Then you panicked tire kicking "buyers" who believe the latest bullcrap from the NAR may compare the properties side by side and determine if the asking price of high end homes might still be a tad too high in Key West. Hopefully, this small lesson will help you cool the panic that the market is taking off again without you on board riding the new Housing Bubble Conch Train.
We are about to compare 809 and 811 Washington Street in Key West.
The first of the two (809 Washington Street) just sold. However, we will list it's photo and data secondly as we want to show the house which is still for sale. The idea here is to show the irrationality of sellers, developers, Realtors and certain lenders who are still trumpeting this idea that Real Estate is bottoming and "Now's the time to buy".
811 Washington Street in Key West is a big beautiful three story Conch Style town home in Key West. It is in a very desirable neighborhood in and around the Casa Marina and Louie's Backyard Restaurant. It was built in 2006, so we are talking newly constructed right at the top of the Housing Bubble.
This For Sale home was beautifully tricked out and apportioned on the inside and out. (To see all six photos of this house, click here.)
Below is an outside photo of 811 Washington Street with its neighboring town homes. Perchance, did you notice they are all the same size and look? (Duh). Anyway, after you look at this photo, browse the data below this For Sale beauty of a town home:
Beautiful 3 br 3 1/2 bath townhome with Viking appliances, custom wood floors,marble baths,and being sold fully furnished with designer furnishings.
MLS# 110326
Status: Active
Original Price: $1,595,000
Listing Price: $1,595,000
Property Type: Townhouse
On Market: 141 Days
Address: 811 Washington St
Key: Key West
Mile Marker: 1
Neighborhood:Casa Marina
Style:Townhouse,Three Story,Conch
Bedrooms:3
Bathrooms: 3.1
Price Per Sq. Ft. $841.24
Square Footage: 1,896
Lot Sq Ft: 1,754
Year Built: 2006
Taxes:$1,599.14
Tax Year: 2007
Exemptions: None
Now let's follow the above For Sale townhome at 811 Washington Street with the Just Sold townhome at 809 Washington Street:
To see all photos of this stellar town home, click hereBank approved price! Perfectly situated in the heart of the CasaMarina district is this truly beautiful 3-story townhome. Cathedral ceilings and custom-cut Carlisle Lumber pine floors welcome you to this quality home perfect for year round living. Bright & open great room, gourmet kitchen with stainless Viking appliances & granite counters, spacious bedrooms with en-suite marble baths and private balconies. Fenced for privacy, this elegant townhome boasts a private bricked patio with native tropical landscaping, relaxing heated pool & a rear entrance. This townhome comes with one deeded, bricked off-street parking space. Close to Duval Street but in a very quiet residential neighborhood. Potential Short Sale subject to Lender approval.
MLS#: Sold July 1, 2009
Address: 809 Washington St
City: Key West
Mile Marker: 1.0
Original Price: $1,550,000
Listing Price: $795,000
Selling Price: $775,000
Sale Price/List Price: 97.48
Price Per Sq Ft. $413.11
Listing Date: 10/2/2008
Days on Market: 270
Interior Sq Ft. 1,876
Lot Sq. Ft. 1,900
Year Built: 2007
Bedrooms: 3
Full Baths: 3.1
Property Type: Townhouse
So we have two homes, nearly identical in every aspect (okay, one has a few more square feet outside, and they were completed construction in different years). They are smack dab next to one another and they look like every other town house in their luxury community.
One just sold for $775,000.
The other is still for sale at $1,595,000.
WTF?
Let's say for a minute I was ignorant of the recent 809 sale. And let's say I agree to buy 811 Washington Avenue at the full price of $1,595,000.
My potential lender and Buyer's Realtor should be calling an out of town appraiser (it's the new Federal law all local Realtor's are bitching about) who will come into town, do comps of recently sold houses in the vicinity of 811 Washington and will discover the nearly identical town house right next door at 809 Washington just sold at $775,000 . . . which I figure to be a 53% discount from the current asking price of $1,595,000 for the 811 Washington town home.
Question: do you think any appraiser knowledgeable about all the appraisers being jailed for fraud is going to tell a potential buyer, "Yup, that 809 sales price was an anomaly. It was a bank short sale. The house you want to buy is still worth $1,595,000."
It ain't going to happen.
Do you think any potential buyer out here kicking the foundations of homes is not savvy to the power of data mining the Internet on their own?
So why in hell is 811 Washington Street still listed for the obscenely insane (in my opinion) price of $1,595,000?
Who is in denial here, I the self-armed housing data hound, or, the members of the local Realtor's cartel who refuse to break ranks and tell it like it is?
And here's something else I'll toss into the mix: 811 Washington might just sell for less than 809 Washington just sold for if the current owner of 811 doesn't smarten up and realize the public is a lot more savvy and protected by better consumer laws (and more are coming) and that the market is still trending down. This is not the time to be dragging your feet if you are a seller.
(Were I a distressed seller, I'd do exactly as Sally O' Boyle, an honest local Realtor now living in Costa Rica once said: lower your listing price weekly by $10,000 until you finally have phones ringing off the hook. It's that damn simple.)
Loans are tougher to get. The pool of people who can afford a Jumbo loan are shrinking like plastic wrap in a hot oven. And more and more people continue to lose their jobs. Liars Loans are dried up. Very few people will ever buy an ARM front loaded loan again . . . especially with rates at some of their lowest of all time . . . because consumers have heard the horror stories of re-setting ARM loans. (And rates are so low, they only have one way to go . . . UP.)
And when all the current off-MLS foreclosures (stealth inventory), regular stealth inventory (e.g. developers's empty properties kept purposefully off the MLS) and coming foreclosures (especially those in the Prime and Jumbo loan classes) hit the market's proverbial inventory shit fan, where do you think prices will head? Up?
This ain't rocket science. It's Economics 101. Supply and demand.
Think about it. A 53% discount on a brand new home and the home next door is still priced to sell at 53% higher. Tell me again how foreclosures will not really affect this supposed housing bottom and how foreclosures will not continue to wipe out trillions more in what was homeowner/developer/speculator/REO equity. If you believe this, you are oblivious to what is in the pipelines of insolvent banks who are sitting on TARP funds as backstops to all the crappy loans they've set off books so as to make it look like they are hale and healthy.
Go ahead. Tell me again the market in Key West is bottoming now.
Here's something local readers of the Good Deeds should have caught a long, long time ago:
Original prices are not being trumpeted. Only the listing prices are. And those listing prices are then compared to SOLD prices to make it look like the fall in prices is stalling.
When 809 Washington SOLD on July 1, 2009, all the Good Deeds report in the local mullet wrapper show is the last "Listed" price (the price changed list price) and Sold price, thus, showing only a 2.52% fall in List Price to Selling Price.)
Like the old Lays Potato Chip hawker, Joe E. Ross from "Car 54 Where Are You" TV show (were he still alive and were he a Realtor) would say, "Oooh, oooh, look at that, the market is bottoming. That house sold for only 2.5% less than its asking price. Oooh, oooh!"
But I've just shown you the previous owner of 809 Washington got a great deal less than what he originally wanted . . . and now his nextdoor neighbor/owner of 811 Washington, be it the developer, a Realtor, a speculator or a homeowner, is left wishing in one hand and crapping in the other. And what do you think they are going to find once they quit their denial of which way the market is trending now?
If you watched friends and family members get badly burned during the Housing Bubble by believing 99% of what Realtors, Lenders, NAR Schills, Appraisers, Mortgage Brokers, Insurers, etc., were pumping non-stop 24/7 around the clock, you know you cannot believe anything the FIRE Economy teat suckers tell you now.
Again, study the data. The truth is in the numbers.
Read people on the Internet such as Dr. Housing Bubble, Mike Shedlock, Patrick at Patrick.net, Ben Jones of the housing bubble blog, etc., who aren't in the pockets of FIRE Economy interests.
Read the data coming out of the Federal Reserve. Read Case/Shiller and do not just accept what Case/Shiller tells you. Read iTulip, the Big Picture, Option Armageddon and all the great links at the bottom of the http://www.a1anews.com/ blog which I've taken time to set off from actual news sources and which will help you interpret Housing Stats and BLS (Bureau of Labor Statistics) stats along with Case/Shiller's seminal work in housing charts.
Anyone buying a house now is betting that prices will go up from here and soon. (I feel the only way you can assure you won't lose a lot of money now is by not settling for anything less than 1996 prices, but that's just Doomsayer me)
Look, I could show you several examples of homes bought earlier this Spring of 2009 which have just this month and last month come back on the market at asking prices less than what the current bagholder paid just 4 months ago. That's insane. That's not a bottom.
What is the purpose of buying a home in Winter 2008 or Spring 2009 only to put the sucker back on the market in Summer of 2009 for a price 10 to 15% less than what you paid? What does that tell me? The market is bottoming?
No, it tells me there are too many people still gullible about Housing and that there are too many people trying to catch the falling guillotines of mis-truths which the National Association of Realtors and the National Association of Mortgage Brokes keep tossing out their SUV windows after the do another drive by on American consumers who haven't done their homework.
As always, Caveat Emptor.
Rock Trueblood
p.s. Sometime this week I hope to have a short eye opening look at so called "Affordable Housing" being sold by developers throughout the Keys. You don't want to miss this one as I'm going to show you current "Affordable Housing" prices vs. some Affordable Housing homes which are currently in foreclosure or bank owned. If you think prices have discontinued falling in the sub-$300,000 range, you are wrong. I feel Case/Schiller will blow through it's too short trendline of "home prices" and that the biggest future losses will be in Prime and Jumbo loan properties. (This new trend started just a few months ago and is really picking up speed. Wait until the biggest bulk of ARM loans reset from 2011 through 2013).
Also, I'll have to put my hands on some recent work done by an excellent blogger who took Case Shiller's work out beyond 100 years. (Case/Shiller's famous trendline does not contain information from the Great Depression . . . which is a huge, huge mistake on the parts of the Good Professors, IMO).
Lastly, since the Housing Crash of today is beyond any "outlier" Black Swan event which any major FIRE pooobah saw (Alan Greenspan, Hank Paulson, Angelo Mozilo, Lawrence Summers, the whole Bush Administration) back as it was blowing it's bubble, I will also write about two other outlier events which property owners in the Keys need to begin thinking about in earnest today: Global Warming and a Japanese style recover which might turn worse than Japan's tepid recovery. And by the way, Japan's property prices have not returned yet to their 1990 peak prices. In fact, Japanese land prices are starting to go down again as the effects of the Great Recession continue to deflate the Japanese economy. But don't take my word on it. Dig. Google it yourself. And read the links of other folk who have no vested interest in the FIRE Economy.
5 comments:
There will be no second half recovery. I live in an upper middle class neighborhood. Within the last 6 months, 2 of my immediate neighbors have been laid off, both having worked for over 20 years for major American Fortune 500 companies. The real story is that can not even get interviws.
NO one is hiring, except at entry level positions.
Combine that with unfunded pension liabilities, this will take a LONG time to unravel.
see
www.pensiontsunami.com
I feel for your neighbors. I just saw a news piece from Miami. Today, the contractor for the new Florida Marlins stadium handed out job applications. Constructions guys interviewed have been out of work more than a year. One guy said he was a carpenter, but that he'd take any job like labor or sweeping.
Unfunded pensions funds are another area not getting a lot of front page coverage, but we discuss them all the time on Motley Fool.
Lastly, like you, I believe there will be no second-half recovery this year. Dr. Housing Bubble lays out the argument better than I can in a short reply:
http://www.doctorhousingbubble.com/the-financial-and-economic-argument-for-no-green-shoots-no-deus-ex-machina-for-the-economy-10-charts-showing-why-there-will-be-no-second-half-recovery-in-2009/
Thanks very much for the website link. I'm adding it to my links on www.a1anews.com and the links down below.
Ok, show me "several examples of homes bought earlier this Spring of 2009 which have just this month and last month come back on the market at asking prices less than what the current bagholder paid just 4 months ago." I'd like to see that.
I wrote about 809 Washington Street in my blog http://keywestproperties.blogspot.com/2009/04/809-washington-street-101-casa-marina.html in April 2009 when it was listed at $899,000 by our office. I thought it was a good deal at that price, but I suspected it would sell at a lower price.
I showed the property several times and most lookers liked it and the location. The unit had some spatial use challenges that make it a difficult house for full time living, however.
When I wrote my blog in April, I pointed out the very same units you reference. You think the remaining sellers will be forced to drop their asking prices. Maybe. But if the remaining sellers are not in financial jegopardy, they may not reduce their prices.
Gary
Some people who don't need to sell can certainly put their house on the market whenever they want. But why would they put/keep a house on the market for twice what an identical home sold for if they don't need to sell? It makes no sense. It makes more sense, if they can truly hold onto it, that they'd get it into a good rental program and ride this out for a few years.
Post a Comment