Real estate market has peaked? (that $3.225 million house in our neighborhood)

From early March… Open house today in our neighborhood:

There’s a house for sale in our neighborhood (we rent a 2BR for $2800/month). It went on the market about a week ago. The first showings are today, 10a-4p, and “All contracts must be submitted by 5:00pm on March 3rd.” This million dollar home (built in 2012; re-sold in 2017 for $1.3 million) sits on a princely quarter-acre lot and offers a vast interior space of 4,574′. It was “coming soon” at $2.95 million two weeks ago, but the asking price now is $3.225 million (escaping NY, MA, and CA vaccine coercion and mask orders is not cheap!). The house comes with the opportunity for a lifetime close friendship with the appliance repair brothers, sisters, and binary resisters (i.e., there is a Sub-Zero fridge).

Zillow estimates the value at $2.225 million. Redfin admits “we don’t have enough information to generate an accurate estimate at this time.”

Zillow now says that the estimated value is $2.54 million and also that the house finally closed on May 9 at $3 million.

My theory is that the real estate market peaked in February 2022. The above failure to achieve asking price is a small data point in favor of this theory. The bigger data point is that… I made the decision to buy a house in February 2022. If I go long, that’s a signal to go short! (“I like to do everything in the dumbest way imaginable”) My feeble justifications: our rent was likely to go up to $5,000 per month in August; the mortgage on a house more than 2X the size (using the 3.25 percent rate that we locked in back in Feb) is about $10,000 per month (but not cheaper per square foot once you factor in property tax, maintenance costs, and unpaid maintenance and management labor); kids won’t have to share a bedroom; we now have a real guest bedroom; more kids in the immediate neighborhood. The house is still in the same Abacoa neighborhood that was developed by the MacArthur Foundation (search process explained).

(We just recently closed and moved in, so be prepared for numerous posts on systems and maintenance! My productive hours per week have been cut by 40. There are daily trips to Home Depot. One recent day I counted five different contractors/service people who showed up.)

Who wants to guess at the real estate price trend for the next 2 years? My guess is that house prices will fall, but not by falling. The price in 2 years will be the same as the price today (maybe with a dip in the middle), but inflation will have eroded the value in real terms by at least 10 percent.

Even if you overpaid by $1 million for a house, one great thing about this climate is that you can grow orchids by wiring them to a tree and walking away. The tree gives the orchid sufficient shade and the orchid gets everything else that it needs from the Florida sky. A neighbor’s house this morning:

16 thoughts on “Real estate market has peaked? (that $3.225 million house in our neighborhood)

  1. Congrats on the new house. I think you will be fine if you plan to stay there for at least 5 years. I hope your new home does not have a sub zero!

    • TS: Thanks. People always say “congrats” when having bought a house just means that nobody else was dumb enough to bid higher (though supposedly in our case someone did bid higher, but with more contingencies).

      Even worse than a Sub-Z: the house has a 42″-wide counter-depth KitchenAid that dates to 2003 and is presumably on its last legs. The cubic footage of this fridge is no greater than a standard 36″-wide normal-depth fridge. It would cost about $10,500 to replace with a new KitchenAid, but I don’t think the custom cabinet covers would fit the new fridge so it would be a wall of stainless steel. That’s kind of a theoretical problem because, of course, it is impossible to buy the new KitchenAid. And even if you waited 6 months for that new KitchenAid and paid what used to be the price of a good used car, it doesn’t have any of the awesome features of the LG and Samsung French door non-built-in fridges that one sees at Home Depot for $2,000 to $2,500. The equivalent Sub-Z is about $13,600.

      I’ve already scheduled a service call for the fridge because the ice dispenser is always clogged.

    • The fridge situation is worse than I thought. Despite its no-doubt staggering original cost, it doesn’t have dual evaporators, much less dual compressors. It has an air door between freezer (where the evaporator is) and the fridge section, just like a $500 landlord special (now 1,000 in Bidies?). A dual-evaporator non-built-in fridge is $2,000 (i.e., 3,000 Bidies). Temperature control within the fridge depends entirely on not cramming it full of food and blocking the single outlet of cool air or the exhaust back to the freezer compartment. The $10,500 non-existent replacement from Kitchenaid has two evaporators (the Sub-Zs, I think, have two compressors as well as two evaporators).

    • The local authorized KitchenAid service guy showed up. He said that nobody wants to work so he’s doing 17 service calls per day over a huge geographical area. I asked how much longer our 2003 fridge would last and he said “longer than a new one.”

      He replaced the icemaker and cleaned an epic amount of dust out of the condenser coils. He explained that a missing shelf was discontinued, which is probably why the previous owners hadn’t replaced it. I found one on eBay for $80. The cost was $471. He said that he’d recently done a complete rebuild on a 2006 KitchenAid built in. Everything except the condenser coils was replaced (compressor, evaporator, fan, etc.). The cost was $2,500.

      He didn’t think that the temperature uniformity was any better on the latest and greatest refrigerators from KitchenAid, Sub-Z, etc. LG says that it has “multi-air flow” for airflow in every section for its non-built-in fridges. So we will never attain airflow nirvana due to being shackled to this 42″ counter-depth configuration.

      https://www.lg.com/us/refrigerators/lg-lrfvs3006d-instaview-refrigerator

      would be awesome! 36″ wide and much more capacity than what we have in 42″.

  2. Gainesville real estate just collapsed on the news Greenspun won’t be living there. Maybe Gainesville just needs to prove less than 5% of its accounts are fake.

    If the government ever said someone wealthy enough to afford a house should know how to fix a refrigerator, there would be a recession.

  3. Not sure if all components of real estate market peaked. Manhattan monthly rentals of connected walk-in closets 300 sq ft one-bedroom are rising 35% above what you are paying for large 2-BR

  4. “KitchenAid that dates to 2003 and is presumably on its last legs.”

    My 25-year old+ white Kenmore refrigerator still hums along perfectly. I bought it for $100 from a guy who kept it in his garage for beer. He had got laid off from his construction job during the last real estate crash and was relocating back to MA.

    • (Intended as a question about how you’ll outfit this place, not a judgment!)

    • Thanks, D-man. That 2013 post is filled with gender binarism, e.g., “He or she may be spending more time…” and “He or she may turn down a better job in another city” #Embarrassing

      I was at Home Depot this very evening! There are some outdoor flood lights that I don’t actually want to use, but it annoys me that some of the bulbs are burned out. So it was off to get some PAR38 LEDs and that led to a subtask of figuring out what color temperature to set them to (3000K was the decision). And then to getting up on a 4-step ladder to install two while two additional are deferred until the electrician shows up with a much better ladder.

      (On further reflection, these floods will be useful in the winter when it gets dark early and the kids want to play in the backyard after dinner.)

  5. @philg:

    I woke up with a cold that I was gifted by my father and felt terrible, but I knew that if I clicked on this link, the sun would come out and I’d be doubled over with laughter. You always exceed my expectations.

    CONGRATULATIONS on your new home. I’m sure the boys will enjoy their new autonomy and privacy, and I truly hope you enjoy it. So far I have not seen any alarming headlines on CNN like: “Greenspun Puts Down Roots in Florida – Lincoln, MA Ravaged by Tornado. Coincidence? We Think Not.” Lol.

    It’ll be fun to read all upcoming blog posts.

    One tiny question: does the new house have A GARAGE? Hmmmm? Any news?

    • Alex: Every house in Florida has a garage! And no house in South Florida has a basement, as far as I can tell. The result is that the garage is always way too small. A 4-car garage would be nice. 1 bay for storage of stuff that would be in a Maskachusetts basement or attic. 1 bay for bicycles and other outdoor-type stuff. 2 bays to keep the murderous sun off 2 cars. Most of the neighbors have 2-car garages that are too full of stuff to accommodate even 1 car. Our house, sadly, has a 2-car garage and I am sick with envy when I see neighbors who have oversized 3-car garages.

    • @philg: Thank you, but much of that is information I already know, so all I can say is that Envy is one of the “traditional” mortal sins (although the list is getting longer: https://www.theage.com.au/world/list-of-mortal-sins-gets-longer-under-vatican-overhaul-20080311-ge6ttw.html ) and the best way to cure Garage Envy is to put something in one’s own garage that is just incredibly Cool and 8-ways satisfying, even if it is not an entirely rational purchase. We await your future updates!

    • I do sympathize with the space concern. I grew up in a house with a very cramped 1-car garage and it was … a pain. But for the bicycles, at least maybe your property has enough space for a small, sturdy, tasteful shed. Hang a light and security camera on it and you don’t have to mess with the garage to take a bike ride. Maybe the boys can pick a color scheme and paint it!

      https://arrow-sheds.shelterlogic.com/knowledge/secure-storage-sheds-protect-valuables

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