Who's out there lending?

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

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

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

Distressed loans

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

Cars in Greenwich

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

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

population growth or lack thereof.

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

Come on, you pikers!

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

Have you eaten here?

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

Decent house in Riverside, cheap!

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

August doldrums

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

Public hubris

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

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

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

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

Current Inventory

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

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

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

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

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

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

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


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

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

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

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

Maligning bluefish

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

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

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

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

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

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

One person shows at Al Franken campaign meet

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

Race to the bottom - newspapers vs. condos

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

Condos in Central Greenwich

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

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

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

Comments from a Retired Investment Banker

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

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

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

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

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

Retired IB'er

The New York Times writes about housing

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

Schools

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

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

SWAT teams

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

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

"Investments" gone bad

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

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

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

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

Bush - how we'll miss him

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

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

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

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