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John J. Holmes, for instance, tried for more than a year to sell his Victorian home within walking distance of Lexington Center. Two weeks after the terrorist attacks, Holmes, who owns a heating oil company, held an auction to sell the meticulously restored, four-bedroom home, built in 1885.
But Holmes and his wife, Irena, rejected offers of $1.2 million, $1.3 million, and $1.35 million, because they believed the property was worth closer to $2 million.
"Why should I settle for less than the home's value because terrorists drove an airplane into some buildings?" Holmes asked. "It was a horrible tragedy, but Osama bin Laden wins if we let him destroy our lifestyle."
In the weeks following the failed auction, the Holmeses listed the property with a realtor, asking $1.8 million. After waiting 12 months for an offer than never came, they rented the home to a family. They said they may consider selling it at the end of the two-year lease.
realestate.boston.com
Slow sales of luxury homes blamed on market jitters
By Thomas Grillo, Globe Staff, 10/27/2002
NEWTON — Carol Brenner, the broker who owns Carol Brenner Realty, has had a five-bedroom, custom contemporary house on Fernwood Road in Chestnut Hill listed since October 2001. Since then, the seller has slashed the price from $4.2 million to $2.75 million.
"We clearly priced the home too high, and our timing couldn't have been worse," Brenner said. "We got the listing on Sept. 11."
Most of the residential real estate market is purring, defying a sputtering economy. But sales of the highest-priced homes are foundering.
In Massachusetts, home sales are poised to match or exceed last year's volume of 57,665 single-family houses and condominiums sold. But high-priced homes are lingering on the market 45 percent longer this year, compared to 2001, according to data from MLS Property Information Network Inc.
"These are uncertain times," explained Chobee Hoy, the broker-owner at Chobee Hoy Associates Real Estate in Brookline. "There are questions about a worsening economy, and the stock market continues its volatility, causing high-end buyers to be cautious."
In Greater Boston, the average time on market for a $1 million-plus home increased from 56 days for the first 10 months of 2001 to 81 days for the same period this year.
And the phenomenon is not limited to Boston. Sellers of luxury homes from New York City to Seattle can expect to wait months or even years to find buyers.
"The housing market for buyers at the high end is dominated by wealthy persons who have a higher percentage of their wealth in the stock market," said Nicolas Retsinas, director of the Joint Center for Housing Studies at Harvard University. "Clearly, the dip in the market has caused an erosion of that wealth, and the ability to trade up to these luxury homes has diminished."
An analysis of MLS data from 10 of the Bay State's priciest communities (Belmont, Boston, Brookline, Carlisle, Concord, Dover, Lincoln, Sherborn, Weston, and Wellesley) found that of the 309 homes for sale for more than $1 million, 109 (35 percent) have been listed for 100 days or more. And 42 have been listed for more than 200 days.
Such sluggish sales have caused some sellers to lower their prices. A review of 154 properties in excess of $1 million that have been listed since Sept. 1 found that about half (75) have had their prices lowered, from as little as $100,000 to as much as $1.45 million.
Barbara Mathes, an agent with Coldwell Banker Residential Real Estate, has been trying to sell her Pinckney Street home on Beacon Hill for two years. But even though the price has been reduced 22 percent, from $2.7 million to $2.1 million, the nine-room Federal style town house — featuring a banquet-size dining room, master bedroom with a fireplace, spacious kitchen with granite countertops, and roof deck with sweeping city views — has gone unsold.
"It's the timing," Mathes said. "Buyers of high-end homes are very skittish about the stock market. I'm just taking a wait-and-see attitude, hoping unemployment decreases and the stock market rises."
Meanwhile, Brenner said, inventories of high-priced homes have increased.
For the first 10 months of 2002, there were 588 homes in Greater Boston priced at $1 million and over, up from 483 last year, a 21.5 percent increase, according to MLS.
Still, Brenner is unsure why so many buyers of luxury homes have dropped from sight, given that interest rates for 30-year, fixed-rate mortgages have hovered at about 6 percent, the lowest in four decades.
"Why aren't buyers out there with checks in hand?" Brenner asked. "Low interest rates makes buying power very strong."
Sophia Camann, an agent at Hammond Residential Real Estate in Chestnut Hill, said there's no mystery. The prices are too high, she said.
"Some sellers are very intelligent, but when it comes to pricing their own property, they are never realistic," Camann said. "They always want us to put them on [sale] for more than they can get."
Despite the slow sales, some sellers are unwilling to discount the price.
Nancy Karassik, who put her architect-designed contemporary style home on Old Marlboro Road in Concord on the market in June 2001, for $1,295,000, hasn't dropped her price. The 10-room home has four bedrooms, 4.5 baths, a three-car garage, and central air conditioning, on two acres.
"I understand there are lots of good reasons for buyers to be anxious," Karassik said. "But I don't have to sell my home, and I'm willing to wait to get my price."
And rather than settle for a lower price, some sellers have simply taken their properties off the market.
John J. Holmes, for instance, tried for more than a year to sell his Victorian home within walking distance of Lexington Center. Two weeks after the terrorist attacks, Holmes, who owns a heating oil company, held an auction to sell the meticulously restored, four-bedroom home, built in 1885.
But Holmes and his wife, Irena, rejected offers of $1.2 million, $1.3 million, and $1.35 million, because they believed the property was worth closer to $2 million.
"Why should I settle for less than the home's value because terrorists drove an airplane into some buildings?" Holmes asked. "It was a horrible tragedy, but Osama bin Laden wins if we let him destroy our lifestyle."
In the weeks following the failed auction, the Holmeses listed the property with a realtor, asking $1.8 million. After waiting 12 months for an offer than never came, they rented the home to a family. They said they may consider selling it at the end of the two-year lease. |
