Reduced another $100K just this morning, this custom home is priced to sell, well below appraisal, I might add, at $1.4 million. The quality of craftsmanship, the setting, the views and the level of privacy this property affords far exceeds that of anything else for sale right now in Somersett at this price point.
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Lindie
Diane:
This house closed escrow only in November for $1,695,000. Now it is for sale at $1,400,000. Is this house going to drop in value at the rate of $100,000 a month until somebody buys it?
Will it be $1.3 million in March?
Will it be $1.2 million in April?
We really do need Gotlots back. Looks like somebody bought only 2.5 months ago and already locked in $300,000 in declining value.
Diane Cohn
Lindie, this property changed hands from one entity to another in November, but these are essentially the same owners.
BanteringBear
Where is the landcaping and plant material? For that kind of money, I would rate the grounds as extremely poor. I know, as a plantsman and designer, I have distinguished tastes. But it looks like they took the cheap route. And the same goes for the house itself. It looks like cheap construction. For nearly $1.5 million, I would expect a much higher quality. My opinion, contrary to what the appraiser says, is that is a $750,000 house disguised in price as $1.4 million. Not impressed at all.
Diane Cohn
BB, the latest round of pictures, taken in the dead of winter, do not show the landscaping well at all. It had just snowed the day before and had barely melted off. The property has full landscaping front and back, including lawn, trees, shrubs, concrete curbing, pavers, a water feature, automated sprinklers/drip throughout… all in all exceeding Somersett community standards for landscape. (Many builders don’t even bother to put in backyard landscaping.)
If you were to actually walk into this house and experience the setting, craftsmanship, detail and views, you would see the value and better know its worth. The internet can only reveal so much…
Lindie
Diane’s and Bantering’s contrasting opinions highlight more than just a difference regarding this particular house. They highlight the perspective of one standing outside the bubble and one standing inside.
Diane has no experience selling real estate outside of a bubble market.(2006 afforded her the opportunity to work inside a deflating bubble market, but a bubble market nonetheless). She came into the business after the bubble was underway, and has never experienced what a normal market is like. Normal real estate markets do not appreciate 10-15% annually. Until about six months ago, Diane had commentary on her website explaining the magic of 10% annual appreciation in housing values with the implication that such extraordinary appreciation was normal and common and the reason to buy now.
While 2006 has no doubt been eye opening to the legions of realtors who came into the business after the cheap money spigot was opened, the thinking among most realtors, especially those who have never worked in normal times, is that last year was the abberation, and that soon, whether it be after the Super Bowl, or after the “Spring Bounce” of after whatever, we shall return to serious annual appreciation. They do not understand that it was not last year that was the abberation, it was 2001-2005 that was the abberation. Yet the bubble thinking has yet to be wretched from the market. And so a non-bubble thinker like Bantering looks at this house and says it is worth half of the asking price. Diane compares it to all the other bubble houses in the biggest bubble neighborhood in town (the whole neighborhood was built after the cheap money began to flow) and says it is a very good deal. Eventually the market will tell us whether Bantering or Diane has it right. It will take several years however for the answer to be clear. Whatever happens to this house in the next several months is not the whole story. Perhaps we all need to return here in 2012 and see what the market has wrought.
This particular house was no doubt built to be a flip. It was first listed by another realtor at $1.8 million. It was a badly timed flip, by folks who thought Diane and her fellow bubble realtors were right, that houses appreciate 10% annually forever. The asking price of this house has dropped $400,000 in about the last six months. This flip went bad. The transfer of title among related legal entities is irrelevant to the declining value of this house.
Diane Cohn
Lindie, I’ve been buying and selling my own real estate since 1990, mostly in the Bay Area and more recently here. Believe me, I’ve seen some slumps. But ever since people started selling land in North America, prices have gone up. Are we due for some catastrophic crash in the coming years? Who knows? I just don’t see it happening any time soon. People need shelter.
Reno Ignoramus
I have reviewed Lindie’s comment closely and I do not read where she forecasts a “catastrophic crash” in the coming years. I believe a fair inference of her post is that the market is overpriced and that prices will fall gradually in the coming years.
The house in question has been reduced $400,000 in the past few months. That seems to support Lindie’s position that the house has been overpriced. A house that sees its asking price reduced 22% in six months does seem to reflect some notion on the part of the sellers that maybe there are still a few fools out there.
The house is now slightly to the downside of the midrange of the $1 million -$2 million market segment. As of tonight, there are listed on the IDX version of the MLS 182 houses in that price range in Reno-Sparks. Seven of those houses have a pending offer. That is less than FOUR PERCENT of those listings with an offer. That is MORE THAN TWO YEARS of inventory in that price segment.
If even half of these 182 sellers are serious about selling, it seems a fair suggestion that prices will indeed fall from here. I believe that was the point of Lindie’s post. As she points out, and correctly I believe, the real point is not what happens to this particular house in the coming weeks and months. The real point is that the market still maintains a dismal pendings:listings ratio. Can anybody serioulsy suggest that a FOUR PERCENT pendings:listings ratio is the sign of a healthy market wherein price gains seem likely?
Diane Cohn
RI, The catastrophic crash comment comes not from anything Lindie said but from other sources I don’t think I’ve talked about in this blog.
Harry Dent, a demographic futurist, is predicting a huge deflationary curve in the housing market coming in 2008. On the one hand, his reasoning looks sound, but on the other, money from developing Asia continues to invest in West Coast companies and real estate, which ripples out to Reno as people migrate here.
Does this matter? Will it continue? Is Harry Dent right? I don’t have the answers. To get the full story, I think you have to purchase his CD, unless you can find something on him in Wikipedia. In the meantime, here’s a summary:
http://www.hsdent.com/realestate2008.html
Perry
I’ve been reading this thread and wanted to throw in my two cents. I don’t want to comment on the craftsmanship or quality of Diane’s listing because I haven’t been there. I would like to comment on my perception of craftsmanship and quality however. I consider myself practical and quite honestly, cheap so my view probably won’t be mainstream.
I live in a newer (2 years) home which myself and friends at work would classify as a “tract shack” in spite of its size. Tract shack is the term we’ve come up with to classify the manner of construction. My house is built with 2 x 6’s and 2 x 4’s for the walls. My floor joists are stock on the first floor and engineered product on the second. The floors are plywood which now is actually some sort of glued product made of thousands of wood pieces. I have cheapo blown in insulation and a concrete roof that is not well suited for our environment. My wood front cabinets look like they came from Root industries. Wood outside white particle board inside. I have walls that for the most part are straight but have the occasional bow due 2 x 4’s that are not straight. I noticed that when framed not every 2 x 4 had two nails through it as they sometimes came out the side, thus reducing the effectiveness of construction standards. I have foam and chicken wire on the outside covered with stucco. My biggest gripe is windows and I’ve a thousand of these low quality sliders that let the dust blow through and heat and cold transfer. Give me a good crafted casement window any day. My house, I would say is of average construction and does not contain the least amount of craftsmanship. My house was simply “turned out”.
I’ve been through countless quality new construction homes in town. I’ve been greatly disappointed. They contain the same drywall as does mine. The same irregularities in the walls as does mine. They use the same blown in insulation as does mine. More often than not they contain nicer upon first glance cabinets than does mine but ultimately they are particle board inside with the same cheapo hinges. They use the same inferior concrete foundation that starts spalding quickly as did mine. I perceive new quality homes as simply being “blinged” out. They have lots of frosting giving them the appearance of quality while lacking the substance there of.
My biggest problem with this sort of quality is it’s very fleeting. Most of the things that people consider craftsmanship these days are the very items that will be torn out and remodeled in about ten years and deemed dated. I don’t have exact numbers but I would guess these quality items like “better” cabinets, carpet, counters, etc. are a 10 to 15% premium over my standard “craftsmanship”. You are then charged at least 25% premium to gain these items. I can think of several words for these items but quality and craftsmanship are not among them. I know there are other factors that differentiate a house like location, lot size and position on the lot. I’m simply referring to what is put in and or on the house.
Visit a Paul William’s built home off of Mayberry behind the Hunter Lake Railey’s and experience craftsmanship. Some of these homes haven’t been touched since new and they look phenomenal even after sixty years.
My two cents…
Reno Ignoramus
Perry:
Imagine it is Spring, 2004, and you are a production builder in Reno-Sparks. You have announced the release of your newest development, “Tuscan Evening Villas” or “Shoreline Meadows” (even though there is no water in sight), or “Stoneybrook Estates” (on a miniscule lot). There is a line of buyers camping out, literally, to put down a deposit and pay whatever foolish price you are asking. Forty percent of the people in line have no intention at all to ever live in the house they are buying. Their intention is to flip it off to an even greater fool before they have to make the first payment on their nothing down, interest only, neg am, stated income, voodoo liar loan.
They don’t give a crap about quality of construction, and as the builder, neither do you.
Thus was the great ponzi scheme called the real estate market in 2004-2005. Can we all try to visualize what these cookie cutter houses in these cookie cutter production neighborhoods in East Sparks and Wingfield Springs and Double Diamond and South Meadows are going to look like in 2014-2015?