Our man in Washington
There's an interesting discussion going on in the comments section of the previous post concerning Wall Street, Washington and in general, pigs at the trough. In the meantime, the question of Senator Chris Dodd coming up, I thought to confirm my suspicion that his "presidential nomination campaign" served as nothing more than a sop to his ego and a sponge for the campaign contributions he could solicit (or extort) because of his position as Chairman of the Senate Banking Committee. As for ego, there's no doubt that every boy and girl serving in the Senate believes, deep down, that he's qualified to be President. But it takes an ego of truly gargantuan dimensions to act on that belief when polls list you at 1% voter recognition. That didn't stop Dodd, of course, particularly when he could indulge his aspirations at the expense of the financial community he regulates. Sure enough, the senator put the touch on his new best friends. Try this or, for a general overview from years past (I believe this latter doesn't include his presidential campaign contributions, which are tabulated separately) this.

Dodd learned from his father, of course, that direct solicitation of bribes leads to trouble, but squeezing folks you can choose to put out of business, well that's just Washington politics. Years ago, William F. Buckley pointed out that our Senator from New London regularly voted against every single defense appropriation except those supporting new nuclear submarines. It's certainly possible, as Buckley posited, that the senator truly believed that the only weapon that could protect our nation from its enemies was the nuclear sub. On the other hand, cynics might be forgiven for suspecting that the man was just a hollow, greedy shill who looked out for his interests and his interests only. I was one of those cynics oh so long ago and I've never changed my opinion.

Wall Street hearts Fannie Mae
Good article here in Bloomberg News concerning the pending bailout of Fannie Mae. It starts out with the rather typical cautionary tale of a borrower seduced by a sub-prime lender and her eventual rescue by her friendly government bank, but then proceeds to discuss, or at least touch upon, the various scandals, fraudulent accounting and other difficulties that have plagued this entity. Why does Jamie Diamon, head of JP Morgan Chase, love Fannie Mae? Why did Warren Buffet dump all his holdings of its stock three years ago? You really should explore some of the Wall Street Journal editorials that condemned Fannie Mae over the past decade for a full understanding but essentially, Jamie Diamon and his ilk could make a lot of money peddling crap and unloading it on Fannie Mae and Mr. Buffet has different standards. Of course, when you add in the cash contributions Fannie Mae made to Chris Dodd and his cronies over the years, it's hardly surprising that this fraud was permitted to operate for so long. And will continue to do so, apparently - just ask The Journal.

Mea Culpa
There's a nice post in the comments section from Pam, who gently reminds me that I used to defend the strength of the Greenwich market. It's true, I did: I did point out what I thought were over-priced houses, and cautioned that, obviously, prices couldn't keep increasing 20% per year, every year, but I was fond of saying that, so long as NYC continued to attract the best, brightest and most ambitious young people from around the world, they'd continue to meet, fall in love, have babies and look toward the suburbs to raise those babies. Because Greenwich is one of the best of those suburbs, I was pretty confident that we'd continue to get our share of new blood, and buyers. But "No one expects the Spanish Inquisition" and I didn't expect the collapse of the credit market and the subsequent downturn on Wall Street. Greenwich never had many sub-prime mortgages or large spec developments to begin with so when the sub-prime lenders and real estate speculators started to topple I thought the disaster would be limited to places like California and Florida. Wrong.

But, long term, I still like our position. There will always be money to be made lending to millionaires, and we're still not adding any new land, so I expect to see a recovery not too long in the future (unless Wall Street and its bankers disappear and the financial world shifts to Dubai, a not entirely impossible scenario). If you own a house that you want to sell, hang on and hope. If you're thinking of buying, I'd look silly suggesting that prices won't continue falling, but as interest and construction costs keep rising, you might want to grab a good deal now - if you don't have to resell in the next few years, I think you'll do just fine.

Pricing
There were 26 price reductions reported yesterday, compared with 2 contracts. Not an encouraging ratio. One reduction that caught my eye was for 4 Old Round Hill, a big, almost new mansion just off of Round Hill itself. This place was originally priced in May '06 at $14,500,000 and slowly dropped to $12.5M a year later. Still unsold, the seller increased its price to $13.995M the next day; not a tactic I'd ordinarily recommend. It's been dropping ever since and yesterday took another hit, coming down another million to $10.9. So two years after first being offered for sale, it's still unsold and is now $3.5M less. The first price was obviously (in retrospect) too aggressive, even for the 2006 market. In today's market, the new price may still be too high. Somewhere in the past two years, I suspect, a realistic price would have moved this house but now, who knows? It's a very nice house with a great location and yard, but is anyone buying?

HoJo's
Thanks to two intrepid readers, Pam, who remembered what letter the place would start with, and Jess, who actually tracked down the article, we learn the following:

"From the Greenwich Post:

Jun 5, 2008
Going up in Blue Smoke
Howard Johnson to house new restaurant; plans for hotel
By Sonia Fernandez, Staff Reporter

The Howard Johnson will be renovated as the Delmar opens a new hotel at that location and Blue Smoke takes the place of Tandoori restaurant
Blue Smoke will be sweeping through Greenwich as Union Square Hospitality Group prepares to open its first restaurant outside New York City.

Named after its predecessor on 27th Street and Park Avenue, Blue Smoke Chophouse will move into the space that was occupied by the Howard Johnson in Riverside, along with a new hotel operated by the same group that operates the Delamar Greenwich Harbor hotel....

The Union Square Hospitality Group has enhanced the ambiance of the restaurant by focusing on wood-fired cooking. Not only will the meats be wood-smoked, but the grills and ovens will also be wood-fired....

Plans to renovate the Howard Johnson and the attached Tandoori restaurant were submitted to the Planning and Zoning Commission on March 19, but have been dropped as both the hotel and restaurant are being gutted to make room for the new plans.

While the new hotel has yet to start the planning and zoning process, Mr. Swinghamer said he hopes the restaurant will be ready by next summer . . . .

[end of article]

I love both Cajun and barbeque, so I'll probably give this a try - if the estimated completion date is accurate, I'll have a year to save up for the experience.

Funny thing - when I Googled HoJo's Riverside to see if there were any stories about its future I found lots of information on the old place with no hint that you won't be staying there again - surprise! and a map locating the motel just over the Stamford border. I suppose that, since it's closed anyway, a little misdirection won't harm anyone but how many other Google maps are this far off? Makes me want to rethink tossing out my old paper maps.

Price reductions

The condos on South Water Street have just had their prices cut by several hundred thousand dollars each. Not too surprising, but it's too bad for the developers. I think they stood a better chance of success before the town zoning folks made them slash the number of units and amenities. You'd think we didn't want Byram developed, or something.

Fun with numbers
The Greenwich MLS has just issued its latest quarterly sales book and it's been interesting to seen how my organization continues to screw up sales data, for unkown motives. 723 Lake Avenue, for instance, was actually first listed at $7,250,000 in February,2005 and finally sold for $5,775,000 in June, 2008. The sales book shows an original price of $6,995,000 (one of the intermediate prices as it climbed down, actually) and only 210 days on the market. I'm not too good at math, but February '05 to June '08 would seem to be more than 210 days.

The sales book gets 26 Mayfair Lane's days on market right (I think - I didn't actually count: 547, but shows the "original price" as $6,750,000, thus making the selling price of $6,250,000 look reasonable. "Nothing to see here - move along, move along." In fact, the original price was $8,350,000 and $6,250,000 represents a heck of a bite from that dreamed-for sum.

So who's gaming the system here? Maybe no one - whenever I inquire at the Board, they blame everything on some third-party computer program that they can't control, but our data are being corrupted and that, in turn, makes it impossible to trust what's being spewed out as truth. In the long run, this can only hurt the entire Greenwich real estate market.

Needless Tragedy
Greenwich Time reports that the head of Shoreline pools has been arrested on second degree manslaughter charges in connection with the drowning death of a four-year-old boy last summer. According to the prosecutor, our state building code mandates three separate safety devices/systems - the newly installed pool had only one of them. Admittedly, the code had recently changed and the pool company may have been unaware of its new obligations, but what troubles me is that our town's building inspector issued Shoreline a certificate of occupancy, an official imprimatur signifying full compliance with all applicable regulations. Our building department has no difficulty sniffing out non-lethal violations of FAR requirements, and is delighted to order builders to chop up attics into non-usable space, lower or remove retaining walls deemed too high, etc. What's so difficult about inspecting something as dangerous as a pool and ensuring that it complies with code?

Statistics
We have 626 single family homes currently for sale in Greenwich, an 18% increase over this time last year. From May 1,2008 through today, July 21, 37 houses sold, compared to 68 last year (comparable numbers for YTD are 174 vs 208.
Contracts aren't any better: 115 this year (May -July 21) vs 148 last year and 160 in 2006. That's a 28% drop over two years, if my calculator and atrophied math skills haven't failed me.

The market is going down
I've complained before about the difficulty of comparing selling prices for the same property because so many houses are renovated between purchase and resale. Here's one that wasn't: 26 Lake Drive South, in Riverside. The current owners paid $2.125M for it in January 2005, did nothing to it (the previous owners had done the necessary renovations like new kitchen and baths)and put it on the market this year for $2.250. That was a reasonable response to the softening market - after commissions and taxes, they'd have been luck to break even - but it sold yesterday for just $1.850. So apples to apples, three and a half years later, it was worth $275,000 less.

And here's another sad tale, perhaps, depending on how you feel about wildly-unrealistic original asking prices: 402 Sound Beach Avenue was listed February, 2006 for $3.399 M and went to contract yesterday for something less than its latest price of $2.395M. In answer to my reader who keeps urging me to show over-priced listings, this is a nice example of why I won't bother; it took 2 1/2 years for the seller to come to his senses. Of course, by pricing it so high to begin with, the seller missed what was left of the bull market and sold on the downside, all to his loss - I doubt this house was $1,000,000 too high in 2006, but it sure was by the time he sold it.

On a cheerier note, Joann Erb's listing, direct waterfront at 200 Shore Road (close to the beach), was listed June 26 this year for $8,000,000 and has already gone to contract, demonstrating again that a beautiful newish (5 years?) house with spectacular waterfront will trump price, a busy road and a narrow lot, every time.

Well, almost every time. 23 Eggleston Lane isn't a new house but does have waterfront on the Cove and a dock. It originally asked $8.5M and dropped again yesterday to a new price of $6.975. You'd think that a $1.5M chop would speed things along but we'll have to wait and see.

26 Mayfair Lane originally asked $8.375M. 547 days later, it sold for $6.250M. I won't presume to read the minds of sellers, but these seemed quite elderly and I wonder if they really wanted to get a high price or just got some bad advice. Either way, it's tough to keep your house in showroom condition for almost two years so, unless you like that sort of stuff, I'd price it realistically and move on.

The glaciers are melting! The glaciers are melting!

Bruce Museum has mounted an exhibit depicting the melting of glaciers all to scare little kids and prove the wickedness of our ways. Fine and dandy, but I do wish they'd thought to include in the exhibit a reference to wooden structures dating from the 12th Century emerging from the melting glaciers in Switzerland, or even some indication that not all scientists agree that the current warming spell is unprecedented in human history . Because, if the earth has undergone this sort of thing in recent history but before the small scattering of humans had the numbers to significantly affect the climate, then perhaps we should pause a bit and reconsider shutting down 80% of the western world's economy. Just a thought.

Seller's season?
A reader asks about the upcoming fall season but I confess that I don't know what's going to happen. Historically, the spring season began in late January, continued through March and early April, then cooled off when all the buyers who wanted to get in their house by the end of June had found a house. Summers tended to be slow, but there were buyers who wanted to be in their new house before school started so they remained active and we usually saw a fair amount of activity. I always liked looking for houses with buyers in July and August because so much of our competition - other agents and buyers - tended to be away and the search could proceed at a more leisurely pace. The Fall market began after Labor Day, roared through the next ten weeks and then shut down for the Thanksgiving-New Year holiday season.

This year looks pretty dismal, to be honest. There is a scattering of buyers around - one of my listings is being shown today, in fact - but certainly their numbers are way down and there's absolutely no sense of urgency. And why should there be? Mortgages are hard to find, house prices are dropping, we're threatened with a possible string of bank runs, Wall Streeters are jumping out windows, Iran threatens war (unless, as it insists, the threat to wipe Israel off the map "was just a joke" - ha ha ha), the Demmerkrats loom on the horizon, etc. etc. If I were a buyer but didn't need a house right away, I think I'd wait. Of course, sellers are getting nervous, too, so what might have been an unacceptable offer six months ago may very well be received with gratitude today. If the market does rebound by spring (big if), that opportunity may be gone.

All of which is to say that I may go on vacation in August and, if I find myself in a nice place, I just might stay there through the fall.

Oops!
54 Rock Maple Road (off Stanwich) was originally listed for $12,450 last year (thanks for the correction by one of the commentators below. I thought it crazily over-priced at the time and said so (without identifying it) in my column. Apparently the market agreed with my assessment so it hasn't sold and today it was marked down, again, to $6,950,000. The sad thing (for the seller, at least) is that a lot of folks in the $7,000,000 market last fall never saw this place when it was pegged at almost $12M (notwithstanding the pleas of one of my commentators, agents just won't waste their time showing grossly over-priced houses. The seller is obviously not serious, so why bother?. They either bought something else, like my own clients, or moved on. Either way, there are fewer buyers in that price range now than there were a year ago, so an opportunity was missed. Where's the bottom for this house and the market in general? I don't know.

A Practical Seller
Nokia, the cellphone people (they also used to make fine snowtires, but I believe they've left that business) bought 30 Owenoke Way in Riverside for one of their executives two years ago(6/29/06) for $2,950,000, down from its original asking price of $3,450,000. The executive having presumably moved back to Finland, the property is back on the market, asking $2,995,000. The company may or may not get that desired appreciation of $45,000, but at least it hasn't mistaken a flat or falling market with a soaring one.

5 Lockwood Drive, in Old Greenwich, seems to be taking a more positive view than mine. This house failed to sell at $2,950,000 in 2005 and was withdrawn. Now it's back, still asking $2.95M. I'm not at all sure that the market is better today than it was in 2005. The seller obviously would disagree.

Falling in Love
It almost never happens, at least in real estate. It's true that, in 1954, my parents saw a house in Riverside with a beautiful library, with fireplace, looking west over a huge backyard and my mother did immediately fall in love: she envisioned having her afternoon tea in that room, with a crackling fire behind her and her wonderful children frolicking in the back yard. My parents bought the house, but the tea thing never happened - five kids did, and our squabbling, noisy behavior put paid to that dream. A typical outcome for most real estate fantasies.

But other fantasies persist: the stranger who will fall in love with a house while simultaneously agreeing to pay more for it than a comparable house, the "foreigner" who, lured to Greenwich by some "international" firm's website is shown your house, converts Euros to dollars in his head and makes you a full price offer, or Elvis returning from Mars in order to reestablish Graceland on your site. Don't hold your breath for any of these to occur.

What you as a seller might want to do is have your agent arrange for you to see two or three houses that she feels are competing for your buyer, then go see them while maintaining an open, objective mind. Leave your memories and life's adventures behind when you go. The swing set that your now 22-year old daughter played on when she was three holds no value, sentimental or otherwise, for a buyer. Same for that secret flower garden where your wife hosted Brownie troop meetings. All warm memories for you, and worth nothing to anyone else. Memories aren't a factor in pricing. On your tour, check out the kitchen - are you offering Formica counters and 40 - year-old cabinets? Was your bathroom last updated during the Coolidge administration? These may indeed have been "good enough for my family", but you're trying to sell the place to a new family, not keep yours in place. Adjust your price to your competition.

And if you have renovated your house, know that all the cherry flooring, Sub-Zero appliance and coffer-ceiling libraries you've installed probably don't set your place apart from others in your price range - they all have such things, or lack them, depending on that price range. If you've got all those amenities and your competitors don't then congratulations: you've priced your house right and you should expect an early sale. If it's the other way around, you're doomed.

Alternative Energy Hogwash
AlGore has demanded that we stop all production of oil and switch to "alternative energy" (undefined) by 20015. How are we to achieve that? He doesn't say. Nor would the very nice young college student who visited my house the other evening, soliciting signatures on a petition that "was in favor of alternative energy". "How are we going to get energy produced in Arizona to homes in Connecticut?" I asked. She was a little imprecise in her answer but I didn't press her - she was about the age of my own daughters and there was no way I wanted to be mean to her. But for all you fans of science fiction stuff, here's Steven Den Beste's take on the subject. He makes my point with far more clarity and succinctness than I can.

The other education shoe drops
Despite its cheery headline today,Greenwich Time does finally get around to reporting the bad news: test scores for writing and math are down for elementary and middle school students. The end of the world is not upon us - almost 80% of the students are at at least grade level in these skills, but the future for the failing 20% looks bleak. There were some thoughtful comments submitted in response to my previous post on this subject, and I do sympathize with teachers who face the unenviable task of drumming knowledge into thick skulls distracted by imessages, the latest U Tube and last night's results from American Idol, but what he heck are we doing here? Some years ago, while trying to make a living as a writer (didn't work, but it was fun), I hired on as a Kaplan tutor for LSATs - Law School Admission tests. My students were all college graduates and eager to master the test, something you don't often encounter when teaching high school students, and I had reasonable success guiding them through the logic and reading comprehension questions that comprise most of the exam. But I was struck by their complete lack of historical and literary knowledge. I'd refer to an event, or a line from Shakespear or even a post WW II classic and be met with blank stares. Edmund Burke said that without continuity, men 'would become little better than the flies of summer"; we're fast approaching that level.

My own beloved daughter, a graduate of the high school, has an appalling lack of 20th Century history and I wouldn't dare to test her knowledge of eras predating that. I once, after seeing her reading some insipid bit of fluff for her English class, wrote to her teacher, who happened to have taught me English in 1969-70, my Junior year. I pointed out that we'd read "Look Homeward Angel" that year, which opened up the entire world of Thomas Wolfe and his works - I think I read them all. "So what's happened?" I asked. He replied that, today, if he assigned anything even approaching the difficulty and length of Wolfe, his students would simply refuse to read it.

I don't pretend to know how to instill a love of learning and the aptitude to apply a keen mind to difficult tasks, but if we can't do it in Greenwich,with all its advantages, I suspect that the Indians and Chinese will figure it out. And then won't we be in trouble.

Update
I agree with the comment posted below about seizing control of our schools back from the union and our superintendent. For an example of how this was done in Los Angeles, check out this article

Tips for sellers
I don't have many, alas. The Wall Street Journal ran an article recently on just this subject (not worth linking to, as it's subscription only) and it had eight or nine tips that we Realtors have been preaching for years. Clear out the clutter, paint to refresh, fix as many defects as practical, don't spend a whole lot on major renovations and, above all, don't over-price your house. The author said that, depending on where you live, expect to sell your house for as little as 50% of what it was worth in 2003. The situation is not that bad in Greenwich, but I recently had, then lost (thank God) a listing that was hugely over-priced by its owner. He took what he'd paid for it three years before, calculated a 7% annual appreciation, added up the money he'd spent on renovations, threw in commissions and taxes and announced his price. Despite my warning that the market no longer supports that kind of financial "thinking" he insisted, then became furious when we had no - literally no - showings in 3 months. He insisted on being released half way through his six month listing contract and I was glad to let him go. The new agent, four months on, has yet to sell it, despite a modest price reduction.

One reader urges me to "think outside the box" and come up with ideas for sellers, aside from pricing a house properly. Unfortunately, there is nothing I know of that will overcome a bad price. I've seen cruises, increased commissions and huge bonuses offered to any agent who brings in a buyer, but aside from ethical concerns (how can I claim to represent a buyer and then recommend an over-priced house because I can earn a Caribbean junket?) I don't think they work. Neither do classical piano players at broker or public open houses, clowns handing out lottery tickets or painting a house day glow orange.

I do believe in decluttering a house, and I mean a severe cleansing of all or almost all of the objects that make your house personal to you: family portraits, kids art on the refrigerator, that nude of your wife hanging in the bedroom (I've seen two of those) etc. Once you decide to sell your house, remove your personality from it to make room for a potential buyer to envision herself living in it. That's hard to do when she's tripping over 4,000 stuffed toys in the playroom. If you don't believe me, take a tip from David Ogilvy. I have an occasional difference of opinion with David on his initial pricing decisions, but you will never see an Ogilvy listing that isn't neat, pristine and in move-in condition. It's a technique that's worked well for David over the decades and it will work for you, too.

But price it right. If you think you've done so, and no one's making offers, you were wrong and you should lower the price, immediately.

460 North Street
This mansion, across from St. Michael Church, is an outstanding old mansion whose original grounds have been sliced down to just under 4 acres. It last came on the market in April '03 asking $12,500. I was pretty new to this business then so when the cop directing traffic asked me as I was leaving,"what's it going to sell for?" I had no hesitation replying, "at least three million less than they're asking". I was wrong: 18 months later it finally sold for $4,000,000 less but, to be fair to myself, that extra million dollar wallop might have been caused by sitting on the market so long.
In any event, it's back on the market now, after what its agent claims was "a total renovation", for $11,950,000. That may still be too high - I haven't seen the scope of the renovations, but it's interesting to see the drop in expectations from 2003 to now.

Taking a different approach, the owner of 101 Dingletown Road put his house up for sale in June of this year at $5,785,000. Finding no takers he raised his price three weeks later to $5,995,000 and, when that still didn't work, raised it again yesterday to $6,395,000. I have never seen this loony strategy work, so look for this house next year at $12,500,000. It will still be for sale.

Update
I had a chance to tour 460 North Street this morning and I was impressed. The "total renovation", a term used with alarming flexibility by some Realtors, was indeed thorough; the custom, leaded glass thermopane windows, for instance, cost over $1M according to the broker, and I believe him. New roof, new kitchen, new baths, new HVAC, etc., all combine to make this house worth at close to its asking price and certainly closer than it was under its previous owners in 2003. I like its proximity to town and because it's set way back from the street, road noise seemed neglible. Neither I nor any of my customers have this kind of money, darn it, but I can only hope someone still does and is willing to spend it in this market. In past years, this house would go in a heartbeat. It may take longer now.

School test scores drop.

Greenwich 10 th graders seem to be doing as poorly on math, science and reading scores as their counterparts in other parts of the state, which baffles me. We're a town comprised of, in the main, well educated parents with an abiding interest in the academic success of their children. I can understand why a kid in Hartford, with a single, drug addicted mother and a slum as living quarters might not be able to read at grade level, but Greenwich? We spend more per pupil than any other school district (with the possible exception of Hartford) for poor results. Why? And what's going wrong in our schools? Even if you, like me, have no children in school, this issue affects your pocketbook - real estate values are hugely dependent on the quality of public education. I doubt we need to spend still more money on the issue, but we ought to find out why the dollars we are spending achieve so little.

Update
A comment below takes me to task for writing about slum kids in Hartford. I, too have at least a little experience trying to teach such kids; in 1969, as a high school student, I tutored a young man in Trenton at his house which I think fairly could be described as a slum. Our tutoring sessions were constantly interrupted by his noisy siblings - they had no other room to play in - while his very young mother, clearly on some kind of drug, snoozed in the corner. Far from denegrating kids like that, I was attempting to cut them some slack. Maybe that's the "soft bigotry of low expectations" but I contrast that student, eager to learn despite his living conditions, with spoiled Greenwich kids and conclude that our kids, at least, have no excuse for not learning.