Funny
Somewhere, a young lawyer is crying for help.

More on 25 Beechcroft
Peter Janis, listing agent for this house, is miffed hopping mad. He called today to point out that I haven't been in the house to appreciate its quality and that, in his opinion, the price of this house has nothing to do with "the numbers". With deference to Peter, whom I like and know to be a good, knowledgeable agent, I think numbers do control for at least two reasons. First is the affect a sale across the street for $6.2 has on a house going for $7.950. The lower priced house may indeed be, as someone described it, "a total fiasco" but what does the buyer know? Two 9,000 sq. ft houses, both brand new, one on a pond and the other across the street from it, how much does a little body of water add in value? I suspect that the answer is, "not $1,750,000". One can point out all the special features in a house, its superb quality and its great flow, all for naught. At least in my experience, the buyer will still ask, "so why would I pay that much more? They both have plasma TVs in the master bedroom, right?"

The second reason numbers count is that bank appraisers count them. These guys can't get into the houses they base their comps on so they mostly ignore special details built into the house they're examining. Does #16's construction match that of #25? They don't know, so they don't care. They look for the most recent sale in the neighborhood, calculate its square footage and age, toss a little pixie dust into the air and presto! They have a value. In this case, the appraiser need merely look across the street to see a house the same size and age of the subject property and, when he learns that it sold just last week for $6.2 million, he's going to be inclined to value the house he's appraising at close to the same price. Or so I think. I'm wrong on all sorts of things (like how to spell Patrick Daniel Moynihan) and I could be all wet on this one. I don't want to see Peter or his listing encounter difficulty; I pointed out the two houses merely to illustrate what I fear will become the dreaded domino effect in Greenwich housing, as more spec builders dump their projects for whatever they can get.

Well Darn!
There were 6-8 comments lined up waiting this morning for posting. I clicked on them and then pushed "reject" instead of "publish" (the buttons on my iPhone are too small for a clumsy-fingered guy like me) and now they're ...who knows where rejected electrons go? Anyway, sorry - please write again.

29 Irvine, OG
Two Sales of Note

29 Irvine sold yesterday for $2,150,000 which is a little less than 75% of what was asked for back in May and possibly far less than its original price in January - I can't tell; all records of the original price, except for the date of the listing contract, have disappeared from the Greenwich Multiple Listing Service's records. Would the GMLS expunge records? You tell me.

3 Old farms Road (north of the Post Road, in Old Greenwich)sold for $1,525,000, 76% of its original asking price back in April, $1,995,000 and $225,000 less than they paid for it ($1,750,000) in August, 2003. Ouch.

Lies, damn lies and statistics.
A real estate columnist in my old paper writes today that

"The Pending Home Sales Index representing contracts signed in August increased 7.4% from an upward revision in July and is 8.8% higher than August 2007."

That would certainly be encouraging, if it were accurate, and I'm confident that her paper will receive no complaints from its real estate advertisers about her column. And that, according to the paper's editor and publisher, is precisely the point.

But what if readers are being delivered a wheelbarrow full of dung? Here are the real statistics for Greenwich contracts.

July, 2008: 39; July, 2007: 40. Call it a draw.
August, 2008: 22; August, 2007: 46. That's 48% down, not 8.8% higher, by my math (and, though I don't pretend to understand what an "upward revision from July" means, Aug. '08's contracts represent a 56% decline from the preceding month, not a 7.4% increase).
September, 2008: 24; September, 2007: 33 - 28% decline
October 1-17, 2008: 6; October 1-17, 2007: 17 - 65% decline.

The last Democrat I admired (and probably ever will), Daniel Patrick Moynahan Moynihan, once said, "everyone's entitled to his own opinion, but not his own facts." At least one paper in town didn't get that memo.

NYT: House prices have a long way (down) to go. Darn it, that ol' pessimist IB'er who plagues these pages must have gotten to them!
I'm kidding about our local Casandra of course and besides - in my darker moments I completely agree with him. One thing to note in the article is the "home price vs. rent ratio". According to experts, whoever they are, that ratio should be 15:1 and in parts of Florida it's still as high as 22:1, indicating plenty of room for more deterioration. What good are ratio's like this? Well, an earlier commentator on this blog noted that the price to earnings ratio was still way above historical levels and predicted that stocks would continue to fall. He was right.
I really don't know what Greenwich's sales to rent ratio is but I'll find that out today (hey - it's early, gimme a break) and post it here. I'm guessing that it's way above 15.

Bye, Bye!
Sternberg Quits
Our School Superintendent announced yesterday that she will not seek to have her employment contract renewed. She leaves in June.
Well, even if her students can't, now we know that Sternberg can read writing on the wall.
Time to consider Peter Tesei's (and others') idea of selecting our next Superintendent from among the ranks of our current principals, who presumably know the town, its students and the parents. And if none do, who are we hiring as our principals?

London Bridge (to NYC) is falling down This Britisher looks at the falling pound and Euro, examines this years sales of expensive New York condos to Europeans and concludes that the New York real estate business is about to fall on hard times . Perhaps he's hysterical [a newspaper reporter? You're kidding,right? Ed.] but bad news for that market is bad news for ours. Who do you think is, after selling their city co-ops, plunking the cash down here?

Politics for a Change! Biden funnels $2,000,000 campaign loot to family . But don't worry: Aides to Mr. Biden said all of the payments he has made to family members or their employers were aboveboard.

Well that's a relief. I was worried that, after only 38 years in Washington, the man had been corrupted!

Leather Jackets
When I sold my first book in 2000, I received a nice advance from the publisher and, suddenly flush with cash for the first time in years, I indulged myself: I had always wanted one of those cool horsehide WW II flight jackets and, as a young lad, my father forbade it - too much of a hooligan look, he felt. Well my father had died 12 years before, I was as adult as I'd ever be and so I went searching for the real thing. I found it at Lost Worlds, Inc., the link for which is above. I couldn't convert their pictures into postable jpegs (I'm sure it's possible but not with my limited skills) so you'll have to use the link to see the product. Or put up with my description. [ figured it out - God bless Google] Real horsehide, meticulously manufactured in NYC to the original Army Air Corp specifications and, all in all, a terrific jacket. Mine's 8 years old now and it's just about broken in. The only thing that's ever gone wrong with it was the little pull tab for the zipper that fell off last spring. An email to the owner, Stuart, got a replacement in the mail, free, that very same day.

So great service, too. They also make some good looking motorcycle jackets (my father would spin in his grave), 1950s western shirts, and all sorts of old fashioned quality garb that I've seen only in old movies.

I have the bonus of being reminded, every time I slip on my jacket, of my first publishing success. You don't need that rush to enjoy this clothing, just a boyhood memory of 12 O'clock High or Gary Cooper facing down bad guys on Main Street. So go to their website and check them out. Great company, great stuff. And if you know how to convert a "web archive" into a jpeg, please write.

Another funny tale about 25 Close Road
Funny to me, anyway. When my first book, The New Millionaire's Handbook had been accepted for publication and was being illustrated out in Kansas City the illustrator was obviously unable to comprehend the size of the monsters we were growing here in Greenwich. He kept sending me drafts of what he thought were mansions and I saw as hovels until, frustrated, I drove my daughter Kat and her camera up to this place and had her take some shots of it as it was nearing completion. I sent those off, the book came out and I thought nothing more of the house until it came up for sale. I brought my book to the broker open house and showed it to the listing agent: "Look! Your house is all over my book! Isn't that swell?" She closed the book and snapped, "put that away!"

As I said, funny to me.

Curmudgeon! From the comments section, this gloomy assessment from Ib'er, or retired investment banker:

Chris, I would agree that pricing will not go to zero.

I am beginning, however, to believe that the real estate correction is going to be much more severe than anyone is currently prepared for. Most prognosticators offered their peak to trough pricing views assuming a not severe recession or significant rising unemployment. I believe we are headed for a severe recession with much higher unemployment.

How far this will drive down prices I cannot guess. Nevertheless, the aforementioned factors added to the destruction of wealth in the stock market and lenders returning to prudent lending standards are/will be massive headwinds for future real estate pricing.

Retired IB'er

If you'll provide your address, IB'er, I'm sure the Greenwich Board of Realtors would be glad to send you a copy of "Everything's Coming up Roses", just to cheer you up. I've worn out my own copy and it didn't do me a damn bit of good.

Mortgage Money
Contrary to what you may have heard, it's still available, and at pretty good rates. My pal Nancy is in the process of refinancing (oh, those wonderful student loans!) with my own firm's mortgage banker, Mark Hawkins (203 257-5805) and approval was almost instant. I'm not flogging Ravies Raveis (tough when your boss points out that you spelled the name of your own G--D--- firm wrong) here and I certainly don't get a piece of the action (illegal and, by odd coincidence, unethical) but a number of large real estate firms have, out of self defense I suppose, pooled their cash and struck a deal with those banks that are still lending. The firms act as mortgage bankers rather than brokers and loans are getting done (for non-real estate customers as well as buyers, fyi).

What's changed, then? Nothing, if you got a loan 10 years ago, plenty if you borrowed last year. Credit score should be over 700 (there are exceptions, but 700 is a good starting point) you're definitely going to be putting 20% and perhaps even 30% down, documentation of income and assets is required - no more "no-doc" loans - appraisals may be tighter, and so forth. In short, the bankers have adopted the Who's credo as their own: "We won't be fooled again!" Of course, when it comes to reviewing the banks's own behavior over the past decade, one might be tempted to ask who was fooling whom, but that's for another day.

What to do with bankers who cling bitterly to their guns, religion and money? The NYT's Floyd Norris says, "jawbone them". Worked on asses, I recall, or do I have that wrong? IB'r, CEA, all you other financial wizards out there. Any suggestions?

In the Crapper Outhouse
In the past ten days, exactly four single family houses have gone to contract. That's not good, for sellers, but if you're tempted to buy right now, your position is pretty strong because you'll be just about the only game in town.

Spec Home Update
Or, as suggested by CEA and borrowing from Instapundit, "Carnival of the Spec Homes".
Either way, there are 44 new homes on the market priced from $6 million to $25 million. Most, but not quite all of them were built before the sellers had found buyers (Tommy Hilfiger's, $25 million on Round Hill Road, appears to be lived in) and at least one of them, 20 Langhorne, remains unbuilt and is offered as a completed house at $10.998 (down from $14.9) or as land, for $2.995. I'd bet it sells, if at all, for a building lot and I'm confident no more money will be put into this project to create another unsold house.

But that still leaves a large number of seemingly unwanted, very expensive buildings all looking for buyers. How many of those were put up by builders without the financial resources to hold on through this "rough patch" - or, if you prefer, "eff'in unmitigated disaster"? My guess is, not so many and if I'm right, we'll be seeing these at huge price reductions - perhaps 50% - or as bank-owned properties. Banks are always interested in getting their money back but they aren't in the business of holding real estate and they like to move those houses they do end up with so they, too may start whacking prices. What will that do to the other spec homes? Common sense suggests that if your stone and clapboard, 11,000 sq.ft. rah da da da house, priced at $12.5 million, is competing with essentially the same house down the street that's asking $5 ... you're in trouble.

Update: The house pictured here, by the way, 25 Close Road, isn't included in the inventory because it's currently off the market. Built in 2003 (by a Russian, I believe - a pioneer!) it never sold, despite all sorts of price "adjustments" from $15.9 million, up to $18 million and down again to, eventually, $15,750,000. Nothing worked. Of interest to me at least is that the seller went through about 5 brokers (it couldn't have been the price, it must have been the broker's fault) and only the last bothered to take her own pictures of the place - everyone else just used the first broker's efforts. I'd expect a little more if I were trying to sell a house in this price range but then, they were probably all very well dressed and to some sellers, that's all that matters.

From Dr. Helen (a/k/a "Instawife"): Is it time to go John Galt?

Perhaps the partisan politics we are dealing with now is really just a struggle between those of us who believe in productivity, personal responsibility, and keeping government interference to a minimum, and those who believe in the socialistic policies of taking from others, using the government as a watchdog, and rewarding those who overspend, underwork, or are just plain unproductive.

Obama talks about taking from those who are productive and redistributing to those who are not — or who are not as successful. If success and productivity is to be punished, why bother? Perhaps it is time for those of us who make the money and pay the taxes to take it easy, live on less, and let the looters of the world find their own way.

Sounds about right to me.

Gee, this doesn't look like any fun.

Chris Buckley fired
Christopher Buckley endorsed Barack Obama last week and has now been fired from his columnist's job at National Review, a magazine founded by William F. Buckley, Chris's father. What the F...?! I'm sensitive to the issue, fresh as I am from my own firing from the Greenwich Post for offending real estate advertisers, but you don't hire a columnist for his opinions and then fire him when he expresses that opinion. Not if you're a serious journal, you don't. Greenwich Post is just fluff, so I don't really give a hoot (and my blog is ever so much fun to write) but I subscribed to National Review for many years and was always impressed by its seriousness of purpose and excellence in writing.

I am by no means an Obama supporter, as regular readers of this blog will have suspected, but I am a huge fan of Buckley - his novels are some of the funniest works to come out of Washington ever - and if he has his doubts about McCain well, who doesn't? I would never resolve those doubts in favor of McCain's opponent but Buckley did. I'd say, "go, and sin no more" but I certainly would never stop reading him. This bitter election is causing once rational people, of all political persuasions, to lose their friggin' minds.

25 Beechcroft
Another Beechcroft spec house
This house is on the other side of Beechcroft from # 16, also a spec house, that started at $8.5 million and finally sold last week for $6.2. Undeterred by his competitor's loss, this past June this builder raised his own project's price to $7.950 from $ $7.5 million (which in turn, was an increase from the original price of $7.2). He paid $2.950 for the land back in July 2007 so I suppose he's stuck at a high price, but the sale price for the place across the street can't be encouraging.
Assuming a $400 per square foot construction cost ($3.6 million and adding in land cost of $2.950, this guy has $6,550,000 into the house before he begins considering pools, landscaping, conveyance taxes, commissions, overhead, etc. Not much wiggle room there, so he'd better hope for a (very) strong housing recovery, starting soon.