offers because think the market is going to turn around in 6 months and those great offers are going to roll in ...good luck.

It's not what they made as a profit that matters if we are talking "where are we going", not "what did they make".

Had they priced the places, let's say, 1/2 way between their absurd asks, which buyers obviously ignored, and what they went for ultiamtely after languishing, then they might have saved themselves $100K. So, lost profit.

Not accepting lower offers b/c you think you'll get better ones in a few months, in this environment, is a sucker's game. And risky.

For the 2 houses I cited here, I can guarantee they got offers that 12 months ago they thought were lowball, that were higher than the 25% haircuts they ultimately took, while wasting months and months of their lives. trying to sell.

Posted by: MoneyForNothing at August 18, 2009 6:27 PM

"MFN:
but remember buyers can only buy a house a seller is willing to sell...."

Posted by: gemini10 at August 18, 2009 4:40 PM

So, supply side then? What you're saying is that Sellers, by their willingness to sell to a buyer, can extract more than the buyer can afford?

Isn't that how we got into this mess?

It takes 2 to tango. But it takes a buyer to purchase ultimately assuming you have something to sell.

The CAVERNOUS disconnect between the ask/bid spread on prime brooklyn (and non prime) real estate is the evidence that buyers ain't buyin what you're sellin.

And so you delist and hope for sunnier days ahead, or death by a thousand cuts.

But the buyer has to pay you what they can afford.

Posted by: MoneyForNothing at August 18, 2009 7:09 PM

I did not insinuate that the sellers made a bad move based on what they paid. They wanted to sell, and bought at a reasonable price. Which, BTW is exactly what ANYONE looking for property right now, as home OR investment should be considering. The price you pay now is going to greatly determine whether it was a good use of a substantial amount of cash. Otherwise you will not be as fortunate as these folks.

All I was suggesting is that overpricing your property, which has been rampant, and turning down offers in a declining market is a bad move. It costs you money you could have made and wastes your time.

Those sellers made some nice profit. Good for them. But they could have made more had they not foolishly, and greedily overpriced their properties.

Wadser, thanks for your feedback.

I agree, the word "guarantee" may be a bit of hyperbole on turning down offers.

BUT, I have plenty of hands on evidence from my ongoing search of sellers who turned down extremely generous offers for properties featured here that are listed hundreds of thousands of dollars below what they were offered. Brokers have flat out told me this while I've been searching. So it may be hyperbole to extend the argument to a property I know nothing about specifically, but the general environment, history, and psychology of sellers of their property at peaks in a real estate bu8bble jsut suggests its more than likely.

Posted by: MoneyForNothing at August 18, 2009 8:28 PM