(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.