If you want to contact my publisher
It won’t do any good, but if you’d like to send along your opinion to my former publisher about his firing me, : Mhersam@hersamacorn.com will reach him. I’m just about to email him myself to cancel my subscription.
Monthly Archives: April 2008
If you want to contact my publisher
Wall Street’s latest Scam
That would be, “auction rated securities”. These were financial instruments touted as ” just like certificates of deposit”, and carried as cash on the account statements of private investors. Turns out, of course, they aren’t, and now people who stashed their money in the things waiting to pay their kids’ college tuition or put a down payment on a house are discovering that they can’t get at their money. A year and a half ago, when the whole thing started going down, Wall Street (UBS, Bear Stearns, Merrill Lynch, name your favorite) alerted their institutional investors and concentrated their selling efforts on chumps. Only in February of this year did the whole structure freeze up. Now, if you need to pay your bills, your friendly banker will loan you up to half the money they’ve frozen, at a nice interest rate. I don’t really blame the “financial advisors” who simply parroted what their bosses told them about these things – these people are nothing more than broo-pushing custodians granted a title and a desk in order to scam their customers- but the principals of the firms knew exactly what they were pushing and should be, but won’t be, held accountable. Almost makes me want to dust off my legal degree and go chase someone.
The beat goes on
Houses are still selling, despite bad market news. All it takes is a good price. Joe Barbieri’s listing at 33 Meeting House Lane has gone to contract somewhere around its asking price of $8,995,000. When I previewed it, I guessed its worth in the high 9’s or low 10’s, so this was a comparative value.
More impressively, if you’re lucky enough to own direct waterfront, is Mark O’Brien’s place at 15 Meadow Place in Old Greenwich. Came on the market last Thursday at $7,995,000 and was gone by Sunday via bidding war. This house, in all respect to Mark and the previous owner, Eugene Remmer, is a tear-down (with the best tree house I’ve ever been in). Waterfront remains king.
My publisher, Greenwich Post, has just fired me – according to the owner, it came down to a choice between my readers, who liked me, and certain real estate agencies who did not. The latter pays bills, the former does not, so I got the heave ho. Fair enough, but I question the wisdom of eliminating one of the few items in a newspaper that, according to my readers,anyway, made the paper worth perusing. If you have no readers, who will advertise? Oh well. I’ll be punching up my posting activity on this site, so please check in regularly for truthful reporting on the real estate scene. If you’d like calm, reassuring news that your real estate investment in Greenwich is doing just fine, feel free to check the Greenwich Post each week.
One reason I was dumped was, I believe, my reporting a New York Times report that Realogy, parent company of Coldwell Banker, Century 21 and Soetheby’s, was in danger of going bankrupt. I hear from other agents that staff members of at least one of those firms haven’t been paid in 4 weeks – they got flowers on their desks this past Friday. That’s a nice touch, but try placating your landlord with a bunch of wilted orchads.
The Helmsley Palace
Thanks to David Ogilvy’s impressive power of persuasion, he was permitted to open the doors of his Helmsley listing on Round Hill Road to all of us unwashed agents who are no more likely to have a buyer in its price range ($125,000,000, if you’re asking) than David is to list my $250,000 mobile home. Some house. I’ll confess that I expected to see a sadly run-down mansion – I don’t know why, except that I know Leona Helmsley was in ill health for a time and I assumed that she’d neglected the house in her final days. Ha! It’s in beautiful condition, maintained, I’m sure, as scrupulously as one of her hotels. This has to be the most famous house in Greenwich, and the view of Long Island Sound, the beautifully decorated rooms, two pools (one indoors) and, of course, 40 acres of lawns all justify that fame. As I am unlikely to be invited to dinner by the next owner, I jumped at the opportunity to see this fabulous mansion that I’ve admired during my fifty-plus years in town. If you’ve got the money, or can at least pretend to, call David for a tour. The wine cellar alone is worth the effort.
There were twelve price reductions the other day, neatly balancing twelve new listings, but I believe that sellers still don’t understand our brave new market. I understand that some sellers feel no pressure to sell and for them, it makes sense, sort of, to refuse anything less than the asking price. But if you want to, or have to move, this is not the time to hold fast. Of every ten houses I see on the open house circuit, I’d guess that eight won’t sell at their current asking price. That’s discouraging. There are buyers out there, but they aren’t going to overpay. Right now, buyers and sellers are pretty far apart as to what constitutes overpaying. I think the buyers have the better side of the argument.
Simmons Lane Monstrosity?
A couple of readers have emailed me about this proposed project, a 30,000 sq.ft. replacement for what was, alas, a rather tired mansion. Not living on the street, its size doesn’t worry me as much as it does the neighbors, but it does seem a tad over-sized, even for Greenwich. What intrigues me most is that this eight – bedroom house intends to host twenty-six toilets. Is there something in the water?
If you believe the New York Times (an iffy supposition), the private management firm that took over a bunch of companies recently is preparing to shed them in bankruptcy. Linens and Things is the most likely victim but, according to the Times, so to is Realogy, the corporation that owns a slew of real estate firms like Coldwell Banker, Soetheby’s and Century 21. As I understand the matter, the firms themselves are okay but the new owners saddled them with huge debt obligations so that the private bankers could pay their investors fat dividends. My father, a Wall Street veteran since 1929, quit investing in the early 1980’s, saying that he no longer understood the business. I think he was on to something.
I’m delighted to see that my reservations about turning corn into alcohol are now being seconded by the main stream media. Turns out that palm oil and corn are not going to save the world from global warming and will instead lead to deforestation and a doubling of food prices. Duh. Just wait until reporters figure out that ethanol as an “oxygenator” that reduces air pollution is a hoax, and that it costs at least as much energy to produce a gallon of the stuff as it yields. Why, given time, they might even rethink the whole global warming scam itself.
New York Times
I spent the day recently with New York Times reporter Peter Applebome, who will presumably write a column about our tour of Greenwich. I just want to say now about any quotes he may attribute to me that: I never said it; it was taken out of context; and any reference to bitter, unemployed Greenwichites clinging to their mansions was entirely invented by the reporter. You just can’t trust these guys!
My friend John Cooke at Prudential has sent me some statistics showing that unit sales for single family homes are down 39% compared to last year. That’s a big drop, but from conversations with other brokers and my own observation, it seems that sellers haven’t absorbed the information. Houses are, in general, ridiculously overpriced – apparently, buyers are taking 2004 prices and adding 10% appreciation for each year since then and expecting to sell them for a huge premium. Sorry to tell you this, but that’s not going to work. We’ve been in a flat market for some time now – don’t be thrown off by the average price increase, because that reflects new construction selling, not your tired old cape – and you should price accordingly. Unless you really don’t want to sell your house, in which case, why is it on the market?
The New York Times reports that Europe is suffering even worse that we are, with prices in Ireland and Spain, for instance, dropping way off from last year’s pricing. Well, what goes up, goes down. Greenwich has usually withstood these market fluctuations but we’ve certainly witnessed years where what up stays flat, and I think that’s where we are now. Again: don’t get out your whiteboard and chart a neat graph of appreciation to arrive at your asking price because you’re doomed to disappointment.
47 Shore Road, Old Greenwich
Beautifully built new house, constructed by John Routh, of Coldwell banker. Top quality construction in every inch, including a terrific utility sink – you laugh, but most builders I know stick a $3 plastic sink in the laundry figuring that even buyers of $9,000,000 houses won’t notice. Mr. Routh obviously does and here, as in every other detail, his care shines through.
Riverside Association, property values
I was once a member of the governing board of this association so I intend no ill will towards the group, but its recent survey of residents bodes nothing good. They’re asking questions about new construction, excessive house size, tree cutting, too lenient FAR regulations, etc., all of which makes me suspect that they’re back, as they were when I served with them, to attacking new construction. Look: if you want to return to the 1950s, when new houses in Greenwich were 1500 square feet (twice the size of the national average, by the way) go ahead, but be aware that you will be paying for it. There is no market, now, for a house less than 3,500 sq.ft and in fact, 5,000 sq.ft is about the real minimum for new construction. You can indeed create moderate income housing in Riverside by limiting house size, but know that, if you do, you won’t be able to sell your house for anything like the price your neighbors received for theirs. A 1,500 sq.ft. new house is worth, I’d guess, about $750,000, so if you’re selling to a builder, calculate $250,000 for the value of your land. A 3,500 sq.ft. house might net $1,800,000, so you can maybe sell your land for $750,000. It’s your money, and your house and if you feel the impulse to subsidize poor folks who can only afford a $2,000,000 house, God bless you. Just be aware of what you’re doing when you vote to shackle your land with these kinds of restrictions, and hope that your IRA will carry you through your retirement.
The driving force of Greenwich real estate has always been the quality of our schools. So it’s a shame that we are turning against them. Stanwich School’s expansion plans seem to be foundering on the shoals of NIMBYism, our new public school superintendent is doing her best to dismantle the talented and gifted program and, I hear, we have at least one avowed communist teaching our kids Advanced Placement history in our high school. Unsophisticates might think that the place to serve the oppressed poor would be inner city high schools, but to really stick it to the Man, you want a tenured position, paying $150,000 a year, in the belly of the beast, where there are no knifings, shootings, or 275 SAT scores to distract you. Right on, brother! We can’t fire these people, but perhaps the administration could be more selective in hiring them in the first place. Which will happen only if we get rid of our current superintendent, a denouement we should all feverently wish for.
John Cooke at Prudential received a fair bit of flack a few weeks ago for allowing himself to be quoted by another newspaper as saying the market was pretty darn bad. As John points out, he didn’t write the headline, he just told the truth but apparently there are those who think he, and all of us Realtors, should sugarcoat things. Bah. Our selling clients certainly can figure out what’s going on, because their houses aren’t selling, so who are we supposed to be keeping in the dark? Anyway, as of the end of February, according to John, we’re down 39% in units sold compared to last year. Worst hit segments are the $1,000,000-$1,500,000 range (-53%) and $2,000,000-$3,000,000 (-50%). $3,000,000-$4,000,000 held steady, but that category only sold 9 units; not enough to sustain the brokers in town. The over $5,000,000 houses dropped unit volume but average price soared from $6,346,000 to $10,595,625, so some folks must be enjoying themselves. The market is not dead: 30 single family houses went to contract the last 21 days; but, like the parrot in that Monty Python routine, it’s certainly resting.
Return to sender?
A couple of houses came back on the market last week after just recently being purchased. Buyer’s remorse is understandable but, so far as I can see, these owners did nothing to improve the houses during their brief ownership yet they’re asking millions of dollars more than they paid. That might have worked a few years ago but it’s not a great strategy in today’s market.
There ought to be a law?
I received a lengthy, well written email from a reader responding to my earlier posting on a considerate builder who took extraordinary steps to shield his neighbors from the effect of his construction. It seems that such builders are the exception, not the rule. My correspondent, a lawyer, said that, short of filing suit, there isn’t much to be done about goons who start work at zero hour in the morning, blast ledges, cut down trees, dump water onto adjoining land and so forth – the town is basically powerless, although it did send inspectors over to the site to remonstrate with the contractor. My reader thinks that we need stronger regulations to whack these guys. I am philosophically opposed to still more regulations and laws affecting how people can use and develop their property but if our current set of laws is being abused, maybe we do. If that happens, it will once again provide an example of bad people bringing down bad effects on the good – I don’t know whether there’s a contractors’ association operating in town but if there is, its members might want to talk things over with those who are abusing our relatively lax laws and tell them to cut it out.
A few weepy-eyed readers brought my attention to a story about Albatrosses on Midway Island choking on plastic and asked me if I wasn’t sorry to have said mean things about the effort to ban plastic shopping bags. No I’m not, and here’s why: the poor birds aren’t choking on plastic bags – they’re ingesting bits of plastic from the tons of other types of plastic stuff floating in our oceans – fishing nets, packaging, Bic lighters, you name it. My point about plastic bags is that it’s an easy thing to do that accomplishes nothing yet convinces shoppers that they’ve done something to save the planet while excusing them from taking any serious steps. Very similar to Australia turning off its lights for an hour (I myself turned on all our outdoor floodlights), Look – if you really want to go back to horse-drawn carts, early death and backbreaking labor, Cuba and Zimbabwe await you with open arms (please bring your capitalist earnings as a donation to the beloved leader). I myself prefer my water hot (On the other hand, maybe banning plastic bags is a good thing, if it spares us from shutting down our economy in order to free the Chinese to ruin the world by themselves. I have grave doubts about global warming, humanity’s role in it and our ability to affect it with 20 years of self-deprivation but, if we’re going to shut down the western world, I’d prefer to see us drag down Asia with us).
We were actually doing pretty well this year in house sales: according to my friend John Cooke, at Prudential Ct, January 2008 showed a nice increase in sales from January 2007, but things have dramatically slacked off the past few months – I’ll have those statistics for you just as soon as John gets off his lazy butt and provides them – the reason for the decline, I’m guessing, is the collapse of the credit market. Right now, lenders are hugely reluctant to lend on anything that isn’t guaranteed by Freddi Mac or Fannie Mae which rules out many Greenwich mortgages. Never mind that Greenwich has seen a mere handful of foreclosures in the past decades, national lenders are running scared and can’t, or won’t distinguish Greenwich from, say, Miami Beach. If you need a $2,000,000 mortgage, these folks are insisting on a 60/40 loan-to-equity ratio, instead of the more typical 80-20. High-end folks tend to have tons of restricted stock available to pledge (unless, of course, it’s bear Stearns stock) so the very expensive houses are chugging along, but a young, highly successful young family that can afford a $3,000,000 house may have a hard time latching on to the $1,200,000 in cash that will permit their banker to sleep at night. I suspect that all this will sort itself out in the near future but, for now, there’s a squeeze on in what, for Greenwich, passes as its bread and butter sales area.
Of course, if you’re not worried about a mortgage…
Sally O’Brien has a great old (1907) Belle haven Mediterranean listed for a mere $11,400,000, and what a house it is. Walk in the front door and everything flows just the way it should: a beautiful winding stair leads to the two floors above, gracious public rooms spread out on either side and, once through the butler’s pantry, a brand new eat in kitchen/family room offers the privacy you want. I have never been able to fully adjust for the “Belle Haven premium” so I offer no opinion on price here, but if money were no object and I wanted to live in Belle Haven, I’d grab this one.
I occasionally get anonymous missives from readers who are somehow afraid that they’ll offend the real estate community if they complain. Are you kidding? We’d run over our grandmothers to get a listing – insult us, say any nasty thing you wish but, if you’ve got a listing, all is forgiven, believe me. In any event, one recent letter writer suggested that we adopt what she says is the European custom and split commissions in two, with the seller paying the listing agent and the buyer paying her own. While it was true, years ago, that both the buyer and the listing agent owed a duty to just the seller, that has changed and buyers’ brokers are now allowed and even required to exert their loyalties solely on behalf of the buyer. I have my objections to the buyer/broker contract as prepared by the mercenaries of my organization, the Connecticut Association of Realtors, and have written about those objections before, but the basic concept of a broker/agent representing a buyer is entirely sound. Sure, we’re ultimately being paid from the seller’s dime, but we’re out with the buyer for weeks on end, helping them find just the right house and our loyalties and often friendship rest with them, Beside, if we do a good job, we’ve got a nice referral who, unlike the seller, commonly, is staying in town. So if you’re a buyer, I wouldn’t worry about your agent having divided loyalties. And if you sense that he or she is primarily interested in selling you a house, any house, then perhaps you should consider finding another agent. Notwithstanding the recent downturn, there are still plenty of us to choose from.
I have written in support of this natural gas project before, all to the annoyance of those readers who insist that I restrict my comments strictly to real estate. It seems to me that creating energy shortages in this region does relate to real estate but rather than repeat my arguments I’ll just note this: the New York Times editorial board has just come out against it. I rest my case.