Daily Archives: March 16, 2009

Charge wounded soldiers for their treatment?

That’s the ruckus being raised over Obama’s plan to make private insurers reimburse the Treasury for treatment of wounded soldiers  but it doesn’t quite sound like a forced payment by the soldiers themselves. On the other hand my great grandfather John Caldwell fought with the Pennsylvania 61st throughout the entire Civil War and recorded bitterly in his diary that, after being wounded in the Wilderness and being sent back to Washington for treatment, he wasn’t allowed to leave the hospital without settling his bill. So I guess things have improved since then and I don’t think Obama is trying to return us to those days. Is he?

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Dead Cats

Two examples of the species.

Here’s a dead cat falling off a cliff:

Number of single family houses going to contract first two weeks of March

March 1-16 contracts for past four years

March 1-16 contracts for past four years

 

And here’s a dead cat bounce:

DJI 3/16/09

DJI 3/16/09

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City in the toilet, Mayor blames blogs

The outgoing Mayor of Salisbury Maryland has read the blogs and doesn’t like them.

Tilghman said in her address Thursday that over the last five years, the presence of a small group of suspicious, mean-spirited people focused on the negative has grown, endangering the city’s vitality.

In her previous career Mayor Tilghman was probably a real estate agent.

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The Repo Man Cometh

Foreclosure.com lists a number of lis pendens filed recently. These are notices of the beginning of a foreclosure action, often, and here are just a few that caught my eye (specific addresses are withheld unless you pay a fee to the company, and I see no need to do that – you can probably figure out most of these).

Lindsay Drive: $6, 186,000. We know of a spec house here – it’s built by the same guy with a spec home on Ridge Street, also liened last week.

Overlook Drive, Milbrook. $3.644. Find the spec house, find the troubled builder.

Windrose (Mead Point). Not a spec house, but a $6.643 million lien.

E. Elm, $2.689 million. Think of a two-unit condominium project whose units, combined, add up to just about this amount and you’ll have it.

There are more, of course, and still more coming.

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So what’s selling?

Not a heck of a lot, just to bring you unexpected news. We’ve seen 29 single family houses go to contract this year: 11 in January, 15 in February and 3 so far this month. Prices? Not so hot, either. There’s the $7.95 Jordan Saper spec house on Perkins, under contract but selling price not yet known, a $6 million sale on 48 Parsonage, today’s $5 million on Bobolink and after that, it’s a pretty quick trip to the low 2s and under 1s, with a brief dalliance in the 3s. None of which is good news for the high end spec house sellers.

Who’s left to buy these houses? It’s cruel to suggest it, but criminals always have money in good times or bad, and usually have the execrable taste to appreciate the excess these houses exude. Consider Long Island. Will the Round Hill Club, fresh from the embarrassment of having members like Walter and Monica Noel exposed in the press, have to make room for new members with less taste but more money? I hope so – it would so much safer, way out there on the 16th hole, if armed, members’ bodyguards were wandering the greens. Especially if those horrible gangs from Wilbur Peck make their way up north!

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56% of asking price

21 Bobolink

21 Bobolink

As hinted here when this property finally went to contract a few months ago, the selling price, reported today, was $5 million, down quite a bit from the original Ogilvy suggestion of $8.9 million. Oh well, what’s a few million for the owner of the Empire State Building? Waiting from May 2007 to March 2009 to unload a house you no longer want or need is a bit of a drag, though.

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$49,900,000,000 to go

Feds move to seize Madoff assets. Despite last week’s news stories about Madoff being worth $800,000,000, $700,000,000 of that was the value of Madoff Securities which is worth, maybe, $10,000,000. There might be a hundred million of yachts, real estate , antique silver and a piano to grab, and that includes the cash and securities Ruth Madoff claims is hers to keep. It’s the cardboard palace for you, Ruthie, unless the feds are successful in switching you to concrete and steel housing.

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Sales still happen

215 Orchard

215 Orchard

And not necessarily at rock-bottom prices. This one on Orchard, across from Central Middle School, sold last week for an even $3 million. That’s down from its asked-for price of $3.8 back in 2006 but it’s not all that painful. Who knew there was a $3 million buyer out there?

 

126 Cat Rock

126 Cat Rock

But here’s an example of a house that still won’t sell, despite being very close to its 2001 price, when it sold at full price for $3.6million. Today it’s at $3.7 million. Other than reader Stanwich, who loves the road, Cat Rock is often a difficult sell, particularly in a weak market. My guess, and it’s just a guess, is that, if these owners have to sell in the near future, they’re going to have to take a loss.

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Gasoline Alley

EZOn/ EZ Off

EZOn/ EZ Off

This dream house under construction at 634 North Street is just one of the 18 houses on that road currently listed for sale at $2.5 million and up (this one, convenient to both the Merritt Parkway itself and the entrance ramp, is priced at $8.950 million). Of those 18, 8 are spec houses; there are many more unsold or still-under-construction projects on side roads like Lindsay ($12 million), Clapboard Ridge ($8 million), Copper Beech ($7 million) and Loch Lane (3, at an undetermined price). Beginning at the curve just north of N. Maple, spec houses include 180 ($4.890), 480 ($5.350), 620 ($6.4 (raised its price when it didn’t sell!), 450 ($6.899), 504 ($8.995, down from $12.9), 549 ($10.950), 605 ($12.495 – builder’s own house, paid $1.1 for land in 99, raised price on this from $11.295) and 918 ($16.9 – technically not a spec house but built in 2006).

That’s a ton of new construction, all available in a dead market. If every single builder is financially solid I’m sure they will hold on and get their desired price, eventually. But if, as I suspect, we have a few weak sisters in the bunch, or even a foreclosure or two in the future, things should get interesting in a hurry.

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He’s late to the party but still gets it

Joe Weisenthal of BusinessInsider.com looks at the NYT’s coverage of Hampton real estate and concludes that there’s trouble. Well, duh. But I do like this observation:

Actually, most telling, is an anecdote about a couple who purchased a home for $1.65 million in 2006, who tried selling it recently for $2.2 million. Nobody bit and they’ve been steadily dropping the price back down to where they’d merely be breakeven. We’re guessing they’ll have to cut further, since there’s no reason to think that inflated 2006 prices are market-rate anymore. But there’s something about the housing mentality that no matter the market conditions, people still think they should make a profit, or at least get their money back.

Once sellers finally give in though, watch out below.

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Flipping – a concept gone by

18 Watchtower

18 Watchtower

Not long ago you could buy a tired old house, do a quick update and flip it for a tidy profit. Not now. This ranch was purchased for $1.2 million in October ’07, just as the air was leaking out of our market. The new owners added central a/c, a new kitchen, redid the baths and refinished the floors and perhaps added on 800 feet (can’t be positive from the listing). They put it back up for sale in April ’08 at $1.795 an aggressively high price, in my opinion, for the market that then existed, and couldn’t sell it. Today it’s come down to $1.395. If it keeps dropping, all of that work will have been for naught. Of course, that original $1.2 million purchase is probably worth something like $750,000 now so a loss was coming one way or the other, but the owners put in a lot of time and expense redoing this house without, it seems, getting much back for their effort.

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That was quick!

Not really to be built but it's a pretty drawing, isn't it?

Not really to be built but it's a pretty drawing, isn't it?

No sooner do we write about over priced land listings than 38 Khakum Wood drops its price from what the seller paid for it in 2005, $4.8 million, to $4.250. We get results!

Actually no, this new price has been a long time coming. After buying the place the would-be builder stuck a foundation in the ground and in 2007 offered the foundation and plans to build the palace depicted above for the preposterous price of $8.5 million. That didn’t include the 17,500 monstrosity itself, mind you, just the plans for desecration of Khakum Wood.

No one was interested so the price has been steadily whacked, a million at a time, until it finally hit the purchase price. Now we’re below ground zero and still digging. Where will we stop?

UPDATE: check out the solar panel on the right side of the roof in the rendering. It’s Green! Build a half-acre house, heat a few pints of water from the sun and that blasted tree-hugger GA daughter of yours will be proud to bring her friends home! Such a deal. And your hybrid Explorer will easily fit in the 8-bay garage.

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When times are tough, the tough use technology!

From England via my reader in Maine comes this tale of resourcefulness:

Thief uses Google Earth to locate lead roofs, then steals them.

The highly detailed satellite images provided by Google Earth opened a unique window on the world when it was launched in 2005, one that proved all too enticing for roofer Tom Berge; he used the website to hunt down a fortune in scrap metal on the roofs of historic buildings near his home in London.

Berge, 27, stole lead worth £100,000 from schools, churches, museums and other large buildings during a six-month spree that began in September last year. He used the website to identify the lead roofs by their darker colour. He was sentenced to eight months in prison – suspended for two years – after confessing to more than 30 offences.

[snip]

Detective Sergeant Chris Grant said Berge’s arrest had had a noticeable effect on crime in the area. “He was a prolific offender up until the time he was arrested. Since then, our crime figures for theft of lead have reduced significantly.”

Well the price of lead has dropped in half too, which may have more to do with the reduction in this type of crime than the arrest itself. We’ll know when prices go back up, eh? Greenwich mansion owners: someone is probably mapping your place as I write.

 

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97 Bottles of Beer on a wall …

Took none down, didn’t pass it around, 97 bottles of beer on a wall.

There are currently 97 active land listings on our MLS (plus many more residences that really have value, if any, as land). A quick run through of that list with an eye for a bargain or even a price that could be justified in this market revealed zero – not a single property that I would recommend at its present price, from $998,000 1/4 acres in Havemeyer to $3,000,000 + plots on Stanwich. I’ll leave Field Point Circle alone, because I have no clients in the $24 million range – that’s a different mind set.

But if someone were looking to build, these prices can’t support their plans. Assume that it would cost approximately $1,000,000 to build a new house in Havemeyer. The day of $2 million houses there came and went in a nano-second a few years ago and won’t be back soon. Even if you were to drive  a hard bargain and get a house built for $600,000, you wouldn’t want to put $1 million into the land it sat on.

And so on, all the way up the price range. Either these listings are going to come down drastically, by at least 50% in many instances, or they will sit untouched until the market not only stops cratering but actually regains everything it’s lost in the past year – a process I think will take a decade.

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WSJ: Nobody doesn’t hate ethanol

Except for Wesley Clark and politicians, of course. The Wall Street Journal points out what this writer has been saying for a long time: the stuff is too expensive, useless and a disaster waiting to happen. Thus, a typical government-mandated program.

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Test run for the national model – Massachusetts goes after medical costs

First came “universal coverage”, now Massachusetts is set to tackle something harder: paying for it, via slashing costs. If it succeeds, look for a flood of sick patients comig to New York City for treatment.

Those who led the 2006 effort said it would not have been feasible to enact universal coverage if the legislation had required heavy cost controls. The very stakeholders who were coaxed into the tent — doctors, hospitals, insurers and consumer groups — would probably have been driven into opposition by efforts to reduce their revenues and constrain their medical practices, they said.

Now those stakeholders and the state government have a huge investment to protect. But the task of cost-cutting remains difficult in a state with a long tradition of heavy spending on health care. Massachusetts has more doctors per capita than any state, Boston is home to some of the country’s most expensive academic medical centers, and a new state law requires comprehensive benefits like prescription drug and mental health coverage.

Our friends the Saudis have an expression for this: “The nose of the camel under the tent.”

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