Wednesday, August 05, 2009

What's a seller to do?

So let's say you're this seller and you're trying to sell a rowhouse in DC:

  • You read that home sales increased in June.
  • The S&P Index is up 11% YTD.
  • But, as of June 2009, the YoY US inflation rate is -1.4%.
  • And, foreclosures account for a significant proportion of all home sales, nationwide.
  • Your house, well situated a block from I-295, has been on the market for more than 90 days.
  • In fact, its construction hasn't even been completed.

What do you do? Raise its price by 4.76%, of course. That'll draw in the buyers!

10 comments:

Anonymous said...

lol

Brandon Green said...

One of the great things about real estate is that public records mean you can always see how successful a strategy is.

Anonymous said...

That price is only going up! You better grab it now before it goes up again!

Anonymous said...

That listing is for Capitol Quarter, a new construction community. The lot isn't completed yet. Guessing that it was a purchaser that dropped out of their contract. I believe that their pre-construction lots are selling - people want the ability to choose their options. They wouldn't have the opportunity to with this home.

If you drive by the community, most of the preconstruction people have settled, so it looks like the old contracts that they had are going through. I think it would probably be more representative to look at a resale rather than new construction, as they operate under different constraints.

Anonymous said...

The original post demonstrates that a little knowledge can be a dangerous thing. This likely is a generic listing that developers frequently make in order to attract the attention of agents to the property. Pricing in these cases is not static and can change (up or down) as variables change so this example is not all that unusual. Much more interesting to watch out for will be subsequent resales.

oscilatorium said...

I'm confused... even before the increase when it was listed at 700k, who would pay that much money for a $400/sq ft house in SE ? Is that supposed to be a good neighborhood ? Why would anyone in their right mind buy there, and not buy something in NW (Bethesda/Chevy Chase) for that sum of money? I don't understand.

Frederick said...

oscilatorium,

EYA was voted homebuilder of the year. They build stunning communities. Not everyone wants Bethesda typical-ness, and, if history is any indicator, this will be
no less grand than their other projects!

Anonymous said...

oscilatorium,

Because then you would have to live in Bethesda/Chevy Chase. It's all subjective. Very different areas.

Anyhow, that house is not located in a bad neighborhood, but it's certainly not located in a great neighborhood. Personally, it's a little too close to the bad neighborhoods for me for what they are asking. However, 3-5 years from now that area could be much more desirable, especially if the Hine development actually moves forward. And 34 years from now when development around the stadium starts again, that will be a plus.

Anonymous said...

Yes, a little knowledge is a dangerous thing. This posting is for Capitol Quarter which is essentially between Capitol Hill and the Navy Yard. It's the Hope VI project that all the crazy people (not me)were camping out at the site a couple of summers ago for over a month at a time to get because at the time they were very cheap for what you were getting. Especially considering smaller houses only a few blocks away on the other side of 395 were $800K plus, and still needed alot of work. EYA has probably less than 10 houses left to sell out of about 125 market rates. They didn't pre-sell all of them because the demand was so great they figured they could raise their prices by holding some back and a few of the original reservations never made it to contract. The "90" day listing represents all the remaining available lots most of which won't be delivered until next year (the houses that have delivered were in some cases bought almost three years ago). Despite that they've apparently put under contract six or seven of these since they opened the model in the last month or so. This is why I assumed they raised the price - if they actually did and this doesn't represent additional options on the house.

I know because I'm buying the bigger model (sold out) and with all the my options will be in a 2,300 sf, brand-new two car garage townhouse with everything I want at about $355/psf, while selling my 1890, smaller (although quite nice) row house in Capitol Hill for probably about $375-$390/psf based upon the most recent sales comps in my immediate neighborhood.

Despite what everyone would like to think prices in Capitol Hill (and I would assume the other desirable areas of DC) have only gone down between 5-10% over the past couple of years. Not that I blame them, I luckily bought my original house in 1999 and prices since have gotten ridiculously high, but I guess we have enough lawyers and lobbyists who are willing to pay to be in the city. If the house is priced correctly and is in top shape they generally sell in a couple of weeks. Although it definitely makes the house I'm buying not quite the deal it was when I reserved it a couple of years ago.

To each their own taste, but I really have absolutely no desire to live in Bethesda/Chevy Chase...

ibc said...

Why would anyone in their right mind buy there, and not buy something in NW (Bethesda/Chevy Chase) for that sum of money? I don't understand.

Why would anyone spend that kind of money for NW/BCC when you could get this in Albany, GA for that sum of money. Makes no sense.