Saturday, September 09, 2006

Realtors' President Can't Sell Home

From the Washington Post:

A Humbling Lesson for Realtors' President

He, of all people, should have known better.

The president of the National Association of Realtors, Thomas M. Stevens of Vienna, admits he didn't follow his agents' advice when the real estate market started to cool. That, he says, is why his old house in Great Falls has now been on the market for a year at the price of $1.45 million.

"What I should have done," confessed the senior vice president of NRT Inc., parent of Coldwell Banker Residential Brokerage, "was listened to my agent and cut the price by $50,000 to $100,000 early on, and the property would have sold last October."

Or, even better, he said, "I should have listed it a month earlier," when the market was only just beginning to lose air.

Now Stevens, like so many other home sellers in the Washington area and around the nation, is waiting for a buyer in a market that has totally reversed course since a year ago. With two or three times the number of properties listed this year as last in some neighborhoods, agents are urging sellers to lower their expectations, put on their best face and offer incentives such as closing cost help.
...
"They sent the letter telling me the listing was approaching a year" and that the price needed another look, he said. "They're doing their job as agents. I'm not doing my job as a seller."

But, he noted, in his defense: "Who knew last September how long this down trend was going to continue," after so many years of climbing upward?
...
When asked how long sellers should expect a sale to take these days, Stevens said 40 to 60 days would be typical. And if a house hasn't moved by then, he said, "You need to adjust the price. . . . But I didn't do that. And my house is still on the market."

17 Comments:

Anonymous Anonymous said...

well he wont have to worry much longer because it will pick up

9/09/2006 09:10:00 AM  
Anonymous Anonymous said...

What a display of knowledge possessed by the RE expert. FYI, they are clueless and don't know sh*t.
Let's keep this thought in mind when we criticize those on the bottom who we affectionally call FB.

9/09/2006 09:13:00 AM  
Anonymous Anonymous said...

"well he wont have to worry much longer because it will pick up"

sure, its going to pick up again. no doubt about that. real estate is cyclical.

unfortunately, hes going to be waiting until 2012

9/09/2006 10:06:00 AM  
Blogger skep-tic said...

clear shift in realtors' PR since Sept started.

9/09/2006 10:11:00 AM  
Anonymous Anonymous said...

For those that are looking to lowball, it may be too soon. Read this for insight.

http://www.bullnotbull.com/archive/japan-tale.html

-Sapiens

9/09/2006 10:34:00 AM  
Blogger grim said...

There are plenty of would-be buyers that are intent on buying right now.

While I certainly wouldn't, and I'd recommend they don't, ultimately it is their own decision to buy or to bubblesit.

However, if they are going to buy, I'm going to do everything I can to try to change their mindset.

The last thing I want to see right now is a buyer paying asking, or worse, over asking.

A good friend of mine sold early this year. He rented back his house from the new owners for 6 months while his daughter finished out the school year.

He spent the summer looking and lowballing. Eventually someone bit. Renting wasn't a viable option for him. After all, he simply made a lateral move from one house to another similarly priced house in another area. He came out slightly ahead, especially since he sold his old home FSBO for an outrageous asking price. He did have some leverage to lowball on the other home.

Every situation is different.

grim

9/09/2006 10:49:00 AM  
Blogger grim said...

There are plenty of would-be buyers that are intent on buying right now.

While I certainly wouldn't, and I'd recommend they don't, ultimately it is their own decision to buy or to bubblesit.

However, if they are going to buy, I'm going to do everything I can to try to change their mindset.

The last thing I want to see right now is a buyer paying asking, or worse, over asking.

A good friend of mine sold early this year. He rented back his house from the new owners for 6 months while his daughter finished out the school year.

He spent the summer looking and lowballing. Eventually someone bit. Renting wasn't a viable option for him. After all, he simply made a lateral move from one house to another similarly priced house in another area. He came out slightly ahead, especially since he sold his old home FSBO for an outrageous asking price. He did have some leverage to lowball on the other home.

Every situation is different.

grim

9/09/2006 10:49:00 AM  
Anonymous Anonymous said...

grim-
i don't know what i would have done without you :)

thanks

9/09/2006 11:24:00 AM  
Blogger skep-tic said...

Reposting this from the weekend discussion thread. I've compiled stats on $150,000+ households in NYC-metro and thought it might be of interest to the blog as a whole:

skep
************

Lindsey,

Addressing your points in kind

"I think it's reasonable to place the floor for high income in Greater NYC at $150K"

There are a lot of towns around NYC where the median income is $150,000+. For example (town, median income, number of households):

WESTCHESTER

Rye, NY
$186,103
5,227

Rye Brook, NY
$205,363
2,166

Scarsdale, NY
$316,453
5,894

Edgemont, NY
$203,781
2,510

Chappaqua, NY
$284,785
5,225

Bronxville, NY
$227,990
2,449

Katonah-Lewisboro, NY
$187,841
6,394

Armonk, NY
$239,485
3,609

Briarcliff Manor, NY
$233,819
2,342

Ardsley, NY
$189,398
3,226

Pelham, NY
$158,241
4,110

LONG ISLAND

New Hyde Park, NY
$158,942
7,860

Jericho, NY
$189,889
4,581

Manhasset, NY
$210,949
5,300

Roslyn
$177,180
5,783

CONNECTICUT

Greenwich
$149,330
23,596

Darien
$215,062
6,746

Ridgefield
$159,968
8,535

Weston
$219,126
3,349

Westport
$181,007
9,626

New Canaan
$211,711
6,970

Wilton
$207,940
6,027

NEW JERSEY

Glen Rock, NJ
$148,159
4,027

Basking Ridge, NJ
$154,367
10,305

Holmdel, NJ
$159,018
5,371

Millburn, NJ
$185,672
6,866

Skillman, NJ
$169,983
6,515

Mountain Lakes, NJ
$200,584
1,338

Ridgewood, NJ
$148,445
8,726

Chatham, NJ
$149,175
7,171

Source: S&P (2005)

I apologize if I've left any towns in NJ out. I'm more familiar with Westchester/CT.

Anyway, as you can see, there are a lot of very high income people in the NYC-metro area. There are likely tens-of-thousands more $150,000+ families in NYC.

There are many additional such households in cities that do no have such high medians, such as Stamford, CT and Hoboken, NJ.

Figures like the above lead me to believe at times that the median income figures for the region as a whole are not so helpful in judging the fundamental value of local real estate.

9/09/2006 12:12:00 PM  
Anonymous Anonymous said...

The market turns out good for us.

When we realized our 5-yr FL house doubled in price, we rented it out with a slight positive cash flow. We bought a new McMansion.

Six months later, the McMansion appreciated 25%. We were happy yet scared. We decided to get our paper gain in cash.

I found a higher pay job and company paid moving and closing cost for selling our new house. I paid my renter $1200 to move out quick in a week and sold it FSBO right away. I got phone calls about my two houses complaining that I listed them too low. I am glad I did.

We sliced our gain in CDs, stocks, and bought one apartment for my parents, and one for her parents , one commercial office all in China.

We are renting and probably doing so for another year. I believe low balling 20% off may seems outrageous now, but I look back at my 25% gain in six months, it was outrageous too.

Cash is the king now. Sit tight and let see how this thing play out. Wow, that was close for us.

9/09/2006 12:15:00 PM  
Anonymous Anonymous said...

seller remorse....

Much more of this coming down the pike.

9/09/2006 12:18:00 PM  
Anonymous Anonymous said...

No transaction = no commish

9/09/2006 12:20:00 PM  
Blogger Math, like gravity, is law. said...

skep-tic said...
clear shift in realtors' PR since Sept started.

9/09/2006 11:11:39 AM

Skeptic...I'm even more skeptical, I think the Realtor's Pres. knows exactly what he did (when he did it), and why he did it. Look at the wonderful spin...ALL the realtors in the country can show that article to ether breathing home sellers, to get them to lower asking prices. Golly gee wiz...who knew?

9/09/2006 02:03:00 PM  
Anonymous Anonymous said...

Skep-tic, yes areas surrounding NYC have wealthy white-flight suburbs. -but still, in many the median income is not enough to justify the $million+ home prices, and especially the median homeowner income in NYC proper (50,000-60,000) is not nearly enough to justify outrageous home prices.

I grant you your mansions in Scarsdale, but that doesn't mean a 2 family brick is worth half a million in East New York.

9/09/2006 07:17:00 PM  
Anonymous Anonymous said...

The entire story is bull, it is so sellers read it and lower there prices.

9/09/2006 09:29:00 PM  
Blogger skep-tic said...

anon,

I agree that house prices can't totally be justified by income (even in the premier towns). however, the disparity might not be as extreme as is commonly accepted here

a couple of examples (using Westchester data because I'm more familiar with this area):

Scarsdale, NY
Median Income: $316,453
Median SFH (Sold through Dec 2005): $1,365,000
4.3 TIMES MEDIAN INCOME

Rye, NY
Median Income: $186,103
Median SFH (Sold through Dec 2005): $1,251,000
6.7 TIMES MEDIAN INCOME

Long term ratio even in the wealthiest areas never exceeds 4:1. So you can see that house prices are off even in these very wealthy towns.

However, they are not as far off as you would think if you took the median income for the region as a whole (which shows a 10:1 ratio of prices to income).

The fact remains that a small portion of our population is taking an increasingly larger slice of the economic pie. Even the wealthy have engaged in some exuberance during this bubble, but perhaps not to the degree the middle and lower classes have.

So, to get to your point, it certainly does not make sense that houses are priced at $500,000 in East New York. However, I am not sure I believe that median income for the region as a whole reveals the correct price.

One possibility is that there has been some spillover from the top locations on down the line, as otherwise high income people have been priced out of the areas they would have bought in several years ago.

9/10/2006 09:46:00 AM  
Anonymous Anonymous said...

Skeptic,

As I noted on the other thread, I've seen different medians for some of those towns (Holmdel & Skillman).

Also, those income levels from that number of people don't really fit with Census data. I think you're placing way too many of the nation's elite wealthy in this relatively small geographic and population sample.

As you yourself note, that doesn't include lots of areas with sizable populations likely to have incomes that high.

In Monmouth County alone there are Rumson, Fair Haven, Little Silver, Colts Neck, Millstone, Middletown, Ocean, Shrewsbury, Brielle and Spring Lake. Outside of Ocean and Middletown (included because of their size) I would think significant portions of the populations in those towns would top $150K.

Also, as you note, median home prices are way out of whack with median income. That is the very definition of unsustainable prices.

9/10/2006 11:04:00 PM  

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