Monthly Archives: May 2006

Popping Bubbles?
There are probably more price reductions being filed with the Board these days than there are new listings. Evidence of the great bubble burst? I think not; rather, we’re just seeing prices adjust to where they should have been all along. Jean Ruggiero, for instance, just took over a Lake Avenue listing that had been previously priced at $5,700,000. Jean dropped its price to $3,150,000 and had it under contract within ten days. We’re not witnessing a $2,550,000 drop in value – the house was never worth $5,700,000. Another example: a builder bought some land a couple of weeks ago for $2,500,000 and re-listed it the next day for $3,500,000. When it eventually sells for something much closer to its original price, will we have seen a bursting bubble or just a market place intervention that separated the builder from whatever he was smoking and returned him gently to earth? The latter, in my opinion.

Insurance
The other week I mentioned a beautiful old house on Cliffdale Road that, while in the process of being restored, burned down. Chubb Insurance paid to have it rebuilt exactly as it was, even down to antique floorboards and moldings. The telling of that story reminded me that it might be time to once again discuss the various types of coverage out there, so I called Raveis’s Insurance guru and fellow Greenwich resident, Mary Dowd to discuss it (no, I get no kick-back for mentioning Mary – that would be immoral, illegal and fattening – but I try to find knowledgeable people in this business and exploit them mercilessly). Mary says there are three basic types of insurance: market value, which banks care about, just protects the bank’s interest, reconstruction and guaranteed replacement value. You’ve probably got more invested in your house than just the amount of the mortgage and, since part of that mortgage reflects the value of the land, you’ll want better protection than market value. Replacement cost insurance is okay (I have it) but beware of caps – many firms limit payouts to 125% – 150% of the face value of the policy. This caused a lot of heartache in California when homeowners lost their houses to wildfires and discovered they didn’t have enough coverage to re-build (same thing happened after Katrina). The most expensive type of policy, guaranteed replacement value, means just what it says: they’ll rebuild your house, regardless of cost. So if you have a very special house, with a lot of exotic custom features, you might want to have your policy reviewed by an expert to see what coverage you actually have. Your current agent can do this for you, and I’d recommend scheduling a checkup. Or call Mary at (203) 767-9049. She can interpret your current policy and tell you about others, all, I understand, without pressuring you or moving permanently into your home.

24 Rocky Point Lane
This is a great listing of Bill Schoonmaker’s that should have flown off the market but, a month after it was listed, it’s still available. The original 1932 house was raised above the high waters that occasionally afflict this section of Old Greenwich and completely renovated. There are fabulous water views from almost every room, a huge (for OG) backyard and a purchase on this street moves you to the head of the waiting list for the Rocky Point Club. As a sailor, I never liked Rocky’s unprotected mooring field but it’s a wonderful neighborhood beach/swim club filled with very nice, unpretentious people; something that can’t necessarily be said about some other “neighborhood” clubs which seem to have strayed from their origins. $2,995,000. Buy it.

Zillow.com
Have you tried this site yet? It purports to tell you what your house is worth but it’s not yet ready for prime time. Example: it claims a five year 125% appreciation rate for one street, based on one address and zero appreciation for the same street if you plug in an address on the opposite side. Another example: it gives a price range for another house $1,987,260 (sounds so precise, doesn’t it?) to $2,958,810. “Official” price, $2,200,000. I valued the house at $3,250,000 while the agent who listed it says $3,650,000. I think I’m closer to the mark than the listing agent but both our estimates are a long way from $2,200,000. Zillow’s a work in progress but, so far, it’s not much of a threat to my industry.

Painter Follow Up
Charlie Ford’s phone number is (203) 536-9106. Good guy.

Ah, Entitlement!
From the New York Times comes this story of the working poor: an agent was showing a couple $3,000,000 weekend homes out on Long Island. The wife didn’t like the selection and, turning to her husband snapped, “If you had a good job, we wouldn’t have to live like this!”

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Days On Market. Sale to List Price Ratios
I’ve mentioned these two worthless statistics before but it won’t hurt to bring them up again. At first blush one would think that these are two numbers of vital interest to buyers and sellers; they would be, if they weren’t so often manipulated. The Board claims to be doing something about days on market but so far, a remedy has eluded it. So here’s how the process currently works: A house come on the market in, say, January ’05 at $10,600,000. It sits unsold through numerous price reductions before its listing is deleted or expires and it’s immediately re-listed at yet a still lower price. It finally sells in April of this year for $8,500,000. Time on market would appear to be, to a rational person, 16 months, and the sales to list price ratio would be 80%. Ah, but you aren’t a professional Realtor – if you were, your logic would tell you that days on market only began at the time it was re-listed and you’d calculate the sales ratio based on the house’s last asking price of $8,995,000, giving you 48 days and 95%, respectively. I am not picking on this house, by the way; this is done all the time. I use its example only to illustrate that, until our Realtor Association’s data collection methods are revised, you should be highly skeptical of numbers that show the average days on market is 118 and the average sales to list price ratio is 96%. It ain’t necessarily so.

Takikomi in Cos Cob
Because I’ve never detected any evidence of use of those ten-burner professional stoves and million dollar kitchens that are now standard in town, I assume that Greenwich does takeout. If so, here’s a great opportunity to expand your taste horizons. Takikomi is a hole in the wall at 395 East Putnam Avenue, just beyond (heading east) Dunkin Donuts in the Minute Man dry cleaners mall. It specializes in absolutely delicious Japanese foods and, while it holds two tiny tables, it’s really a takeout and catering operation (free delivery on orders over $25). I’ve driven by the place every day for three years and only just discovered its existence. I’ve been eating my way through their menu ever since. Lots of fish, but also many cooked items: Karaage (chicken), pork cutlets, teriyaki, hibachi, etc. Everything is served in large, divided trays – easy dining, easy clean up, and everything is good. Inexpensive– complete meals run from $7.50 to $10.95 and nice, pleasant sales help. There’s a separate menu for corporate and private party catering. (203) 422-0448 or you can order online at takikomi.com

21 Hendrie Lane
Mary Louise Morgan has just listed this Riverside house for $2,295,000 and it seems well worth its price. Its present owners completely renovated it three years ago and it shows nicely. Four bedrooms, huge eat-in kitchen (see above) and a reasonable backyard, for Riverside. I still miss my family’s acre+ on Gilliam Lane but, like the pick-up baseball games we held there, those days are long gone.

Summer Jobs for Kids
Just as no modern, responsible parent would let their child engage in any unsupervised sport activity, every summer job for the little darlings must somehow nurture their future as investment bankers, or so it seems. I ran into Charlie Ford the other day and we discussed just this issue (as well as the crummy, disposable houses being built these days, but that’s another article). Charlie’s father taught me how to paint houses years ago and after he retired his son took over the business (he’s great, but I can’t find his number. Check back next week). Although Charlie is flooded with job offers he can only accept about half – not enough good workers in town and during the summer, the busiest time for exterior painting, no college kids. “Greenwich kids don’t do painting” he says, and I’m sure he’s right. Most seem to be off in the corporate world serving as unpaid interns. I think the children and their parents are missing something here. By working for Charlie’s dad, I learned all sorts of things: showing up on time, customer relations, time management and, once our crew was experienced enough to work unsupervised, responsibility and decision making. We made good money, too. Did the experience pad our resume? Probably not as much as an internship at Goldman Sachs, but I never worried about that. I still don’t.

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Listing Your Home
Two agents I know recently lost the chance to list a home because they each told the owner that her house was worth something like $2,350,000. Who got the listing? A third agent, who gave her price opinion as $3,350,000. The hopeful seller obviously believed that the third agent was a kindred soul who saw value where lesser agents couldn’t. In fact, the seller has probably done herself no favor and is in for a long, long period of showing her house to non-buyers. A case in point is a house in Greenwich that sold last week for $3,725,000. An impressive sum, but this house sat on the market since September, 2002, when it was priced at $5,500,000. That’s an awfully long time to keep your house in showroom condition. If you want to sell your house, price it competitively. If you just want to annoy yourself and give house tours to strangers, then stick a ridiculous price on it, buy yourself an open house sign and stick it on your front yard on Sundays. You don’t need a Realtor for that.

Fools Rush In?
An interesting Old Greenwich property showed up on the market last week and I alerted four different builders to its possibilities. All four, all experienced builders, passed – they have other projects going and didn’t want to over-extend themselves in this uncertain market. I can’t say for sure, but I think that, a year ago, at least one of them would have stepped up and grabbed it. Despite my own clients’ lack of interest, the property still sold, at a premium, in a bidding war, so there are still some bold builders out there. To paraphrase the old saw, there are old builders and bold builders but no old, bold builders.

As evidence of the above, two properties went to contract last December and between then and early April, when they actually sold, the buyer combined and reconfigured the lots and then designed and got town approval for two new 10,000 sq. ft. houses. The lots are back on the market, asking a $1,250,000 premium for those approvals and plans. It seems obvious that someone has developed cold feet and, if I were a spec builder of a $10,000,000 house, I’d be donning wooly socks too.

And the Reason for the Above?
Borrowing power has dropped. A year ago, a 5.75%, $500,000 30 year jumbo fixed cost $2,917 a month to service. Today, that same loan is at 6.75% – to keep the same $2,917 monthly payment, the buyer must borrow 10% less: $449,740. $1,000,000 in borrowing power last year? So sellers, adjust accordingly and buyers, get off the dime, because next year, things may well be worse.

Great Houses
Taste in housing is an entirely subjective thing, but I think Patte Nusbaum’s listing at 6 Jofran Lane, $2,950,000 and Diddle Mcallister’s at 230 Round Hill Road, $5,450,000, are two of the nicest, most interesting houses I’ve been in in a long time. Both are (gasp) contemporaries, which means they’re open, airy and filled with light. Taking nothing away from another listing on Jofran, a traditional colonial with low ceilings and lots of walls, if I were trying to sell No. 6 I would first show the colonial and, if a sense of claustrophobia set in, move the client next door to see and experience what $450,000 less can buy. They’d be blown away, if they shared my taste. That said, I bet the colonial sells first.

Classics
Don’t like contemporaries? Then check out David Ogilvy’s 1925 house at 40 Park Place ($3,995,000) or Dianne Carnegie’s 1917 house at 31 sawmill Lane ($9,850,000). Both houses have been completely renovated and restored and are absolutely beautiful. Park is one of my favorite central-Greenwich streets and demands and deserves a premium, so $4 million seems like a fair, intelligent price. The Sawmill Lane listing is far more expensive but it’s probably twice as large as the other, sits on its own three acres vs. 0.85 on Park, and abuts an additional sixteen acres of conservation land. Obviously, two different houses for two different buyers, but both are splendid.

Riverside Run Saturday May 13
When my kids were younger they’d make me put down my cigarettes, tug on my tennis shoes and pant through the entire three mile loop of this race. Lots of fun seeing my neighbors and their kids, some walking, but I was always amused at the sight of a few guys so desperate to win something, anything, that they’d come from out of town and sprint around the course, outpacing five year olds and family pets to claim a cheap trophy. That’s a pathetic cry for help, if you ask me.

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Price it, Sell It
For all the doom and gloom expressed over the current state of the market, houses that are priced right are still selling. My fellow office-mates, Bari Taylor and Dee Webber, listed 2 Lakewood Circle South for $4,500,000 on a Friday, showed it Saturday, had an agreed on price Sunday morning and it’s now under contract. So there are buyers out there, and they are buying, at the right price. This was obviously one such price.

The End of Lawns as We Know Them?
I read an interesting article in the Times last week about Scott’s new product, a genetically engineered grass that doesn’t need mowing, pesticide, fertilizer or (much) water. Environmentalists are generally supportive but worried about an “Ice-Nine” effect if the grass’s spores invade the world. Assuming that issue is addressed, this sounds like a nifty product, but bad news for the lawn care industry. Heck, between global warming ending snowstorms and now no more mowing, what are these guys going to do for three quarters of the year?

Building the Old Fashioned Way
Fine Homebuilding’s annual “House” issue contains a provocative essay from a builder who thinks the conventional method of building frame houses is out-dated, inefficient, unduly expensive and just plain wrong. He makes some good points. These days, a builder is more construction manager than craftsman, over-seeing as many as twenty different subcontracting teams, of varying skill, training and criminal backgrounds, all of whom show up and leave when they want to and often fail to arrive at all. One study in Arizona concluded that anywhere between 25% and 45% of the total time of construction of new homes is spent with absolutely nothing going on. That’s a lot of money to pay for carrying costs. Another point: the author, a builder for thirty-five years, confesses that it’s hard to do your best work when your fingertips are numb and you’re standing in five inches of semi-frozen mud. And so he advocates more factory-built components and less on-site creation, which he quotes an M.I.T. professor as saying “makes about as much sense as assembling a car in your driveway.” Commercial construction has already moved in this direction, with a buildings skin, structure and mechanicals built as three separate components. Anyone who has ever carefully framed a house and then watched as the plumbers and electricians cut it merrily apart to accommodate their product will appreciate the merits of a new approach. You can read more at the builder’s website, bensonwood.com.

Gas Prices
Okay, I realize this is a real estate column but as a real estate agent I do an awful lot of driving and $3.00 gas is a real annoyance (although I am glad I drive a Honda Accord and not an Escalade). Far more annoying than the price of gas, however, are the howls from politicians that this is all George Bush’s fault – there’s plenty of blame go around: who dreamed up mandating 55 different blends for different areas of the country, thus fragmenting our national distribution system? Who decided to dictate the use of ethanol, which, many experts say (it’s debatable) consumes more energy to produce than it yields and definitely adds additional cost? Who has stopped new, efficient power plants, natural gas pipelines, LNG terminals, the Long Island Sound power cable, offshore drilling, onshore drilling, arctic drilling, and on and on and on? In fact, we all did and if the trade off we chose was higher prices – the only thing, government subsidy and mandate fans notwithstanding, that will force conservation and make alternative energy sources economical – in favor of NIMBYism and Iowa primary politics then so be it. But let’s stop the whinging, eh? It doesn’t produce a single drop of gasoline. Repeat after me: demand (world-wide, see China) is up; supply is down – price goes higher, all over the globe. Even the dumbest, most cynical politician knows this in his heart, but demagoguery is such fun they can’t resist its allure.

Trees
And while I’m annoying my tree hugger readers, may I say a word against the latest proposal working its way through town, an ordinance granting third parties the right to bar tree cutting on private property? I like trees (almost) as much as the next guy, and massive clear-cuts like that which occurred on Langhorne Lane last year appall me, but we are already so over-regulated in town that the thought of yet another board is, in my opinion, nuts.

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