Uh, oh, if Slappy the Happy Clown's posted, it must be bad news!
That's right, boys and girls, Slappy's stopped by our studios to give you the week end round up on our real estate market. Four single homes went to contract this week and three of those were under $2 million. The exception was 11 Cob Island Road which after initially asking $5.750 million, finally dropped its price to $4.95 and found a buyer. Slappy is very sorry to say that that modest number of contracts is half of last year's, and last year made Slappy unhappy. Oh well, don't forget to drink your Cocoa Marsh
and then it's time for most of you to go to bed!

Update: Slappy has noticed that the Greenwich Post's real estate section, which used to have a column called "On and Off the Market" and featured homes newly listed and homes newly sold has been rechristened. Now it's just called "On the Market" - the sales are gone. Slappy doesn't blame the Post for this - the poor paper just ran out of material for the "Off the Market" portion. It's a sign of the Times, not of the Post.

Luddites at Play

Environmentalists to solar power: Drop Dead!
I have long argued that the Greens desire to destroy modern civilization and bring back the green gardens of Eden for a select few members of the human race: them. I've been called an alarmist, an idiot and even a real estate agent but you tell me: if they don't want coal, oil, nuclear energy, solar power or wind power (if generated inside wilderness areas or within view of their homes or from their car windows), what will they support? Nothing? Then how will we survive? The Greens like to say, "by using new, wonderful technologies that would have been invented long ago if they hadn't been squashed by Dick Chaney and his oil companies and that will be, once the messiah is inaugurated" but juicy conspiracy theories have not and will not power anything. Until we learn to harness hot air.

What do we do next?
Well, the House has passed the bailout bill and the DJI, which had been up 300 points earlier today, is now up just 60, and still falling. California can't find anyone to lend it money, which is worth pondering; California's economy is larger than that of France's, yet no lender in the world seems to think it's capable of paying back its debts. Things are about to get really interesting, really fast.

Bringing order from disorder
From John Tierney. I only saw one - life must be good (explanation in link)

45 Byram Shore Road
A reader asked about this house and here's what the records show. In 1999 it was a nice, if un-renovated 1896 mansion ( a mansion by 1896 standards - it's 5,000 sq. ft.) with deep water access - good for tying up your yacht, don't you know. It sold for $5.375 that year and just a year later, the buyer resold it to its present owners for $6.473, untouched. The market used to be like that, once - remember? Anyway, now it's been completely restored (still the same size, however) and put up for sale at $13.250. That's not at all a crazy price for this street and in better conditions I'd expect it to go fairly quickly. Today? I just don't know. There are certainly buyers out there who still have money and this is a beautiful piece of property so, ... maybe. Like everything else these days, we'll just have to wait and see.

Mark to Market as explained by a dummy.
I've been having a good conversation via the comments section with a couple of financial experts about the merits of the SEC's proposal to let banks escape the accounting requirement that they "mark to market" their portfolios of toxic loans. Marking to market means adjusting a firm's books to reflect the actual market value of an asset. If the market price goes up, the asset's value is adjusted accordingly. If it drops, however, well it's quite the other way around.

Right now, banks don't like the rule because the market value of those toxic loans is zilch - no one wants them. "But there really is value there," the banks complain. "If we carry them at zero our capital requirements will rise and since we don't have any more money, we'll be forced into bankruptcy!" The government has listened and now wants to permit the banks to assign a value to these assets at some level, as-yet-undefined, above zero. I, in my ignorance, opined that this made sense because, down the road, there would be value realized in these loans and why put still more banks out of business while we all awaited a recovery? I was quickly set straight by a couple of readers. Once you abandon the mark to market rule, they warned, you abandon the last vestige of accounting discipline and open the floodgates to "creative accounting". This is what brought us the Savings and Loan disaster and it will happen again, if we permit it. (The only remaining section of the New York Times that I will read is its Business section and here's a good article on this topic by Floyd Norris, "Mistakes of the Past Live Again" ). By the way, Warren Buffett thinks the idea stinks, too - hearing him say so during his interview with Charlie Rose the other night sealed the deal for me.

Why is all this in a quasi-real estate column, aside from Wall Street's collapse affecting our property values? Because, in my opinion, many home sellers are acting like those banks. They "know" that their house is worth more than its current market value and they refuse to mark its price down. Home values will rise again, they reason, so why admit that, today, their house is worth 20% less than it was last year? That's fine, if you don't need or want to sell your house right now. No accounting rule will force you to make the adjustment (unless you go to refinance your house) and you can just sit and hope, fingers crossed, until prices start climbing again - maybe in 2014, maybe sooner, maybe later than that; your guess is no worse than mine. And there's a comfortable feeling believing that your house is still worth what it once was - I do it myself; I see no need to acknowledge that my own $2 million dumpster duck isn't worth that anymore and I like the reassuring feeling of wealth it givs me.

But I'm not trying to sell my house right now so I don't have to admit reality. Neither do you, unless you are ready to sell. If you are then, SEC laxness or not, you'll have to get real.

172 Milbank Avenue
Here we go again
Yesterday you could have bought this beautiful house for just $3.999 million. Today, because you dawdled, its builder demands $4.250 - ok, I'm sorry - won't you please let me have it at its original price?
The listing agent is a good friend of mine and a real expert in real estate so her decision to move the price up during a week when everything else seems to be falling apart strikes me as ...odd. I'll have to ask her about her reasoning next time I see her.

Point Counter-Point
Whither the real estate market? We link, you decide.

Real Estate market driving you crazy?
Don't worry. Thanks to the hard work of our Senators who spent the week saving the financial world, you'll soon have cheap mental care available. Of course, there are those who think that this onerous requirement will do to health care what the Community Reinvestment Act did to the mortgage industry, but don't worry, be happy! ("Here: take this pill")

We helped bankrupt the banks. Now we're doing the same thing for health care! What does "mental health parity" legislation, which has now been incorporated into the big "rescue" bill passed by the Dem-controlled Senate, have to do with the nation's financial crisis? ... P.S.: Actually, the thinking behind the push for "parity" and the now-questionable decades-long push to extend mortgages to "underserved" groups seems eerily parallel: 1) Stodgy/greedy old bankers say they can't afford to lend to minorities who don't meet traditional mortgage criteria. But we have a noble social goal to fulfill and we know they're wrong! ... 2) Stodgy/greedy old health plan administrators say they can't afford to cover hard-to-diagnose mental problems (e.g., anxiety) and substance abuse to the same extent that they cover easy-to-diagnose physical problems. But we have a noble social goal and ....

Update: How much pork did these public servants stuff into their maws? How about $112 billion? Remember, it's a "crisis".

Uh oh
Leveraged buy outs next to go down? This reporter thinks so

Take Realogy, formerly Cendant, the world's largest real estate franchisor, whose businesses include Century 21, Coldwell Banker and Sotheby's International Realty. Its debt trades at about 75 cents (U.S.) on the dollar, a level that implies a fairly high chance of default.

This is bad news for Leon Black's Apollo Management, one of the world's biggest private equity firms. Its purchase of Realogy, completed in the spring of 2007, when the buyout frenzy was at its height, valued the company at $8.5-billion. It's safe to assume Realogy is worth considerably less today as real estate values go into the tank.

Say good riddance to Bear Sterns
I previously mentioned that Bear Sterns facilitated penny stock firms by providing them clearing and financing services, thereby enabling those boiler rooms to rip off unsophisticated dupes; the article linked above gives another reason we should be glad to be shed of this firm. It was 1997, the Community Reinvestment Act (CRA) which opened the gates to sub-prime mortgages, undocumented loans and the whole panoply of dubious lending practices was just getting going, and guess who stepped through first?

The first public securitization of CRA loans started in 1997 by Bear Stearns. The number of CRA mortgage loans increased by 39 percent between 1993 and 1998, while other loans increased by only 17 percent.

I realize that Bear Sterns was followed through those gates by every Wall Streeter who could afford a calculator (Warren Buffet said last night that there were three types of people on Wall Street: innovators, imitators and idiots) but if the market's going to start somewhere weeding out these schnooks, why not employ the FIFO method? Bye bye, Bear Sterns.

So who's lying, the Democrat Majority Leader or his spokesman?

Senate Majority Leader Harry Reid, D-Nev., pressed for passage, with the alarming news that one of the country's premier insurance companies was about to go bankrupt if the crisis was not quickly resolved.

"We don't have a lot of leeway on time," Reid told reporters in the Capitol. "One of the individuals in the caucus today talked about a major insurance company -- a major insurance company -- one with a name that everyone knows that's on the verge of going bankrupt. That's what this is all about."

He did not identify the insurance company, and later in the day Reid spokesman Jim Manley said the senator was speaking broadly and not referring to anything specific.

"Senator Reid is not personally aware of any particular company being on the verge of bankruptcy," Manley wrote in an e-mail to ABCNews.com. "Rather, his comments were meant to refer to the conditions in the financial sector generally. He regrets any confusion his comments may have caused."

Regardless of which man lied, the comments of this fine senator sent insurance stocks plummeting. Call me a cynic, but it occurs to me that these Dem's have a vested interest in a ruined economy for the election and are doing their damndest to achieve it.

Shocker!
New York Film Festival screens movie on Che Guevera depicting his executions of political prisoners, homosexuals and anyone who got in his way! Well no, in fact the movie omits that sort of filthy propaganda and instead glorifies the sadistic blood-sucking piece of scum. Gets glowing reviews, though from the usual useful idiots. But I wonder - did the headline surprise you? If so, does that tell you something about Hollywood and its reptilian denizens?

Update: for another view of this hagiography, try this.

This probably won't be the last dumb assumption I make today but it was the first
"CEA" whose comments on marking to market, real estate and other matters I have praised, has no wife, she is a wife. If you'd like to see a picture of the idiot in command of this keyboard, look to your right.

What fun is this?
Credit crisis spreads a pall over Silicon Valley

This should be interesting
A reader brought to my attention this monster on Round Hill Road which has been on the market since May at $25 million. The land it sits on has a history. It was originally offered for sale in 2003 as 9.9 acres at $9.5 million. It sold for $8.1 million (so much for $9.5, but a man's grasp should exceed his reach and all that)in August 2005 and 4.3 acres were split off and sold that year to this builder for $7.25 million. He must have had second thoughts because in November 2006 he tried to resell it for $7.45 million but finding no takers, he proceeded to build this 22,185 sq. foot mansion. He finished in May, put it on the market, and there it sits.

I hold no malice toward this builder. To the contrary, he's built a succession of beautiful, extremely well crafted houses over the years and sold each of them in the $6 million range. I don't know what possessed him to pay $7.25 for a parcel of land, however, because at that price he either has to sell the house he built on it for over $20 million or lose his shirt. So I hope, for his sake, he finds a buyer, quickly. But in this market, I also hope he has a second shirt.

Update!
My brother Gideon points out that the Helmsley price reduction of $30 million now holds the record for the largest price reduction in Greenwich real estate history. I declined a reader's request to identify the "King of Over Pricing" earlier this week but it's now a matter of public record that David Ogilvy can claim the title of "King of Price Cuts". Imagine that client meeting. "We're going to require a price cut." "Okay,sure - how much? 100 thousand?" "Er, no, a little more than that; let's say, .... 30 million?"

Time out?
One of the most successful builders in town, Jordan Saper, bought 29 Calhoun Drive this past for July for $2.375. Even though the market was declining then, the property, listed at $2.495, moved in just 13 days. But July '08 is not October '08 and today Saper returned the place to the market, asking $2.450. I doubt he'll get that, but here's my point: if a builder like Saper has developed cold feet on proceeding with a project, what does that say about the prospects for other land deals? Nothing good, I suspect.

Hurry, hurry, hurry!
The Helmsley estate has been dropped from $125 million to $95 million, a saving of a full $30 million. If you've been waiting, now's your chance. I once hazarded a guess, when the Queen of Bedford Hills Women's Prison was still alive, that the place might be worth $45-$50 million. The listing broker was obviously far more optimistic than I and remains so even today - but that optimism is dipping.

Oh, come on!
Greenwich Post reports today yet another assault on our coffers: a "Victim" sues town for sewer back-up . Look - I certainly regret that this poor lady had raw sewage sloshed around her basement and that foul odors permeated her home but without more - an allegation as to how, exactly, the town was negligent, I don't want her reaching into my pocket. Sewers back up for all sorts of reasons but most of those: tree roots invading lines, too much stuff entering through the toilet, you name it; are the responsibility of the homeowner, not her fellow citizens. "Emotional harm? "Punitive damages?" 'Attorney's fees?". Somebody hand this lady a bucket of bleach and a mop and tell her to get over it.

I may be being unfair here and the lack of specificity may be due to lousy reporting by the Greenwich Post rather than lousy lawyering (on the subject of reporting, it adds nothing to learn that the litigant's a single mother and unemployed - irrelevant!) I'm not reassured however, by this quote from our former First Selectman, Roger Peterson, who represents the woman and who is demanding that his former constituents pay his fees:

“What happened to her is extraordinarily egregious that the town has not stepped in to remedy this situation and to compensate her for the damages she has suffered."

"What happened to her is extraordinarily egregious that the town"? Did Roger screw up the English language like this when he was in government? All I remember of the guy was him running around Greenwich in his (town-supplied) car, trying to arrest people by showing them his phony Police Commissioner badge.