There are no distressed sellers only distressed buyers

Today, we went to Mosman and initially wanted to look at 6-8 properties. Today ended up being a surprisingly interesting day.

Let's get the bad news out of the way. Two of the houses we went to were sold on Friday/Saturday and were not open. One of them recently cut its asking price by 10%. The other one looked like a decent property on the web and the asking price was not cheap but fair. Forget what people tell you, just work on the assumption that there are lots of people with firepower out there. We also went to another new opening. People were literally queueing to get inside. The property culture is alive and well. 

The good news is maybe there is a credit crunch brewing..We went to this auction but found out it was called off because, according to the agent, several interested parties could not line up financing before the auction. Take it with a grain of salt of course.

Also saw an article in the Mosman Daily talking about people from the Eastern Suburb looking around in LNS, driven by the rumour of distressed sellers in LNS. Personally, thought it was an example of selective sampling. If you are a journo and you obtain a story based on interviewing 2 or 3 folks, journalism is indeed an easy job. While I have no doubt the migration up north may be happening, one wonders if there are no distressed bankers in the Eastern Suburbs ? Another point is do people bother to think at all ? There may well be distressed sellers out there. However, let's think about when did corporations start reducing their workforce last year ?

In summary, nothing is ever easy. Be patience and do the hard yards......

Two more interesting examples

I don't have time to see too many properties that I am not interested in. I rely on the price ranking function of Realestate.com to work out what the agents/vendors are expecting. Just last week, came across another example. A duplex in Mosman that was ranked around the $1.5M range on the website was sold for $1.1M.

A house in Greenwich was asking $1.69M. It was sold for $1.58M. Think when it was first listed last year, the owner was expecting $1.75-1.8M.

On the other hand, to be fair, the market is not totally inactive. A few houses in the mid to high one range did get sold. Prices for those houses were probably $1-200K lower than what they would have fetched in 2008.

I guess the lesson is buying a house is like having a job. The harder you work the more likely you will end up lucky.

Is this really happening ?

Especially the last paragraph.....If this becomes wide spread, why would you accept 4-5% rental yield ?

>>>>>>>>>>>>>>>>>>>>>

From the SMH (21/2/09):

Clearance rates in the east and lower North Shore are down on the same time last year.

There have been 400 auctions so far this month, the lightest February volume since 2004.

February sales have averaged $563,000. The cheapest was a Willoughby studio mortgagee sale netting $142,000.

Last Saturday agents secured the sale of 66 per cent of their 164 listings. The dearest sale was that of a $1.83 million six-bedroom Strathfield house with a new swimming pool. It last sold for $1.77 million in 2003 and potential buyers were advised during its initial January marketing to expect above $1.5 million.

It is all happening.....

It is hard to imagine but the stock market is not getting any easier. Last night, the Dow index punched through the support and triggered a classic bear signal. Looks like the merciless bear is back in charge.

Talking about bear, wonder if there is a bear strolling through LNS these days. Yesterday, I noticed quite a few houses having lowered their asking price. A $2M house in Wollstonecraft cut the asking price by $50K. Two $3M+ house in Cremorne cut their asking price by $300K. However, cutting asking price is one thing but it does nothing if the asking price is too high to start off with.

A more useful indicator is a recent sales on H*lt Avenue in Mosman. A 4 bedroom house went for $1.525M. I remember several comparable houses were sold for $1.9 to $2.1M or so. Have not seen the latest one but I suppose it should be fairly comparable to the houses sold in 2008.

Not a bad fall but  it feels like it is an isolated transaction. Pressure is slowly building on other sellers as well. I have heard of a seller offering to pay for the building inspection. Things are cooking but I wish more houses would come on the market. A common complaint these days is there are not a lot of listings out there. One presumes most sellers still want to wait through this mess before they sell.

The tug of war continues.....

Shouting from the rooftop

Today we went and saw5 houses in the LNS area. It feels like we are still VERY early in the game.

For the recent listed ones, there were lots of people inspecting. Moreover, one or two already had offers. To make it worse, those offers were pretty close to the asking price.

The funny observation was we went to see this house with an asking price of $3M or so. Of course, we didn't know it was asking $3M. We thought maybe $2-2.5M. Ocassionally, we like to see these dream homes. It is like catching a glimpse of the lifestyle of the "Rich & Famous" or seeing a celebrity on the street. Anyway, we drive a pretty ordinary Toyota. While there were quite a few parties going through as well, as we walked out, we noticed that the cars parked on the street were nearly as beaten as ours. I think we, Australians, have become very good at concealing our wealth. In our case, it is certainly not difficult :)

Personally, I am intrigued that some people are so ready to act. I feel like shouting from the rooftop - Don't we know how bad things will get ? Winter is coming.... Hope not but there is a chance that it will.

What is going on ?

Somehow, I have an impression that things are really not disastrously bad out there. When I went to Westfield over the weekend, it felt a bit business as usual. Certainly not a ghost town. Yet, the government is literally dropping money from the helicopter. Not to mention, the soap opera with Turnbull. Does the government know something that we don't ? 

Having wiped out $96bn in debts and now we are on the way to accumulate another $100bn in debts, makes you wonder if we may one day become  the Banana Republic again ? But then we can always grow more bananas to earn the precious foreign currencies.

Anyway, something of note this week. I was browsing Real Estate.com. Looks like some vendors are lowering their asking prices by $100-200K.

Things are warming up.....

Two markers out there.....

Now that the 2009 season is underway, would be interesting to see whether the bull or the bear will prevail.

As far as I can tell, the market still feels OK for the apartments. When it comes to the houses, it feels a lot less velocity. On the other hand, don't think the vendors have adjusted their price expectation too much either.

Personally, I suspect my requirements are similar to most folks. An OK house in reasonable/good condition on a reasonable patch of green stuff in a reasonable location (close to school/transportation etc etc...). I am not after one of those architectural masterpiece with a "w@@ker" street address with the view of the blue stuff. I don't plan to have to work until 2098 to pay off that super size mortgage. 

There are two markers I am watching:

a) There are two houses on H**t avenue in Mosman. Both are slated to be auctioned in Feb. These two houses are interesting because a few houses on the same street were sold for $1.9 to low $2M last year. Per Realestate.com.au, the price range for these two houses are over $1.6 to $1.7M.

b) There are two "normal" large houses in Wollstonecraft (for sale) asking for $2M+. If buyers snap up these two houses at the indicated price range, the price gap between Mosman and surrouding suburbs would have become minimal. It would also suggest that there are still buyers out there who are quite aggressive.

Let the game begins !!!