Seattle Bubble Forum Archive

How far do you think high end homes are going to fall.

MLS#26188045 is asking $2.5 million. It sold in 2005 for $1.5 million.

$2.5 million with no view and less than an acre of a lot...

I don't care how many granite counters it has, the price of last sale seems much more reasonable.

This is the most ambitious flip I've seen in the Puget Sound market place on a time/dollar basis!

It's fun to point at these flipper fools, but until these houses actually sell at these prices, I don't see any impact to the market. Many of the homes that folks point out as ridiculously priced are just that - priced well above any market comparables.

If flips are priced right, and then not selling, that's a different story.

I think the main factor in the pricing of new or nearly new high end homes is simply the cost of development plus 10%. Obviously, the buyer doesnt care what the builder spent, he only looks at market prices, but the developers will certainly try very hard to set and stick with pricing that covers their costs. They will not build houses when the market price wont cover their costs, unless they guess wrong about the market.

Here is a great example:

MLS #26023925

This is a developer who has optioned a two acre lot, and is hawking an off the shelf architects northwest plan "custom" home. The listing indicates he hasnt closed on the lot yet and hasnt applied for a building permit yet. So this is a pure spec house offer. The $1.8 mil pricing is a calculation based on the cost of the lot, the cost of construction, and a reasonable profit.

Because these developer spec houses typify the eastside market in the $1.2 mil to $2.0 mil range new house market, construction costs drive the prices. Comparable older existing houses will tend to be priced a notch below the cost of construction pricing of the new ones.