15 Shoal Point, Rvsd
The acid test
This house sold, finally, for $3.275 in 2005, $1.0 million less than its deluded builder originally asked. It's newly back on the market, asking $3.3 million. If the "15% off 2005 prices" theory is accurate, the selling price should be $2.783. I hope that, just this once, I'm all wet and that the house sells for a new record. It's right up the creek from me and as that great tax cutter JFK once observed, "a raising tide raises all ships".

When in danger, when in doubt, run in circles, scream and shout
The Wall Street mess
Rather than pass out a trillion dollars to the same wonderful folks who strove so mightily to bring about our and their own ruin, why not cut taxes by the bucketful and see what happens? I bet we grow our way out of all this. And if I'm wrong well, just think how cheap Greenwich real estate will be.

For a more cogent article along somewhat the same lines, try this.

It could be that a Congressional rejection of the bailout proposal, rather than clogging the markets, will unclog them. If Congress goes home having sent financial institutions a clear signal that there will be no bailout of any kind, then sellers will bring their securities to market, and we will find out what the market thinks they are worth.

In the worst case scenario, the market will assign low values to the securities. Firms that are sufficiently capitalized to hold mortgage securities will earn profits at the expense of weaker companies that have to sell securities or go bankrupt. In the end, it may turn out that the winners really took advantage of the losers. That is capitalism at work in financial markets.

Or this:

"I must tell you, there are those in the public debate who have said that we must act now. The last time I heard that, I was on a used-car lot," said Rep. Mike Pence, R-Indiana. "The truth is, every time somebody tells you that you've got to do the deal right now, it usually means they're going to get the better part of the deal."

(I suspect that you can profitably use Rep. Spence's advice the next time you talk to one of us real estate agents, too).

83 Riverside Avenue
You missed this one, too
I wrote about this Fran Ward (Shore & Country) listing earlier this summer, praising it as a good deal. It started in May at $1.750, which wasn't crazy, and dropped to $1.599, so I suppose (contract prices aren't reported, only sales)that it went for somewhat less than that. This was the old stable/carriage house for a larger estate and had been completely renovated. Not for those who insist on the very newest of new houses but it certainly matched my taste; I'm delighted that someone else agreed.

Peter Tesei
Okay, that's not really our First Selectman pictured here but the poor ol' guy was panhandling on the Town Hall steps and I felt sorry for him so I posted his image - he'll feel better now, I'm sure, once he gains access to a computer and sees his smiling visage.
Anyway, I did hear Mr. Tesei speak today and he did an excellent job discussing our town's budget and a number of problems afflicting Greenwich. I came away thinking we're in good hands, even if I did vote for his opponent.

Tesei told us that Greenwich sends Hartford $600 million each year in taxes and gets back $5 million. This is particularly distressing because, just the other day, I heard a panel discussion of certain liberals bemoaning the fact that cities like Waterbury hit their citizens with property taxes 5X greater than Greenwich. The solution, according to these redistributionists, was to tax Greenwich more heavily. They ignored the one commentator who pointed out that, while Connecticut's population has decreased over the past two decades, the number of municipal employees has increased 39%. Why cut spending when there's a golden goose down the road, just waiting to be plucked?

The answer to our declining schools, Tesei suggested, was to bring some accountability to the School Board (which, by charter, Tesei can't control). Right now, our two political parties each put just two members up for election every other year and, by default, they are elected. The parties could select 4 candidates and create a real contest at the expense of making the incumbents nervous. Tesei seemed to think this was a good idea and so do I. Go put some pressure on your local Democrats and Republicans and consider running for the Board yourself. And don't forget to toss our current superintendent, Betty Sternberg, out of office next year. She's not to blame for everything bad about our schools, I suppose, but heck - it's a start.

Diane Fox, P&Z head honcho, also spoke. I usually disagree with everything the lady has to say and today was no exception. If she has her way, and she always does, watch out for new, stricter requirements for elevating additions to houses along the waterfront. Ms. Fox has smoked a bit too long from the Al Gore bong and seems to think the sea level is going to rise 50' next year. Fortunately, she'll be there with her regulations to save us.

She also wants to see "affordable housing" apartments built along the Post Road and in downtown Greenwich all for the purpose, she claims, of providing housing for our municipal employees. This is a crock and I suspect she knows it. When pressed on the issue of who, exactly, was going to occupy this housing when cops, firemen and teachers all seem to want what everyone else does: a single family house with a backyard, Fox fell back on 'elderly". Nothing against old folks downsizing, but I wish our town planners would be honest enough to admit that that's who we're building for instead of casting these projects in the glow of a "we're providing housing for our workers" argument.

30 Bayside Terrace
You missed it
When this house (building lot, really) dropped from $2.495 to $1.6ish, I brought it to the attention of every builder and home building client I knew; to no avail. Two other agents who, like me, grew up and/or live near here experienced the same lack of success. Janet Milligan and her client were smarter and now the place is under contract. Riverside waterfront, even Grade B waterfront, will never again be so cheap (I say, hopefully, as a Riverside waterfront owner). Whatever, it was a great buying opportunity.

No surprise here
Existing home sales fell 2.2% in August
Raveis's Greenwich mortgage officer, Mark Hawkins, says that Connecticut appraisers are noticing that house prices have stopped falling in areas outside of Fairfield County. The hope is that we'll soon see that same phenomenon here but I find it a little disturbing: traditionally, Greenwich is the last to feel a real estate downturn and the first to emerge, so something odd's going on - can you say, "collapse of Wall Street"?
Update:
Prices aren't doing so well, either, according to Bloomberg

Get out your checkbook?
Some readers have complained that I'm boring them with reports of price reductions but I keep harping on this subject because it's such a good indication of what's happening in the market and, as a bonus, illustrates the perils of over-pricing your house in the first place. So here we go again. Bored readers are invited to turn to other blogs and return later.
20 Langhorne, an as-yet-unbuilt mansion, has dropped from an asking price of $14.900 million in March '08 to $10.998 today. Same house as promised at the first price, you can now save $4.0 million. I'd offer still less, just to test the waters.

8 Hobart, new construction, has dropped from $7.8 in July to $6.995.
29 Byfield, a financial disaster in the making, was reduced an additional $500,000 today. It started at $9.495 in April, it's down to $5.198. If it doesn't sell now, look for it at auction.

I mentioned 38 Langhorne, unimproved (except for a new septic system) land on Monday questioning how it could be worth $1.2 million last year and $4.15 million on Monday. Coincidence or not, the owner, Mark Mariani, lopped $1.0 million off the price today and now offers it at $3.15

89 Perkins was priced at $5.875 last September and didn't sell - apparently I wasn't the only person who thought its price was ridiculous. It's been dropped $1.5 million and is now asking $4.375. There are still, to my taste, some serious layout issues, but at least the price problem is being addressed.

Fire Sale

So you want to sell your house
A man much wiser than I (a low hurdle), one who's made millions in residential real estate over the past 35 years, told me recently that he saw a house in Florida much larger and nicer than his own, selling for 50% of its original asking price. He sold his current house by cutting 15% off what he paid for it in 2005 (and ignoring the money he'd spent on improvements) and made the deal. His thinking was that, yes, he was losing money on his sale, but was buying a much more valuable property at a bargain price, thereby more than making up what he'd "lost".

That makes sense to me, especially the part about cutting 15% off what your house was worth 3 years ago. And if you can take advantage of this market to switch to a nicer house, so much the better. Money is fungible, after all, so in evaluating your own house sale, pay attention to the other end of the transaction and see whether you net out ahead of the game.

If you're not planning on buying another house but still want to sell your existing home, that theory is still a good idea. Use a good real estate agent to provide the market value of your house - owners themselves tend to be too emotional to do this objectively - then price it at least 10%, and maybe even 15% below what houses comparable to yours are asking. You may have to cut your price still further but at least you'll get the attention of every buyer out there. Yours will sell, while your competitors's linger.

Most disgusting headline of the year
PETA urges Ben & Jerry's to use human milk in ice cream.
My personal theory is that Bush and Cheney have infiltrated PETA and now are turning it into the laughing stock of America, thereby destroying it. Good riddance.

1 Butternut
This one's not on North Street but it's a spec house that was built and listed for $5.895 in April 2005. Still empty,it's available today for $4.350.I don't mean to tell you how to spend your money, but there is a growing number of houses out there that, bought now, are going to look like real bargains down the road. How far down the road? That's the unanswered question that's currently wreking havoc on the market.

A reader asked for a survey of unwanted spec houses for sale on North Street. I found five active listings (plus a bunch of expired which may soon be back).

480 North. Original price $9.5 million, now $5.495, for sale since July 2006.
504 North. Original price 11.75 million, now increased (?) to $11.995, for sale since November 2006.
537 North. Original price $9.995, now $8.25, for sale since May, 2006.
620 North. Original price, $6.390, now $6.4 (?!), for sale since April 2008.
969 North. Original price, $12.750, now $11.5, for sale since July, 2005.

My guess, based on driving around town and seeing a number of jobs nearing completion, is that we'll see more, rather than fewer of projects like these coming on the market. That can't be good news for builders.

What about commercial property?
12 Grigg Street, just off of Greenwich Avenue, is listed for $2.495 million. It's on 0.10 of an acre and has two parking spots. I don't know much about commercial real estate in Greenwich (other than that the big guys insist on being directly on the Avenue - they don't do "around the corner") but this seems high to me. I'll watch its progress and we can learn together.

How low can they go?
Here's a new, exciting blood sport: what's going to happen to all the spec houses in our fair town?

537 North Street came up for sale May 6, 2007 for $9.995 million; it can be yours today for just $8.25. Tomorrow?

"Please, sir, may I have some more?"
Can't we just shoot these guys?
The New York Times reports that the MBA Wizards, not content with a trillion dollar relief package that will bail them out from their stupidity, are scrambling for more. Ugly.

One last shot (for today) at some of the hypocrisy now flowing from Washington
From Kevin Hassett, writing in Bloomberg.com

Greenspan's Warning

The clear gravity of the situation pushed the legislation forward. Some might say the current mess couldn't be foreseen, yet in 2005 Alan Greenspan told Congress how urgent it was for it to act in the clearest possible terms: If Fannie and Freddie ``continue to grow, continue to have the low capital that they have, continue to engage in the dynamic hedging of their portfolios, which they need to do for interest rate risk aversion, they potentially create ever-growing potential systemic risk down the road,'' he said. ``We are placing the total financial system of the future at a substantial risk.''

What happened next was extraordinary. For the first time in history, a serious Fannie and Freddie reform bill was passed by the Senate Banking Committee. The bill gave a regulator power to crack down, and would have required the companies to eliminate their investments in risky assets.

Different World

If that bill had become law, then the world today would be different. In 2005, 2006 and 2007, a blizzard of terrible mortgage paper fluttered out of the Fannie and Freddie clouds, burying many of our oldest and most venerable institutions. Without their checkbooks keeping the market liquid and buying up excess supply, the market would likely have not existed.

But the bill didn't become law, for a simple reason: Democrats opposed it on a party-line vote in the committee, signaling that this would be a partisan issue. Republicans, tied in knots by the tight Democratic opposition, couldn't even get the Senate to vote on the matter.

53 Park Avenue South
Beauty in the eye of the beholder
I've long held a sneaky sort of admiration for the builder of this house because he defied convention and built what he wanted. The only trouble with such defiance is that, eventually, the time comes to sell the damn thing. This Old Greenwich property has dropped from $2.777 million to $2.075 million and still won't move. Either the "right" buyer will finally show up - a rarity in this business, despite what many sellers want to believe - or the price will reach a level that spurs someone into action. Either way, there may be a wait.

Langhorne Lane
One of the most successful Realtors in Greenwich (well, that's my little brother Gideon, but never mind) has commented that the Antares fiasco on Langhorne Lane still resulted in the highest price ever paid for property on the street. Considering that the houses there are mostly rather shop-worn contemporaries, I'm not all that impressed, but others obviously are.

Take, for instance, 38 Langhorne. It came on the market 3 years ago for $2.250 million and finally sold in January 2007 $1.250 million. The new owners tore down the house that graced it, stuck in a new septic system and have returned it to the marketplace for $4.150 million, thus setting a new record for a septic system on the street.

Not to be outdone, the owners of 20 Langhorne have done nothing to the property they bought for $1.9 million (the original asking price was $2.950) and are now asking $2.995 million. Go for it guys - let me know how you make out.

Courtesy of The Blovina Bloviator, here's a picture of the Chairman of the House Ways and Means Committee, relaxing after a strenuous day of cleaning his four rent controlled apartments and flying down to his spot in the Caribbean. This gentleman will be writing your tax laws for the next four years, with Nancy Pelosi's approval.

You ask, I'll Google
(from the comments):"Chris, where is a link to the Greenwich Times article which quoted Livvy Floren as feeling bad for the Fulds? She got ripped on those boards for those remarks."

Here's the article, and here's the quote:

The town is home to longtime company Chief Executive Officer Richard Fuld Jr., whose friends and acquaintances from the financial services industry said had spent his entire 39-year career building Lehman Brothers into the nation's fourth-largest investment bank - only to see it pushed to brink of extinction.

"I feel sick. That's been his whole life," said state Rep. Livvy Floren, R-Greenwich, a friend of Fuld. "You know his heart and soul is in that."

Floren said Fuld and his wife, Kathleen, have been active members of the community and have generously contributed to groups such as the Greenwich High School PTA and Greenwich Country Day School, where their children spent their early years. They have opened their North Street home to parties for the GHS field hockey team, she said.

"I've just always found them to be really delightful people, so low-key and unassuming," said Floren, a former president of the GHS PTA. "I really feel so badly.

I don't see any reason to rip Ms. Floren - she's his friend and is doing what friends are supposed to do, stand up for them in times of trouble. The rest of us who aren't his friends can observe, objectively, that the guy completely ignored his responsibilities as CEO and destroyed the careers of everyone under him. Dummy.

"One of the great mansions of Greenwich’s 300-year-old history”
On second thought ....
Antares' great mansion has been sold (I believe as part of a settlement of a lawsuit) for $13.750 million, hardly chump change but a bit less than its original price of $25 million. Both prices, by the way, were for a shell of a house - the buyer is expected to add his own necessities like kitchens, baths and light bulbs.

When questioned about this precipitous fall of one of the future great mansions of Greenwich, Antares' principal Joe Beninati was eager to dispel the notion that Antares had blundered.

"You see a long term capital loss," he explained, "but you're wrong. We pulled off a tax-free exchange: we got rid of this ugly pile of stone no one wanted and got back a ton of Lehman Brothers stock, plus a potful - not a handful, a full potful - of magic beans."

Beninati leaned back in his chair, hooked his thumbs under his Vineyard Vines suspenders and looked thoughtfully towards his window, or where a window would be if cubicles had windows. "You know, he drawled, "Jimmy and I turned out to be pretty much a pair of dumb f..ks when it came to real estate. I mean, other than the satisfaction of throwing all those old folks out of their apartments, our Byram condo deal really sucked. Our mansion plan was even worse and as for the redevelopment of Stamford, well...."

He leaned forward, an earnest scowl on his face. "We're not down though, Jimmy and me. We got plans, big plans. Our biggest problem has been figuring out where we can operate without someone smarter than us eating our lunch. And then, just last night, it came to me: we're going to get into collateralized debt obligations, big time. You watch, we're gonna take off like gangbusters. I absolutely guarantee it."

Our interview was terminated when movers arrived to repossess Beninati's desk but he's promised to call me, just as soon as his phone service is restored.

480 North Street
London Bridge is falling down
This place came on in July, 2006 asking $9.5 million. Today it was lowered to $5.495. I wasn't convinced that $9.5 was the right price two years ago but at its new price, perhaps we'll stop hearing about the lack of affordable housing in town.

Greenwich cops running low on ammo?
Great - they'll have less to bring to the High School next time a kid kicks a chair.

40 Sawmill Lane
We'll be seeing more of this
40 Sawmill sold for $6.0 million May 5, 2006. It came on the market this morning for $5.995.

John Cooke, Prudential, Sales Report
Courtesy of my friend John, here are some statistics to chew on:

Sell Lehman Brothers!

Oh, gee, Barney Frank as well?

Reform Fannie Mae at the expense of po'folks? Not if Barney Frank, champion of the poor, scourge of George W. Bush, had his way. According to Wikipedia

In 2003, the Bush Administration recommended what the NY Times called "the most significant regulatory overhaul in the housing finance industry since the savings and loan crisis a decade ago." [5] This change was to move governmental supervision of two of the primary agents guaranteeing subprime loans, Fannie Mae and Freddie Mac under a new agency created within the Department of the Treasury. However, it did not alter the implicit guarantee that Washington will bail the companies out if they run into financial difficulty; that perception enabled them to issue debt at significantly lower rates than their competitors. The changes were generally opposed along Party lines and eventually failed to happen. Representative Barney Frank (D-MA) claimed of the thrifts "These two entities -- Fannie Mae and Freddie Mac -- are not facing any kind of financial crisis, the more people exaggerate these problems, the more pressure there is on these companies, the less we will see in terms of affordable housing." Representative Mel Watt (D-NC) added "I don't see much other than a shell game going on here, moving something from one agency to another and in the process weakening the bargaining power of poorer families and their ability to get affordable housing."[6]

[emphasis added]

Uh oh, Bush got to Dodd, too!

NYT, October, 1999 - Agreement Reached on Overhaul of U.S. Financial System

The breakthrough in today's legislation came in a backroom meeting at the Capitol soon after midnight, when a group of moderate Senate Democrats -- led by Christopher Dodd of Connecticut and Charles E. Schumer of New York -- forced a compromise between Mr. Gramm and the White House over the legislation's effect on the Community Reinvestment Act, a 1977 anti-discrimination law intended to encourage lending to minorities and others historically denied access to credit.

Mr. Dodd, whose state is home to the nation's largest insurance companies, and Mr. Schumer, with strong ties to Wall Street, have long sought legislation to repeal the Glass-Steagall Act. Both men said in interviews today that they moved to strike a compromise after it became apparent that the legislation might be killed, as it was last year by Mr. Gramm, over the debate about the Community Reinvestment Act.

...Mr. Gramm had maintained that he did not want anything in the bill that would expand the application of the Community Reinvestment Act because it was, he said, unnecessarily burdensome to banks. He had sought a provision that would exempt thousands of smaller banks from the law. He also wanted a provision that would expose what he has described as the ''extortion'' committed by community groups against banks by requiring the groups to disclose any special financial deals the groups extract from the banks.

But the White House found that provision unacceptable and had its own ideas about community lending. It wanted the legislation to prevent any bank with an unsatisfactory record of making loans to the disadvantaged from expanding into new areas, like insurance or securities.

The White House had insisted that the President would veto any legislation that would scale back minority-lending requirements.

The mortgage mess
Okay, this whole mortgage meltdown is obviously the deliberate work of that Ol' Debbil, George Bush and his puppet master, Dick Chaney, but this
article from the NYT in September, 1999 suggests that those two evil-doers were at work during the Clinton administration, pressuring Fannie Mae to expand "minority" home loans to 50% of Fannie Mae's portfolio. "Minority home loans" meant no income verification, no job necessary and drive-by appraisals. Bush, of course, knew that this was a guarantee of disaster but somehow he persuaded Monica Lewinsky to put a bug in Bill's ear and the rest, tragically, is history.
From the NYT's article:

In a move that could help increase home ownership rates among minorities and low-income consumers, the Fannie Mae Corporation is easing the credit requirements on loans that it will purchase from banks and other lenders.

The action, which will begin as a pilot program involving 24 banks in 15 markets -- including the New York metropolitan region -- will encourage those banks to extend home mortgages to individuals whose credit is generally not good enough to qualify for conventional loans. Fannie Mae officials say they hope to make it a nationwide program by next spring.

Fannie Mae, the nation's biggest underwriter of home mortgages, has been under increasing pressure from the Clinton Administration to expand mortgage loans among low and moderate income people and felt pressure from stock holders to maintain its phenomenal growth in profits.

In addition, banks, thrift institutions and mortgage companies have been pressing Fannie Mae to help them make more loans to so-called subprime borrowers. These borrowers whose incomes, credit ratings and savings are not good enough to qualify for conventional loans, can only get loans from finance companies that charge much higher interest rates -- anywhere from three to four percentage points higher than conventional loans.

''Fannie Mae has expanded home ownership for millions of families in the 1990's by reducing down payment requirements,'' said Franklin D. Raines, Fannie Mae's chairman and chief executive officer. ''Yet there remain too many borrowers whose credit is just a notch below what our underwriting has required who have been relegated to paying significantly higher mortgage rates in the so-called subprime market.''

Demographic information on these borrowers is sketchy. But at least one study indicates that 18 percent of the loans in the subprime market went to black borrowers, compared to 5 per cent of loans in the conventional loan market.

...Home ownership has, in fact, exploded among minorities during the economic boom of the 1990's. The number of mortgages extended to Hispanic applicants jumped by 87.2 per cent from 1993 to 1998, according to Harvard University's Joint Center for Housing Studies. During that same period the number of African Americans who got mortgages to buy a home increased by 71.9 per cent and the number of Asian Americans by 46.3 per cent.

In July, the Department of Housing and Urban Development proposed that by the year 2001, 50 percent of Fannie Mae's and Freddie Mac's portfolio be made up of loans to low and moderate-income borrowers. Last year, 44 percent of the loans Fannie Mae purchased were from these groups.

Why shouldn't everyone pay income taxes?
From Professor Glenn Reynolds, of Instapundit

On a related note, I think we should rethink this business of having lots of Americans who don't pay income tax. As the Tax Foundation comments: "It is time for a serious public discussion of whether it is desirable to have so many Americans disconnected from the cost of government and what the consequences are of using the tax system as a vehicle for social policy."

Personally, I'd like to see everyone pay at least some income tax, and I'd like to see the amount of tax paid, by everyone, go up or down every year in tandem with federal spending. That would encourage fiscal discipline directly. It would also make it harder for politicians to promise everybody a free lunch, but hey -- why shouldn't they sacrifice something, too?

19 Farley Street
I like this house, a completely renovated 1900 farmhouse off lower Lake Avenue and within easy walking distance of downtown. $1.585 didn't move it but it's now down to $1.225, which doesn't seem crazy. I know the builder (no, he's not my client) and he does excellent work, so no cheap shortcuts here. I don't like the phrase "condo-alternative"; you're either in the market for a condo or you're not, but this is a reasonably-sized house for a reasonable price, in my opinion.

Orchard Place Condos
This was a fairly hot neighborhood a few years ago - despite the noise from I-95, it's within walking distance from the train and Bruce Park and condos were selling briskly. 71 Orchard Place, however, has been listed since May, 2007 and is still for sale, suggesting that this area's moment has paused, at least for now. Original price was $1.995 million, today it dropped to $1.595. Perhaps that will do it.

620 North Street, a new mansion, didn't sell at $6.390 million from April, 2008 until now. Today it has a new broker and a new price, $6.4 million. I wouldn't think this is the best time to raise a price, even if by only $10,000, but heck, what's to lose?

Harvard Graduates 1890
The Best and the Brightest?
The Wall Street Journal ran a scary story this Saturday on how close we came to a complete financial collapse last week. Of course, we may still see everything implode but, for now, the Paulson solution seems to have calmed the waters. I suppose we have no choice but to bail these people out, if you believe the WSJ article, and I do, but what sticks in my craw, and my wallet, is having to pay my money to save these jerks' hides. When they were prancing around town in their Bentleys crowing about how smart they were and how deserving of their financial windfall because they were so, so much smarter than us little people, Wall Street's wizards never offered to share their good fortune with the rest of us - at least, I never got a check. Now it turns out that they're complete morons, Harvard MBA degrees and all, and had no idea what they were so blithely buying and selling. Perhaps most galling, their leaders, guys like Dickie Fuld,and Merrill's John Thane, now admit that they were clueless about what the people under them were doing. But by God, they were chairmen of very important financial firms and that was worth a few hundred million, wasn't it?

Because of a loose (and now severed, thank goodness) family connection, I once followed the career of a particularly obnoxious Greenwich resident as he went from failure to failure, ruining one company after another and pocketing $10 million, $25 million, and so on in "please go away" money from each corporation he screwed up. With nothing to boast about boast he did, maintaining a mansion in town, flying all his favorites to Aspen for a millennium dinner that cost $1,000 a plate and in general, exuding an air of superiority that might have been intimidating if one didn't know what an incompetent buffoon he was. He's retired now, I believe - I can only hope he's soon joined by his younger peers.

Woe is us
The New York Times reports that 97% of all LIRR employees receive a 100% disability pension, courtesy of the federal government and an employer who couldn't care less about spending taxpayers' money. I don't like the idea of my money going to thieves, naturally, but what's more frightening is thinking about all the other scams just like this one going on around our country. This hoax, now exposed, might be addressed. Who's going to stop the rest of them?

Kaiser Wilhelm II
In memory of my uncle, Dr. Gerard Fountain
At a family dinner last night we got to reminiscing about our Uncle Gary who died in an accident last month at the age of 91. In addition to being a noted psychiatrist, Dean of Sarah Lawrence, professor at Dartmouth Medical School and an all-round terrific person, Gary was fond of telling what he called, "the only World War I joke you'll ever hear". We thought it a shame that such a recent joke (Gary first heard it on a Scarsdale playground in 1920 or so) should expire with our uncle so here it is again, ready for a new generation:
"Why did the Kaiser change his socks?
Because he could smell defeat."
When you stop laughing you can tell it to your grandchildren - after you explain who the Kaiser was.

Why Blog when readers can write this themselves?
Buried in the comments is this thoughtful essay from "Retired IB'r. I don't share his dark pessimism, but it's certainly a more accurate view of what's happening than you'll find in the latest NAR press release.

To look to recent times (last twenty or thirty years) as any indication as to how real estate will perform in the future is totally folly.

The author of the article you sited for example talks about how the Vancouver market did in the early '90's and extrapolates about today's recoveries.

The run-up’s in values in the last five to ten years dwarves any other period in our lifetime of experience by many orders of magnitude. Just look at the numbers.

This correction is not like anything anyone alive today has ever experienced. And all you have to do is look to the extraordinary moves by the Treasury and the Federal Reserve of last week to put the current situation in perspective.

Do not forget, our "leaders" told us six months or so ago that this was contained to subprime and it was a $50 billion problem. Now it is a trillion dollar problem and climbing six months later. I will not debate whether our "leaders" were stupid or duplicitous, but one or the other fits IMHO. Still, the rapid expansion of the problem demonstrates the mindboggling mess we find ourselves in. Add to this, the fact that Europe and the rest of the world has yet to see the problems in their banking systems as we are currently experiencing (and they will) tells me that this is a worldwide problem that has not nearly run its course.

The tremendous, unrelenting expansion of credit encouraged by the Greenspan Fed linked with a complete and utter failure of regulators and the total breakdown of underwriting standards by financial institutions is what created the worldwide credit bubble that we are witnessing exploding real-time today. To think this mess, which has real estate at its epicenter, will adjust in a mild manner and rebound quickly begs credulity.

Finally, the extraordinary events of the Treasury’s evolving bailout program appear (the details are still hidden in the mist) to not be designed to stop the fall of real estate prices, but instead an attempt to fix the broken intermediation of credit, which has come to a halt, through non-transparency of asset values. To not understand this, is to not understand the current financial meltdown. Whether Paulson, Bernanke et al succeed is still a big open question.

One day, we will find our way out of this wilderness, but it will take time, and the massive destruction of wealth (through the writing down of bad debts). The real estate markets will also have to correct to sustainable levels (without “easy credit” to support them), and only then will real estate appreciate again.

Retired IB’er

The sun's still shining for at least one person in Canada
The author is probably a real estate agent but makes some good points for those people who, like me, don't believe the sky has fallen permanently. Try it, if you wish - article is here.

Where do you live now that you've been fired by Lehman?
The answer, courtesy of reader "Jess", is Dick Fuld's place on North Street. Don't worry, if you and a few dozen other ex-Lehman folks start crowding him out, he can always move into his other homes.

Fuld's house

NOT Mr. and Mrs. Dickie Fuld, but a fun photo

Rentals
A reader asks,

How are 'The Rentals' over $5,000.00 per month - moving in the Old Greenwich - Riverside Area - is the 'Rental Market' slow too??
Is it a plus to rent the house along with all the furniture - yes - fully furnished?

I don't know much about the rental market but I hear that it has slowed and that prices have been falling for several years now - the latter may change if buyers want to wait and see what happens to the single family market.
In the past six months, 64 single family homes in Old Greenwich and Riverside rented for $5,000 or more (or at least asked $5,000 or more - some actually rented for less than that) and there are currently 29 houses actively for rent. I would think, but do not know, that the market will slow down now that September 1 has passed.
Furnished or unfurnished? Definitely unfurnished. Most houses are rented that way and most tenants already have their own furniture. A temporary tenant, one waiting for his own house to be finished, say, may have his furniture in storage and might welcome the opportunity to leave it there but, as a rule, I think unfurnished homes rent faster and more easily.

Blogger update
Cleared out all the temporary cookies and stuff from memory and Blogger now recognizes what day of the week it is. I may try this on my own head and hope for similar results.

Your house as an investment
One commentator on this blog points out that the house my grandmother bought for $15,000 in 1957 and which is now worth, I hope, $2.0 million, has returned "only" a 10% annualized return. With all respect, he misses the point - I've never argued that real estate, even Greenwich real estate, is the best place to stash your investment money, but assuming you need a place to live in and raise a family, this is a great town to achieve that goal.
My grandmother entertained 5 grandchildren in that house over the years, had a happy life there herself, got to watch and paint the goings on in the creek, hosted Katharine Hepburn for tea on the front porch (Hepburn, as a very young girl, considered my grandmother the movie star a role model - it was nice the two finally caught up with each other)and, all in all, got full value for her $15,000. When Nancy and I moved in we spent a small (huge to us) sum gutting and expanding the place and raised our own three children there. They could walk to school, ride bikes to their friends' houses, fight, swim and boat and in general, have a pretty nice childhood.
So if we end up selling the house for less than an index fund might have earned, so what? Vanguard certificates could never have produced any of the joys, sorrows and pleasures we've experienced in our house. and we didn't pay rent. I'd do the same thing again.

Fowl Play
Okay this is rude...
The victim attacked by the Tod's Point turkey Is still concerned. Looking at her picture, I wonder whether the turkey attacked because of feelings of inadequacy in the er, chest deprtment.

Slappy the Happy Clown
Three contracts this past week instead of 10 per day
Some of my peers will insist that I report this as a strong sign of a recovering market but the best I can say is that, for a fat girl, she sure doesn't sweat much.

Blogger.com still causing problems
Still having difficulties posting, the program doesn't recognize that it's now Saturday morning, won't save drafts, etc. It's nice of Google to provide this service but they're absolutely silent when they run into difficulties, don't suggest when they might correct anything and provide no way to contact them. I am in the process of switching to WordPress but until then, please bear with me.

Joe Biden on "altruism"
The other Vice Presidential candidate has strong thoughts on what it means to be a nice guy and give to the poor. One of my own readers considers paying more taxes to be "the neighborly thing to do" (query why he doesn't just go ahead and do it - would he like the IRS's address?). this fellow in Denver takes another view

When exactly did taxation transform into a form of charity? Biden, it seems, has a difficult time differentiating between coercion and generosity. The distinction is simple: When one fails at altruism, he is a louse; when one fails to pay taxes, he ends up in the slammer.

But anyone can "jump in" at any time. Biden and his wife, who would be considered wealthy under an Obama/Biden tax plan, for instance, gave an average of $369 a year to charity during the past decade. So you can see that by "help," Biden means assistance with your money.

Have you ever wondered when exactly taxation became a tool for mass redistribution of wealth?

"We want to take money and put it back in the pocket of middle-class people," Biden explained in an interview on "Good Morning America." The wealthy, last I heard, did not "take" or steal from the defenseless middle class; they, most often, earned their money. There is nothing to give back.

Moreover, the very premise of Biden's argument is a rickety mess. The rich already shell out their share. According to the Internal Revenue Service, the top 10 percent of households pay roughly 70 percent of all federal income taxes. The top 5 percent pay over 60 percent of all taxes. The top 1 percent? They pay nearly 40 percent of all income taxes. Sounds like an unfair share to me.

Myself, I like the moose hunter more every day.

(Friday September 19, 2008)
Time flies!
Another year has gone by and it's once again Talk like a Pirate Day!
AARRRGGGH!

Date and Time stamp not working
I blame it on Blogger.com, not me, because other bloggers are complaining. No word from the operator as to what's happening and why but I presume they'll fix it.

Greenwich Time reports that a wild turkey is threatening beachgoers. So far, the police have decided to let the poor bird stay where she is but spokesman, police Lt. Kraig Gray warns, "it's being more aggressive than it normally should and sooner or later something will end up happening."
Er, like Thanksgiving?

Let's hope it doesn't come to this
The New York Times reports on The Pain of Selling Short

AGI and Lehman, explained. But the authors seem to have no better idea what will happen going forward than I do which is to say, eh?

World does not end (today)
Stocks Soar

Buying during the Depression?
A reader asked if anyone had the institutional memory of what happened to real estate in town during the Great Depression (and no, I don't think we're going there). I'll call some of my friends who do have that kind of memory - Bernie Yudain would be a great source, I suspect - but I do know that a friend of mine's great uncle was offered almost all of the land that now comprises Indian Head Road and its offshoots for $30,000. He saw the value but alas, was no better off than the seller so he turned it down. My friend is still working for a living but had that land been bought ...

I also have noticed that some of our most magnificent estates were built in the 30's, and why not? Land was cheap and labor was cheaper. If you had money during the Depression, there wasn't a better time to spend it.

There are already great buys out there today. I've mentioned my brother Gideon's listing on Indian Head Road - one acre of beautiful lawns, pool, secluded, with a custom built house, all for $3.6 million. Other agents and I were marvelling today over how much the market has changed because, 2 years ago, $3.6 million in Riverside bought you very little. Heck, I sold two houses just last year at $3.8 each and, while the houses were nice enough, each was on a half acre on a busy road. And no pool. If I had money and wasn't worried about being forced to move in the next year or two, I'd be out looking for bargains. This period will eventually look like a buying opportunity if you buy the right house at the right price.

And so, look: I found some happy news after all.

Well darn, this isn't going to help fill out the Happy News department. NYC coop prices plummeting.

Manhattan's finest co-op apartments may have already lost a fourth of their value as a result of the financial crisis, and the worst is yet to come, says leading New York estate broker Kathy Sloane, of Brown Harris Stevens.

An owner of a five-million dollar Park Avenue apartment, only an average residence by investment banker standards, "may be lucky to achieve $3.5 million" a month from now, said Sloane, whose clients have included celebrities, the super-rich and prominent families including the Clintons.
"If someone saw a bid between $3.8 million and $4.2 million from a qualified buyer, take that bid," said Sloane in an interview to be broadcast on 20/20 Friday night.

Some of these owners sold in New York and came out here to buy houses. Can anyone say, "down sizer"?

Sucking up to Royalty
Okay, this is shooting fish in the barrel but ...
Grab onto your hats, my old paper,The Greenwich Post, has launched its new gossip column:

Scene ... Greenwich residents and talk show hosts Regis and Joy Philbin were seen dining at Valbella in Riverside last Saturday night. At a separate table was WWE chairman and Greenwich resident Vince McMahon and his wife, Linda. Also seen dining among the celebs was Greenwich Hospital president and CEO Frank Corvino. On a separate occasion, His Royal Highness Prince Moulay Rachid of Morocco and a bevy of young beauties were dining downstairs in the wine cellar while his three bodyguards waited for him upstairs.

Scene... Riverside residents and TV personalities Kathie Lee and Frank Gifford were seen having dinner at Figaro on Greenwich Avenue last week.

Aside from the fact that, if you want to see, meet and actually speak with Frank and Kathie Lee you can come to my church on any Sunday and do just that, instead of gazing longingly from afar as Frank masticates a lamb chop,is it really worth chopping down a tree to distribute this hard-hitting, must-have news? Does it enrich one's life to know that someone heard from someone else that Eric Clapton was on the same island (maybe even at the same time!) as that third party? What sort of self-respecting newspaper editor allows himself to be involved in this schlock?

It surely hasn't escaped the notice of the Greenwich Post that our town is suffering a bit of a rough spot in the ol' real estate market yet, to save printing costs, they've cut their last remaining real estate columnist to a bi-weekly schedule to make room for the doings of His Royal Highness Prince Moulay Rachid of Morocco. The columnist is no loss, unless you wanted to read the latest press release from the National Association of Realtors ("Everything is beeeoootiful, everything is fine ..." ) but still, how does this man look himself in the mirror?

I was the only paid columnist at the weekly advertiser (and they solved that problem) so the absence of real estate news can be attributed solely to the lack of funds to actually print a paper. Of course, if you remove all the content from your paper, there might - just might - be a connection with a declining readership, no matter how many copies you stuff, free, into mailboxes.

I'm not (particularly) bitter that I'm no longer associated with this drowning enterprise -I'm having fun being on line and I'm proud to be free. My former editor might try it himself.

Do as I say, not as I do

This fine gentleman from our Parking Authority is parked in the exact location that netted me a $25 parking ticket. I have his license plate (197 GW) - should I drop him a note and ask that he contribute to the cause?

How not to cut your price
65 Summit Road in Riverside just cut its price from $1.375 to $1.350 million. I strongly encourage sellers to check their asking price and slash that price if no one's offering to buy, but a tiny price cut will accomplish nothing. If your house isn't selling, a $25,000 difference of opinion as to value isn't the cause.

Housing Lots for sale
68 Halsey Drive in the Havemeyer section of Old Greenwich was offering a four-lot, approved subdivision for $3.450 million, or $862.5 per lot. It's been reduced to $2.7 million - $675 per lot but I'm not sure that will do it. Assuming $1.0 million to build and carry each house here, you'd have to sell them for $1.675 each, or more. Two of the lots are tiny: 7,000 and 8,000 sq.ft., respectively, so if they sold for less, you'd have to get more on the other two. I like Havemeyer, but new houses there were struggling at the $1.75 range at the height of the market and to risk that kind of money today means you've got a rosier vision of the near-future than I.

Fuld's Acres
Wanna buy a house?
I figured that Dick Fuld was too busy to invite me in for a cup of coffee this morning and escort me on a photo tour of his cottage at 717 North Street, but here's the entrance. Very nice, and I suspect that it nicely balances his $26 million coop in the City.

You know, my father pulled a few of his Wall Street connections years ago and got me an interview with his best friend, Bill Golden, who mentored me when I'd just graduated college and was considering: Wall Street or law school? I concluded that I was strong on communicative skills and weak on math so I chose law school (reading his obituary linked here, I just discovered that Mr. Golden hated math too - darn!). Now I learn that all these "math wizards" were just making up the numbers as they went along - shucks, had I known that, I could be living where Dick does now, instead of being relegated across the street, snapping pictures with my iPhone. Too late smart.

89 Lower Cross

House for sale, cheap
This almost-completed mansion at 89 Lower Cross Road can be yours for just $2.595 million. It's within a stone's throw of prestigious Conyer's Farm (but just try throwing a stone across the barrier and you'll be arrested faster than you can say "chukkar") has it's own pond just beyond a large swath of wetlands and the building is mere inches from the road, thus sparing you expensive snow plowing bills in the winter. I'd rush - as they say, "this one won't last!"

Slappy the Clown's Happy Dance

Happy Talk
I am under increasing pressure from my real estate peers to stop being gloomy and start reporting happy news. Ever eager to please, I looked up recent listings going to contract and compared them to last year. From June 15 through September 17 of 2007 147 houses went to contract, compared to 101 this year. That's a drop of 31%, more or less. In the shorter period of August 1 '07 through September 17 2007, we saw 64 contracts vs 33 this year.
So what's the happy news? I dunno - I suppose we could have sold nothing, and wouldn't that be a bummer.

This is offensive
Received via email this referral fee schedule from a local builder:


Offensive because I think a real estate agent's customer should be able to trust that she's getting good advice, not a disguised sales pitch. Or at least, that's my opinion.

Sleeping in the Playground
The town is planning to
redo the Bruce Park playground.
According to its sponsors,
a) Every child can reach the highest play level
b) Play structures are configured to support all children’s development
c) Pathways and surfacing are universally accessible
d) Cozy gathering and away spaces provide a rest from the action
e) Equipment such as swings with back support
f) Sensory-rich and ground level play activities.

It all sounds boring enough to drive even the most adventurous child back to his videogames.

Ugly
Stocks not doing well today
Uglier still:

With no hope for the return of the mortgage securitization and overall liquidity continuing to dry up, we believe that with fewer mortgages available,fewer people will qualify for mortgages, and homeownership will head materially lower. All this creates a recipe for meaningfully lower US house prices.

With apologies to the Rev. Jeremiah Wright, the chickens have come home to roost

Lehman's bad real estate ventures

One real estate investment broker described Lehman as “the real estate A.T.M.”
“They definitely were the mavericks out there,” said the broker, who did not want to be identified to protect his business relationships. “If you needed money, you could get it.”

Does anyone remember the Lehman/Antares ventures? Here's what Mr. Beninati, "Mr. Antares" says of his lenders on his own web page:

"In every deal we do, lenders decide if that project is for them," Beninati said. "But over the years, the opposite problem has arisen. Several banks might agree to finance our projects, and we regularly have to call some of our oldest and dearest friends in the industry tell them that Antares cannot give them business on a particular deal."

Gee, I don't know, it seems to me that Antares was only too happy to "give them the business".

From The Grim Reaper Gazette

Housing starts at 17 1/2 year low
I've had a couple of conversations with builder friends and clients and I can confirm that this same sense of caution pervades Greenwich, too. Of course, fools rush in ... and all that, so we may still see some activity.

Where's the legal authority for the Government to buy AIG?
Nowhere, but apparently not enough people care.
David Zaring:

But, in the Fed's legal defense, maybe, just maybe, the settled expectations are different here, based on the government's takeovers of Fannie and Freddie, and the pleading by AIG for government involvement. Does the very fact that the insurer hoped for Fed action suggest that the Fed could act?
Hmmm. The other defense would be that emergencies are emergencies, and when that happens the rules go out the window, and hopefully regular elections mean that the officials the people trust are dealing with the emergency. Abraham Lincoln adopted that reasoning, and he won the Civil War. I suspect we're at the "anything goes in an emergency" stage of things. But maybe reasonable minds could disagree.

Megan McArdle writes,

A lawyer friend IMs "I would be fascinated to know on what authority the Fed is claiming the right to do this." It's probable that they don't actually have the legal right to do anything like this. Their authority is this: who's going to stop them? No one wants to take on responsibility for this mess themselves.

I'm all for living in interesting times, but these days, things are getting curiouser and curiouser.

Hunter Thompson Lives
Reading the rantings of Greenwich Round Up is a bit like spending time with your crazie Uncle Eddie, fresh from another unsuccessful round of electroshock therapy at Silver Hill. Always entertaining, equally confusing and crammed with HUGE HEADLINES, tuns of mispelings and nasty things to say about almost everybody. But always fun, so long as you're not on the receiving end.
And, to give Crazy Eddie his due, they guy is way ahead of the local press on issues like the Byram School fiasco, the bozos (okay, I used a picture of bonobos to depict them, but close enough) on our School Board, and the sad, escalating decline of our daily paper, Greenwich Time.
I disagree with him most of the time - I happen to support the new Stanwich School, for instance, even though I have no kids at that school and if I, as a disinterested person, can applaud their efforts it seems reasonable to assume that our P&Z's decision in favor of the project could be because reasonable people think it's a good idea, rather than because of bribery and corruption.
But so what? It's a fun read.

NOT subject property
The builders are leaving tra la, tra la
89 Lower Cross Road was offered as a to-be-built mansion back in 2006 for $6.7 million. Construction started but no one bought and now you can buy it, complete with "foundation and partial framing" completed, for just $2.595. How valuable are such improvements after they've sat out in the weather for a few years? Another way of asking that is, what's a building lot worth on Lower Cross, minus the expense of scraping off and disposing of the wreckage?

Gabriel Nathan Schwartz
Ah, those fun loving delegates!
Some readers suspect me of being a Republican sympathizer. I'm not. But I do like following the foibles of politicians of both parties, such as this yokel who got robbed $50,000 at the Republican convention by a lady he let into his hotel room. What a 30-something male lawyer is doing carrying that much jewelry is a mystery, but $4,000 of the loss was a pair of earrings and he is a Republican, so perhaps that's the explanation. But take a look at the guy's picture. Could anyone with an ounce of self-honesty think this face would cause a beautiful woman to invite herself up to his room? Maybe she was also a masseuse.

One of my favorite and wisest writers, James Lileks
Has this to say about boom times:

Having lived through a few such panics – real estate in the late 80s, the Savings and Loan crisis, junk bonds, the dot-com nonsense – I can conclude only one thing: no one pays attention to their gut. Whenever real estate spikes, my gut always says it’s a temporary thing, because two-bedroom houses with a cement yard and a bathroom that consists of a bucket can't possibly be worth $800K just because it’s in California. Ditto the dot-com: start-ups like tentonsoftofu.com were getting millions of dollars with the usual vague projections: in the future everyone will be online, and since tofu will be more popular than ever, people will want to buy 20,000 pounds at a time if we offer the convenience of online ordering combined with free shipping. Most people thought it was nonsense, but the times were good, so enjoy.

Pricing tip
I'm aware of a certain house whose owners paid too much for, back in the day, then compounded their error by over-improving what they'd bought. It's a lovely house, but it's priced way above what they can ever hope to get for it. When their agent suggested a price reduction, they proudly showed off a new kitchen they'd added and asked, "how can you ask us to drop our price now that we've redone the kitchen?" Well, if they'd asked their agent, she would have advised against throwing more money into the house. At a certain point of over-pricing, adding features will not address the real issue, which is price. These folks have just built a beautiful kitchen for someone else to enjoy but it will be at the sellers' expense. My advice? Get advice, before you spend money on a house you're trying to sell.

It must be the Boston Globe's day
here's a good blog on truth in real estate advertising. Turns out, buyers aren't stupid. Who knew?
The writer wonders what the phrase "must see" means. Had she asked, I'd have told her: a complete mess from the outside, so bad that no self-respecting buyer will get out of her car to examine it. The phrase implies a promise that there is something to see inside but in my experience, that's a lie.
One of my favorite phrases is, "now priced to sell". What the hell was it priced at before?
Or, "renovated", with no further details. Believe me, if we agents can find anything positive to say about a house, we'll mention it, so if you see this phrase but no specifics like new kitchen, new master bath, etc., you can assume it means that the fireplace ashes have been removed and the dust bunnies swept from under the bed, period.
"Convenient to transportation" of course, means it's cheek-by-jowl with the highway, the railroad, or both.
"This one won't last" almost always appears on dogs (and usually in conjunction with "must see". It's always bittersweet to see this description still lingering on year-old listings.
Need any other interpretations? Care to add some of your own? Pile on.

More pricing follies
29 Byfield, mentioned here before, was listed April 15, 2008 for $9.495. It's been dropping like a rock ever since and today was reduced again, to $5.698.
39 Boulder Brook, also listed on April 15 by the same broker, came on at $8.595 and dropped yesterday, again, to $4.998. Same broker, same listing date - same builder? Someone's losing sleep, if so.
12 Doubling Road, coincidentally, was also listed by the same broker,back in September '04 for $14.5 million and eventually sold for $7.575. A building lot was split off and sold for $4.130 in '06 (nice price for the seller, I think) and now the original 1913 mansion, completely restored but shorn of several acres of its magnificent lawns, is back on for $13.5 million. Convenient location and nice house so maybe this time's the charm.
And then we have 228 Stanwich Road. Its original owner tried to get $2.125 for it at the height of the market in 2007 but finally sold it for $1.7. The new owners returned it to the market, untouched, a year later, and asked $1.895. Today they lopped off $46,000. Call me crazy, but I think they'd be better off shooting closer to the price they paid for it. Regardless, I don't think a 2% price cut is going to be much help.

35 Club Road
This new construction in Riverside sold yesterday for $8.675. The owner wasn't engaged in a spec project, as I understand it, but someone saw the finished product and made him an offer he couldn't (or didn't) refuse. A new record for non-waterfront property on this road, I believe. So that's nice.

Uh oh
Five hours ago: Goldman Sachs expected to reassure investors amid market turmoil
30 Minutes ago:Goldman Sachs reports huge profit drop

Are you reassured?

Good Lord!
A columnist for the Boston Globe who understands Obama's tax plan. Next up, the New York Times? Nah.

Okay, here's some good news for homeowners
If this market has messed up your dream of getting rid of where you live and moving into something better there is a silver lining: great contractors are available for small projects. My Pal Nancy recently hired Rick Hvolbeck and his partner, Al (whose last name I should know, but forget) to replace a rotten column (not my newspaper column but one holding up the porch), failed sills and window trim. They did a terrific job for an incredibly reasonable price. No surprise here: Rick's a 3rd generation Greenwich home builder and Al clearly knows his stuff as well, but, according to Nancy, they came when they said they would, were neat, did a beautiful job and had no hidden expenses when they were finished.
Rick can be reached at (203) 249-2297 or RCH1043@aol.com. The two of them are so good that I'll permanently post their contact info on the side of this blog. If you've been considering new kitchen cabinets, a new garage (these guys can build you a new house, of course) or, like Nancy,just fixing those depressing, rotted bits of your house, now is the time to do it and these two are the men to call. No, I don't get a discount for my own work, I just know how difficult it has been to find competent people willing to attend to smallish jobs. Now's your chance.