19 Farley Street Buy this house now, $1.045 million.
A reader asked about nice houses in the million dollar range - this is one. Its builder, Al Oliveira, does great work. I met Al when he and Rick Hvolbeck did just a stellar job on Pal Nancy's house, replacing work that had been done by far less talented carpenters in the past. If his workmanship displayed there is typical of his other work, and I'm sure it is, then this house was built well and tight. It certainly appeared to be when I toured it.
This was priced originally at $1.595 and, a year ago, that would have been a fair price. Now, after several price reductions that have dropped it below what it cost to build, it can be had for a hair over $1.0 million. That's an excellent buy and no, it's not my listing. But I'll be glad to sell it to you - give me a call.
Update: someone said she couldn't find the house on Raveis.com. It is a Weikert listing, but here are the details as posted by Raveis:19 farley Street, ML# 69428
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16 comments:
Glad you posted your contact information - Chris.
Chris-- 1st time poster. Love the blog. I agree that this place looks better than most of what is on the market at that price, but the builder's costs to me are irrelevant as a buyer. I am assuming this place was a teardown where the land was bought in 2006/07. If so, then the fundamental problem is that the builder vastly overpaid for the land. It seems clear to me that builders such as this guy had wildly optimistic projections to be doing teardowns at the bubble peak. He will be lucky if he gets out with a small loss, in my opinion.
I have been renting in Greenwich for about 18 months and watching the market. Since you brought up rents earlier today, you probably realize that relative to rents, prices have been fundamentally out of whack for a while. Prices were clearly unsustainable when the local job market was healthy and now they are significantly more so. I believe these million dollar starter homes are the perfect example of why the Greenwich market will experience a huge drop in the coming year or so.
You need a steady supply of young people getting big bonuses to support this segment of the market (and the move up buyers in the low single digit millions as well). A large percentage of this group is being eliminated right now with more to come in the next few months. Basic point is that prices were too high already and have not even begun to price in the turmoil on Wall St.
I saw this home posted by you - in the past Chris - yes - the price is right - if you were to ask me - good luck in selling it - great location!
Please keep us posted.
Well, I'm pretty sure that it's a huge loss but you're right: as the cowboy song addressed to cattle being driven to the slaughter house goes, "it's your misfortune and none of my own" (I'm a huge Michael Martin Murphy fan).
But I do know what it costs to build a new house and, even if labor and land costs drop 30%, I think this will still prove to be a good deal at $1.0 million. If we start seeing Frank Corvino selling apples in Greenwich Hospital's parking lot, of course, all bets are off.
Good One - Chris - apples and pencils! :)
I just looked for this listing on the William Raveis website - couldn't find it - am I doing something wrong.
I know it's the NYTimes, so in a way it's automatically suspect, but here is a decent chart of where rents/prices are in the NYC area currently. Assuming Greenwich is not too far off from this, 30% off seems about right to get back to long term trend. Of course, this assumes that the economy doesn't underperform the longterm trend in the next few years, which may be a big assumption at this point.
http://www.nytimes.com/imagepages/2008/10/16/business/16housing.graphix.ready.html
It is great having the listing linked at the bottom of the post. Would be nice to see that every time you talk about a listing.
Links to listings is a great idea - I'll start doing it. I had tried to use the GMLS information but that's proprietary and didn't work. Until a reader requested it, I hadn't thought to go to the Raveis site for the same information but, since that works, I'll try to do it more often. Should have thought of this earlier but, as you must have noticed by now, this blog is very much a work in progress. Live and learn.
Like the poster at 5.32pm, we moved to Greenwich recently and are renting. The owner of our home bought the house in 2006, the price / rent ratio on our home is a shocking 25x !(I have not included property taxes and maintenance costs, if I did, the ratio would be much higher)
I have noticed the same price / rent ratio in a handful of homes that are listed for both sale and rent.
It's only one indicator but what this means is that home prices in Greenwich may fall another 20 - 30%in order for the market to get to equilibrium.
I toured this house 4 months ago. I thought that it had an awkward
layout together with the massive boulder in the back yard, which would force them to bring the price down.
Well, the price has come down, by about a third. Can't do much about that boulder, so you'll just have to take it for granite.
I disagree with 1st time poster: while I agree that Greenwich housing prices will weaken further in general, the million dollar and lower home market may have a slight edge over other segments. The empty nesters/down sizers/bought your house many years ago and still have a cushion to sell and trade down people, will fill the market where the young people used to support. I am one of those people and represent many baby boomers.
excuse my ignorance when you talk about 25x rent/price ratio that is yearly rent vs price?
Yes, the ratio is price of the home divided by yearly rent. (Again, I didn't include prop. taxes and maint. costs in my 25x ratio. If you include it, i.e. subtract the tax and maint. cost from the yearly rent, our ratio would be much higher than 25x).
As a renter, you want the ratio to be as high as possible. As a home buyer you want it to be as low as possible.
This is the same concept as the P/E ratio for stocks.
Here's a link for the Price / Rent ratios around the country. It includes peak and current (data was compiled in May 2008)
http://www.nytimes.com/imagepages/2008/05/28/business/20080528_LEONHARDT_GRAPHIC.html
According to the chart, the NY metro area peaked at 26.8x and was at 22.2x in May 08.
Yes, a lot of people during the boom years got lucky and bought their house at, say 23x and sold it at 28x.
But over the long term, it's very difficult to make money on a home if you pay more than 20x. Ideally you want to pay in the low teens.
Another way of thinking about it is that the inverse of 20 is 1/20 which is 5%. Well that is roughly the home buyer's net cost if you deduct the income tax benefit of the interest payments and add the associated costs (i.e. legal, broker's etc,) from a 30 yr fixed loan. In Greenwich, that would be the Jumbo rate. So currently at 7.6%
Of course, this is a rough calculation but it gives you a good way of thinking about how a home should be valued.
Either way, Greenwich real estate, on average has a lot further to go down.
Given all of that information. I do wonder what is up with 23 EGGLESTON LN.
They lowered the price of the property to 6,495,000 and now are asking for 14,500 a month in rent.
37 times.
I do believe that the property is two building lots so that might explain it all but I did think it was a little odd to see such a low rent on such a high priced property.
Hopefully I haven't gotten Tamar angry with Chris now.....
http://www.raveis.com/propdetail.asp?STATE=CT&FROM=propfind&PG=1&TOTAL=55&sortdir=ASC&KEY=2193225&FSTKEY=2336181&LASTKEY=2526883&LASTPG=11
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