I’ve suddenly started receiving emails containing pictures sent by people I know, but to view them I have to join something called Tag. No way. According to their terms of service, by “joining” Tag, I’m agreeing to have commercial messages (that would be spam) sent to my address. I have enough of that already, so I’ll do without the pictures. So if you’re sending me photos you think I should see, please find an alternative delivery route.
Daily Archives: June 6, 2009
NYT June 6
HOME prices in the United States have been falling for nearly three years, and the decline may well continue for some time.Even the federal government has projected price decreases through 2010. As a baseline, the stress tests recently performed on big banks included a total fall in housing prices of 41 percent from 2006 through 2010. Their “more adverse” forecast projected a drop of 48 percent — suggesting that important housing ratios, like price to rent, and price to construction cost — would fall to their lowest levels in 20 years.
Such long, steady housing price declines seem to defy both common sense and the traditional laws of economics, which assume that people act rationally and that markets are efficient. Why would a sensible person watch the value of his home fall for years, only to sell for a big loss? Why not sell early in the cycle? If people acted as the efficient-market theory says they should, prices would come down right away, not gradually over years, and these cycles would be much shorter.
But something is definitely different about real estate. Long declines do happen with some regularity. And despite the uptick last week in pending home sales and recent improvement in consumer confidence, we still appear to be in a continuing price decline.
There are many historical examples. After the bursting of the Japanese housing bubble in 1991, land prices in Japan’s major cities fell every single year for 15 consecutive years.
Why does this happen? One could easily believe that people are a little slower to sell their homes than, say, their stocks. But years slower?
Several factors can explain the snail-like behavior of the real estate market. An important one is that sales of existing homes are mainly by people who are planning to buy other homes. So even if sellers think that home prices are in decline, most have no reason to hurry because they are not really leaving the market.
Furthermore, few homeowners consider exiting the housing market for purely speculative reasons. First, many owners don’t have a speculator’s sense of urgency. And they don’t like shifting from being owners to renters, a process entailing lifestyle changes that can take years to effect.
Among couples sharing a house, for example, any decision to sell and switch to a rental requires the assent of both partners. Even growing children, who may resent being shifted to another school district and placed in a rental apartment, are likely to have some veto power.
In fact, most decisions to exit the market in favor of renting are not market-timing moves. Instead, they reflect the growing pressures of economic necessity. This may involve foreclosure or just difficulty paying bills, or gradual changes in opinion about how to live in an economic downturn.
This dynamic helps to explain why, at a time of high unemployment, declines in home prices may be long-lasting and predictable.
So the Democrat Senate has come up with a bill that cuts billions from the allocation for our troops in Iraq so that we can add that money to more billions borrowed from China and then turn $108 billion over to the IMF for Venezuela, Iran and Hezbolla can borrow it. For some reason, probably because they have to face their constituents in 2010, certain Democrats are balking and the bill is stalled.
The shame of this is that I would like to see the Republicans forced to come up with a coherent set of principles and campaign and (wouldn’t it be nice) win on those issues. If the Democrats self destruct in an orgy of California/New York liberalism, it’ll remains business as usual in Washington, with the same politicians taking their turn back at the trough.
Hot Air reports that Harrison Ford is shocked, shocked! that the redistributionist candidate he supported so fervently wants to raise taxes on him and his privileged class of small airplane owners. Renault is a good choice but Moore’s own shock that Al Qaeda wanted to kill him even though he voted for Kerry is closer to the mark, I think.
A local gadfly organization has killed the Nets stadium proposed for Brooklyn and with it, the Frank Gehry tower that looked so cool. Instead of new buildings and jobs, Brooklyn will continue to enjoy dilapidated warehouses and exposed rail yards. No change here! So chalk up another victory for the obstructionists, one that can be placed alongside their other scalps like the West Side Highway, the Javits Center expansion and the new Penn Station. I’m not saying that all of these were great ideas – I won’t miss a football stadium on the West side, for instance, and I do appreciate the irony that Penn Station needs replacing only because there were no obstructionists t prevent its razing in the first place, but it seems that it has become to build anything new in New York today. Every project hits opposition block by block, interest group by interest group and the delays eventually kill everything. The Empire State Building went up in 18 months, from idea, land acquisition, design to construction. Imagine doing something of that size in 18 years, today.
Burger King franchise in Tennessee posts “Global warming is bologna” sign, corporate headquarters and Keith Olberman don’t approve. If I head out west later this summer as I hope to, I’ll have to stop by and buy something.
After a fair amount of navel gazing GPD Chief David Ridberg has awakened from his trance to announce that his force should probably have alerted neighbors before raiding an abandoned house on Bedford Road as a SWAT exercise.
“You just can’t tell how sensitive a particular homeowner is,” Chief Ridberg said in defending his decision to send 35 troopers dressed in full body armor and equipped with automatic weapons, tear gas and three armed personnel carriers crashing through the doors, windows and walls of an abandoned house. “Some yokel has a few too many beers, he looks up from the cop show he’s watching and just freaks out when he sees us. I mean, if the goddamned citizen was at work like he should be, he wouldn’t be bothered, right? But okay, from now on we’lll give a couple minutes of warning.”
Despite Ridberg’s concern over scaring citizens, at least one neighbor wasn’t frightened. “I might have been, if I thought they were terrorists or something,” said Miss Penelope Von Scnhizerbaum, surveying the smoldering ruins from atop her mare, Marisa N. “But I could see right away that they were cops. They were just standing around, eating doughnuts an smoking cigarettes and I figured, that’s our boys.”
A couple of smallish land parcels have sold fairly quickly recently, presumably to individuals who want to build new (because, so far as I know, builders can’t get construction loans without a signed contract with a buyer. That was the case a few months ago; it may have loosened up). This 0.33 acre in Riverside came on just a couple of weeks ago priced at $999. I thought that its price was probably negotiable, but never assume that you’re the only game in town – in Greenwich, you usually aren’t. I called the listing broker just now to show it this afternoon and learned that it has an accepted offer, and no further showings are allowed. Clients of mine just contracted for what is basically a land sale, on a larger scale and I have two more looking to build. So all is not dead out there in the land.
The world’s very best real estate attorney (along with his brother Joel, of course) Jeremy Kaye alerts me that 253 Round Hill Road, the spec house listed for $25 million smackeroos, did in fact close yesterday, for $16.5 million. I’d guessed $15 million, tops.
Is Greenwich Round Up blogger Brian Harod still a Greenwich resident? Who cares? Well, certain Byram residents who are members of the RTM along with Harod do, and they say he’s moved from town and is no longer eligible to serve on that august body. Harod says he’s staying up at Purdy’s Farm, which is very much part of Greenwich, but, having suffered through a few terms on the RTM myself, I’d think Harod would welcome an opportunity to move his household belongings a few yards over the border and become a free man. or Brian could move in with Jerry Poricelli over in Stamford and agitate for voting rights from there. That should keep him busy.
I’m more worried about the lack of news from Ric Bourke’s trail, frankly. Does no news yesterday mean the parties took the day off, or have the few reporters covering the case just gotten bored? So far, the prosecutors seem intent on establishing the conspiracy to bribe Azerbaijan officials but haven’t linked Bourke to that conspiracy. I suppose they’ll try to do just that next week. Or the government will drop the matter entirely and focus on Brian Harod’s residency. Attention must be paid!