Forbes Reports: Price Declines to Come to America’s Ritziest Addresses
Thanks to Spark who linked to this Forbes Magazine article earlier about the level of inventories of million dollar homes in America and what it means for some of America’s wealthiest neighborhoods.
I’m going to highlight it again for those of you who didn’t see it when it was linked.
It’s a similar story in Lincoln Park, where single-family home prices slipped only 2.2% last year, far less than in the rest of Chicago. But inventory has since tripled. Wagner Appraisal Group figures there’s a 16-month supply. A year ago “I was almost cocky about our position compared to the rest of the market,” says Jennifer Ames. No longer. After 11 months of lowering the $2.1 million asking price on her 3,400-square-foot house, Ames sold it in June for $1.6 million.
Given the glut of unsold homes, Lincoln Park’s prices may well slide at least 15% this year–as Chicago’s did in 2008. If you look at Fiserv data going back many years, you find values in Lincoln Park track the rest of Chicago pretty closely with a one-year lag.
By the way- even the once mighty Manhattan looks to be in for a large correction.
Unsold inventories in Manhattan are at their highest levels in a decade. You can’t tell by looking at data about its condo market. According to Radar Logic, which generates national realty info from its New York City office, condo values fell only 4% last year–far less than the 12% drop for the city as a whole. It’s been held aloft by new-construction condo sales above the $1,200-per-square-foot level, says Radar Logic founder Michael Feder, reflecting deals struck a year or two ago. Once they pass through the system, the average price of a condo will plummet to $900 a square foot, reckons Feder.
America’s Most Troubled Luxury Neighborhoods [Forbes Magazine, Stephane Fitch and Matthew Woolsey, June 24, 2009]
Yet $1MM+ condos in the prime buildings downtown are still selling and people are signing up for condos in The Legacy without mortgage contingencies. Go figure.
We’re going through a massive global retrenchment due to the global credit collapse, that simple.
The bubble was much more that just a bubble in housing prices caused by careless lending. What really happened over the past 10 years was that the United States and European countries made a deliberate policy decision to found economic “growth” on the credit expansion and asset inflation, while incomes and real productivity stagnated.
Now we’re seeing the inevitable contraction and it will continue for a few more years at least, taking a lot of paper “wealth” off the table with it. Deflation is inevitable, so we can expect the upper end to inevitably follow the rest of the economy.
Upper bracket stuff will still sell, and to more solid buyers who have a lot more cash to put into the deal. They will want much more for their $1MM , or $5MM, or $25MM. Even Manhattan buyers will want a lot more for their money than a 1200 sq ft 2 bed 2 bath in a cookie cutter high rise.
I’ve looked. I don’t see whole lot of $1MM sales that weren’t closings of contracts signed pre-2009.
Funny.. you all still think this is global… one punch in the face globally for those that bet on the U.S. but that’s it, a punch for the rest of the world.. then they move on. This will be a US crisis for quite some time.
Ze, this is way more than a punch for the rest of the world. the UK is on the verge of bankruptcy and credit downgrade, Spain has an 18% unemployment rate, the former soviet bloc countries and in a depression, China has tens of millions of unemployed, Japan has succumbed to deflation and major drops in exports, Iceland’s financial meltdown? Uniquely an American thing?
Gary: The Legacy is going to be interesting. It’s original marketing was during the big boom years.
I personally know of people who make $100k in income who “bought” $900,000 3-bedroom units. What will happen to those “buyers” next year?
They put 10% down- but there’s no way they can close.
http://yochicago.com/today/lincoln-park/is-lincoln-park-one-of-americas-most-troubled-luxury-neighborhoods_8967/#comments
“Bear in mind as you read the article that Forbes has a nearly unblemished record of getting it wrong in national real estate stories.”
HD.. I concede.. expand that to nations in debt that lack any real productivity.
PAGING STEVEN HEITMAN.
“nations in debt that lack any real productivity”
So, that excludes Brazil, China and who else? Or do you consider oil reserves “real” productivity?
“PAGING STEVEN HEITMAN.”
As noted in the thread where this was linked, the Chicago house referred to in the story is in Lakeview, not LP.
oil=assets… ability to grow sugar cane=productivity… I’ll add India to the list too. If I am China I finance development there. Hell better chance getting paid back lending $200 each to a billion Indians than you did lending some putz 60k for the BMW.
I am also not saying this all happens without pain.. I am saying that first you realize your position is too big, then you try and support the position, then you realize it’s too tiring and or impossible to do so you say f* it and move forward. When they say F* it, game over and US will never be able to finance debt in dollars ever again.
This is where things are heading.
If people were really worried about moral hazard the EU should’ve invaded Iceland and imprisoned the 250k citizens there, or at least taken over the government.
If there are no real repurcussions for defaulting on your sovereign debt, everybody will do it. Icelanders should be punished severely, up to and including sent to forced labor camps. Their word means nothing apparently and their central bank was allowed to speculate and reap profits during boom times but the populace isn’t sufficiently punished in the bust times.
There were 137 closings total for $1M+ att and det single-family in Lake View, Lincoln Park, Loop, Near North, Near West, and Near South combined for 1/1/09-6/15/09 (24.9/month.) There were 36 closings from 5/1/09-6/15/09 (24/mo.) There are currently 1,122 listings over $1M. This indicates a current inventory of over 3.5 years.
Bob we don’t live in the 14th century anymore. Iceland is feeling the repercussions. Inflation is soaring, their currency is pretty much worthless, tourism has dropped and their economy has reverted about 25 or 30 years backward, which for Iceland is the equiv of the dark ages.
“This is where things are heading.”
After WW2 I believe the US had a larger debt as a percentage of GDP. After several decades of real productivity we got through it with no default.
I don’t see the US defaulting for another 20+ years. Not until the medical benefits entitlements start to hit the fan. Then the seniors will vote for their benefits en masse, but to no avail. Theres not enough money out there. Too bad future grannies and grampies you’re not going to get the benefits you felt so entitled too.
It will be bittersweet leaving the baby boomers who had an entitlement paradigm their entire lives poor in their old age.
Post WW2 the US was the only manufacturing game in town, with rebuilding demands being huge. I fail to see the parallel.
Can’t believe I agree with Bob, but the boomers better start putting more in the system if they want anything in 10-20 yrs.
I still believe in the best this country can be, we can come out of this, just some hard work and some cutting of the fat. We have a lot of it, maybe we can make some high end soap and export it to China.
Our current accounts deficit is shrinking, if we focus on green tech, (and soap) we can build our currency in a future time of inflation, thats a win win.
Foreign direct investments, will buoy the US empire, more that the UK could pillage from its colonies.
Thanks for including the Manhattan info in with this article Sabrina. You just don’t know when to let up do you?
I think it takes more than stating on your forum some random thoughts and obsecure articles to really understand the state of NYC’s housing situation right now. Try living there for a couple of decades, get a solid understanding of the differences between cow town Chicago and Manhattan THEN post your info.
It may be down, but it was the last to feel the pinch and I am thinking, having dealt with all levels of RE there that it will not fall as hard as Chicago has. Prices may be coming down, but at the same time, prices on some unique properties are doing just the opposite. Refer to Curbed’s article about both Chupi and One York penthouse…opposite ends of the spectrum and a good look at what is happening there.
“Can’t believe I agree with Bob, but the boomers better start putting more in the system if they want anything in 10-20 yrs.”
My parents have been diligent savers their entire lives, they’ll be fine. But if the rest of the boomers driving their SLKs and 3 series today think that I’m gonna subsidize their old age with increased taxes on me, well I got news for them: my passport can easily be dusted off and away I go.
It will be one massive talent drain from the US when this happens, and it will happen. Wait and see.
what will save us is that people actually want to live in this country. Think hypothetically, if American borders were to be sealed *forever* beginning next week: would you stay or would you leave? How about the rest of the world? Do you think the rest of the world would immigrate to the country or stay put. What if the borders in China were sealed….how many Chinese would choose to stay and how many would move to California?
WOW, I think I had a wave of Steve Heitman in my last post…usually I am not so confrontational, but it rubs my last nerve when uninformed people attempt to compare two extremely opposite markets like Chicago and NYC.
There is no comparison people!!
“differences between cow town Chicago and Manhattan ”
If you think Chicago is a ‘cow town’ you are really disconnected from reality. Why even stop in any of the ‘flyover states’ to begin with?
Seriously we could do without the coasters here: they bring their money in and drive the price of everything up. I’d rather they stay out on the EC with their “edge” our out on the left coast with their ignorance.
“There is no comparison people!!”
Other than they are both dropping in value, that is.
I don’t have a problem with the coasters overspending here, since they often buy from locals. They aren’t significant enough to actually impact overall values. Just ask the zer0.
“the differences between cow town Chicago and Manhattan ”
“it rubs my last nerve when uninformed people attempt to compare two extremely opposite markets like Chicago and NYC.”
WL:
While I appreciate the partial mea cupla, you spout the “be civil” line and turn around and post that kind of shite. How noble of you. Especially as one of the first to always compare Chicago and NYC, and always in terms insulting to Chicago.
Yeah, they’re different. Yeah, people in Chicago won’t spend eight-figures on an *apartment* to be in a building with the “right sort” or whatever. Yeah, those of us who choose to live in Chicago are generally pretty happy that Chicago is different from NYC. Get over it (and yourself).
Forbes is always on top of the latest trends.
HD.. I think most people would stay put. French would stay in France.. Brits in Brit, Italians in Italia… Mexicans in California… stuff like that. Personally if I could have any passport in the world right now I would want an EU one.
As for putting more into the system.. sounds like throwing good money after bad to me…
westloopelo: glad to see you derive your self worth by how much better NYC is vs. everywhere else.
all: it is easy to bash Forbes but they are right in one key aspect: wealthy sellers can hold off much longer so price capitulation is later for them vs. poorer sellers … but it will come eventually.
Far from the truth trader, I know my self worth (financially and other wise) and it is not derived from my KNOWING how much better NYC really is.
Come on now anon, as much time as you spend on this site, you know I have been more than kind to others in spite of being ganged up on almost daily. I am repeatedly questioned about what I know and how I run my business daily, something which I have held onto and been very successful at for over 25 years.
While I do ‘turn the other cheek’, so to speak, most of the time, there comes a time when insults from the likes of G (and lately Sab as well..although thinly veiled) just become a bit too much and a bit too personal. As you see, he has taken a juvenile path and now refers to me a zero…how much more distasteful can one be? Do you question his comments or why he has chosen to take that route with me? you tell me to get over it and myself..tell you what, I am over posting here as it is a never ending battle. Keep posting about what you all THINK about the RE sitution, just be advised that while you have such deeply held thoughts and opinions about the market, if you are a life long renter, no one will take your comments seriously.
In the end, because of such tasteless comments and insults I can only rationalize them to be the result of a great amount of jealously for not doing with their lives as I have done with mine. Whatever the reason, I know where I stand in the RE game whereas ppl such as the miserable and bitter G do not. And G, you really know nothing of NYC RE market other than what you read…doom and gloom is your mantra. If you were actually be actively involved in the market there to the extent that I am, you would really understand it is not all doom and gloom as it is here.
And of course the loser Bob…keep renting and degrading every listing that appears here while enjoying your $1 beers and you haute cuisine from Wendys on a daily basis. People like you will never actually own their own property…and realizing that sad fact makes you one negative arm chair RE no body. LOL @ dusting off your passport and leaving…yeah, some one will miss your studio rent $$$$!!! LOL too funny….
“People like you will never actually own their own property…”
Mwaha.. Says who? You? You’re over-levered and way long on real estate, I think thats says enough.
Unlike you I’ve actually been successful at long-term planning before without grampy and granny’s support. With your condescension of thrift it is quite obvious you are caught up in the whole American paradigm of “consume now, use credit, save zero (or less)”. You can get by with it due to your granny backstop. Most everyone else can’t.
And yes I’ve lived and worked overseas before. It was a higher cost of living higher tax environment and from observing their behavior over there it made sense why you wouldn’t be motivated to work or save if you were being taxed at 60+%. Oh and that country’s economy is now being destroyed as well as their ponzi economics RE came crashing down as well, worse than here.
Keep believing those with no skin in the game are plebians who never will be in the game, you aren’t my peer group and won’t ever be so its of no concern to me. You’re going to see a lot of people get some really nice places in the future era where CASH IS KING. Remove the funny money loans and the idiots overpaying are removed from the equation. Once its back to a solid downpayment and a verified income stream all of a sudden valuations are going to tank.
In short non-savers should’ve never been allowed the keys to RE ownership. They were via no doc, zero down loans and government programs and they ruined the toy for everyone. But the gates are closing again and the pendulum continues on towards conservatism.
I think you could all use a time-out, children.
damn no electro music lovin, antique shopping, dress wearing, west village latte-sipping comments. I am soooooo disappointed. I thought that was about to get good.
“Come on now anon, as much time as you spend on this site, you know I have been more than kind to others in spite of being ganged up on almost daily.”
You’ve lately taken to throwing out generalized insults which you must know are near certain to elicit a negative reaction from many beyond those who have attacked you. And slipping into “renters don’t add anything useful to the conversation” is–as some might say–weak sauce, and counter to much of what you claim to be your view.
I recall our first exchange here where you took some breezy phrasing as “uncivil” or something–it leads me to believe you’re a bit sensitive about things internet, while being a belligerent yourself at times (I make no judgment about who is “right”, I just don’t like internet double standards).
Anyway, I generally appreciate most of what’s posted for what it is–the one thing that gets to me is the “nothing here is worthwhile; it’s all hate-hate-hate and flame wars” posted by people who don’t (appear to) contribute anything themselves. You add, G adds, Stevo adds, and all we all pay for it is clicks and our time. So I think we all get what we pay for.
“damn no electro music lovin, antique shopping, dress wearing, west village latte-sipping comments. I am soooooo disappointed. I thought that was about to get good.”
I could’ve went there but that would just re-invigorate him (and be promptly censored). Instead I took the high (low) road of pointing out to him he’s probably going to lose money on his investments in Chicago. If he’s as long on properties as he claims, he’s probably going to lose a lot.
An accounting prof once said the best way to insult a businessman is to insult their bottom line/business acumen. If he were a run of the mill pridester I would’ve taken a different approach 8)
“the best way to insult a businessman is to insult their bottom line/business acumen”
That is always what starts WL on a real rant.
I will miss westloop, but i will always have the memories. Especially that catfight he got into with the realtor of the big humble park home. that was some crazy chatter.
guess so anon.. good thing I’m not a businessman. Only thing that gets me is HD still blaming I/O loans for this whole crisis 🙂 DAMN HIM!!!
oh and once again.. from a native new yorker… city boy even. Chicago is 100 times better place to live.
IO loans contributed not caused the mess.
No one told this buyer.
2136 n Dayton
Purchased in 10/2007 for $1,365,000
Pending after 20 days at $1,599,000
Oh boy!
The problem with IO loans is they more resemble a lease with the appreciation/(depreciation) potential/(risk). As the note is non-amortizing they are basically a pure play on RE appreciation and hence, more used by RE speculators than by those who wish to remain in their residence over time and one day own it outright.
Not as bad as option ARMs but still nonetheless a definite contributor to the bubble.
C’mon, who really believes we have heard the last of him? I’ll bet his word ain’t worth any more than his business acumen.
I think the zero has resorted to his lastest attacks as he finally realizes he is stuck in Chicago for the long haul and would rather be back in NYC. Things aren’t turning out as planned for him and he’s going to wind up a landlord in cow country, lol.
Somebody should’ve told him RE is not a liquid investment and when using leverage, one can get stuck being underwater on their mortgage obligations.
Maybe he’ll soon get a cow of his own..perhaps from Big Al’s boat ride.
So who is right? Sabrina that Lincoln APrk is back at 2003 prices, or the Forbes article, Jennifer Ames, and Me who stated that Lincoln Park has been very stable while the rest of the city and country have fallen dramatically in value?
Come on now guys… say I was right so far 😉
(:
Sabrina – Who was right? It is your blog you should admit when you are wrong. Forbes does not lie (except for their predictions which are wrong).
“the Forbes article, Jennifer Ames”
The house discussed is in Lakeview. It was sold at a loss.
Do we believe vague implications (resting on one factually incorrect example) in a Forbes article or the facts, Stevo?
The fact of the matter is that Lincoln Park is the greatest place on earth to live. I love it there. If only I could afford it. Afford to own, that is. Not afford to rent. I would never rent in Lincoln Park and be looked down upon by my friends and peers. Oh well. Maybe someday, we can all dream, can’t we?
Real estate is an illiquid asset. Just because an asset doesn’t transact doesn’t mean prices are holding up.
It takes a buyer and a seller to establish a value. The reverse is also true, but I think we are very much into a buyer’s market (as long as buyer’s are willing to be patient).
GLS – Thanks for your wisdom! I am a smarter man for reading your post.
why do all of steve’s examples involve contigent or pending properties. How about some SOLD???
“why do all of steve’s examples involve contigent or pending properties. How about some SOLD???”
He doesn’t ant to seem condescending with all of the continuing appreciation on these lovely LP homes, demonstrated by the closing prices at 105% of final ask or more?
In general, i agree with Steve Heitman’s assertion that LP property values are holding up pretty well.
So i checked the most recent sales (3 mos back) of SFR in 8007 to see. Here are the properties that sold/resold.
2115 Datyon – 4/06 $700,000 4/09 $630,000
410 Webster – 4/04 $751,000 4/09 $737,500
1952 Maude – 3/03 $1,025,000 5/09 $900,000
2120 Fremont – 10/06 $1,395,000 4/09 $1,595,000
2100 Fremont 6/04 $1,167,900 6/09 $1,722,500
2056 Seminary 10/02 $1,595,000 6/09 $1,900,000
2525 N. Greenview 3/09 $2,235,000 5/09 $2,025,000
1827 N. Sedgewick 10/04 $2,700,000 5/09 $2,375,000
1950 Orchard 3/01 $2,100,000 6/09 $2,725,000
i excluded a couple gut rehabs, and i assume a couple of the above were renovated significantly betwee sales. I would call the overall trend down, as more than half the people lost money.
There were 24 single families closed in 8007. You listed 9.
Bubbleboi: Those are the only properties that sold in the last 3 months?
What happened to the market being “normal.” That is basically nothing. The market is dead.
The Forbes article said inventory is at 16 months. Who knows if that is accurate but it tells you you have buyers holding onto “wish for” prices while almost nothing sells.
Doesn’t sound like a healthy market to me.
Steve: Then what are the other prices like?
2520 N Lincoln – Are realtors talking prices down? What could they have received?
Purchased in 2006 for $365k
Sold in 5 days at $370k today. Asking was $375k
Sabrina – I am just curious where you get your data that prices are below 2004 prices? I am in the field everyday and see what is happening. Where do you get your info?
out in the field and never heard of Case-Shiller?
Comes out tomorrow, btw.
C-S is, quite obviously, the best source of data on housing prices and their movement.
However, as discussed many times here, it is not neighborhood-, or even city-specific (covering metropolitan areas). To a certain extent, the condo index (which actually gets much less attention than the SFH numbers) is bit better as an indication of city pricing, since condos are much more heavily concentrated in Chi than in suburbs.
But it is certainly possible for a neighborhood to buck the overall trend represented by the C-S numbers.
Amature!
i agree on the comments about c-s index’s weaknesses but i think it only highlights why the real market is worse.
there is still too much unsold inventory listed (and unlisted) at unrealistic prices. if they were marked-to-market, the index would be far lower. the trend is still lower despite all the isolated cases being quoted. i still see far too many cases of make me an offer please.
Extremely bad day yesterday (NOT business related) and I snapped over the/with the immature and unneeded comments. I should know better than to let anonymous online comments questioning my standing and opinions get under my skin.
Bob and anon(tfo) I do apologize to both of you for what I said to you yesterday. I was out of line in doing so. Bob your comments make me see some humor in RE here and anon(tfo) I do respect your intelligence and input. Most of what you say is spot on and is backed up with facts. I have nothing against either of you, but was disturbed by your posts…taking the path of G is not something a wise person would do and does not shine a good, deserved light on you. I will not comment on him further and stand by my comments about him. Hopefully we will just ignore each other..I know I plan on doing so.
FWIW, I owe no one. I do not have a single property that has been financed by any institution and haven’t for some time. Every property I buy is with cash. The only time I took advantage of my grandparents or parents wealth is when I stayed with them during my college years. I worked in RE and earned every dollar on my own. My parents paid for my education and they were repaid with the first rehabbed 4 or 5 houses I did. They raised us all to be self sufficient and their work has paid off. Their $$$ is theirs, ours is ours.
I made it a point early on that I would never be indebted to anyone or any bank. I understand, am extremely fortunate and appreciative that I can say and live like this. I realize it is not the norm for all, esp while attempting to buy their own home. As far as long term planning is concerned, I have worked hard to do that and I am doing well at that. I did take some rough, high $$$ RE hits over the last 3-4 years (mainly FL props) but I learned not to invest so heavily in upper level properties that I would try to sell later. If I do invest in them, they are for my own use and nothing more.
I am still very much in the clear with enough $$$ put away for retirement…a good retirement.
All is fine with my long and short term investments. While I am concerned with my $$$, I am far from being worried about it. I will always be with my head far above water, not to worry. Did I make miscalculations and mistakes in past, of course I did, just as many others have. But I learned from them and will not do so again….ever.
“….American paradigm of “consume now, use credit, save zero (or less)”….this is not my situation. I do consume only when I really like something. I pay cash and do not use credit for those purchases. I do live a pretty basic and boring life, although I do love nice homes and nice cars and have a good chunk invested in both. Do I have to means to live a crazy carefree lifestyle? of course I do, but that is not me at all. What I do have, what I have worked hard for, is all mine and every single thing was purchased with much thought and is very much appreciated.
I am not ‘leveraged’ and in debt to no one whatsoever. I do not invest anyone’s $$$$ other than my own. I thought a lot of buying like crazy in Chicago, but after the first few, I stopped, realizing that I would be stuck with these places with little to no chance of reselling. Once completed, I will retain them as rental properties, or as many of you call for owners to do daily, I will sell at a loss to myself. If this is the only way to get out of ownering them, I will do so. I will get out of the Chicago market as I have no real interest in participating in it….just not my idea of operating my business.
OK, I am done with my explainations. Please refrain from throwing out such barbs towards me and I will return the favor. As you said about me before Bob, “Sure he does get a bit irritating on occasion, he doesn’t bother me”, that is the same way I feel about you. Extending the proverbial olive branch and will leave it at that.
I plan on resuming posting about the featured properties and that is as far as it will go, so please do not attempt to get me involved in anything other than that.
Sabrina:
“Bubbleboi: Those are the only properties that sold in the last 3 months?
What happened to the market being “normal.” That is basically nothing. The market is dead.
The Forbes article said inventory is at 16 months. Who knows if that is accurate but it tells you you have buyers holding onto “wish for” prices while almost nothing sells.”
And what exactly is wrong with pricing at wish for prices and holding onto your place if no offers match what you want for it? I am sure not all in this category MUST sell…many are probably wanting to move up to a more expensive property…do they “need to”…probaby not, but what is the harm in trying? Is it your $$ at stake? No, it is theirs and it is not our place to call them out for their choice to attempt to do so.
Thanks bubbleboi for posting the obvious. Of course Sabrina it is not a great amount, but 9 (or 24 according to whose info you take) does not equate DEAD. The upper level has a very weak pulse, but it is not flatlining yet nor will it ever. How can you not understand this while continuing to downplay any movement?
The entire market is down, but there are still some who can and do obtain mortgages and according to what is being written across the country, these people are getting good deals and are right in investing at this time…if only right in their own eyes.
I am sure most who are buying now do realize the chances they are taking with their money. I am also sure that they are all planning on living in these residences for a long time and not looking to flip them for a profit in a couple of years.
Investing in housing for the sole purpose of returns on your $$$ is no longer happening, but people ARE buying for shelter and we should be congratulating, instead of insulting them.
WL:
So now you’re telling me that many of those $1-$3 million homes that are on the market are simply on the market because they don’t have to sell? So they hire agents, stage the house, have strangers tromping through all because “gee- someone might buy it”.
I know of a few people who put their homes on the market at “wishing prices”- all the while told by agents that it won’t sell. And it doesn’t. The listing is removed pretty quickly.
“Wishing” prices aren’t selling. Period. What’s the point? That’s NOT the market. The market will tell you what it should sell for- not what you “hope” it will sell for.
These are the houses I’ve seen on the market for 2 to 3 years now- many of them empty.
Until these houses are priced for reality- then we’ll have some true movement in the upper bracket.
The homes I’m seeing selling are priced either at or under 2004-2005 prices. People want “deals.”
In a way, yes I guess that is what I am saying…although they may have been either fortunate to have the available $$$ to buy an upper level house or were able to score a huge mortgage to do so, some of these owners just might not be RE savvy enough to accomplish a sale.
They just may be going into it disregarding their agent’s advice, placing a wish price on their home, with the only expectation of getting a feel of where the market is concerning their own place.
Believe me, in all the years of buying/selling a large number of places, most of the time employing close relatives as brokers/agents their ‘advice’ has on occasion backfired on them and I have ended up with a sale on my wish price or very close to it.
I really don’t think it ever hurts to place a prop on market priced at what YOU think you should be getting for your house if only to gauge the (or any) responses to your price. This allows maybe nothing more than a wake up call, but IMO, it does serve a purpose, right?
I would like to think that if an owner places his/her property on the market with their wish price attached and they do not see any interest, that they would have the sense to lower the price and keep lowering it until they do see some interest.
For a home to sit for 2 or 3 years (I really haven’t seen much of that lately) overpriced and not being reduced is just plain ignorant of what is happening. Currently I have six places in both NY and S Fl that have been reduced to pre bubble pricing. Gradually I am seeing more and more interest shown, but with this interest also comes some pretty outrageous requests. Furnishings included, assessments paid for the first year, re-painting to the offerer’s specifications, etc. that I have never dealt with before, anywhere. I can understand a current buyer trying to get a great deal on a condo/house, but the buyers need to realize as well that we are not in it just to satisfy their outrageous demands…we are in it to sell at a price that offers us the opp to cover the original price we paid, a portion (as opposed to the full recoup of rehab investment $$) of return on my rehab investments and an even more outrageous expectation on our parts as sellers….god forbid A PROFIT!!!
Throughout your response Sab, you still do not acknowledge that SOME places have been sold. Were they significantly reduced in price or did they go for close to the asking price? ???
Anyway, I think no matter what facts are shown to most readers here, there is still a denial that there is any activity in the market at all in order for those who have not owned before that they are still smart enough to rationalize not buying. Now what happens if there is never a break in this whole mess? What if this IS the time to buy or LOL be priced out forever? Will die hard non investors/buyers of homes for their own long term use still insist they did the right thing in not buying?
Dear westloopelo,
You have to be denial to not realize there is and continues to be a breakdown in the real estate markets. Since when was profit in any speculative enterprise guaranteed? If you can make a profit, good for you. But guess what? All those “outrageous” requests are just a sign of the times. If you don’t have to sell and you can ride it out for better times, that might be the best move. But if you can’t, then you and others will have to realize losses.
I’ll keep lobbing in my -25% pricing, re-carpeted, re-painted, and furniture included bids. Because guess what? That’s where I (and apparently others) think the market is.
I have been looking in LP for a $2-3M single family for over 4 years. Several trends are evident in this range: (1) nothing was moving after the fall credit crisis disruption, (2) existing homes in marginal locations or with less than up to date stylings have sold but at large discounts — 15% or more (see sales in 2200 block of lakewood at $1.9 off $2.5 list or Maud $1.8 off a $2.5 list, 625 Schubert $2.2 off a 2.75 list), (3) recently nicer property, particularly new or newer construction by established quality builders is selling around 10% off list. The homes over $3.0 are in trouble and not moving. The jumbo market requires 30-40% downpayment on homes in the $2.0M and up market.
Sabrina on June 30th, 2009 at 7:31 am
WL:
So now you’re telling me that many of those $1-$3 million homes that are on the market are simply on the market because they don’t have to sell? So they hire agents, stage the house, have strangers tromping through all because “gee- someone might buy it”.
westloopelo on June 30th, 2009 at 8:43 am
In a way, yes I guess that is what I am saying
WL, nearly no one is “testing” the market to see wha they can get these days. And those who are simply wishful thinking fools. People who are listing their homes for sale these days are doing so because they have to to some degree.
Case-Shiller defines Chicago as the entire Chicago-Naperville-Joliet, IL Metropolitan Division, which includes all of the following counties: Cook IL, DeKalb IL, Du Page IL, Grundy IL, Kane IL, Kendal IL, McHenry IL, and Will IL.
It is a worthless exercise to extrapolate the CS data to a neighborhood in Chicago, let alone a single property.
“defines Chicago as the entire Chicago-Naperville-Joliet, IL Metropolitan Division”
Which–inexplicably–excludes Lake County.
“It is a worthless exercise to extrapolate the CS data to a neighborhood in Chicago, let alone a single property.”
It is indeed worthless to try to extrapolate the CS data to a neighborhood in Chicago as it is a futile exercise, or to any data set that is smaller than the sample sized data set.
Its much less worthless to try to interpolate the CS data to a neighborhood in Chicago, however.
Sabrina on June 30th, 2009 at 7:31 am
“The homes I’m seeing selling are priced either at or under 2004-2005 prices. People want “deals.””
westloopelo on June 30th, 2009 at 8:43 am
“Throughout your response Sab, you still do not acknowledge that SOME places have been sold. Were they significantly reduced in price or did they go for close to the asking price? ???”
wtf?
The return of the 0: I always knew his words weren’t worth much, now we can say the same about his word.
Oh G. Are you protecting your favorite blogger? How cute…
He is a superhero to save the damsel in distress..
kinda like Handy Man.
(Dammmnnn!!!!!)
Vocab police in force today….busted.
Change much less worthless to slightly less worthless and I will agree with you.
Cook IL, DeKalb IL, Du Page IL, Grundy IL, Kane IL, Kendal IL, McHenry IL, and Will IL combined is down to 2003 levels so LP is down to 2003 levels? Come on.
“[CS-Chicago] is down to 2003 levels so LP is down to 2003 levels?”
Condo index is down to slightly above 8-03 level. Down 78 bips from March; off 13.46 from 04-08. Still not the same, but as Ze sez, it’s gonna get uglier.
“Vocab police in force today….busted.”
I’ve had more glaring linguistical gauffes, fortunately nobody notices until anon(tfo) points them out. (He’s like our resident Jeeves from AskJeeves).
In terms of future direction of the condo market, I’m not so sure. I think Chicago is likely to level off for the summer, just like last year. Heck maybe even get a nominal bounce (a percent or two).
In terms of the entry level in LP/LV, I was searching for under 250k, non-highrises yesterday and the inventory was awfully small. Maybe it won’t budge or maybe it will grow as properties priced over 250k are cut down a bit, we’ll see.
In any case I’m gonna continue renting as that is cash flow positive to buying in my neighborhood.