Save your money?
44 Greenwich Hills Drive, a 3 bedroom condominium, was originally listed for $849,000 in October 2006. It didn't sell so it was pulled from the market in March of 2007 and renovated: new kitchen, new baths, hardwood floors, etc., and returned to the market in July, 2007 at a new asking price of $1,100,000. It sold last week for $835,000.

So did the sellers (heirs, in this case) waste their money performing all those renovations? On the one hand, it didn't sell in its original condition at $849,000, so perhaps renovations were called for. On the other hand, judging from the new price of $1.1 million, a lot of cash must have been poured into this place. My hunch is, and I have no personal knowledge to support it, is that the heirs would have been better off slashing the original price rather than throwing good money after bad.

For What it's Worth - ahead of the Wall Street Journal!

The link is to today's WSJ's editorial denouncing the Green's efforts to block any sort of transmission of energy whether produced by windpower, solar or cow farts. We said it earlier here, repeatedly, but perhaps the WSJ says it best: "The only energy sources they seem to like are the ones we don't have."

Nalgene update
I mentioned a week or so ago that my favorite plastic water bottle, manufactured by Nalgene, had been pulled from the market due to hysteria - "if it saves the life of just one baby" sort of stuff. Friday, the FDA concluded that the stuff is safe. Not soon enough to save my water bottles and, naturally, not sufficient to quell the hysteria. This country's in trouble.

Why didn't I think of this instead of real estate?

Some corporation (link above) is selling off the Macaroni Grill, a chain I've never heard of, for $132 million. Pretty impressive, considering that there's no macaroni on its menu!

Update
Here's a fascinating tidbit from a Phoenix, Arizona diner: "The calamari at Macaroni Grill was tender and fresh...." In Phoenix? Really? Why do I suspect that this poor benighted soul has eaten nothing but frozen seafood her whole life? Of course, my ancestor, Albert Fountain, who spent most of his adult life in New Mexico and Arizon fighting Indians (and who was murdered in the White Sands of New Mexico) would probably have been grateful for any seafood, fresh or frozen. But I'm holding out for macaroni.

Slowly, oh so slowly
44 Calhoun Drive sold Friday for $4,041,050. It was originally listed on the Ides of March back in 2006 for $6,200,000, so I suppose its sale was a relief to the sellers, even at 1/3 off.

For Sale by Owner

The city of Bozeman, Montana has put its city hall up for sale and isn't using a Realtor. This has the local real estate organization up in arms but what the heck, they can always try again with professional help if they need to. Bids are due this Friday. So far, no bids have been received so if you've always had a hankering for a municipal building in the shadow of the Rockies, now's your chance.

Nantucket blues?
A reader who's hiding up in Nantucket sent this link - to my eye, things don't look any worse (or better) up there than they do down here. Which makes sense, sort of, because the island is more or less just an adjunct to our town (which is why I rarely visit, but nevermind).

"Chris

Long time reader and vacationing up in Nantucket... Seems the real estate envirnoment is not so good here either... Thought you might find this link interesting...

Update:

Link was bad before - sorry

See what happens when you don't have Bush to kick around?

For some reason that eludes me the blogger at Greenwichroundup.com chooses to link to a story today about poverty in Fredericton, Canada. I'd never heard of the place but it turns out to be in the middle of nowhere in New Brunswick (redundant, I know) and is even the capital of that sorry province. All very educational, but the question that struck me as I read an interview with the director of some soup kitchen was who he would blame for the sorry plight of his clients. I figured it couldn't be Bush or those wicked Republicans so I guessed global warming. I was wrong - he said it was all due to globalization but that, as my college-educated daughter would have been happy to tell him, is all Bush's fault; so I was close.

Here's a map of Fredericton - don't you think the best way to end poverty there is to encourage the inhabitants to get the hell out of Dodge and move someplace where there are more jobs than peeling birch trees and turning moose antlers into coat racks?:
View Larger Map

Does this mean that A Rod's not buying Antares' white elephant?

Last year, in a rather transparent attempt to demonstrate buyer interest, any buyer interest, in its collossal (35,000 sq.ft) blunder on Langhorne Lane, Antares hired a publicist who "toured" the place with NY Yankee A Rod and made certain that the press learned of the visit. Most of us considered it to be nothing but hogwash at the time and the house did not sell. Still hasn't. Now, according to the NY Post, the man's buying an apartment in NYC. Well, at least he was interested in real estate, even if it wasn't in Greenwich.

Apples to Apples

97 East Elm Street, a nice old 1920's single family house that was renovated in 2004, sold for $1,612,000 back in December, 2004. It sold again Friday for $1,795,000, which was full asking price and after only 10 days on the market. The appreciation was no home run - by my bad math, roughly 2.5% per annum, straight, not compounded, but rent during that period would probably have been somewhere around $3,500 per month so that's $133,000 saved, plus tax benefits. Regardless, good investment or not, because the house was basically untouched during this latest period of ownership, it offers a good idea of what's happening in our downtown market. And I'm always delighted to see evidence of active buyers [just as exterminators drool over evidence of active termites? - Ed].

Why wait for the coronation when the Messiah has arrived?

Speaking at a fund raiser held among San Francisco pan-handlers desperate for change, Obama raised $7.2 million in just three hours while basking in Speaker of the House Nancy Pelosi's adoration, who called him "a leader that God has blessed us with at this time."

Weren't they supposed to pass out palm fronds? Where's mine?

More NY Times economic and mathematical illiteracy

I'm beginning to think that Times reporters simply don't know anything at all about what they write about, which is an improvement, I suppose, over my earlier thoughts that they were part of a vast conspiracy designed to feed off the stupidity of their readers. Here's the latest example, this time confusing just about everything, from the square footage of houses to the delinquency rate of second mortgages. Sure, it could be that the Times deliberately chooses not to give hard numbers of an actual increase in loans gone bad because readers would then realize what a non-story it was and perhaps hate Bush a little less, for just a few seconds, but I prefer to believe that these guys are just dumb as a sack of rocks and simply don't realize what they're saying.

The comments below the linked article are well worth reading, especially this one that quotes Michael Crichton:

"Briefly stated, the Gell-Mann Amnesia effect is as follows. You open the newspaper to an article on some subject you know well. In Murray's case, physics. In mine, show business. You read the article and see the journalist has absolutely no understanding of either the facts or the issues. Often, the article is so wrong it actually presents the story backward, reversing cause and effect. I call these the "wet streets cause rain" stories. Paper's full of them.

In any case, you read with exasperation or amusement the multiple errors in a story, and then turn the page to national or international affairs, and read as if the rest of the newspaper was somehow more accurate about Palestine than the baloney you just read. You turn the page, and forget what you know."

New vs. renovate

A reader asks, "Sorry to be off topic, about the new construction per feet cost. What is a new addition to a house cost nowadays per feet. Also, was told the cost to build a second floor (above the existing house) was much cheaper than adding to first level. Any opinions?"

Well as you know if you stick around this blog, I've got lots of opinions and some of them are actually based on fact (but you'll have to figure out which those are). Anyway, addressing the last question first, I've been disappointed in the past to learn how little money can be saved by adding a second floor to a ranch. Building up, in other words, instead of starting anew.

You start off with a savings, of course, in that you already have a foundation and its infrastructure - water, sewer, etc. But then you have to look at what you're improving. It probably has 8' ceilings which are fine for you but a turn-off these days to buyers. You can add to the height of the first floor, but that's expensive. If you don't, while you won't exactly be putting lipstick on a pig, you will be building a house that lacks appeal to many buyers (unless heating costs stay high, in which case, low ceilings may come back in vogue).

How's your electrical service? It's probably outdated. Will your existing furnace be large enough to service twice the existing space? Are your windows original and hence obsolete? How much will it cost to extend your chimneys? If you're going to have new baths upstairs, do you want to leave the original baths untouched? Is your plumbing adequate? How much will a new kitchen cost?

Etc. So, in my experience, you're not going to achieve much of a cost saving. If other readers have had a better experience, please write in and educate us.

Plain old additions and re-dos are, or can be cheaper than adding on, but it's always cheaper to, say, frame out a nice, square window opening than it is to deal with a slanting old one (blending the outside trim can be a bear, for instance). Having worked on both - old and new, I have spent as long as a full day doing a window in an 1840 Maine farmhouse and perhaps 45 minutes framing and popping in a new window in an addition we put on. And of course, you never know what's behind a wall until you open it up - surprise!

Just remember that the most expensive words in a remodeling job are, "as long as we're doing that ...."

There's nothing wrong with taking an old clunker and bringing it up to date and, if you get the house for the right price you'll make money. Just not as much as you think, though.

If you want to know why we're in the current mortgage mess, read this puff piece from 1998. Money quote: "Fannie Mae and Freddie Mac operate independently each with a preferred lender base, but both are in the business to make sure that as many consumers become homeowners as possible."

That they did, with the result that together, the two entities now hold 46% of the national debt or they did in 2003, when the linked article was written. No one listened back then and I wonder if anyone is really listening now.

Appraisal woes
Interesting article here on the difficulties in appraising houses in a falling market.

Lenders are more cautious and, because house prices are falling so rapidly in some areas, won't accept a "comparable" sale that's six months old.

"In San Francisco, neighborhoods are small, which compresses the number of comparable homes, making appraisals particularly complicated. 'Any time you have a reduction in volume, especially because that is when the underwriting criteria of lenders tends to become more stringent, it's difficult,' said Charles Warren, who runs a San Francisco appraisal business called Warren and Warren. 'Lenders want to see comparables from the last 30 days, and all of a sudden you are left without any valid data. That exacerbates the problem.' "

And this bit of sound advice: "Buyers should make sure to leave their financing contingencies in place until the lender has signed off on the appraisal. The down market means that lenders are reducing appraisal values more often."

On a brighter note, I heard an interview with a tri-state lender this morning (Hudson something or other - they're opening an office in Greenwich but have been lending in Fairfield County for some time)and he was surprisingly optimistic about the housing market in this area. His bank has always held on to its loans, rather than repackage them and sell them on the national market, and, while the bank has insisted on a minimum 20% down, on average, its borrowers put 39% down. "Our customers are people buying homes," he said, "not speculators." So far this year, its Fairfield County loans are up 1,700 over 2007, which was their best year. So, there are buyers still out there.

The bank president also pointed out that the housing collapse has hit hardest in just seven states: Michigan, Illinois and Ohio, which he attributes to the collapse of auto sales and its effect on the income streams of people who work for auto parts suppliers; and Florida, Nevada, California and Arizona, which all suffer from a glut of speculative building. He still likes the Northeast as a place to make housing loans. I hope his enthusiasm is justified by later events.

Update

The bank is Hudson City Savings Bank.According to its website, it's doing very well. They specialize in jumbo prime mortgages, so no wonder they like Greenwich.

White Elephants and such

Reader Juan asks, "Will you provide the link for article by the 'colleague who compared assessed value...'? "

I would be glad too, if Greenwich Citizen posted the guy's stuff on line, but it doesn't (they didn't post my column, either, which I always thought was kind of dumb). Police blotter? It's there. Real estate? Who's interested in real estate in Greenwich, Connecticut?

Wanna guess who's next on the bankruptcy rolls?. Here's the part I like best about this Florida entrepreneur's delusions:

Another current McKinney project is a $135 million spec home, The Manalapan Residence. This three-story 67,670 square foot home includes 14 bedrooms, 24 bathrooms, an 18 car garage, a 6,140 sq. ft. master bedroom suite, lavish Grand Rotunda room for entertaining, dual water walls, aquarium ceilings and walls, movie theatre, casino and club room with stunning aquarium wet bar, oceanfront gourmet family kitchen, catering kitchen, outdoor summer kitchen, his/her offices, 10 wet bars, two wine rooms (one for red, one for white), gymnasium with beauty salon, two swimming pools (classical lap and grotto waterfall/waterslide), shark tank, two elevators, bowling alley, tennis court with pavilion, archery range, 1/4 mile jogging/go cart track, butterfly gardens, Italian and Floridian gardens, sculpture gardens, citrus orchard, guest house, staff house, back-up generator, full home automation, and more.

One reader has suggested that Greenwich residents who want to build a dream house just wait a few months and take something off the hands of a failed builder for pennies on the dollar. If you're also thinking of a little vacation spot in Florida, you may want to apply that advice to our south, too.

Okay, land values are going up in some areas;Do you suppose we in Greenwich can develop a market for cute little blonde kids?

School construction delayed again

It's hardly a surprise that the Hamilton Avenue School project has again missed its latest completion deadline, as described above - use incompetent volunteers to oversee a construction firm with, to be generous, a dubious history involving numerous allegations of involvement with organized crime and you can probably predict the results. But now the same group of volunteers is about to undertake the reconstruction of Glenville School. Hmmm. We've witnessing dropping test results, an inability to bring school construction projects in on time or anywhere near budget and our response is to welcome back the Superintendent and set her and her minions off on another quest. I'm not sure that's the best way to run a railroad.

The Boys are back!

Ever wonder where drake mallards got to during the summer? Turns out, they molt and don brown feathers like the hens - who knew? Now that fall is approaching, they're molting back and will soon be their colorful selves once again. I don't think my little iPhone camera can show those feathers but if you click to enlarge you might get a glimpse of the change. Otherwise, take my word for it - how much have you got to lose?

Correction!
I'm not the New York Times (no s..., Sherlock), so I put corrections in a prominent place or, at least, as prominent a place as a blog with 200 readers a day gets. Anyway, I was wrong about police overtime pay being included in the calculation of their pensions. Here's what someone I assume knows what he's talkingabout wrote:

"When the Greenwich Police Officers work overtime at a construction job it is NOT part of their pension. NO overtime, including patrol and private jobs, is included, their pension is based on just their yearly salary. Just wanted to clarify that."

I still don't like paying cops to direct traffic at construction sites but at least we're not paying twice for that "service" once when they're out on the street and again when they quit.

I've hit the big time!

First bit of spam has arrived in the comments box. No doubt computer generated by my mention of homeopathic "medicine" (it starts, "In 2003, my company came up with a way to treat most viruses, using already existing, safe drugs. It's the subject of patents pending....")I deleted it before i finished so, alas, if you want to invest in this sure-fire winner, you'll have to wait for it to appear in your own spam box.

The fellow who kept posting obnoxious comments seems to have faded away once I switched from automatic posting to moderated and I was considering going back to the unfettered format but if the computers have found me, I guess I'll keep things the way they are, at least for now.

Another myth bites the dust, no doubt to be replaced by five more

Airborne, a supposed cold-preventative mix concocted by a school teacher and adored by Oprah, has just agreed to pay millions of dollars to settle a lawsuit brought by the government. Users are undeterred, of course, because the stuff works in their minds and presto. "It's hard to prove something doesn't work if you don't catch a cold" one regulator said, which brings to mind the old joke of the fellow who's found painting a long green line on a Vermont road. "Keeps elephants away", he explains to an inquirerer. "But there aren't any elephants around here", he's told. "Works pretty well, then, don't it?"

If you ever care to have your faith in the native intellegence of Greenwich residents shaken just a bit, stand by the counter at a CVS and watch presunably well-educated consumers pay big bucks for homeopathic remedies, all of which have been thoroughly debunked by the FDA, Consumer Reports and any scientist I ever heard of. Doesn't matter to these folks and it's not my money, so I don't care. Until I remember that they vote.

(White) elephant graveyard?
What's happening to the market for our mega-mansions? To no one's surprise but their spec builders, their prices are falling even as they remain unsold (well that's dumb - if they sold, their prices would stop falling, even if their value didn't, but you get the point). Today 40 Zaccheus Mead lane, originally listed in February 2007 for $11,200,000, dropped its price again, this time to $7,995,000, 30% below original ask. The real problem with this property is its yard - it doesn't have one - but that sky high price didn't help much.

Interestingly, this latest price drop places Zaccheus in direct competition with 8 Copper Beech, which does have a yard (but "only" 11,000 sq.ft vs 15,000). Which will sell first, and at what price? We'll see. Ten Copper Beech, built at the same time as #8 was, like #8, priced at about $9,500,000 last summer, but its builder accepted a bid of $8,050,000 last February and got rid of the place. Number 8's owner has now matched that price and in fact dipped a little below it at $7,995,000, but February was then and August is now. Different markets.

Finally, I see that my colleague and columnist for another paper has compared assessed value to selling price and concluded that all our homes increased in value the past year. That's comforting but I don't believe it - something is wrong with his methodology, I think. In any event, even he admits that sales have dropped a wee bit, like 30%. He says, don't worry, be happy. I'm less sanguine.

Does anyone at the New York Times know anything about business and how it operates?
This error in which the paper completely screws up the meaning of profit either reveals an abysmal lack of knowledge or an abiding faith in the economic stupidity of Time's readers. Or both. It must have hurt to correct it.

Even I don't want to see our oceans destroyed
Here's an alarming article that OwlGore and I can agree to worry about: according to this scientist, and he certainly seems to know what he's talking about, we face the extinction of life in our oceans and a sea of slime. Ugh.

Just want to let you know that I read all sorts of things, including articles from the other side of my usual thinking. Well reasoned arguments, good; hysterical rants from fat frauds on houseboats, bad.

Okay, we finally have a justification for the $500,000 Greenwich kitchen.
Humans got smarter because we cook. Of course in our town, that just means the staff is learning new tricks but in principle ....

One way out of a bad real estate decision

Investors.com has an informative article today on an alternative for troubled homeowners, giving the lender a deed in lieu of foreclosure. It's simpler (and cheaper, so less is wasted on attorney's fees or - and this hurts doubly - real estate agent fees), faster and, at least according to the article, protects your credit history. I don't know about this last feature, one way or the other, but I am aware of at least two instances in town where would-be builders are bailing out of their projects by exactly this procedure, so something must have appealed to them. You might want to check it out, if you find yourself in this situation.

I would think that, if it's your kids' home you're trying to protect, you'd want to fight to the bitter end but if you're involved with a failed spec project, reading the writing on the wall and turning the land, half-finished house, whathaveyou to the bank might make sense.

Russians using any and all weapons in their invasion, but brave folks are fighting back.
Two Georgians claim they have Big Foot's body.

Tom Friedman has been in the sun too long.
I assume that everyone reads James Taranto's "Best of the Web" column in the WSJ but just in case you missed it today, he does a wonderful job of deconstructing Mr. Friedman's claim that solar and wind power could be cost effective if only Congress would give them a jump start. Maybe, but only if Congress raises the price of all existing fuels sky high (scroll down to "Gas heads towards $19.84 a gallon") as Taranto proves with quotes from Friedman's own column. So really, Friedman isn't arguing that we can get affordable energy from these alternative sources but rather, if we jack up everything else, they might make the cut. Not an encouraging prospect for a healthy economy, I don't think.

Here's Taranto on Friedman:

Friedman fantasizes about a solution to the energy problem that "will take more than a Manhattan Project":

'It will require a fundamental reshaping by government of the prices and regulations and research-and-development budgets that shape the energy market. Without taxing fossil fuels so they become more expensive and giving subsidies to renewable fuels so they become more competitive--and changing regulations so more people and companies have an interest in energy efficiency--we will not get innovation in clean power at the scale we need.'

Such a massive exercise of government control over the economy is "cost effective" only in the sense that ignorance is strength and slavery is freedom.

Club Road, Riverside. Bad photo, decent house on a half acre. I stopped by today to review for a builder but, at just a bit more than $2.2 million, this wouldn't be a bad buy "as is" for someone who wants a bit of a renovation job. It needs updated baths and a new kitchen would be welcome, and central air couldn't hurt, but you could be on Club Road, among plenty of $4 million houses (and up) for under $3.

A reader sent me this link to an article on the end of our consumer culture as we know it. It's a tad depressing and I'm not as gloomy as its author but it's always useful to know what some investors are thinking. And besides, he might very well be right, which is a scary thought.

Olympics - who cares?
I haven't been watching the Olympics - not one minute of coverage - and I'm glad to see that I'm not the only one. I've never been a big fan of watching other people pound water and as for large Armenians sweating over dumb bells well heck, I'll give that a pass, too. And while I admire the Chinese people, I detest the dictators who run their country so there's that, too. Plus, there's the cheating by officials.I'll be curious to see what the final ratings are; for all I know, it's just a handful of kooks like me boycotting the damn things and the rest of the country's glued to the set. Fine with me - enjoy.

Sale to Ask Ratio - You Never Can Tell

Three sales reported today neatly illustrate the vagaries of our real estate market.
88 Old Stone Bridge was first listed 3/27/07 for $2,595,000 and, 482 days later, sold for $1,850,000. That's 70% of the original asking price but it won't show up that way in our statistics because the Greenwich MLS, for whatever reason, chooses to compute the sale to ask ratio from the last listing price. In this case, $2,100,000, which yields a 88% ratio.

1 Lauder Way, on the other hand, was listed for $7,495,000 2/12/08 and then raised in May to $7,995,000 and quickly sold for full price. That's 6% above its original asking price. I've poked fun at sellers who've tried this tactic before but clearly it worked this time. I'll call the listing agent, Rene Gallagher of Round Hill Partners and ask her how she did it.

Just to balance those two, 38 High View Avenue was listed for $1,795,000 on 7/14/08 and went to contract in 14 days. It sold yesterday for $1,788,000, or 99.6%.

Moral of the story, at least for the first house and the last is, price your house right and it will sell, even in this market. I'm clueless about Lauder but, as I said, I'll ask.

How do you make money in a down real estate market?

Turns out, it's a simple two-step process. First, admit that you fathered John Edward's child. Then buy a house for $300,000 from one of Edward's political backers and resell it 18 months later for $1,200,000. Now, wasn't that easy? And you didn't even need a real estate agent to accomplish it.

Power Shortages Predicted

It's the fifth anniversary of the most recent wide-spread blackout so the papers are filled with look-back articles and, more alarming, look-ahead scare stories that predict bad things coming. Nothing new here; experts have been giving the same warnings for years and we continue to oppose solutions. The failure to maintain and grow electrical supplies has disrupted all of East Africa and some Casandras are predicting blackouts in the Washington D.C. and Maryland area in 2011. Solution? It's beyond me, but if the Dunce of Wales has his way and gets GM food banned, maybe the loss of 6 billion peasants to starvation will make the question of extra energy moot.

Police Unions and traffic control
The New York Times reports that the Governor of Massachusetts is trying, again, to get rid of the requirement that policemen direct traffic around construction sites. Fat chance - the state's been trying to achieve this for decades and union power always prevails. The Times says no other state wastes resources like this but, wouldn't you know, Greenwich uses a modified system, requiring off-duty policemen, on overtime pay, to steer cars around all non-public work projects. A town employee can move traffic around a town tree cutting operation but if that same bit of tree trimming is being performed by CL&P or a private tree company, cop(s) must be on hand. Don't hire one at your peril, because these guys will shut you down in a heart beat and even arrest you, as they did at the Post Office project on Valley Road.

Cops make out like bandits with this deal and Greenwich obviously figures that what we don't see won't hurt us, so our "negotiators" continue the practice. We spent, according to BET minutes, $32,000 a month in police overtime directing traffic during the Mianus sewer construction project, a work effort that stretched out years. That's just one small example, of course. And I assume, but do not know, that a cop's overtime earned directing traffic is treated like all his other overtime when calculating his pension. Because that pension is based on the cop's last year's total compensation it's the norm that the retiring civil servant racks up as much extra pay as he can, all to our financial woe. As a town, we seem to accept this ridiculous situation as the price of labor peace but it sure looks like union extortion to me.

UPDATE:
A reader informs me that I was wrong to assume that overtime pay is included in calculating pensions:

When the Greenwich Police Officers work overtime at a construction job it is NOT part of their pension. NO overtime, including patrol and private jobs, is included, their pension is based on just their yearly salary. Just wanted to clarify that.

Realogy and its Greenwich real estate branches

I'll admit to still being a bit miffed at being fired from my Greenwich Post column for repeating what was reported in The New York Times Realogy, parent company of a number of real estate franchises including Century 21, Sotheby's and Coldwell Banker, was saddled with a crushing amount of debt when it was taken over by Leon Blackstone's group, Apollo Management. Century 21 is no longer around in Greenwich to complain (its gold, polyester-blazered image just didn't cut it and they were too dumb to switch to faded Breton red trousers and wool blue blazers)so it was up to Coldwell Banker or Sotheby's manager to squawk; one or both of them did. End of column.

But not the end of the story. Realogy is having a bad year, like a lot of real estate companies, and Moodys has just cut its debt rating to - well, is there a grade below junk? Too bad, says I.

Update
But there's always another side to any story. Here's a far more positive take on Realogy's cash position

Stop the presses! Get out your checkbooks!

Mel Gibson's digs on Old Mill Road have dropped from $39.5 million to just $35 million. You procrastinated, you won!

Let them eat cake.
Prince Charles, perhaps one of our dimmer world figure heads, doesn't like genetically modified food. Fair enough, but his complaint that "we [will] end up with millions of small farmers all over the world being driven off their land into unsustainable, unmanageable, degraded and dysfunctional conurbations of unmentionable awfulness" sounds to me as though he rather misses the good old days when his serfs knuckled their foreheads as he passed and, damn it, knew their place.

The Prince would dispute this, of course and predicts world wide disaster if things are permitted to continue as they are. But this is the same gentleman who sixteen months ago warned the world would suffer cataclysmic horrors in eighteen months if we didn't immediately save the rain forests. Well, we still have two months to go before we know whether the world will end but things aren't looking good for the Prince's prognosticative powers.

While he was predicting doom last year, our king in waiting said, "You learn as you go along. I am going to be 60 this year. I would be a blinding idiot if I had not learnt a bit by now." You said it, Charley. I rather think the Prince would agree with his subject British scientists who claim that fat people cause global warming. Stick all those fatties back on 1/2 acre subsistence plots and foot-pedalled water pumps and we'll soon see the pounds melt away. All while saving the planet. Jolly good.

Internet for home buyers

The National Association of Realtors has released some interesting statistics depicting changes in how buyers first found the home they eventually purchased from 1997 to 2007. They had a nice chart that my lousy computer skills prevent me from importing but here's a summary:


1997: 50% via a real estate agent, 3% via internet, 8% newspapers, 3% magazines

2007: 34% agents, 29% internet, 3% newspaper ads and 1% magazines.

This jibes with my own experience except that, in this rather sophisticated market, I'd guess that almost all my clients have been prowling the Internet before they first call me. On the other hand, they usually end up buying something they hadn't yet seen or considered, so I feel I'm adding something beyond what Zillow offers.

Definitely bad news for newspapers, though, considering how expensive their ads are.

Attention, Los Angeles:
You don't want your fat folks chowing down on Whoppers? How about tasty rat snacks?

Who says politics has to break up friendships?
I see that District 5 (Riverside) yielded six votes for Lee Whitnum. My first reaction was surprise that my area of town hosts so many nuts but I was still further surprised when I realized that that I know, and like, at least five of the probable suspects. And probably all six. I do adore them but I think I'll stay out of their way until the fall election's over.

Contracts = activity.

Not sales, which are a lagging indicator - who cares what happened 30 - 60 days ago? With that in mind, you may want to know that we saw 11 houses go to contract in the past 10 business days. That's not much, obviously, so let's hope that it's merely a reflection of vacation schedules rather than a lack of interest in buying homes. Usually in August, that's the right explanation but I, at least, am a little nervous.

Rant of the morning - real estate readers, avert your eyes

California, home of all great ideas, was the first state to ban smoking in restaurants and now many of its cities have expanded that to the smoggy area outside. The ban seems to be working but I do wonder what possible health benefit is achieved by protecting an outdoor cafe patron from inhaling second hand smoke while continuing to expose the poor bastard to the world's foulest air (you say, "China's is worse, but every evening, prevailing winds dump a new load of Chinese poison on poor old California, so they're doubly blessed).

What concerns me, however, and what alarmed a few folks way back when the first smoking ban was imposed, is, "what's next?". Doomsayers predicted,and were scoffed at for their prediction, that this kind of governmental intrusion would spread and of course it has, from calorie counts and trans fat bans in New York City, no foie gras in Chicago, no smoking, alone, in your own car, etc.

Now Los Angeles has banned additional fast food joints in South LA. Leave alone the possibility that these places provided jobs in a blighted area that has never recovered from the Rodney King riots (and before that, the Watts frolics of 1965), what kind of paternalistic beneficence is going on here? Grown adults won't be allowed to buy a $1.00 cheeseburger but must instead opt for a full course tofu dinner that (a) costs far more and (b) doesn't exist within 5 miles of South LA?

Except for those too lazy to cook, the most healthy dinner is probably one you prepare yourself because you have full control and choice of ingredients. Los Angelenos apparently, don't have that option and are forced into the streets where they stuff themselves on the first food offered.

"The people don't want [fast food joints], but when they don't have any other options, they may gravitate to what's there," [Councilwoman Jan]Perry said in Monday's Los Angeles Times. So much for the free market - the city council will now decide what people want and don't want.

The city council exerts this dubious authority on the grounds that the citizens under its control are too fat: obesity consumes public funds to treat so sure, let's "do something" about it and individual choice be damned. "We can't take away their X-boxes" one supporter explains, alluding to the fact that lack of exercise contributes at least as much to the problem of chubby wubbies as cheese does, but why not? Exactly the same rationale applies. In fact,this reasoning opens the door to anything politicians want to impose for the good of "the people" - forced exercise, for instance (you say no, but Barak Obama is floating a proposal for compulsory "volunteer" service, 2 years for every young adult in America, so why not a brief stint of calisthenics each day in the local park, to get ready for that service?)

Even I'm not so old that I can't remember when people were pretty much free to do what they wanted to do so long as they weren't harming anyone else. That freedom has slowly eroded as the kind of people who enjoy telling others what to do have gained ascendancy via a "social cost" argument. We as a society are paying the medical costs for (some) people so we have the right to tell all of you to: wear seat belts; motorcycle helmets; not ingest trans fats; no goose liver (okay, it's not a health cost issue but we also have taken over the prerogative of protecting the well being of geese - so there); and so forth and so on. Just wait until we have national health insurance and we can go after diabetics and juveniles with rotting teeth for consuming too much candy. I admire the optimism of reformers who truly believe that if we all only did as they told us to it would be a wonderful world, but I wonder at, and fear, their combination of naivety and lust for power.

(Rant over.)

Milbank Avenue still draws optimists

I see that yesterday two adjacent properties on Milbank Avenue, 196 and 198, went to contract. These are tear-down multi-families so I assume that a builder's planning condos on the site. Asking price for each lot was $1.6 million and, while asking and getting often aren't the same thing, it's encouraging that someone still has enough faith in the Greenwich condominium market to go to contract on this land.

The devil just whispered, "a fool and his money ..." but that's just mean.

Update:

The sales price was just announced: $1,250,00 for each lot, so about 22% off asking price.

Sell that house

A reader asks:

"I have taken my home off the market during August, just needed a break and nothing was happening. I plan to put it back on, when would you suggest? When things were cooking, would it have been the 1st/2nd week in Sept?"

She's right (or he's right) that early September has traditionally seen a surge of new listings that mark the beginning of what used to be, anyway, the fall buying season. I think I'd still advise putting it on at that time - perhaps September 15th, which allows for Labor Day (the 1st) and the week after that for kids to get settled in school and their parents to begin looking. I also like the later date because, in this market, it will provide an opportunity for the seller and her agent to take a hard, objective look at the competition, old and new - the stuff that came on the week before. At that point, if both seller and agent are convinced that the house is fairly priced (remember, I said make a hard, objective comparison) then, especially in a case like this, where the property's been on the market long enough to wear out its would-be seller, I'd reprice it at least 10% lower. You do want to sell the place, right?

But make sure, in calculating that reduction, that you're not over market to begin with (and the fact that it hasn't sold suggests that it is). There's a "new" listing today that's come back with a new broker and a new price that's 15% off its original but that original price was ridiculous, given the location. I'm being deliberately vague about this home's identity because I don't want to embarrass the owner or make it even harder to sell but, when I first saw this place a year ago, I thought it was easily priced 2X too high. If i was right and, so far, the market bears me out, a 15% reduction isn't going to do any good and will only prolong the owner's agony.

Speaking of which, the house is a spec project and has a lot of company out there. Local banks funded many of these houses and I wonder how long it will be before we start seeing some of these small banks in trouble. Just sayin'...

We're all going to die

So Give your money to the government. It's stories like this that give global warming a bad name. That and OwlGore's mansions, planes, houseboats and limousines, of course.

WWTDD?

That means, of course, "what would The Donald do?". I don't believe Mr. trump has stepped foot in town since he abandoned the fair Ivana but even the master of bankruptcy might be stumped by the challenge of unloading certain land on Quaker Lane, way up off Riversville Road. This is a very nice parcel of land with a couple of old caretaker cottages but it's been kicking around for quite awhile. (Mr.Andrew Kissel may have had eye on it but if so he permanently lost interest in further projects after his misadventure on Dairy Road - the new house built where Kissel's body was discovered remains unsold, bye the bye, despite being marked down $10.750 to $8.950. Market conditions or psychological impact? I don't know).

The land was listed for $1.995 Million in April of '04 and sold for $1.650 in February of '05. So far, so good, but it was returned to market in April '07 for $2.495 and some of us, noticing that nothing much had been done to the buildings and that the land itself hadn't expanded thought, "huh?". The marketplace agreed and the price gradually kept dropping until, as the listing expired this past April, it could have been had for $1.995. Now it's back with a new broker and the price has been edged back up a jot to $1.999 million. I guess the new broker thinks things have improved since April.

I repeat that this is very nice land and will make someone a great building site but I suspect that the 2005 sales price marked its high water mark, at least for the foreseeable future. Time will tell and apparently, the seller has lots of that.

No taxes for NYC

Mortgage losses are so large that many Wall Street firms won't be paying NY City income taxes for years according to the Bloomberg article linked above. That's probably bad news for Connecticut, too.

Oil Prices fall as demand drops

Don't tell the Demmerkrats, but this is how the market place works. Too bad that the same underlying principle applies to real estate.

Buck teeth? Not on Chinese television!

Good Lord, it turns out that a Chinese government official nixed the appearance on TV of a little girl who has buck teeth (picture and story above). Spring for some braces, comrade.

There are lots of reasons I haven't watched a single minute of the Olympics and this just adds to them.

Off to open houses

It's Tuesday morning, so it's time to spend some gas and see what's new today (not much and, despite gasoline dropping to $4.19 a gallon in Cos Cob, it remains a commodity I am increasingly reluctant to consume, so I'm picky about what I see). One listing that caught my eye is five acres on Wooddale, off of Lake: 5 acres in a 2 acre zone, with a 1952 contemporary by Minoru Yamasaki. I understand that the guy designed the Twin Towers which, despite their tragic ending, remain one of my least favorite examples of modern architecture.

In fact, this fellow seems to sum up much of what I don't like about the past century's architecture. According to Wikipedia,

His first significant project was the Pruitt-Igoe housing project in St. Louis, Missouri, 1955. Despite his love of Japanese traditional design, this was a stark, modernist concrete structure. The housing project experienced so many problems that it was demolished in 1972, less than twenty years after its completion. Its destruction is considered by some to be the beginning of postmodern architecture.

I can't say I'm any more enthusiastic about postmodernism (you suspected that from my politics, didn't you?) but tearing down malfunctioning ugly buildings certainly has my support.

Update: Here's more on the Pruitt-Igoe housing project.
And photos here.

Update: It's actually a very nice modern house, 1950's style. Lots of glass providing great views of the surrounding lawns and woods, a simple layout and a very quiet, understated place, all in all. Of course, it will never survive the wrecker's ball, so I'm glad I had a chance to see it before it's scraped into a dumpster.

Code Pink Marches to Georgia!

Well they haven't exactly announced anything like that but given their outrage of a few years ago (link above) I expect to see them off any day now.
More here

Or perhaps they're off to Moscow hospitals?

Or Washington!

Update: Never mind - turns out, it's all Bush's fault.

Tear down of the week

This house at 12 St. Claire Avenue in Old Greenwich sold in a bidding war this past April for $3 million and change. I was, and remain astonished, because I don't think a builder could afford to pay so much for land and expect any kind of profit and a private homeowner will, I'd estimate, end up with a house costing somewhere around $5 million dollars. Will this street support that kind of value? The buyer obviously thinks so. In any event, another one is about to hit the dust.

Update: After inquiry, I learned that this 0.55 acres was held as two seperate lots, dating back to when Old Greenwich had much less restrictive zoning regulations. So, under the "grandfather rules" of zoning, the purchaser will be able to erect two houses where one now stands, even though he couldn't do that today, were it one lot.

I still question the wisdom of paying $1,500,000 each for two 11,900 sq. ft. building lots on this street. One upside: the sight of two huge houses on two tiny lots should more than distract us from the loss of a nice old farmhouse.

A surplus of phone books

Today's dead tree edition of Greenwich Time has an AP story on the so-far-futile attempt by legislatures to permit homeowners to opt out of receiving 5000 phone books each year. The article isn't avialable on line but while Googling for it I came across a similar article which I link to above. Most encouraging news" Bill Gates thinks the books will be obsolete in five years. Others aren't as sanguine, because there's lots of money generated by these things but for once, I'll hope that Gates is right.

Buying Foreclosed Homes in Bulk

Thanks to a reader I have a link to the story I mentioned yesterday. It's found above.

Who's out there lending?

Not Fannie Mae. I'm still searching for the article on brave investors pitching to buy entire portfolios of foreclosed homes from banks but here's a bit of gloomy news from last weekend, just in case you missed it. You can use the link for the full article but this sums things up rather nicely:

Fannie Mae executives, in a conference call with analysts on Friday, said they intended to reduce the growth of the company’s loan portfolio and stop buying riskier so-called Alt-A mortgages by the end of the year. Fannie Mae will also begin charging more to guarantee loan repayments, a step that is likely to push mortgage rate higher.

“Fannie and Freddie’s decision to curtail support of the mortgage market is going to make mortgages more expensive for potential home buyers, which is going to hurt the overall economy,” said Howard Shapiro, an analyst at Fox-Pitt, Kelton. “They’re the only real buyers in this market, and they’re going to buy less. That’s really bad news.”

Distressed loans

There was an article in either Bloomberg or the NY Times yesterday about vulture capitalists buying huge chunks of foreclosed properties from banks. I haven't found that article yet but while I was looking I came across this related story (see link above) about investors buying bad loans and mortgages. What I found interesting was that leon Black, principal of Apollo Group and owner of Realogy (which, in turn, owns Century 21, Sotheby's and Coldwell Banker) is NOT interested in buying bad mortgages, even for pennies on the dollar. Does he know something he should be telling us? A little buyer's remorse going on? We'll see, perhaps.

Cars in Greenwich

The web site I link to above may or may not be accurate - I don't think its calculation of median price is on target, for instance. But if you jump around to all five of our zip codes (tat would be 06807, 06830, 06831, 06870 and 06878) you can compile the number of motor vehicles it thinks are in town. Or you can trust my math (always a dangerous thing to do) and learn that we have 43,917 motor vehicles kicking around. That number includes motor scooters, mopeds and the like, but it's still a lot of steel on our streets, given that 25% of our population of 62,000 is under 16 (roughly). No word on how many landscapers, cement trucks and the like fly through our town every day but I do notice, I think, a lessening in their number. If you want a taste of those numbers, park near St. Catherine's at the intersection of the Post Road and Riverside Avenue at 8 in the morning and count how many turn into Riverside. Multiply that by 5 and Bob's your uncle!

Here's another neat trick. Use the website above to navigate and see how many households in Greenwich proper have 5 or more cars: 199 households(owner-occupied and rental) 995 cars. Remind me to stay away from the Back Country on Sundays.

population growth or lack thereof.

Click on title above to reach some interesting data on how Greenwich hasn't grown since 1970, when our population was 59,000 to today, 62,000. Might make you wonder why we have so many moretown employees, but ....

Come on, you pikers!

A Russian, taking time off from militarily invading his neighbors, has just bought a house on the Riviera for $500 million Euros which, assuming 1.49 dollars per Euro, works out to about $750 million of our pathetic greenbacks. And you're worried about stetching for a measly $30 million mansion? Heck, Helmsley's digs for $125 million look positively cheap.

Have you eaten here?

I'm a huge fan of Mexican food and an extended stay in New Mexico pretty much ruined by palate for Taco Bell. Port Chester has some good restaurants but I've been intrigued by this food van which parks at the top of Richmond Hill in Stamford. It's usually crowded and last Saturday, when I stopped by to try it at 1:30 in the afternoon, I was told there'd be a twenty minute wait for my order. Twenty minutes on a Saturday afternoon suggests that something good's cooking so I'll try again. In the meantime, if you've tried it and care to spare me ptomaine poisoning, please write soon.

Decent house in Riverside, cheap!

Well, for Riverside. A couple of price reductions have been taken on this renovated carriage house and at $1,495,000 I think it offers good value. Of course, times being what they are, you might want to try negotiating a price even below "good value".

August doldrums

Town Hall Municipal parking lot, Thursday, 1:30 p.m. Town employees may be at work but the builders and homeowners they usually serve are obviously out of here.

Public hubris

Our First Selectman has chastised the Public Housing Authority for keeping residents in the dark concerning its plans to add new housing units in town. The full article is linked above but I think this quote, as lifted from Greenwich Time, sums up the attitude the head of the housing Authority holds towards lowly citizens and neighbors:

Jonathan DuBois, the Housing Authority's chairman, said the agency had wrongly been under the impression that it was responsible for developing such plans, and that elected politicians were in charge of coordinating the public vetting of them.

We worked with the town agencies for more than a year before the development plan was announced to the public. When it was announced to the public, I expected that the process of public disclosure and explanation would be directed by the Board of Selectmen and the first selectman, who would tell us what meetings to have. That was a mistake," DuBois said.

I'm really not interested in Selectman Tesei's interpretation of what the Housing Authority's up to and apparently neither is he. His demand that they speak, openly and publicly, is a good move. Should be fun to see the fireworks at the first public hearing, a show that, I suspect, the Authority was hoping to avoid.

Current Inventory

John Cooke of Prudential has emailed me the current inventory as of July 31st (click on image to enlarge).

What are we to make of this? Eh? Inventory's up, but we all knew that. I can find some comfort in the fact that the market is not entirely dead. From June 1 to July 31 this year 115 units (30 condominiums, 85 single family houses) went to contract. Among single families,six were priced at $7,000,000 and above (no guarantee what they sold for)three in the $5's, seven in the $4's, nine in the 3's, eighteen in the 2's and twenty-two below $2MM.

Ignoring that June-July isn't our busiest period (nor is August, come to that), we can extrapolate to some dismal figures if we're so inclined. According to Cooke, we have 76 homes available priced above $8MM. Take the 3 contracts we actually had in the two month period, multiply by 6 (that would yield 18) and we have a 4.2 year supply of mega mansions. Boo hiss.

The $7-8MM range isn't so bad - about a year's inventory, assuming no one else decides to list their house in this range for the next 12 months.

We saw no contracts in the $6-7 range so John's inventory of 33 either suggests an infinite supply, you should drop your house out of this price bracket or hope that things will get better come September - probably some combination of all three, I suspect.

$5-6MM, we have 33 houses to unload, and 1.8 years to do so.

$4-5MM, 43 units, 1 year's inventory.


$3-4MM, 62 units, 1/2 year inventory - price your house here!

$2-3MM 105 units, 1 year's inventory

$1-2 139 units -not so bad, but don't count on moving next month.

I repeat, June and July are usually slow months so we can hope for a rejuvenated market come fall. If so, this inventory will shrink faster than I've just extrapolated. I'd feel better about predicting such happy news if the credit market were stronger, Russia weren't invading Georgia (that's Europe Georgia, lest you totally panic) and there weren't an election coming. But all these interesting things are happening, so I'm guessing we'll see a period of hesitation among buyers as they wait to see how things sort out. Bad news for sellers and real estate agents, but what are you gonna do?

Maligning bluefish

Today's WSJ (link above) contains a story of bluefishing off Nantucket and the author quotes several local chefs who never eat, serve or think about these feisty creatures. Not fair. First, they fight much harder and much longer than striped bass, so they're more fun to catch. Second, they're usually easier to catch and when you're casting into a bluefish feeding frenzy on the surface of the sea, you'll experience more excitement in 15 minutes than you will in a week of striper fishing.

It's true, as the author claims, that bluefish do have very sharp teeth that can leave lifetime scars. Ask my boyhood friend Teddy Sumner or have my daughter Kat show you her scar from a snapper (a baby bluefish!) earned years ago. The answer, I have found, is to crush the barbs on your lure's hooks with a pair of pliers so you can achieve an easy release without going near those teeth. You'll lose a few fish but when the blues are biting, you'll never notice the difference and when you boat the creature a flip of the wrist and he's free again. No one needs 15 dead, stiff bluefish stacked like cordwood in the hot sun in the stern of his boat. One does nicely, so let the rest go.

And how do you treat that unlucky one? Easy, if you have any facility with a fillet knife. Place the fish on a board (if you can find a chest-high fish cleaning station at your marina, you're in luck). Cut right behind the head down to the spine, then slide the knife blade along the spine to the tail. One fillet. Set aside, flip fish, repeat. But you're not done! Slap a fillet skin-side down and carefully insert your blade between the skin and the meat. Slide backwards towards the tail again, making sure to keep the blade pressed against the board underneath, while gripping the skin with your left hand (assuming the knife's in your right). Now you have a nice, skinless fillet that's almost ready to cook.

But there's a final trick, taught to me years ago by Riverside resident Buzz Harris. Again picking up your fillet knife, carefully remove all of the reddish flesh you find on what was the skin side, leaving only opaque whitish flesh. The red stuff gives bluefish the strong oily flavoring that only a mackerel lover could enjoy.

Cook it any number of ways. I prefer to grill it over coals with not much of anything except perhaps a bit of lemon. Baking it with tomatoes and onions works, but hides the taste, I think. If you've been diligent about trimming, you shouldn't need to mask the taste.

One other note: you don't need to fish from a boat. They're nice to have because you can scoot around, searching for feeding frenzies (and if you do find one, cut your engine way before you reach it and glide into casting range. Otherwise, you'll put the fish down) but surf casting for these puppies is a blast. Try Tod's (I'm usually unsuccessful there) or the end of Steamboat Road (crowded) but best, Martha's Vineyard, Nantucket or really anywhere with a decent surf. If you catch nothing,you'll still have enjoyed a meditative spell on the water's edge, casting rhythmically, admiring the birds and the clouds and perhaps even a deep thought or two. It's my church.

One person shows at Al Franken campaign meet

I sympathise with his plight, if not his politics. Reminds me of some of my book signings.

Race to the bottom - newspapers vs. condos

After purchasing Greenwich Time and the Stamford Advocate recently, Hearst turned its attention to the Connecticut Post, parent publisher of our local Greenwich Citizen, among other weeklies. Hearst paid $155 million - the seller paid $205 million for the same package of papers twenty-eight years ago in 1980 (click link above). Hearst probably still over-paid.

Condos in Central Greenwich

A reader has asked about those condo's on the corner of Milbank and East Elm and about central Greenwich condominium prices in general. It's an odd mixture. The two condos on Milbank are not selling - they either sold privately and I missed it or they've been rented. They were originally priced as though they were part of Lily's Path across the street, which has almost sold out at astonishing ($5,000,000+) prices. But these two are much smaller and, although nicely built, lack a few rooms, have just one car garages and generally never seemed to attract buyers. Similarly, a cluster of condos on Idar Court, which is off of Field Point Road, south of Town Hall, seemed to miss the mark when it came to location and buyers balked at walking down (and up) hill to the Avenue. The builder/developer couln't move them at $4,000,000 and had the good sense and great fortune to unload them on an out-of-town buyer. That -"sucker" may be a bit harsh a term so - "guy" just sold one last week in the low $2's. I think that was a good price, for the new buyer.

Returning to Milbank and heading north, there are another couple of brand new units sitting unloved and unwanted at $5.9 million. I have no idea what they'll eventually sell for, but it appears that the developer is going to be disappointed - these have been on the market for over a year.

Other condo projects on the street range from $3.9 million down to the low $2's. I once rented a decrepit old Victorian (now a condominium, alas) on the street with two roommates and for a trio of young men just out of college, it was a terriffic location. We could walk to the Avenue for entertainment, two of our future wives (one each for two of us, not two wives for one) lived down the street, and if I hadn't packed up and headed for law school I might be there still. But much as I like the street, I think the condo developers got ahead of themselves in pricing their projects. I personally wouldn't pay $6,000,000 to live in a Greenwich town house and this seems to be a sentiment shared by a lot of potential buyers. It's mean to advise you to wait for the foreclosure sales but I do think that there's some room, now or in the future, for a bit of price negotiation.

Comments from a Retired Investment Banker

Here's the first of the comments from a reader I mentioned the other day. A broad discussion of the topic of house prices can be found in the comments appended to "Whither the Market", below.

...."As to whither or wither, I hate to repeat myself, but no question the answer is wither!

What you must keep reminding yourself is that this cycle's unravelling is not like any thing remotely experienced in our generation. To expect the market to retain outside gains as the market corrects is unrealistic in the extreme.

Easy financing caused the gains and contracting financing will bring on the declines. It's all about the exploding credit bubble. And even when the credit markets return to stability (in the distant future) the lax lending that caused real estate price levels to elevate are gone forever (at least a generation or two).

The party is just getting started, especially in the NY metro area."

Retired IB'er

The New York Times writes about housing

Just in case you don't read the NY Times, I thought I'd point out two interesting articles that appeared in today's Business section. One article, on climbing mortgage rates (previously discussed in this blog) is linked via the title above. The other, interviews with various economists on how to calculate a home's value in today's market, is here. There's probably not a whole lot that's new to financially sophisticated readers (and aren't all Greenwich property owners financially sophisticated?) but a nice rundown of current wisdom. If you don't want to spend your time I can summarize: no one knows where mortgage rates are going but if they continue to climb it will cost you more as a buyer and sellers will get less for their house - pay the bank, pay the seller, but not both - and economists are all over the place when it comes to valuing houses. There - now you know.

Schools

A reader posted a comment below, asking why no Realtor would give him any information about the relative merits of the various schools in town and instead restrict their comments to "all our schools are good". That's not necessarily how parents feel, but we real estate agents are barred from saying much else without violating a host of civil rights laws and state regulations. We can't mention proximity to churches, whether a particular neighborhood has a lot of kids or none or anything else you as a buyer new to town might find useful. Welcome to the new world.

I believe we can suggest that you contact the Board of Ed and grab the test scores for each school, but I don't know how much help that is. You may be able to visit each school and get a feel for how they're run but in these post Columbine days, who knows? I do know that the principals are all pretty proud of their respective schools and you can almost certainly make an appointment to meet with any of them and get a sense of how the head of each school views his bailiwick. Or join a newcomers club and talk to other parents. Their opinions may not be factual, but at least they aren't prohibited from speaking their mind. Good luck.

SWAT teams

So you're a small town mayor in Maryland and you have the misfortune to have a couple of crooks pick your address at random for a drug delivery - they'll mail a package to your house and then pick it up under the pretense of a delivery gone astray. Arizona cops stumble across the scheme and enlist your local county's sheriffs to raid your house, even though they know that you aren't guilty of anything. Had the sheriffs asked your local cops, they'd have learned that you were a non-druggy and the mayor of the friggin' town, for cripe's sake but when SWAT team equipment is ready at hand, why worry about details that might spoil the fun? They charge in, shoot your two Labrador retrievers to death then handcuff you and your mother in law and make you lie in your pets' blood for two hours while they ransack the place.

Then they let you go. No apologies because, 'we don't need no stinkin' warrants". There are lots of good reasons to oppose our supposed war on drugs and its futility is just one of them. Another is how we have empowered storm troopers and even what was once the beloved Coast Guard to trash houses and boats and terrorize civilians. Not good.

"Investments" gone bad

A house on Riverside Lane sold for $1,639,000 in January 2007. The new owners added some new touches and put it back on the market exactly a year later for $1,895,000. That didn't work out so today it took its 4th price reduction and is now offered for $1,699,000. Even if they get that price, the sellers will lose at least $100,000 after they pay commissions and taxes, plus whatever they spent in renovations. Oops.

There's another house, on North Street, that continues to try to defy the market. It was first listed 8 1/2 years ago for $5,750,000 and didn't sell. It's been on and off the market ever since, unsuccessfully, and reappeared today for $3,995,000. That might have been a good price 8 years ago but there is now such a stigma attached to the place (you try to explain to a client why it hasn't sold in over 8 years) that I don't know what price will move it. It's a nice house, too, so that's a shame.

Finally, returning to Riverside, north of the Post Road, there's a renovated house that came on 1 1/2 years ago asking under $2,000,000 but still $150,000 more than two new houses around the corner. The new houses sold immediately and those of us who saw this one at an open house all suggested, gently, to its broker that he'd be better off dropping his price below theirs. I guess he finally listened, but his new price announced today is way overdue and probably too late.

None of these examples is necessarily evidence of a free-falling market, although I suspect all could have sold for more than their current asking price a while ago. What they do have in common is that they were all overpriced initially and, good market or bad, that kills a sale. They're just getting hammered twice now, instead of once. Oh well.

Bush - how we'll miss him

Good link above to an opinion piece wondering how people will cope when they don't have Bush to kick around after January. Who will be left to blame? The author cites a number of examples of Bush-bashing but she missed an opinion piece in yesterday's Wall Street Journal that blamed the sorry condition of illegal immigrant meat packers on, who else, George Bush. The article is only available via subscription but trust me, its author is absolutely beside himself over Bush's callous treatment of the poor workers and the president's personal intervention (with Dick Chaney, no doubt) to create hell on earth for the until-then happy workers.

Fine,and Bush is certainly the Devil himself, but a quick Google search turned up a book review dated 2001 that blames the problem on a change in immigration law that was enacted in 43 years ago.

"Congress in 1965 inadvertently came to the rescue of the union-busting, wage-lowering strategy of the new meat packers. The 1965 immigration law had a major impact in the direction of the meat-processing industry by creating surplus labor pools with spiraling family chain migration and massive refugee resettlement operations."

Bush hadn't even begun drinking or joined Skull and Bones in 1965, when, according to this second article, Eden was lost, but it's his fault for not fixing it! The three Demmerkrat administration we enjoyed since 1965, Johnson's, Carter's and Clinton's were too preoccupied to take care of these people but Bush, that awful Bush, will rot in Hell for his wilful failure to do so. And now he's leaving. What will we do, what will we do?

Auction rate securities

Some time back, when a non-profit group I'm involved with discovered that they had $1,000,000 of funds frozen into this type of debt instrument, I wrote that it was a typical example of Wall Street treating its customers badly. These securities were described as as good as cash but, when the debt markets collapsed, firms like UBS and Merrill Lynch got their large customers out of them and re-sold them to non-profits and ordinary schmos - people who, say, wanted to hold their down payment for a house in an account yielding a quarter point more than a CD. Of course, when it came time to access those funds and buy the house, the schmo's "financial advisor" was forced to admit that there was a bit of a liquidity problem and the money wouldn't be available for, say, a year or two.

My column on the subject elicited the usual outcry from certain stock brokers advising me to stick to writing about real estate and stay away from subjects I was too dense to understand. I understood their ire - they're the ones who, having no clue what they were doing, sold this junk to their customers and were feeling the heat, but I take a certain satisfaction watching their employers roll over and agree to buy these securities back. And pay fines of $100,000,000 or so. Yesterday it was Merrill's ($12 billion)and Citigroup's ($7 billion)turn. Today we'll see UBS cough up $22 billion. Who else among the large firms is in hot water? All of them.

Who you gonna believe, me or your lyin' eyes?

Perhaps foreshadowing my later career as a trial lawyer, this quote from "Duck Soup" (not by Groucho, as I remembered, but by Chico disguised as Groucho - see link above) was one of my favorites when I was a kid. It's still a good one. I have been chastised over the past year or so by some of my fellow Realtors for telling readers, first in my column and later on this blog that sales are way down and will probably continue that sorry decline for the foreseeable future. In fact, although the specific reason for my column being terminated was my daring to report on the financial woes of Realogy, parent company of Coldwell Banker and Soetheby's, I'd generated a deep reservoir of ill will in the real estate community by telling the truth.

I don't know what these "keep it quiet" folks think they're up to; if their clients' houses aren't selling, or selling at discounted prices, who is left to be fooled? Regardless,even the Greenwich Time has finally admitted today what the industry has known for at least the past two years:

Update 2:05 PM Here's what I wrote before I was so rudely edited by Blogger.
house sales are falling. At least 30% this year. GT finds a ray of hope in the number of sales (condos) under $500K but that number only increased from last year because prices have fallen below last year's levels. For those who like anecdotal evidence in addition to statistics, there's this: I called my plumber yesterday for a quick repair job. In years past he, and most plumbers in town, were so busy with new construction that non-emergency response time was 2-3 days. yesterday, he had someone at the house in 15 minutes. If the plumbers aren't busy because the builders aren't busy, things are slow.

Read the comments

"Retired IB'r" has some very thoughtful, and wise comments appended to the "whither the market?" post below. Tomorrow I'll move them up-can't do it now with my iphone - but if you're reading this Thursday night, check them out

Don't do this to yourself

Two reported contracts caught my eye this morning because they both illustrate the agony caused by holding out for the 'right" selling price. Now I may be entirely wrong, here, and the sellers may have been perfectly content to stay with their property until someone met their price, but, given the desparity between the original asking price and the last price, it's a fair assumption that the sellers should have moved more quickly to adjust their wishes to reality.

44 Calhoun Drive was first listed on March 24,2006 for $6,200,000 and was last listed at $4,495,000. It went to contract yesterday, 2 1/2 years after first being offered, for no more than its last asking price and probably less.

Same story with 11 Hettiefred Road, in western Greenwich. Nice construction (over) priced at $3,375,000 way back in August 2006 and finally under contract yesterday for, at most, the latest price of $2,349,000.

I've always counseled clients to try their best to hit the market with the right price the first time - a listing is only new once, and grows stale with time - but if you or your agent make a mistake it will be immediately apparent. Do not wait for "the right buyer", the one you think will wander in, fall in love with the place and pay more than it's worth; that buyer isn't coming. Do cut your losses, right away. Slash that sucker, and not in $15,000 increments, which only invites a death of a thousand slices. Move it, move on.

Greenwich Round Up Scoops the town papers

The local blog (hit link above, then scroll down a bit) has been reporting for several days on a story that our local press missed: the strange case of the purported Rockefeller who seems, besides being a kidnapper of his own daughter, to be a German con artist and murderer, wanted for questioning in California since 1988 (or thereabouts) when his landlord's body was found buried in his backyard. Roundup dug up a Greenwich connection to all this and was reporting on it all while the "real press" worried about wiffleball tournaments. The latter may be more family oriented, but give me corpses and con men,any day.

Whither, or wither the market?

Heck if I know. Interest rates are higher than they were although, at 6.5%, I find it hard to be too sympathetic toward buyers - when I graduated and bought my first house, my mortgage was 14% and that "special" rate was granted only because my new law firm represented the bank. But credit remains elusive, and the only two players in the mortgage market, Freddie Mac and Fannie Mae, don't lend in amounts that will do Greenwich buyers much good. I don't see that changing in the near future. In fact,Freddie Mac just announced dismal financials for the last quarter and sees no turn around in sight. Pakistan is impeaching Musharraf, which won't do much for stability in that region and Israel appears to be readying a nuclear strike against Iran. Add the possibility of a veto-proof Democratic majority in the Senate and House, plus Obama, and things don't look all that swell.

But despite all this, it might still be a reasonable time to buy. No one, particularly me, can predict the future, and it's not entirely irrational, I hope, for you to expect that you'll hold onto your job, that income will keep flowing in and that you'll continue to have a family who you want to house. So should you wait for what you think will be the bottom of the market? Here's a little financial exercise that might give you perspective.

Suppose that last year you found a house that you liked for $500,000 (feel free to add zeros to these sums until you've reached Greenwich pricing). Interest rates were 5.5%, and assuming an 80/20 loan to value ratio, your monthly payment, principal and interest, would have been $3,406.73. This year, that house has dropped 10% to $450,000 but interest rates have climbed to 6.5%, yielding a P&I payment of $3,237.57. You've stayed in a house that you didn't want to own (or rent) and saved $169 a month. If that sum is enough to make or break you, you probably have no business buying this house to begin with.

So buy now or not? Prices may continue to drop, and my personal suspicion is that they will, but I don't anticipate a free-fall. And remember, while the price of the house you want to buy may be dropping, so is the price of the current house you want to sell. Interest rates and property values may go up or down - you won't get a sure-proof guarantee from me or any real economist but it's often the case that the two move in opposite directions. Over the long run, Greenwich real estate has always held its value and I don't see that changing. I might not rush out to buy a condominium in Las Vegas or Naples, Florida right now, but if I were looking to raise a family here and planned on staying put for 5-15 years, I'd buy here again.

2nd Quarter sales statistics

Nothing encouraging here. 154 single family homes sold in Greenwich in the second quarter of 2008 (134 of which were multi-list, the balance for sale by owner, I believe). This compares to 230 in the same quarter last year, 225 in 2006, 266 in 2005 and 296 in 2004. Average and median prices were $2.874 and $2.012 this year compared to $2.780 and $2.067 in 2007. If you really want to get depressed, my former employer, Greenwich Post, says just 84 single family homes sold in the second quarter. They credit Bob Fossum with those statistics and he's always right, so it's a puzzle but not great news for sellers in either case.

Speaking of The Post, I just learned that they downsized their real estate reporter, Jane Dove. I got fired for ticking off a couple of advertisers but Jane's demise was caused by budget cuts at the paper. Both firings raise the question, however, of how little content can you leave in a newspaper before your readers leave you?

Update: My friends at Shore & Country Real Estate have more data comparing the first half of 2008 to 2007. Same sort of stuff, but note their caution at the bottom of the page that many of the transactions reported as sold in 2008 were contracted for in a better market, 2007.

OwlGore buys a houseboat

One hundred feet long,powered by solar and bio-fuel (although, inconveniently, it's presently running on good old diesel and electricity and they don't sell bio-fuel on the lake where this behemoth is docked), and dig that jet ski! Pictures at the link above, but you don't really need further proof that this fat fraud has one agenda for himself and his friends and another for us, do you?


Maybe he'll use the thing to give rides to polar bears.

Waterfront redux

A commentator below asks why certain Old Greenwich waterfront properties are lingering, if these properties are so hot. I answered him in the comment section but here it is again:

It's true that there are five waterfront houses currently for sale in Old Greenwich, but I blame price for their availability more than anything else. Old Greenwich saw some very quick sales of better waterfront - better priced or better location or better condition - in the past two years. 19 Meadow Place, for instance, basically land, came on in April this year for $7.950 and sold immediately for $8.500. 35 Cove Road asked $8.2 and got $8.2 in 22 days. 200 Shore Road, new construction with an incredible view, asked $8,000,000 and went to contract almost immediately for what I'd guess was asking or close-to-asking price.

Etc. The houses that are lingering are doing so, I think, because the sellers paid too much attention to the prices other waterfront fetched and not enough attention to the particular drawbacks of their own land. Nothing that can't be remedied by a price cut. 164 Sore Road, for instance, came on at $8.4 but the sellers quickly realized they were too high, cut the price $500,000 and had it sold for $7.4 within 28 days of first listing it. That's a smart buyer - why prolong the agony? Besides, they pocketed a very nice sum.

And if you're looking for impressive sales of waterfront and are willing to look a bit past Old Greenwich into Riverside, Lowther Point sold this spring for $22,000,000. That one did take a few years to find its buyer, but the original price was er, "aggressive" and put many buyers off.

So I still like the stuff.

Zillow - Misperception of home value

Zillow reports (see link above) that the majority of Americans think that their house increased in value last year while the reality is, few did. This is very much like the reaction we agents get when, giving a price opinion, we show the seller a list of comparable house sale prices and are met with, "but my house is special". So is your wife, and so are your kids, but they're all a drag on the market. Get real (and yes, I'm just kidding about your wife and kids - I'm sure they're just adorable).

Blowing against the wind

If you Google "windmill opposition" as I did in the link above, you'll find 230,00 entries. Wherever these projects are proposed, opposition immediately swarms up to defeat them, whether in Bovina, New York, anywhere else in the Catskills, California, Nevada, or anywhere within sight of those eco-champions, the Kennedys. The same phenomenon can be observed for a power line transmission wires (893,000 hits)coal powered fuel plants (1,990,000)or nuclear energy (12,100,000) I'd guess that this fierce nimbyism will severely curtail the amount of energy generated from wind and certainly delay massive projects for at least a decade. So how are we going to run our economy? The best, or most revealing answer, comes from a European environmentalist - we don't - our western economy must be destroyed.

So the next time Mr. Obama says that our economy must be transformed, you might ask, "transformed how?". Nancy Pelosi isn't concerned. As she recently stated, "this whole wind power thing is a hoax - it will take ten years for wind power to make any appreciable contribution to our energy needs and we need a solution now. That's what the Democrats have come up with: we're going to release 10% of our Strategic Oil reserve right now, right away. That will give the country a four-day supply of fuel, which will allow AlGore, Barack and me to gas up our jetsand get the hell out of here to Bali. The rest of you chumps can just freeze in the dark. See ya!"

Thanks, Nancy

Waterfront is still King

B.K. Bates recently listed a Belle Haven waterfront property for sale at $15,750,000. The property was listed on July 23rd but the first broker open house wasn't scheduled until early September, no doubt because BK wanted to give her fellow agents time to return from vacation. She herself was clearly not taking it easy because yesterday she reported that she had a contract on the place - both sides of the deal which is nice work if you can get it.

I didn't see this place before it went but, at 1.6 acres and its construction date of 1933 I hope I'll be forgiven if I suggest that this represents a very healthy price for waterfront building lots. It might be renovated (which was last done in 1980) but, given the relatively large size of the lot and the age of the building, it might easily be destined for the dustbin of history. Regardless, it's nice to know that not everyone has lost their pocket change.

What is it about Byram?

Greenwich Time reports today (link above) that the Byram Library expansion project is behind schedule and, worse, has soared from a $2.7 million budget to $4.8, a figure which is presumably still climbing. How in Hell do you miss a cost estimate by this much? I can only guess that the same folks who have dealt so well with our Hamilton Avenue and Glenville schools turned their attention to storing books, but maybe they should retire. "Only" $1.3 million of Greenwich taxpayer money is sunk in this mire, but it's still appalling. Sheesh!

Lawyers and Real Estate

One area of disagreement my instructor and I had yesterday was the proper role of lawyers in real estate transactions. She, like most agents I know, hates lawyers and thinks they should be eliminated from the entire process, as they are in California and many other states. I think that, given my instructor's own estimation that 97% of all agents don't know what they're doing, why would anyone entrust a $3,000,000 transaction, "the most important investment decision you'll make in your life" if you believe the flacks from the National Association of Realtors (I don't, but never mind, to anyone except a trained, experienced real estate lawyer? I heard more misinformation about real estate law yesterday than I usually encounter all year. "Time is of the essence is just a standard term," for instance. Wrong! And, as I pointed out to no effect, if you don't know the legal implications of a term, don't write it into a contract. Buyers and sellers in Greenwich are spared the doubtful assistance of well meaning but ignorant wanna be lawyer/real estate agents because we don't use binders and all transactions are done via contracts prepared by attorneys. Yes, there are some lawyers in town who know as little about real estate law as the agent who sold the house, and there are some out sized egos around ready to screw up deals by imposing ridiculous terms and conditions solely because they can, but a good attorney, together with his or her paralegal, will protect your interests and ensure a seamless, smooth transaction far better than most agents. No, I longer practice real estate law but I remember when I did and I certainly can appreciate watching a good one at work today. Money well spent, I think.

Sales Meetings for Real Estate Agents

I usually avoid these things like the plague because, in my experience, the instructor usually tries to impart neat tricks that are supposed to bamboozle the customer and get them to buy what they don't want and don't need. The whole concept reminds me of why I hang onto my cars for ten years - I hate, absolutely hate, enduring the agony of dealing with an uneducated car salesman practicing Cheap Tricks 101, like "what will your neighbors think when they see this new car in your driveway?" I don't care what my neighbors think and I don't need to visualize owning the car, no matter what you were taught. Give me a good price and let me out of here.

But yesterday's meeting was refreshingly different. The instructor,a woman with 35 years experience, emphasized treating people decently and well, developing a rational schedule to select, view and eliminate houses for showing and bringing value to the transaction by knowing real estate - inventory, neighborhoods, the cost of improvements - cold. I'm not sure I learned all that much because I already try to employ those skills to the best of my ability but I left feeling much better about the firm I'm associated with and the training it's imparting to its agents. The best agents, by the way, are often exactly this type, regardless of where they park their shingle. The instructor claimed that 97% of all real estate is sold by 3% of all agents and suggested that that meant that 97% of all agents don't know what the hell they're doing. I think she was a bit harsh there, but I won't disagree that there are a lot of licensed agents who don't put much effort into keeping up with this business. Perhaps they're too busy writing blogs about non-real estate related matters!