Update - the lot featured below wasn’t sold and has now been cut in price again to 590k.
Summer is over and with it the remainder of optimism in the market. Some sellers are just so stubborn in their refusal to accept reality about changing market conditions. The theme of our report is to hire a realtor (if you are going to pay the enormous transaction cost to sell a house) that actually understands where the market is going rather than where it was or based on wishful thinking.
Down markets have a way of enforcing discipline on irrational sellers. In the case study below, it took 4 months for the seller to really understand that the property was over priced, not in a high demand location, and it needed to be below $600k to attract interest. Back in May if the seller listed it at the current price it would likely be sold and the deal complete. This kind of real estate is not particularly liquid because the only buyers (the builders) are a temperamental lot. Even a group that behaves as self destructively as the builders will eventually start acting sensibly. I wonder what is different about the market now vs the irrational exuberance of 2017 other than pure sentiment.
4 months and a $70k reduction. Will it sell now ?
Another example of a tough market and horrible strategy is found in overpriced new homes. These new builds are all done to a different standard, some that were not particularly well built. In a slow market these just appear to sit vacant forever.
In the example below a new build in Killarney is absolutely languishing on the market. The cumulative days on the market is actually misleading because it doesn’t reflect how long it was under construction and sitting finished without being listed while the attached side was being marketed (and sold).
428 days on the market and the price has only dropped by $45k. It has been closer to two years this house has been finished and unsold regardless of the realtor stats. I wonder what it will take to get it sold now. Maybe drop it another $90k to get an offer. It isn’t easy to calculate the monthly carrying cost here but it has to be substantial in just the time value of the trapped invested capital before we get to utilities and taxes.