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August 14, 2009

Open House Picks: Six Months Later

Comment: What the heck happened to all those listings? Can't be good...
Open House Picks 2/13/09 [Brownstoner]
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Well what I do know is that little house on 543A 6th avenue had dropped their price to 1.275m and changed brokers to Corcoran 3 months after Townsley&Gay couldn't sell it.
It's a pretty reno, but tiny, tiny house and they were asking WAY too much for it. Unfortunately even 1.275 was too much for it.

That 8th street house, while kinda in a good location as it was really close to the F&R train at 9th street was HORRRRIBLE inside - total gut job needed. I suspect the seller didnt want to entertain offers under 800K which I am sure they were receiving OR there were way too many problems with the building that required too much money to fix

Posted by: gemini10 at August 14, 2009 12:48 PM

Also - the link is wrong!

Posted by: gemini10 at August 14, 2009 12:55 PM

Isn't this what happens when prices are in decline?

People who don't "have" to sell (haven't lost job, gotten divorce, etc.), simply take their home off the market when it doesn't fetch the prices they hoped to get.

Now they'll live in it for while longer, make more improvements, put the kids in bunkbeds, etc -- until the market recovers and they can get the price they want.

Right?

Posted by: chuck at August 14, 2009 1:07 PM

All I know is I've been getting a flood of emails from StreetEasy about properties being taken off the market - coops, condos and houses, all over Brownstone Brooklyn. I'm not sure whether sellers are waiting for the market to improve, or simply taking properties off the market until after Labor Day when things will pick up again somewhat. I suspect it's a bit of both.

Posted by: CarrollGardened at August 14, 2009 1:08 PM

Yes, I wondered about that 8th Ave house. It wound up getting cut to about 1.9 if I remember correctly...Anyone know what happened?

Posted by: Miss Muffett at August 14, 2009 1:10 PM

The 8th Ave house was purchased in 1990 with a mortgage of $306,000, according to Property Shark. Looks like they took some more money out over the years, but still don't owe a ton on it. I'm guessing they were just fishing to see how much they could cash it in for... maybe they are retired folks who don't have a real need to sell.

Posted by: Kris at August 14, 2009 1:14 PM

I also suspect it's both. Brokers we're working with say more inventory is due in the fall. For those awaiting a better market, thing is, the most optimistic economic predictions indicate a very slow, limp "recovery" as well as continuing pain for NY RE market. I guess the question for sellers is how long they are willing to "wait, especially since their bets may hurt them as prices decline further.

Posted by: Miss Muffett at August 14, 2009 1:14 PM

Agreed the South Slope house (6th Avenue) was way over priced for it's size and location. It was purchased in 2005 for barely over a million. What were they thinking with an asking price up nearly 50% since then? I have no idea about the reno, but I can't see it being worth that much.

Posted by: Kris at August 14, 2009 1:15 PM

CNBC's Rick Santeli just said he heard from a friend on Wall st that a lot of people are getting interviews and getting hired .

Posted by: sebb at August 14, 2009 1:20 PM

"What the heck happened to all those listings?"

Filed under SHADOW INVENTORY.

***Bid half off peak comps***

Posted by: Brownstones Half Off at August 14, 2009 1:27 PM

Wrong, chuck. This is a historic boom/bust. After adjusting for inflation (i.e. keeping future prices in 2009 dollars), they will not see the recent peak again in their lifetimes. To hold out is to accept less later. But they fall for the "greenshoot" recovery garbage on TV and in the papers and think otherwise.

We figured that's how you got your info, sebb.

***Bid half off peak comps***

Posted by: Brownstones Half Off at August 14, 2009 1:33 PM

I agree with Miss M. that sellers who take their properties off the market trying to wait for return-to-peak pricing are probably playing with fire.

Of course no one knows for sure, but my opinion is that those sellers better have a LONG time to wait. Years. Maybe a decade or more.

Posted by: JKB at August 14, 2009 1:45 PM

CNBC's Rick Santeli just said he heard from a friend on Wall st that... blah blah blah.

Posted by: DitmasSnark at August 14, 2009 1:53 PM

Regarding whether people are 'holding out'....couldn't it be it is not worth it for them to sell unless they get a higher price. Otherwise it is just fine to stay where they are.
Also--even for others in declining market and it declines further....doesn't it become easier to 'trade up' when prices are even lower'. Such as: right now someone would need extra $250k to get something better suited...if prices drop 20% then need only extra $200k (yes assuming that their current property is paid for).

Posted by: Petebklyn at August 14, 2009 2:02 PM

"...sellers better have a LONG time to wait. Years. Maybe a decade or more."

In vain.

***Bid half off peak comps***

Posted by: Brownstones Half Off at August 14, 2009 2:03 PM

Yo BHO What's Good???

Damn I cant take a vacation without something going boom!

Can we agree The Mutant Asset Bubble is over????!!!

The What (Thanks for the laughs)

Someday this war is gonna end...

Posted by: Return of The What at August 14, 2009 2:09 PM

Pete - I guess it depends on the seller. It may be that we are headed for a period of "the new normal" which is basically closer to historical norms, instead of the yes, mutant asset bubble that crashed in 2008.

Posted by: Miss Muffett at August 14, 2009 2:12 PM

I'm well, ROTW. Welcome back. I knew you couldn't stay away too long!

***Bid half off peak comps***

Posted by: Brownstones Half Off at August 14, 2009 2:14 PM

"Also--even for others in declining market and it declines further....doesn't it become easier to 'trade up' when prices are even lower'. Such as: right now someone would need extra $250k to get something better suited...if prices drop 20% then need only extra $200k (yes assuming that their current property is paid for)."

Assuming that their property is paid for is a BIG assumption. And how is it a gain for someone to get a place for $200K cheaper when they have to sell their place for that same amount less?

But, yes, anyone who doesn't need to sell right now probably shouldn't. Problem for the market is that more and more people will need to sell as more time passes thus driving prices lower.

So anyone who can't wait indefinitely is potentially going to have a harder reckoning later than they would if they just bit the bullet and cashed out now.

We're looking to rent - gasp! - and we've been offered a number of places where people really want to sell, but they're looking to rent their places out for some indefinite period until the market comes back.

Over time, that gets harder and harder to do, I imagine. And the shadow inventory builds and builds ...

Posted by: JKB at August 14, 2009 2:20 PM

"right now someone would need extra $250k to get something better suited...if prices drop 20% then need only extra $200k (yes assuming that their current property is paid for)."

that's correct. but I believe that many owners are underwater with jumbo mortgages and depend on rental income which is quite risky right now.

Posted by: bklplebe at August 14, 2009 2:20 PM

The best argument for price preservation in brownstone brooklyn always revolved around the supply side. Certainly many owners are going to pull back and hope to wait it out for market improvement. It may work. The alternative is that the supply side slowly builds (with new forced sellers and old sellers who can wait no longer) until you have sort of a race to the bottom. I don't think anyone can really know which outcome we are going to get, but for someone with either belief to not recognize the other as a possibility begs for some bad decisions.

Posted by: Ledbury at August 14, 2009 2:21 PM

"The best argument for price preservation in brownstone brooklyn always revolved around the supply side."

the supply argument works for a premium over other types of homes such as frames. It does not make sense in the overall market: there will be a proportional correction over all types. In fact one could argue that more expensive properties will have a more dramatic reduction.

Posted by: bklplebe at August 14, 2009 2:28 PM

In fact one could argue that more expensive properties will have a more dramatic reduction.

I hear what you are saying, but I think this expectation only works if you believe that the driving factor in price reductions is the reduction in overall wealth. I actually think the bubble was more driven by a complete bastardization of the proportion of wealth people spent on housing. And my gut tells me that the proportion distoriton (hey, that rhymes) was actually worse in the $0 - $1.5 million market than it was in the $1.5 and above market.

Posted by: Ledbury at August 14, 2009 2:36 PM

Listings shmistings. The next installment of 'Last Week's Biggest Sales' will definitely prove that properties in Brooklyn are all fetching record prices.

Posted by: Smudge at August 14, 2009 2:40 PM

"And how is it a gain for someone to get a place for $200K cheaper when they have to sell their place for that same amount less?"

Because if it's a percentage decline across the board, you benefit when trading up.

Your former $200,000 place is now worth 20% less ($160,000), but the $360,000 place you want, with the same 20% decline, is $288,000. It used to be a $160,000 jump, and now it's $128,000, or that same 20% less of an absolute increment.

Posted by: Sparafucile at August 14, 2009 2:40 PM

Damn I cant take a vacation without something going boom!

Can we agree The Mutant Asset Bubble is over????!!!

The What (Thanks for the laughs)

Someday this war is gonna end...

Posted by: Return of The What at August 14, 2009 2:09 PM

What went boom in the past week??????

Yes, most of us agree that the mutant asset bubble is over. To whatever extent you want to characterize it as an explosion, it is well past us and the second derivatives are all positive now.

Time for you to say "Uncle."

Posted by: daveinbedstuy at August 14, 2009 2:50 PM

Last Week's Biggest is always going to be a gleaming indicator of market health, because Brooklyn is hot, and Wall Street is living on free money and no reckoning. The choicest places are going to sell. But the market is splitting, and even just below the choicest is at a dead stand still. Anyone here know top tier lawyers? Ask them how they're spending their time. If they're not in bankruptcy law, it's cricket, cricket, all day.

Dave, I think the recovery is a canard; I hope I'm wrong, but other than getting the corpse to twitch with some stimulus, I'm wondering what the growth driver is going forward. And btw, EU is outgrowing us now, by a sig margin. Our house isn't in order, not by a long shot. Again, hope I'm wrong.

Posted by: Whuh at August 14, 2009 3:25 PM

http://www.crainsnewyork.com/article/20090809/SMALLBIZ/308099970#

"Shadow units cast pall over market"

Who know what to think?

Posted by: theandrewlee at August 14, 2009 3:36 PM

Just read that Crains article posted by theandrewlee:

- “More inventory will continue to lower rents,” says Marc Lewis, president of Century 21 NY Metro, who believes that Manhattan vacancy rates are closer to 5% than the 2% reported by most industry players. -

Doesn't rent control, um... de-control once the city-wide vacancy rate goes above 5%?

Posted by: chuck at August 14, 2009 4:02 PM

@what happened to all those listings... Can't be good.

Mr. B shows his colors once again and how nauseating. Apparently sellers are on the right side of things and have some moral right to get what they ask for, regardless of what buyers, who are the ONLY people who determine the value of a property by their willingness to purchase it at a specific price.

Just pathetic. Mr B. What's happeed is that buyers are voting with their wallets, and the answer is a definitive " no thanks" to overvalued properties not worth nearly what sellers think they are.

It's the natural, corrective mechanism of the market after years of financial steroids, and I'd argue it is indeed very good.

Stop trying to condition people that when properties don't sell for ask, it's bad news. It's news, and it's inddicarive of the macro trend.

Posted by: MoneyForNothing at August 14, 2009 4:09 PM

money is right
what is strange though is that with wages low, unemployment high, economy down the drain, prices have not dropped considerably

Posted by: bklplebe at August 14, 2009 4:22 PM

>> what is strange though is that with wages low, unemployment high, economy down the drain, prices have not dropped considerably

Most people looking for a home to buy have one to sell, so I'm not surprised there's resistance (even if it is logically better to have prices falling when you're trading up). What does surprise me is that first-time buyers are in this market at all, given that it may be a once-in-a-generation opportunity for a major correction.

Posted by: Smudge at August 14, 2009 4:30 PM

can anyone really tell if there are more properties being pulled before being sold?
even in the strong years there were always plenty of properties with excessive price tags that never moved.

but even if it is higher, and i suspect it is, it doesn't mean it's just a matter of time until prices come down to the range the dreamer's hope for.

there is a battle, if the local economy stabilizes before homeowners' liquidity gets stretched then the prices will never plummet. On the other hand if you believe, the economy will remain recessionary then you believe there will be a race to the bottom, even in prime brownstone brooklyn.

i take the first bet.

Posted by: antidope at August 14, 2009 4:35 PM

first-time buyers are all over properties in other states. that's what accounted for increased sales this quarter. but those first time buyers were helped by obama 8k credit and increased foreclosures. 8k credit makes no sense for NY prices, there are not enough foreclosures. Besides first time buyers cannot afford more than 300K-400K

Posted by: bklplebe at August 14, 2009 4:35 PM

Prices are coming down, but slowly because it is an illiquid market. Highlighted by people pulling properties rather than take the loss. Inventory builds, then prices will drop more.

Wait until winter hits...

Posted by: MoneyForNothing at August 14, 2009 4:36 PM

I love the follow ups but MFN is right. Let's not forget bubble or no bubble sellers usually pack a lil fluff in thier asking price. The numbers are very close.

Posted by: jack slade at August 14, 2009 4:37 PM

under regular circumstances a mid career ivy league couple should bring $260K together. I don't see why such a couple should not afford a 3br apt in Manhattan or a small brownstone in prime areas. This brings the price to max 1 mil

but this is under normal conditions and risk should be factored in...

outside prime areas the price should be more than halved as such couples would not touch those (bad schools)

Posted by: bklplebe at August 14, 2009 4:43 PM

Can we agree The Mutant Asset Bubble is over????!!!
Objectively YES!!

Posted by: pierre de taille at August 14, 2009 5:37 PM

It would be unseemly for me to gloat about the Lefferts Manor house being the only one to sell, but still....

Posted by: Bob Marvin at August 14, 2009 10:52 PM

Go ahead and gloat, Bob. Several houses are in contract in Lefferts Manor. 128 Rutland did pretty well considering that the kitchen and bath both need updating.

Posted by: dt at August 16, 2009 12:23 PM

I won't gloat dt, BUT I WILL observe that, despite the conventional wisdom that houses in "marginal" brownstone areas would decline in price more than those in prime areas, Lefferts Manor, and PLG in general, have done relatively well. Of course I DON'T agree that PLG/LM is marginal.

Posted by: Bob Marvin at August 16, 2009 11:09 PM

dt and Bob, I just love how you guys can spin anything to be a positive! The house sells for almost 20% below asking and you're gloating! Kudos to you!

Looking back at the original post, I said that I thought the asking was reasonable and that it would sell for the same as the 2 story house that closed for 1.05M, and dt agreed with me. But actually it closed for 120K less than that.

Posted by: shillstoner at August 17, 2009 10:27 AM

Shillstoner,

:-)

Posted by: Bob Marvin at August 17, 2009 11:04 AM

« Brooklyn Bridge Park's Grand Staircase Open House Picks »

August 14, 2009

Open House Picks: Six Months Later

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