209 Bedford RoadIf the GMLS records are accurate, the current owners of this place bought it, newly renovated, in 1998 for $1.525. Nine years later, in May, 2007, they put it back on the market and asked $3.495 million. I thought that was aggressive - renovations new in 1997 don't read as new, in this market, ten years later - but regardless of my view, the market wasn't impressed and the house didn't sell, despite a long series of price cuts. Today it was marked down to $2.5 million, or about 70% of its original asking price. Maybe it should have started there 1 1/2 years ago; now, it may be too late to get that price.
Posts
5 comments:
The question is: What is a fair price in today's market for any property - Chris??
Where does one start?
I'd start by figuring out what the market value of a property was in 2005 (not that hard to do) and knocking 20% off that. harsh, but that's how I see the market. For sure, the days of calculating a desired rate of return for your term of ownership and setting the price there are over, at least for now (of course, that was always a stupid idea, as I told at least one would-be client. he listed with another broker at the price he wanted and, several price cuts and many, many months later, it's still unsold).
There seems to be several price cuts and unsold properties in town - Chris - it makes me wonder - how any-one knows the fair market value of their property. Yes - very confusing and frustrating for all - how low can they go - and where at the buyers??
No one is going to buy an illiquid asset now.
What you are seeing in the stock and bond markets are people fleeing to Treasury bills (if not cash outright), because they do not want to be caught with something they cannot readily sell (ask all those people with auction-rate securities, anything mortgage-backed, etc. etc.). Banks aren't even lending to each other, because they fear that they will not get paid back if bad assets put the "bank" in "bankruptcy".
A house is one of the most illiquid of assets, plus it is a depreciating asset that requires money to maintain, and a lot of "frictional costs" (brokers, lawyers, etc.) when transacting.
So there really are no buyers. No one wants to buy anything expensive, no one wants anything illiquid, and no one can get credit to borrow to actually buy a house if they needed to.
For all the talk of these hedge funders, I would be curious (Chris...?) to know what % of Greenwich houses are bought with a mortgage. Because if it's, say, 70% are bought with borrowing, then that is 70% of the market that no longer can get get funds to buy a house at a low enough rate to make it work for them.
CEA
CEA write : "No one is going to buy an illiquid asset now."
I will, but and its a big but, only for significant haircuts to value, which the real estate markets have not begun to price in yet. But they will...
Retired IB'er
Post a Comment