October 8, 2017

Luxury Apartments For Folks Worried About The Apocalypse

A weekend topic starting with The Real Deal. “In March 2013, financier Martin Zweig’s widow Barbara put her penthouse at the Pierre Hotel on the market for $125 million. This August, four years, several brokers and several price cuts later, it finally sold — for $44 million- one of the biggest discounts the market has ever seen. Finding the right asking price in Manhattan real estate can feel like a game of pinata, and every miss is costly. If Zweig had listed her pad for $44 million four years ago, sold it right away (assuming the demand was there) and put the money in an S&P 500 ticker fund, she would be sitting on around $70 million today.”

“Distinguishing a $50 wine from a $500 wine may be tricky, but telling a a $5 million pad from a $50 million one is something most buyers can do. And even if they can’t, they usually hire brokers who can. ‘I don’t think overpricing is effective in any price range,’ said Elizabeth Sample, a top luxury broker at Sotheby’s International Realty. ‘We all lost listings recently that we just couldn’t take and we’re just walking away from,’ Jade Mills, one of the top agents in Los Angeles, recently said.”

“In a 2001 study, economists Paul Anglin, Ronald Rutherford and Thomas Springer found that a 1-percent increase in a property’s price increases its time on the market, on average, by 1.3 percent. Time on the market costs money. It can also create luxury real estate’s version of a deflationary spiral: if an apartment gets price chop after price chop buyers may be more inclined to wait and see if it gets another.”

“‘It’s a Zillow world and the price history of a property is akin to getting a tattoo,’ said Chad Roffers, chair of luxury real estate auction house Concierge Auctions.”

“We take it for granted that homes are sold through the song-and-dance of ask and offer, while auctions are for bankruptcy. That wasn’t always so. As TRD’s Adam Pincus pointed out, in the 1880s, a lot of New York properties were sold via auction at the Real Estate Exchange and Auction at 26 Liberty Street. Brokers and asking prices didn’t really take over until the turn of the century.”

From The Healdsburg Tribune in California. “Some in Healdsburg would like to tax the owners of homes that sit vacant most of the time, but California voters have made that a difficult task. At Monday’s Healdsburg City Council meeting, a discussion on whether to levy a tax or assessment on ’second homes’ began with a primer on property tax law from the city attorney. Councilmember David Hagele noted that when he campaigned for a city council seat last year, ‘if you knocked on a door on Tucker Street, you knew that the next voter would be six doors down.’”

“‘This issue has a tangible effect on the quality of life in our community,’ said councilmember Joe Naujokas, adding that ‘we need more data,’ about how many vacant homes are in the community, especially after members of the public have cited figures ranging from 10 percent to more than half of the community being vacant homes.”

The Vancouver Sun in Canada. “The author of Millionaire Migrants was one the first to provide evidence that the foreign real-estate dreams of China’s wealthy have arguably had more impact than anything on Metro Vancouver’s housing unaffordability. UBC geographer David Ley, along with SFU’s Wu Qiyan, told me early this year the city’s real-estate bubble would be punctured when leaders of the People’s Republic of China further restrict money leaving their country.”

“Now strong signs are appearing that Metro Vancouver’s real-estate balloon has indeed been pricked by China’s heightened capital controls. Demand for multi-million dollar dwellings in Metro Vancouver is falling. ‘All the high-end stuff is sluggish,’ says Vancouver realtor-analyst Steve Saretsky.”

“Real Estate Association of Greater Vancouver figures show the median price of a detached home is down more than $500,000 since February, to $1.7 million. Veteran Canadian real-estate data analyst Stephen Punwasi also has little doubt ‘Chinese capital is having a tougher time getting out of China’ since leaders introduced tighter controls in January. ‘Vancouver locals selling $3 million bungalows are going to have trouble finding an alternative to foreign urban land buyers, so prices need to be slashed,’ Punwasi said.”

“Even though Canadians can be forgiven for being uninterested in the macro-economics of China, it’s worth knowing its authoritarian leaders motives. They want to keep more capital in China to bolster monetary reserves and secure the country’s extraordinarily high volume of loans. As Saretsky says, China is trying ‘avoid a run on its banks.’”

From The Florida Times-Union. “The sky is falling. The sky is falling … or probably will any day now the way things are going. Cat. 5 hurricanes, 7.1 and 8.1 magnitude earthquakes, a total solar eclipse, terrorist attacks and threats of nuclear war with North Korea have me shaking in my flip flops.”

“I’m not the only one worried about the apocalypse. Doomsday writer David Meade predicted the world would end Sept. 23, but later backtracked that claim, saying astronomy and the biblical Book of Revelation predict Oct. 17 will start a seven-year cycle that will bring about the end of the world. He cited hurricanes Irma and Harvey as omens of things to come. ‘The world is not ending, but the world as we know it is ending. A major part of the world will not be the same the beginning of October,’ he told the Washington Post. No kidding!”

“On Jan. 1, followers of the Sword of God Brotherhood prepared for Armageddon by climbing a mountain in Bugarach, southwest France, where they believed aliens hidden inside the rock would save them. Larry Hall had a better idea. In 2008 he bought a retired vertical, underground missile silo and converted it into luxury apartments for folks who are worried about the apocalypse. His survival condo project can withstand catastrophic events, can house a dozen families, and has food, fisheries, gardens and a pool. A second silo is due to be finished fall 2018 — sounds like a hotel chain time-share to me.”

“Nevertheless, as author Stephen King said, ‘There’s no harm in hoping for the best as long as you’re prepared for the worst.’”

“I better get busy working on my bucket list — write a best-seller; fill my sharks teeth jar to the top; clean the house — nah; research the family tree; shred 40 years of tax records in case a post-cataclysm extraterrestrial or zombie tries to steal my identity, and shed a few pounds, because if I go, I want to go lookin’ good.”

“On the other hand, as Erma Bombeck said: ‘Seize the moment. Remember all those women on the Titanic who waved off the dessert cart.’”