Thursday, September 17, 2009

Gimmie A Price Break

That house pictured above has been for sale - on and off - for at least the two years I've been living on Boston's South Shore. I remember it starting at over $1 million.

Last year I swear I saw it down to $850,000 as a FISBO. Then, this spring Coldwell Banker got the listing. Right away they put it back to $900,000. Now mind you, this was AFTER the market had substantially weakened, AFTER the stock market dropped 40%, and AFTER unemployment started heading to 10+%.

So I said all this to the broker who flat-out denied that the house was ever listed that low. Now, whose memory do y'all want to bet on?

But let's get back to the house itself. It's a staggering, for this region, 4,900 square feet but its LOCATION LOCATION LOCATION is a substantial negative.

It's situated on a major roadway AND, behind it is yet another major roadway. So the noise is severe and continual.

Furthermore, only 200 yards away from it ARE RAILROAD TRACKS. The diesel commuter train shakes this house every single day.

And there's more:

It has NO deck and NO backyard. In fact, since it was carved into a steep hillside, the backyard is a huge severe slope that can neither be sodded nor even landscaped on account of its size.

There's plenty of space and sharp cherry wood floors, YET the most important room, i.e. the kitchen, is small and very ordinary. $900,000???? I don't think so.

Lastly, the house pretty much typifies this recent housing bubble. It's a new McMansion crammed on to a bad lot.....AND it's chintzy *pre-fab* construction to boot!. It flies in the face of the gist of that old real estate maxim - *you don't want to have the nicest house in a bad neighborhood* - because it never rises to it's presumed value.

Someone will eventually buy this house. I'll wager that it's an out-of-stater. People from the South or West get used to big living, buy a whole lot of furniture and plastic toys....and just can't bear to go smaller when the husband gets transferred to a place like Boston. Newcomers will accept the unrelenting noise of a house like this also because they'll have no idea how much it will cost to heat such a monstrosity over the 5 month Massachusetts winter.

What this homeowner did was make a fallacious calculus. He figured that if he sold the house himself at $850,000 that it would be equivalent to a broker-sale at $900,000. He's right with the arithmetic. BUT, he did it backwards. He was supposed to try a broker first. Once the house sat out there *bidless*, there's no way he could raise the price - not in this market.

This is why 99.99% of home sellers are petrified of LOWERING their prices!

It's far safer, in their minds, to stay high and delusional hopeful.

So why did this one make my blog today?

Because I was just alerted to a price reduction on it. They dropped it from 900k all the way down to 890k. What a gesture!

My wife's response was a belligerent, "Give me a break!"

West Coast Tom surely had a thang for Nell Carter:


Anonymous said...

you're hilarious. as soon as you find a house that is worthy of your presence and is also at a price you would pay, you're going to wonder why it is available and get cold feet.

Anonymous said...

what do you think of the real-state over next few months ? already bottomed or expect another 10% or more decrease ?

I mean, what would pay for that house ? 600K ?

Like stock market, RE is crazy now. Multiple bids on foreclosure /REO properties.

Phoenix saw 10% price increase since April of this year.

Anonymous said...

The FHA is imploding with only 4.4% of cash on hand for all of their outstanding loans. They are now just hiring a risk compliance officer!

I swear, if this was not so devasting for our already teetering economy, it would be hilarious how incompetent the government really is.


Anonymous said...

You are right to wait. Real estate prices are headed much lower.

Bernanke managed to push it out a little further, but in doing so he guaranteed a truly spectacular blow-up that may well take out the currency also.

The bad news is, you probably won't want to own any house with high energy bills. For that matter, you probably won't want to own any house.

CaptiousNut said...

Anon 9:32,

Be sure to come back and rub it in when I miss the bottom!

Anon 1:24,

I wouldn't pay 700k for it. So somewhere in the 600s - though not sure where. I am personally very anti-noise because I spend so much time at home.

I'd be careful about purported *price increases* these days. As the mix of homes selling changes (more high end homes in the spring buying season) the *median* can make counterintuitive moves.

REO in places like Florida is hot at the moment. That will fade from oversupply. 23% of all Floridian mortgages are currently delinquent. Only an idiot would buy anything there today given that ominous outlook. And, despite the frenzy, stuff is still going for roughly 70% off peak prices.

Anonymous said...

maybe you'll catch the bottom whenever it happens - this year, next year, three years from now - and in the meantime your life passes by while you raise your family and spend your time in a p.o.s. rental and have to deal with a degenerate landlord.

CaptiousNut said...

My landlord is a *degenerate*.

BUT, I am living in a 600k place for the rental equivalent of 416k.

My place happens to be very, very nice....AND cheap.