Will The High-End Drag Down Everyone Else?

If no one buys this Bugatti Chiron for $2,998,000, will that hurt the sales of $90,000 Mercedes Benzes? Gideon says no.

I was belly-aching about the lack of high-end ($7M+) sales the other day to my friend* Chuck Royce, who certainly knows things, and he said “We lost 300,000 financial jobs and those buyers just aren’t there anymore”.

I won’t argue with the Voice of Royce, certainly the government-caused melt down of the housing industry, followed by the near collapse of the financial sector, took a terrible toll on jobs in the investment business.  But I still think there’s more to this. After all, there are now PLENTY of young couples out there getting into bidding wars over $2M tear-downs, particularly in Riverside and Old Greenwich. It’s one of our busiest segments, and consider the money being spent: they’ll pay anywhere from $2M to $4M+, just for the land, then spend $2M-3M to build the dream house.

Take the folks who just paid $4,325,000 for the right to tear down 206 Shore Road, Old Greenwich: they will be all-in for around $7M when they’re done building. Does that sound like a weak market?

No, what’s going on here besides Royce’s observation of 300,000 eliminated jobs is that young buyers, more than ever, want brand new. That means if you dumped millions into a property 15 years ago, you may not get that money back. Maybe your $12,000,000 house is now only worth $7,000,000, but the buyers are there. Their tastes have changed, but they do exist!

We notice this loss of value most in our extreme high-end properties, but will that erosion inevitably drag all the other prices down? I say no. It’s like the Bugatti example above. Prices in the rarefied categories, whether it be art, property, or automobiles, don’t really have much influence on the rest of us.

 

*You qualify as my “friend” if you can reliably pick me out of a police line-up.

Greenwich’s Wettest Drought II

Greenwich Gazette reporter, Wanda Round, seen leaving Aquarion World headquarters, Monroe, CT, earlier today.

Speaking to a gaggle of skeptical* reporters, a visibly irritated Marad Fogwogger,  Aquarion Water Company’s Vice-President insisted, “The drought will go on as long as I say it goes on!”. When pressed for more, he added that the public becomes “confused” when massive rainfalls appear to have no effect on the drought declaration.

Here is his full statement:

“This is too complicated to fully explain, but I will say that the whole thing can be attributed to global warming”, Mr. Fogwogger explained. “Warm air in the upper atmosphere causes warm rainfall, you see, and this warmer rain, well, it evaporates much more quickly. Yes, and it, um, warms the existing water in the reservoirs, so that water evaporates quicker, too! So, to sum up, the more rain we get, the lower the reservoirs drop, got it?”

 

 

*don’t you wish

Hanging Wit Da Brokahs OR… My Trip To Florida

The legendary, but still hip, Fontainebleau Hotel, Miami, Florida

Like me, you can think of nothing more fun and exciting than going to a Realtor’s convention and hanging out with a gaggle of Realtors. It’s “gaggle”, isn’t it? Pride of lions, pod of whales, eye of newt, gaggle of Realtors?

So down to Florida I jet, staying at the fabulous Fontainebleau, which I hadn’t seen since watching James Bond saunter by the pool in the movie “Goldfinger“. See those pictures on the website of wonderful ocean views? My view was more parking lot and some sort of inland canal, but still, over all, very nice room.

So NOT my view…

This chap talked about international real estate markets, actually interesting, I swear!

Hangin’ by the pool…(there were eight or nine different ones)

One of two iguanas that lived in the palm trees next to this pool. Note to iguana fans: have you ever seen a better set of caudal spines in your life?

Almost all of my time was spent in various “seminars” but it wasn’t as bad as that sounds. Years ago, I went into NYC to attend some Coldwell Banker broker thing, and the whole time was spent listening to lectures on sales technique, how to ask “tie down” questions, and generally how to steer hapless customers towards a sale.

This was anything but. The brokers I met with are all dominating their local markets and all of them are NOT working for national firms. There entire focus was on “building their brand”, which every broker needs to do, regardless of who you work for.

Still awake? Ok, so besides real estate, they also had interesting speakers like thriller-writer Brad Meltzer, who talked about extraordinary individuals like the cops who started the Make A Wish Foundation, and how maybe you’re not going to do anything that big, but you can still find a way to improve the lives of others (can you imagine such poppy-cock?). But seriously, I liked Meltzer’s speech the best.

I wonder if anyone here suspects I’m a white guy from CT!

 

Come on, who wouldn’t want to pose with a camel!

That building had the views…

Great spot to sit around and smoke a thoughtful cigar…

 

 

 

 

 

Two More Bellwethers

200 Guards Road, Conyers Farm, Greenwich, closes for $13,500,000. List: Michele Tesei. Sell: BK Bates

These two sales, one at the high-end, one at the low-end, tell you everything you need to know about the state of Greenwich’s real estate market.

Starting with the high-end, a Conyers Farm sale for $13,500,000: this sale dispels the myth that “no one wants these big, backcountry estates anymore”. Yes, they do, and they will buy when the price looks right. It started at $27,895,000 and found no takers for two years, four price reductions, and two brokers.

But when the ask got down to $17,500,000, lo and behold, a buyer appeared! Do you see the message in that last sentence? It’s not that people didn’t want Conyers Farm and the backcountry, it’s just that they don’t value it the way they did 15 years ago. That, too, will change some day, so people buying Conyers now will reap the benefit as surely as those who bought Manhattan co-ops in the 1970’s.

11 Dialstone Lane, Riverside, likely tear-down, comes on for $1,095,000, gets an instant deal. List: Helen Maher. Sell: Danielle Scialpi-Malloy.

Next we have this low-end, Riverside tear-down example. At $1,095,000, this is really about as cheap as it gets in this part of town, south of Route 95. It came on the market Feb. 21st and had a deal about 10 minutes later. Hasn’t closed yet, so we don’t know the price (wouldn’t be surprised to see it went over ask), but the lesson here is buyers are SO ready to buy!

Whether it’s a builder who knows he can easily get high $2M’s, maybe low $3M’s on this site, or a young couple who might actually use the existing house, there is money waiting on the sidelines, ready to jump in when the price looks irresistible.

Despite the self-imposed headwinds coming from the economic illiterates in Hartford, people continue to want to live in Greenwich, and they will buy your real estate. All you have to do is price it right. So simple.

The Wimpification Of Greenwich

Scene of devastation: somehow the car was able to make it…

The Friday Morning Snow Storm

I actually felt bad for the snowplow guys. There they were, all buzzing around town, searching for something to plow, finding nothing but clear roads. There was a bit of snow sticking to lawns, but no customers wanted their lawns plowed.

Yep, Friday’s “snow storm” caused every school to close and, more importantly, cancelled all of Gideon Fountain’s carefully prepared house-showing plans, and for what? Essentially flurries, the sort of snow Vermonters would barely notice, let alone change their plans for.

Absolutely pathetic, and a sign that Americans, well, Greenwich Americans, get softer and wimpier every year. This despite nearly every household owning at least one 4-wheel drive vehicle. Driving in snow is what they were made for, dammit! If that makes you nervous, go find an empty, snow-covered parking lot and practice. If you fear snow, you are a sissy, plain and simple, and the world can be a very hard place for sissies. Now, get out there!

At the height of the storm…thank goodness we could take shelter in this handy tunnel!

Sorry, no more skating, no more fun, all because some sissy-pants chiropractor or urologist or something, successfully sued the Town of Greenwich when he broke his leg whilst trespassing on town property.

You wanna see the right attitude about snow? THIS is the right attitude… Copy this guy!

 

Bellwether Sales

10 Copper Beech Rd has closed at $6,400,000 (but sold for $8,050,000 in 2008.

As every school child knows, a bellwether is a “predictor or indicator of things”, so, as I’ve said before, laziness compels me to look for bellwethers. I want short-cuts to help me assess the state of the market. Why spend hours analyzing dozens and dozens of recent sales when you can just point at one or two and proclaim, “There’s your damned market, right there!”

So here’s one of my bellwethers:

10 Copper Beech, as seen above. What is so painful about this one, besides the $1,650,000 difference between 2008’s and 2017’s price, is that these owners did everything right; the house was absolutely perfect inside, each and every room just beautiful. Even the [flipping] furnace room was a work of art, I kid you not.

Yup, it was perfect, no indication of being nine years old, might as well have been built this year. And the reward for all this perfection? $1.650M less, plus the additional money put into it since purchase. Very unfair and definitely worrisome for the Greenwich high-end sector.

My next bellwether:

20 Gilliam Lane, Riverside, closed at $2,150,000.

Here’s another one where the sellers did everything possible (they even increased the lot size!) and the market nevertheless delivered a swift kick to the @#%. I grew up (so to speak) next to this property, know it well, and always pay special attention to its selling price every time it comes back on the market. Here’s how it’s worked out the last few times:

1995:  $937,100.

2006:  $2,355,000.

2011:  $2,150,000.

2017:  $2,150,000.

Believe you me, each one of those sellers added plenty of value to the property, particularly the most recent ones, who did beautiful decorating and paint work, added a full-house generator, updated baths, and, get this, they had the property re-surveyed and discovered it wasn’t the .24 acres they thought they had bought, but was instead .3661 acres!

You mathematicians in the audience will perceive that is over FIFTY PERCENT more property! It went from having zero FAR remaining, to being able to add more than 500 square feet, a significant improvement. Oh, and did I mention that they piped the stream, and filled the gulley in the rear, creating a new, flat back yard? Huge improvement.

The market’s reaction? Ho-hum…what have you done for us lately? Sorry, we’ll pay you exactly what you paid 6 years ago.

And that, my friends, sums up this market: Our buyers are feeling optimistic, their jobs are secure, their stock portfolio way up, but for real estate purchases, they are cautious. They will buy, but they do so almost reluctantly, and if they have their way, they will pay you less than whatever you paid.