When A Recession Is A Good Thing
David Bates / February 1, 2011-3:25 pm
If there is a good position to be in during this recession, it just might be as an ultra-luxury real estate buyer. In good markets, there can be a little wiggle room on the seller’s ideal price for a dream home. But in this radically-changing, depressed economic environment, some sellers can be a little more motivated… reasonable… shall we say, flexible.
For example, in the good old real estate sales days of 2007, 719 sellers who sold their homes for more than $1.5 million on average had settled for 90 percent of the original list price. In 2008, the 570 parties who sold in the same price niche received only 89 percent of their original list price. In 2009, transactions in this niche plummeted like a bad stock to nearly half the 2007 transaction count, and the 408 lucky sellers who did manage to see the closing table settled for 86 percent of their original list price on average.
In the financial hysteria that comprised much of the first half of 2009, there were a couple of lucky buyers who did even better. Take the buyers of a Buzzard’s Bay compound that had been marketed for $7.7 million, but closed for $5.5 million. At nearly 30 percent off the ask, that’s not only a slash in price worthy of a retail promotion, but a savings of more than $2 million.
And while $2 million in savings is nothing to make light of, it doesn’t come close to the savings that occurred on the purchase of 56 Chestnut, Beacon Hill. The owners of the 1820s townhome located on one of Beacon Hill’s most prestigious streets were at one point asking $11.5 million. Four hundred days after they began their quest to find a buyer, they took an offer of $7 million, $4.5 million less than their original asking price, making this sale the year’s largest ultra-luxury price adjustment. When you take 40 percent off, you can feel good about a purchase. When you save $4.5 million, you can take that to the bank.