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We Could Have Cut The Prices By 20%, We Just Want To Move Forward

A report from 4WWL in Louisiana. “Many operators of short-term rentals in New Orleans are seeing a dramatic drop in bookings during the pandemic. ‘So that’s become a real problem especially for the host that purchased properties as a function for paying for their mortgage. If they purchased a double they’re going to owner-occupy one side and Airbnb the other,’ said Angie Lutrick, a agent with Entablature Realty. She says one of her clients is now trying to sell her short-term rental. ‘She’s able to keep her home, she’s got another Airbnb through that home, but for the people that this is their home and their income, this is going to have devastating effect,’ Lutrick said.”

From Business Den in Colorado. “A Country Club mansion has yet to find a buyer more than a year after its owner lost his short-term rental license — and the list price was just slashed by more than $500,000. The 7,800-square-foot home at 410 N. Marion St., known as Marion Manor, is now listed at $4.99 million, down $680,000 from the original 2019 pricing of $5.68 million.”

From Westfair Online in Connecticut. “The 152-acre Sherman estate of real estate executive and art dynasty heir David Wildenstein and his jewelry designer wife Lucrezia Buccellati has seen its listing price slashed from $8.5 million to $6.9 million.”

From Drovers on Kansas. “Asking price for the Crocker Springs Ranch, located in Chase County, Kan. has been reduced to $7.095 million, according to listing agent Hall and Hall. The 3,300-acre ranch is located in the heart of Kansas’ Flint Hills where cattle ranching is the community’s dominant economic driver. The ranch was first listed in July 2019 for $8.58 million.”

The Miami Herald in Florida. “Gianluca Vacchi, Instagram sensation and board member of Industria Macchine Automatiche, bought a $24.5 million home on Sunset Islands in Miami Beach. The property went under contract in June, after a 9% price reduction from the original listing price of $27 million. Developer Morabito Properties CEO Valerio Morabito bought the property in 2012 for $5.6 million and built the home in 2019. Construction cost about $21 million. Morabito listed the home in December 2019.”

From Socket Site in California. “With inventory levels in San Francisco having just hit recession-era levels, the number of homes on the market which have undergone at least one official price cut has ticked up another 20 percent in the absolute over the past two weeks to over 400. As such, there are now nearly 300 percent more reduced listings on the MLS than there were at the same time last year, over eight times (8x) more than there were in July of 2015, and the most reduced listings since the end of 2011.”

From Forbes on New York. “Two years after selling a three-story penthouse for $59 million, one of the most expensive sales in Manhattan at the time, the developer of a luxury building on the High Line in Manhattan has steeply discounted the remaining four apartments, with the price of one full-floor unit overlooking the elevated park dropping by more than 50%.”

“The units at The Getty Residences in Chelsea had been on the market for the last three years. The units range from a 3,312-square-foot, three-bedroom, 3 1/2-bathroom that had its price cut about 42% to $9.4 million to a 3,816-square-foot, three-bedroom, 3 1/2-bathroom apartment with a balcony dropping 43% to $13.8 million. Ran Korolik, vice president and partner of developer Victor Group, said the price cuts reflect the current real estate market.”

“‘We recognize that the New York City luxury real estate market is currently in a much different place than it was even a year ago,’ Korolik said in a statement. ‘Therefore, we are taking a proactive approach by significantly reducing the prices on the remaining homes at The Getty Residences to reflect today’s environment.'”

“In an exclusive interview with Forbes, Korolik said after the coronavirus pandemic upended the market, he hoped a ‘dramatic reduction (would) get people to come and transact’ in what he calls a ‘trophy building.’ ‘We could have cut the prices by 20%,’ Korolik said. ‘We just want to move forward.'”

“Jonathan Miller of Manhattan appraisal firm Miller Samuel says the new development prices have been recalibrated since the market began correcting. ‘There has been a broad range of discount severity across new development which is largely related to how aggressive the developer set prices,’ Miller said.”

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This Post Has 95 Comments

  1. ‘the price of one full-floor unit overlooking the elevated park dropping by more than 50%’

    Half off is unrealistic?

    ‘We could have cut the prices by 20%…We just want to move forward’

    That’s the spirit!

    1. From 1987 to 1994, the price of a one-family row house where I live fell 50 percent, adjusted for inflation. The price of condos and co-ops fell by more.

      Higher inflation than today cushioned the nominal blow, but we know many people who had to save for years to bring money to closing just to sell and get out with nothing. Then, as now, you had a large generation moving out of the singles and couples phase into parenting, devaluing small units relative to large ones.

      People who think 50 percent-plus declines are crazy talk should know it has happened the past.

      1. Then there was a second bubble. Do people never learn? And now a third. This article from 2008 is worth a read, as we are back in the same place.

        https://nymag.com/realestate/features/47224/

        “If the fears once centered on the Brooklyn renaissance’s going too far, too fast, now the worry is that the renaissance won’t go far enough; that it will suddenly recede like a fickle tide that strands a fleet of errant ships. And the people who bought in to the fringes of the New Brooklyn will wind up trapped—in a bad neighborhood, a stifling mortgage, a failing block.”

        “But one commenter has been gleefully forecasting just such a collapse. In July 2007, in a comment thread under an item about a painted doorway on a landmarked block in Clinton Hill (this is a fairly typical Brownstoner story: Homeowner on landmarked block paints his doorway in violation of local regulations; outrage ensues), a commenter calling himself The What left a simple message. Referring to Butler, who goes by Mr. Brownstoner on the site, The What wrote: “Mr. B, go kill yourself.”

      2. Housing prices fell 40%+ across the board during the last minor correction. We’re already half way there and right now and this is just the beginning.

        “From 1987 to 1994, the price of a one-family row house where I live fell 50 percent, adjusted for inflation”

        So how was this “adjusted”?

  2. BTW, one of the advantages to putting this together every day or a few times a day is I get to see the flow of crater. And it’s off the chart. I’m busy but I’ll try to post a gargantuan CRE/apartment bubble post later and possibly an international post as well. My saved articles are overflowing. We are definitely seeing a convergence of the CRE/housing crash.

    1. BTW, one of the advantages to putting this together every day or a few times a day is I get to see the flow of crater. And it’s off the chart.

      And yet the Fed’s Ponzi markets are hitting new highs, while the Oligopoly media REIC shills chirp that Everything is Awesome!

    2. Ben – I see lots of crater posts at the high end but nothing much posted about craters under a million. Are you seeing any areas in the country that are softening? Not seeing anything in OC California.

      1. Postings on Reddit from people looking to buy houses are still showing that things are bonkers on the lower side (non super luxury) in many markets. Houses are quite a bit more expensive where I live with bidding wars. People waving all contingencies, waving inspections, as-is to get properties for $950K and stuff. Feeding frenzy. I want it to crash.

        1. ‘things are bonkers’

          Yeah, and people are hoarding nickle coins too.

          I’ll stick with the big picture.

  4. I am waiting for the day if it ever arrives for inventory to rise and prices to drop in the Sacramento area.

    1. Try preserving your savings for five years, then shopping among the wreckage of the coronabug housing collapse.

      A Phoenix will eventually rise from the ashes, but first the fire will have to run its course. And that will take years, not months, to play out.

      1. Try preserving your savings for five years

        Are you not paying attention to what the Fed is doing, PB? Gold surging past $2000 isn’t just a sign of a growing flight to quality – it’s a direct reflection of the Fed’s debasement of the currency, which is accelerating to Weimar 2.0 levels.

        1. My definition of “savings” extends to diversification across whatever portfolio of assets work best for you to survive the present dispensation of the Fed’s War on Savers. Keeping all your money parked in dollar-denominated bank CDs or savings accounts paying negative real returns and subject to dollar devaluation is not a recommended strategy.

          And may the odds be ever in your favor.

          1. Prior to a series of unfortunate boating accidents I’ve experienced lately, the value of the lead, brass, and copper I had accumulated was growing in leaps and bounds.

          2. When my siblings and I cleared out my parents’ home to get ready to sell it a few years ago, the last stage was contracting with a junk dealer to haul away all the accumulated detritus of 50 years’ occupancy that we had temporarily stashed in their garage.

            The junk dealer missed his appointment time by well over an hour. Meanwhile, an enterprising rival saw the stuff on display in open garage and asked if he could have a look. I said, “Sure,” figuring a head start in clearing out the garage couldn’t hurt.

            When the original junk dealer showed up and checked out the contents of the garage, the first words out of his mouth were, “Where’s the metal?” I bit my tongue while thinking, “If you snooze, you lose.”

          1. Please refresh my memory: Didn’t Japan enjoy years of deflation in the aftermath of their central bank’s failed ongoing attempt to use Quantitative Easing to create inflation?

            I am helping my son survive his online college macroeconomics course this summer. The discussion of how to use a printing press technology to create economic growth seems to be missing.

            “The Fed may shift to a policy of buying bonds to cap yields for short-dated maturities at fixed levels, says Mark Cabana at BofA Global Research who argues the move is likely to take place in September as the Fed looks to mitigate the risk of deflation over the next few years.

            The new policy may result from worries that the Fed currently lacks tools to support economic growth when policy interest rates are near zero anyway after the central bank moved aggressively to combat the recession resulting from the coronavirus pandemic.

            In an interview with MarketWatch, the former New York Fed staffer, now at BofA, noted this so-called policy of yield-curve control hasn’t seen much use by other monetary policymakers. Only Australia and Japan have adopted the unconventional policy measure, so far.

            Once viewed as an outlandish option only used by deflation-stricken Japan, yield-curve control has come up in recent discussions among senior Fed officials.”

          2. “Get ready for more human subject experiments at the Fed.”

            How large of a rosebud can we get out of Joe Sixpack?

          1. PB, please don’t spew mindless Narrative bullshit in here. Gold isn’t rallying because of COVID, as much as Real Journalists and their globalist propaganda outlets would have you believe otherwise. It’s rallying because a growing number of former sheeple now understand that the Fed is hellbent on debasing the currency into near-worthlessness to prop up its Ponzi markets and asset bubbles.

          2. I was interested in the news of a closing price above $2000, which I believe is an all time record high for gold.

            Didn’t mean to give the impression of endorsing a misleading attempt to blame the situation on the pandemic.

        4. Weimar 2.0 levels

          How is the US in 2020 similar to Germany in 1923 and how is it different? Will an internal debt pyramid end the same way as impossible mandatory external payments? Is gold a speculative asset, or merely a stable and impartial benchmark of wealth? What is the current trajectory of real assets that are not of interest to speculators (if there is such a thing)?

          1. Suggest getting a copy of Adam Fergusson’s “When Money Dies” if you want to know what’s in store for us as the Fed prints away all government and corporate debt. It’s not going to be pretty, except of course for the oligarchs who will be using their free FedBux to buy up the distressed assets of the proles for a song.

  5. ‘So that’s become a real problem especially for the host that purchased properties as a function for paying for their mortgage.

    Die, speculator scum.

  6. The 3,300-acre ranch is located in the heart of Kansas’ Flint Hills where cattle ranching is the community’s dominant economic driver.

    Sounds to me like real estate speculation with Yellen Bux has been the community’s dominant economic driver, albeit a fraudulent and unsustainable one.

  7. ‘So that’s become a real problem especially for the host that purchased properties as a function for paying for their mortgage. If they purchased a double they’re going to owner-occupy one side and Airbnb the other,’

    This seems like an extremely risky business strategy, closely akin to the widespread purchase of stocks using margin loans that exacerbated the severity of financial collapse at the onset of the Great Depression in the early 1930s, when the loans suddenly had to be repaid at the very moment the collateral was collapsing.

    How’s it working out for them?

    1. This seems like an extremely risky business strategy,

      Especially for stupid people. Yet they are the easiest ones to talk into pursuing it. So who is talking them into it and what are they gaining from it? In an honest society that seems like something a person might go to jail for.

      1. Who is talking them into it? Mr. Money Mustache, and the FIRE crowd, and Dave Ramsey, Graham Stephan, and anyone else who uses the phrase “passive income.” I guess those starry-eyed Millenial followers weren’t building their real estate empires buying properties cash.

        A few of them might get a reprieve if the properties were in the suburbs which can be unloaded onto couples fleeing the CHOPpy cities.

  9. Hint dont drive in Mahattan with a 1/4 tank of gas……
    Much about the project has been kept under wraps since the site (formerly home to a Getty gas station) was purchased in May 2014 for $23.5 million

  10. From today’s Financial Times:

    UK watchdog plans curb on property fund redemptions
    SIOBHAN RIDING AND GEORGE HAMMOND

    UK regulators have proposed a notice period of up to six months for investors seeking to withdraw money from property funds, in a move aimed at preventing a repeat of high-profile suspensions that have left £12.5bn frozen in these vehicles.

    In a bid to reduce the risk of liquidity mismatches — when a fund cannot sell assets quickly enough to meet clients’ redemption requests — the UK’s Financial Conduct Authority said yesterday that it was considering a requirement for investors in certain property funds to give notice of up to 180 days when they want to cash out.

    Many property funds allow investors to withdraw their money on a daily basis — a feature that has made them popular with wealth managers and retail savers. However, suspensions tend to hit the sector in times of stress. According to investment platform AJ Bell, about £12.5bn of investors’ cash is trapped in daily traded property funds, after the coronavirus sell-off prompted asset managers to call a halt to trading.

    1. Interesting they are moving to entrap HODLers at a time when many may wish to cash out, before an even deeper crater threatens to swallow them alive.

      I’ll bet nobody proposed any limits when the bubble was inflating and a river of money was flowing into the property funds.

    1. I’ve noticed that there haven’t been anymore freeway blockades in Denver since then. Antifa leadership (which Real Journalists insist does not exist) has probably decided to back off on Denver for a while.

    2. “A person who witnessed the shooting said that Young was in “a state of shock” after the shooting and that she believed he was “horrified at what he did.”

      Um, what did the dim witted Marxist sheep expect to happen when he busted a bunch of caps into a crowd trying to hit a vehicle that had already passed?

      1. The incident was a major black eye locally for the rioters. It was impossible to bury, though the Real Journalists tried to spin it as being the driver’s fault, but that didn’t fly.

        1. “spin it as being the driver’s fault”

          The /r/Denver sub-Reddit has been a circle jerk of self-hating white liberals for the past week over this #Narrative. Eight felonies, EIGHT. When he gets what’s coming to him in prison he’ll be wishing he was dead like Garrett Foster.

          130 pound white boys tend not to do well on the inside…

      1. Check out the latest Commitment of Traders (COT). Commercial speculators – the Fed’s usual accomplices – have taken out massive short positions in gold. In normal times that’s worked to knock the price back down, but these are not normal times. A growing number of the red-pilled are on to the Fed and its scams. Since Jerome Powell has dropped all pretense of being a responsible central banker, the dollar has been sinking like a stone while precious metals have soared. Now it looks like the Fed’s primary market-riggers may have been caught on the wrong side of trade for once, which could end up costing them heavily.

    2. The local coin dealer is now paying $1.50 over spot, minimum, for silver. That mean $27.60 per ounce as of right now. I will divest myself of everything at $30.

      2. The local coin dealer is now paying $1.50 over spot, minimum, for silver. ”

        Demand must be high and going higher . usually they pay less and sell for more

        1. Yup, they’re expecting silver to appreciate significantly, and pay a bit extra to hoover up whatever they can find.

        2. Per Kitco, silver is being bid at around $25. However, the real world price at which you can actually compete a transaction and go home with physical metal in your hand is more like $40. That’s a helluva spread. Yesterday I check in with a few local coin shops in my area, and all are seeing big increases in demand for bullion coins. While the MSM would have us believe that’s due to fears over COVID, the local coin dealers can lay that myth to rest. People fear a societal breakdown, first of all, and the great majority of customers also seem to be aware of the pernicious role of the Fed and its currency debasement.

      3. Hmm, I’ve got a few tubes of 2009 silver AE’s sitting around. Maybe I should call some local buyers.

        1. The dollar works better as a unit of account for low denomination purchases, like food and toilet paper.

          Just don’t convert any more of The Precious than is needed for nearterm spending, and you will be fine.

          2. That was my point. Only convert what you need for nearterm spending to dollars, and HODL the rest.

        2. Because car dealers don’t take silver. I’m thinking of buying a new vehicle given that hyperinflation may be around the corner. I’d rather do it before the run-up.

          1. We have all the cars and musical instruments needed to for the foreseeable future…plenty of inflation hedge in our driveway and piano room.

        3. To pay off dollar-delineated debt. Gold bug Lynette Zang hammers on the idea of using gold to pay off a mortgage.

  14. In the Missoula area housing is still all systems go. still. Riots in Seattle and Portland opened the floodgates of people moving here. High income WFH types who think $500k for a home is just a shade above free, compared to “back home”, where the same house goes for $1.2m. So they offer $525k cuz what the hell, $25k over asking is nothing if you really want it. That $500k house was $350k 2-3 years ago. I have friends and family in other parts of Montana as well as Idaho who are seeing the same phenomenon.

    I read some of these articles and scratch my head because in my part of the world it’s 180 degrees the other way.

    1. I don’t think you have to worry about hoards of ghetto dwellers descending on suburban and rural areas. Not with the way housing demand is collapsing.

      Coeur d’Alene, ID Housing Prices Crater 16% YOY As Sellers Flood Market And Slash Prices Double Digits

      http://www.zillow.com/coeur-dalene-id-83814/home-values/

      *Select price from dropdown menu on first chart

      As a noted economist said so eloquently, “liquidate whatever you’ve got to eliminate all debt and hold onto every dollar you’ve got…. You’re going to need every last one of them.”

    3. “In the Missoula area…”

      Years ago, I went to a friend’s funeral down in Hamilton. I was surprised at the franchise commercial development along the 93 through Missoula, which resembled most of metro America.

  15. I get the impression financial policy is creating bigger and bigger debt bombs, which results in the bondholders getting wealthy, but also leading to sudden redistributions when the debt bombs explode and bailouts with newly printed money happen.

    1. Many parents may have to stop working entirely if schools don’t reopen, Goldman Sachs says

      Isn’t that great that people can just stop working now, like nobody even needs money? Wow, this is some incredible economy! It must be nice to not even have to work. Where do I sign up?

        2. After my comment I just found a comment where somebody still got the extra $600 today, so apparently they didn’t stop it. Weird.

          1. Interesting. But unemployment checks tend to be laggy. I wouldn’t be surprised if that means that even if they restart it now they won’t get anything next week.

          3. NY is paying regular state benefits for up to 59 weeks.

            Most state unemployment funds have to be wiped out by now. Of course, they are allowed to borrpw from the Feds to continue paying.

            We should start a poll on how big this year’s Federal budget deficit will be by Dec 31st. We’re already around $4T. Will it hit $10T?

  18. Hopefully, I won’t have to wait 5 years to buy at a reasonable price in Sacramento, California. Else I will have to move and rent a larger place for a while. I may do that and just invest the down payment in a high growth liquid S&P Index fund.

    1. I will have to move and rent a larger place for a while. I may do that and just invest the down payment in a high growth liquid S&P Index fund.

      Odds are high you’ll be glad you did it rather than thinking things were going to resolve in your favor quickly.

      1. Carl, have you left on your roadtrip yet?

        We’ve completed our 4-day, 10 state slog for now, working out of an airbnb for two weeks before moving to the next one in another state.

        Tons of RVs on the road out there. As well as charter buses full of kids going…somewhere?

        1. No, slowly getting stuff ready. I damaged the awning on the stupid RV against a tree, I’m used to watching out for side clearance but not top clearance :-). Need to get that fixed. Also waiting for a coffee machine to get here from China that my wife will be promoting in her videos. All this talk of banning Tiktok and WeChat will directly affect her if it happens. We’re all used to running a VPN in China but we never thought we’d need one here. The hope is to head out in a couple more weeks. On a side note I’m also trying to get my new portable music system working well so I can play with some of my old army band friends as I pass by their town.

          1. Is this a rental RV or did you just purchase one? My god, everybody and their brother just bought an RV. The sheeple herd mentality is strong right now. (Again, no offense to you, Carl, I’m just remarking on the insanity of it all).

            I was just talking to a woman today who’s getting the “extra $600.” She’s in the restaurant industry and furloughed. She brought up the record RV sales and told me that she knows younger folks who are buying them who are right now laid off but collecting the free cheese. I asked her if they are paying cash and she said heck no, they’re borrowing. So, the subprime lenders are apparently out in full force. This is MUCH, MUCH worse than 2005. Lord help us…

          2. I’m used to watching out for side clearance but not top clearance 🙂

            I think that’s true for most – which is why many bicycles get smashed into the exterior wall of garages above the garage door 🙂

            Re: the coffee machine. It was funny for us packing for a month “on the road”. We ended up bringing our own coffee beans, grinder, and coffee maker. Sometimes it’s nice to bring the familiar with you.

          3. Is this a rental RV or did you just purchase one?

            Bought a used one. Yes, prices are too high. This might be our only chance before I retire to make big long trips though. And if I get laid off in the meantime it works as free emergency housing. I’m very conscious that the day I get rid of it may be the happiest day of my life…like a boat :-).

          4. We ended up bringing our own coffee beans, grinder, and coffee maker.

            Since it’s my wife’s business we’re all in…single station espresso machine, transformer to make 220V for it, some kind of small roaster, etc.

          5. some kind of small roaster

            Ooh, well if you get out in the next few weeks and make your way out to Tennessee/Kentucky, I’ll have to come get some coffee beans!

        2. Ooh, well if you get out in the next few weeks and make your way out to Tennessee/Kentucky, I’ll have to come get some coffee beans!

          ? I thought you were in Seattle? First trip is planned to be around the perimeter of the continental US. So we won’t be in Tennessucky (I was in the 101st ABN DIV at Ft. Campbell, I’ll call it that if I want to :-)) this trip. But if there’s a second we may make it there.

          1. ? I thought you were in Seattle?

            Normally I am. We road-tripped out here to do some research on areas to move to in the future/retire to. Working remotely from VRBOs.

            BTW funny you call it “Tennesucky”, as I’ve called this our “Tennesucky” trip. And here I thought I coined the term :/

          2. BTW funny you call it “Tennesucky”, as I’ve called this our “Tennesucky” trip. And here I thought I coined the term :/

            OK :-). Some of us called it that in the army in the late 80s. My commander kind of liked the place and found it a bit offensive. One time he lectured us on “if Ft. Campbell sucks, it’s because you suck”. That became a useful saying for barracks drinking humor later.

    2. “Hopefully, I won’t have to wait 5 years to buy at a reasonable price in Sacramento, California.”

      Sacramento is hot in the summer and foggy for months from Fall, Winter and early Spring. It’s a big, less than flat, valley with lots of crime. I mean, maybe Davis, or the other way to Shingle Springs or Folsom, but Sac? WTF?

      1. Last summer we stayed with friends in the Fairfield area. They live in a large ranch home in the middle of a rural stretch of beautiful rolling hills to the west of Sac with low density development. The guy is a retired mechanic who maintains the property himself, including the use of his tractor as needed. It’s not a setup that could work for everyone, but for these resourceful people, it seems perfect. My two nagging concerns for them are heat and fire, as I can’t imagine how hot it gets there by late summer, and by October the fire threat is great.

        1. Another nagging concern for me would be the possibility of a mild short term disability like a broken ankle, which would severely limit the abilities of a handy man, say, during a wildfire.

    1. RV wholesale shipments tracked by the RV Industry Association posted their best month in 2020 and the highest monthly total since October 2018 as deliveries to retailers reached 40,462 units in June, a 10.8% rise over the June 2019 total of 36,525 units.

      Uh, that’s NOT crater.

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