Auction Inaction
Last weekend I attended an auction for fifteen condos at a schwanky building on Capitol Hill. Three years after opening, this place hadn't sold all of its units yet. They were probably getting a little desperate in this economy and decided to let the market decide what these homes were worth.
Originally priced in the low to mid 400's, they were accepting opening bids in the low 200's. The rock bottom starting prices drew in the crowds. There were probably 200 people at the Grand Hyatt, waiting for the auctioneer to kick things off. Although I knew it was unlikely that any would go in my price range, I attended anyway. I was hoping for an educational, if not a participatory experience. And that's exactly what I got.
All the units quickly vaulted past my cap. They sold for around halfway between the original cost and the minimum bid (around the mid 300's.) There were quite a few obvious speculators in the room (they had different-colored bidding plaques that allowed them to bid on multiple units)... and I couldn't help despising them. Even though I was out of the bidding pretty early on every unit... there were a lot of young families obviously looking for a home and bidding nervously. They were all outbid by the big money... at least when it came to the nicer units. These buyers had an easy time of it... they could see exactly what the market was willing to pay (in the form of these young families) and then just eclipse that amount. This is a safe strategy if you are banking on the economy rebounding and the housing market coming back up in the next few years. I didn't really see two of these speculators squaring off on a property and bidding the price up beyond what an actual homeowner would pay. That aspect of the auction felt a bit like collusion to me.
Anyway, as my search for a property to invest in continues, I feel a bit disheartened. I'm now quite convinced that I won't find anything close to the size and quality of my current apartment in my price range. I'm not sure whether I should move to a different part of the state, accept a much smaller place, wait and hope that the market keeps crashing, or embrace that my apartment is a sweetheart deal in a great neighborhood and look to bury my savings into soybean futures.
Labels: Dear Diary
posted by John @ 12:09 PM
8 comments
8 Comments:
Some of my earliest enemies were the comics "agents" who routinely showed up at auctions when I was a teenager. Sent by rich kingpins, these guys would just stand there and bid and bid and bid until they got what they were after.
I'd bring $50 or whatever I had saved up only to watch these suit-wearing pricks snatch up the first five or six bundles at almost every auction. They typically paid for everything with $100s.
Sometimes it was fun watching them go head to head -- "yes! bankrupt each other! leave in a huff! leave now!"
There are whole countries of people in the world who never aspire to own their property but rather rent living accommodation for their whole lives. I think we are far too obsessed with buying. Rent. Renting is impermanent, like life, and pragmatic, I suppose, because we can always change our minds. Spend the money on something else, that's what I say. God knows what I'd say you should spend your money on but I'd say you'd find something... I'd say...
There's a bit of dissonance between your "couldn't help despising [the obvious investors]" theme and your "as my search for a property to invest in continues" closing. If you are approaching this purchase as an investment - an opportunity to make money - how can you "despise" the other investors? Aren't they just doing the same thing you are - buying property to make money - but just starting with a bigger bankroll? If you accept that it is morally okay for you to make money from property you buy, why can't they?
Perhaps the difference is that you want to be an investor - someone who puts a significant stake into an enterprise, nurtures it, hopes for it to be successful, and, in so doing, contributes something to society (insert all the common arguments about the stabilizing influence of home ownership here), while the others were speculators, hoping to make a quick buck by inserting themselves into a transaction to which they contribute nothing and from which they make money only by getting between a legitimate producer and a legitimate investor.
With a little effort, I think I could make the same argument about low's "comics agents."
In the end, however, I agree with Molly. If you really want to invest your money, find something else. Do some research and find the next Google, the next Microsoft, the next IBM, the next Polaroid. Maybe it's green technology, maybe its asteroid mining. Put some money into an enterprise that needs doing. And keep renting your cool apartment. I never really bought all those arguments about the stabilizing influence of home ownership anyway.
Walter, you're right. These people were speculators rather than investors. They were not trying to realize the American middle class dream of home ownership. They were trying to realize the American upper-class dream of owning other people's homes.
I'm not approaching this as an "opportunity to make money" so much as an opportunity to "buy into the system of home ownership." I'm not doing that because it will have a stabilizing force on society. I'm doing it because having an asset like a condo can save your ass when something tragic and unforeseen happens.
Only a foolio would "invest" in closed bundles of comics where inspection is impossible. That's a hobby for wealthy people who don't have the patience to peruse an actual comic store. I simply wanted comics. For the art.
I despised adults in suits with money to burn and no interest whatsoever in what they were bidding on. I envied their untouchable advantages, and their robot-like detachment just made it worse. Where X-Men comics were concerned it was like bidding against Sentinels.
John's frustration at being grossly outbid reminded me of my own.
No comment.
Edited the article to clarify investor vs. speculator. Also fixed a few gross grammar mistakes. God, I need to quit hitting the "publish" button when I scribble out a quick post from work.
Interestingly enough, the condo complex has called me twice in the last week to tell me that purchased units have become available again. At least some of these speculators seem to have abandoned ship.
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