Open House Picks: Six Months Later

Why do the Mr. B supplied comments always reflect seller bias? "Not much to celebrate" assumes that lingering properties are bad news, but for potential buyers, it's good news - showing that overpriced properties won't sell in this market, which in turns puts downward pressure on prices.

Posted by: Miss Muffett at September 11, 2009 12:45 PM

Oh DIBS, do we have to go through this again? Some people always need to sell - always have, always will. Sure, some sellers will opt not to sell now, but not all can. Plus, many sellers, even at prices vastly reduced from peak, would still make a killing over their original purchase. Even I am tired of repeating this again!

Posted by: Miss Muffett at September 11, 2009 12:53 PM

DIBS, the Hicks St. house had a previous price chop of 550K before the new reduced price went on market. So to be fair, the selling price was a difference of 3,500,000 to 2,700,000 which is 20% discount off initial ask.

Posted by: Miss Muffett at September 11, 2009 1:05 PM

Actually, I guess it's 23% off ask per Boerumresident. As folks here know, I think it's going to get worse before it gets better. If we were at 23% off peak at height of spring sales season (when this must have gone into contract, I don't think discounts of 35-40% are totally implausible as we head into fall/winter and even next year given continuing uncertainty. I am not holding out for "brownstones half off" but I also don't think that is impossible. I would certainly be happy getting a 30-40% discount off peak.

Posted by: Miss Muffett at September 11, 2009 1:09 PM

But if you're an owner who is not planning to sell, why care what the prices are? It is a home after all, not a pile of stocks. I'm looking forward to the day that I don't have to care about prices anymore and can instead focus on the joys (and yes, annoyances) of home ownership. Until that day, however, you bet I'm out to get the best deal I can on my next home, given the vast repercussions on every other aspect of my life! (and the fact that the current market direction favors prospective buyers...)

Posted by: Miss Muffett at September 11, 2009 1:13 PM

MoneyforNothing, I think you also meant that BUYERS control price since they have to be willing and able to buy, right?

Posted by: Miss Muffett at September 11, 2009 1:16 PM

Ringo - I did not see Hicks house, but I did see many, many other houses at peak that sold for shocking amounts that did not seem justified. That's exactly what was so crazy about the peak - the fact that homes that had plenty of defects nonetheless sold for astronomical prices. It was totally crazy!! So sure, one can say now, in retrospect that 3.5 seems like a crazy price, but back in the day, daring to express that kind of sentiment resulted in being at the receiving end of a slew of "bitter-renter" type insults. Alas, there are still quite a few sellers out there clinging to pre-bust asks.

Posted by: Miss Muffett at September 11, 2009 1:19 PM

Sebb - if I knew exactly, I would be a rich woman. My bets are that there will be continued weakness in the NYC RE market for at least one more year, and likely longer. I predict continuing weakness, then plateau, then a slow climb back, but no where near the record increases we saw in the decade of the boom - that was very likely a once-in-a-lifetime occurrence. If I had to make a specific wager, it would be this (for prime areas, which is where we are looking albeit we are open to "fringes of prime" with decent schools):

Current: 25% off peak
Next 6 months: 30-35% off peak
Next year this time: 35-40% off peak

I think 50% off peak is very aggressive prediction but not impossible, but I am confident that 35% is a very conservative bottom and suspect it could be closer to 40% (again, this is not a wild prediction, but on the conservative side).

Posted by: Miss Muffett at September 11, 2009 1:46 PM

Also sebb, I just want to acknowledge that your question just now was the most polite you have ever been to me, so thanks!

Posted by: Miss Muffett at September 11, 2009 1:50 PM

DIBS - why do I think prices will continue to weaken in NYC? Several reasons:
- Employment may weaken further
- NYC is lagging national trends - entered slump later, so it may take longer to exit
- interest rates are likely to rise
- many analyses I've read indicate continuing weakness
- bubble was so huge that a 20-25% correction (probably where we currently are) has further to go
- all trends point to continuing downward pressure

Posted by: Miss Muffett at September 11, 2009 2:12 PM

Woops, forgot one other key reason: Case-Schiller, and other metrics that indicate continued weakness.

Posted by: Miss Muffett at September 11, 2009 2:16 PM

I agree Sebb - now if only Joe Wilson (and his constituents!) could learn that!

Posted by: Miss Muffett at September 11, 2009 2:19 PM

BH76 - but this very thread suggests the opposite, that even townhouses are suffering. Now, as we all know, there is a wide range of townhouses (and FWIW, we're looking at 2 families as well as single families) so perhaps there are some that are less affected - there will always be rare trophy properties. But they are the exception, not the rule. In any event, we are looking at relatively modest homes so am not sure our competition are the topheavy salaried folks you mention -- but even if it was, there is plenty of uncertainty among their ranks as well.

Posted by: Miss Muffett at September 11, 2009 2:43 PM

Actually, does Mr. B write all the posts these days? Aren't there hired writers who create posts? And if so, are they instructed to favor sellers in their observations? Or are the hired guns owners too with a stake in propping up values? I'm not being flip, just genuinely curious.

Posted by: Miss Muffett at September 11, 2009 2:45 PM

Kris - this really is treading well worn ground, but again, those hoping for further declines are not necessarily "cheering for the financial ruin" of many people. It all depends on your perspective - during the run-up, many people were evicted, priced out, or convinced that it was a good idea to spend an inordinate proportion of their income on housing. To hope for a correction benefits many people too. There are always winners and losers. I don't belittle the suffering of those unlucky recent buyers who got in over their heads and have to sell at a loss, but I think they are (hopefully) a small percentage of the market. It is also hard to feel sorry for many other owners who have to reap a more modest profit now instead of the killing they would have made during the peak - in many, many cases, they can still make out quite nicely, even at prices 50% off from peak.

Posted by: Miss Muffett at September 11, 2009 9:05 PM

And Kris, your suggestion that prices staying high is "no big whoop" is inaccurate too. I can't tell you how many people I know find housing costs to be the single biggest stress of living in NYC. Just as you say many thousands of homeowners may suffer from the stress of being underwater if prices decline further, so too must one consider the other side of the coin: that the high prices of the bubble years created huge stress for many, many hard-working New Yorkers who, increasingly, could not afford to live here, even if this is where they had the best chance of finding work. There is truth in both sides of the argument, and it's as wrong to dismissively caricature those hoping for a correction as it is to fail to acknowledge that yes, a correction will cause pain for some.

Posted by: Miss Muffett at September 11, 2009 9:27 PM

Kissifer - congratulations! If you love your home, and you can afford it, don't let all this market talk stress you. $360/sf certainly sounds like a pretty reasonable price (though I don't really know the market in Harlem). Enjoy your purchase!

Posted by: Miss Muffett at September 11, 2009 11:21 PM