154 CognewaughWhere the market's heading?
You can make up your own mind, but this new construction was listed for $4,895,000 in June, 2007 and, finding no buyer, slowly dropped to today's price of $3,750,000. It has 7,743 sq.ft. (no way to tell if that includes the basement) so at its original price the builder was looking for $632 per sq.ft. and now he's asking $484. So the price has dropped, by my math, a little less than 25% - you math wizards should feel free to correct me.
Interesting, the builder paid $1.4 million for the land in March, 2006 and put it back on as land in November of that year for $1.75 million. I guess he decided to go forward with the house when he couldn't find anyone willing to take the land off his hands. I wonder if he regrets that decision now or whether he still has enough built into the price to walk away with a profit? At $484 per sq.ft., I wouldn't think there's a huge margin remaining.
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8 comments:
what is your estimate of the margin?
Good One - Chris - well said!
Cognewaugh Road - another - scary road to travel on - yes. esp in Winter!
My realtor recent told me that waiting for housing prices to drop in this area is not the answer. In her experience home owner price reductions (unless they are a real fire sale) has NO impact. as a result, many sellers are quite prepared to take substantial discounts but are NOT willing to advertise them to the general public.
This seems a shortsighted view from a sellers perspective - to me anyway. But I am interested in your thoughts?
That seems to be
Margin? I don't know - I don't know the builder or what he's paying to build but let's just say that he nets $3,550,000 after paying commisions and conveyance taxes (a conservative guess). That gives him ($3.550 / 7,743 sq. ft.) $460 sq. ft. Deduct the $1.4 he paid for the land and he has $2,150,000 to build, develop the site, landscape it, pay the architect, cover his overhead, pay his lawyer, and God knows what else. That's $278 a square foot and I don't think you can do all that at that price. But I'm speculating on the numbers here, so ....
Price reductions? I don't disagree with your agent, as of now. There aren't nearly as many price reductions as there should be - those who do take them sell their houses, those who don't, don't. I can't understand sellers who say they're willing to accept a lower offer yet refuse to publicly admit that on their listing. Lower the friggin' price, for G..'s sake and sell the place! Many buyers are uncomfortable low-balling a place because they don't want to hurt a seller's feelings so if you're one of those sellers whose feelings won't be hurt, say so aloud and have your house attract bids. there - that's not so hard to understand, is it?
I have driven by the house many times and it looks great from the outside. I grew up on Cognewaugh so it is nice to see some of the old junk houding stock being upgraded. As for the road being a scary ride, that was part of the fun of learning to drive. More importantly, Cognewaugh is convenient because you have access to Stanwich, Bible and Valley yet it is not a busy road. Additionally, you get the North Street School district at Cos Cob prices.
It's like, if they lower the price and ADMIT the house is worth less money, then it is somehow that the OWNER is worth less as a person. It is bizarre.
I think it's $350 a square foot to build. Let's say it's 6000 sq ft of livign space - so $2.1 million, plus $1.4 for the land = $3.5. Toss in another $200K for commissions = $3.7 is Cognewaugh's all-in cost. And that is assuming fairly low building costs and reducing the square footage.
He is making no money here, selling at $3.75. He will lose money at anything below that.
Chris, I also hate to say this - but showing daily stock market graphs is kinda misleading. Like showing the last listing price and "discount from list" rather than the original list price. It's a snapshot of one particular moment in time.
I believe we are in a bear market, and we have a ways to go down. Lehman and Merrill have laid off a lot of people (somewhere in the neighborhood of 1,000, if not more) the past 2 days. It's not the one-time Dow Jones drop. More telling would be a one-year and three-year look, because you don't "bounce back" from -31%, but you can "bounce back" from a few hundred points.
CEA
Yeah, I know that, CEA and I learned it from my father (he who started out on Wall Street with a newly-minted MBA in 1929 and saw it all). So I never listen to those stupid business shows that, each day, bring on an "expert" to expalin why the market went up that day - they use a different expert the next day to explain why it went down. But the charts do add a bit of color on a grey day.
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