Daily Archives: September 8, 2009

Greenwich falls, David Ogilvy, Tamar Lurie and Joe Barbieri move to New Jersey

According to Forbes, Greenwich zip 06830 has dropped to 78 on the 100 most expensive zip codes in America. 78th! Alpine New Jersey is four times more expensive and sits astride the ant heap of housing prices. Greenwich’ top realtors were defensive even as they packed their BMWs and prepared to move. “I’ve always priced my listings at Alpine’s level,” Lurie sniffed. “I can’t help it if rubes like your customers insist on paying less.”

“Hey, I’ve done my part, and for years,” Ogilvy insisted. “Every year, year in, year out, I increased prices a minimum of 6.7% and agents like you profited. Now you have this silly blog and have singlehandedly brought ruination to the Greenwich housing market. Get lost.”

Joe Barbieri, perhaps because he’s on track to be the most successful agent this year and has been selling up a storm, was more sanguine. “Hey, s’long as I can get an Italian wedge in this Alpine, what do I care? Write if you find work, or if you quit this blogging and it’s safe to come back.”

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Auto loans – the next bummer?

Probably. Of the $1.6 trillion Americans owe in revolving debt, $1 trillion is auto loans. Worse, loans now comprise 101% of a car’s value (people borrow to cover the amount they’re underwater on their old loan) and are 63 months long on average, much longer than the old average of 48. Conditions are ripe for bad things to happen, and the article I link to blames Wall Street’s passion for securitizing these loans. Perhaps he’s right, but it’s no new  phenomenon. I knew a girl from Skidmore, so long ago I don’t remember her name (she grew up on Long Island, as I recall) who was written up in the Times years ago for being the financial wizard who figured out how to securitize car loans. And that happened decades ago. She graduated in 1975 or 76, worked for Kidder Peabody I belive, but I’m pretty sure she’d moved on from there when she had her brainstorm. Regardless, we’re talking 1980, or early 1990s, not 2007. Wall Streeters have always been quick to figure out how to make a buck and, sometimes, their interests coincide with the general good. Sometimes.

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In-town condos continue their slide

1 NorthfieldThis two (?) unit condo development started off brand new asking $1.19 million last year. One sold yesterday, for $775,000. That seems about right, but it must be a disappointment to its builder.

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Sometimes, odd pricing strategies don’t work

187 Stanwich, a lovely old house that must have enjoyed a quieter setting when it was built in 1800, sold for $2.615 million in August ’07. When the owners decided to resell it in October ’08 they priced it at $2.750, then dropped it $10,000 every two weeks for months on end, until they hit $2.680 million and, frustrated, raised it to $2.685. That still didn’t work, so the price reductions resumed in more aggressively sized chunks and today it’s at $2.395. Assessed value is $1.258 million – uh oh.

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Road trip cancelled? Darn!

Reader Shoeless just sent me this story from Bloomberg. FGG and Walter Noel appear to have settled with the Massachusetts Secretary of State. I called that office this morning to confirm that tomorrow’s hearing was still on but now I’ll have to call again. Looks like I’ll miss my chance to blog live from Boston.

Fairfield Greenwich to Pay Fine, Repay Massachusetts Investors
2009-09-08 18:50:44.288 GMT
By Sree Vidya Bhaktavatsalam
    Sept. 8 (Bloomberg) — Fairfield Greenwich Advisors LLC,
whose feeder fund placed money with Ponzi-scheme operator
Bernard Madoff, was fined and ordered to return principal
invested by Massachusetts residents, the state’s top securities
regulator said today.
    Fairfield Greenwich placed “almost all” of its Sentry
Fund assets, totaling $7.2 billion, with Madoff, according to a
statement today from Secretary of the Commonwealth William
Galvin.

–Editor: Rob Williams

UPDATE: Yup – settled (no news of terms yet) and hearing is cancelled. Thanks, Shoeless, for saving me a six hour drive, but I was geared up for this. Drat and double drat.

UPDATE II: Chicken scratch: $8 million. In fairness, Sec. of State Galvin only claimed $6 million is losses for Massachusetts residents, but still, Walt can cover this by just stiffing his cabana boy.

BOSTON (Reuters) – Massachusetts’ top securities regulator said on Tuesday his office has settled for $8 million with financial swindler Bernard Madoff‘s feeder fund Fairfield Greenwich Group, becoming the first state regulator to reach such a agreement.

“This Fairfield settlement, which provides restitution and interest for Massachusetts investors, represents the first investor relief ordered by a regulator in the Madoff scandal and I hope that it will become a template for other resolutions,” William Galvin, the Massachusetts secretary of State said in a telephone interview.

The announcement comes one day before Galvin’s office had scheduled extensive hearings with Fairfield Greenwich executives to examine details about the firm’s relationship with Madoff.

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Another sale contract

48 Byfield lane

48 Byfield lane

Yet another Ogilvy listed/sold project, this one near the Merritt Parkway. Listed 834 days ago for $7.5 million, eventually dropped to $5.95 million, contract on August 28th but reported today. Final sales price not disclosed yet but obviously, less than ask.

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In Belle Haven

186 Otter Rock, listed (by David Ogilvy) in 2007 for $5.7 million sold, 735 days later (by David Ogilvy) $4 million (our MLS records show 90 days on market, by the way, so you know what to do with that figure). Nice when that works out though; it’s the same as getting half a listing for an $8 million house.

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“Near Belle Haven”

14 Augustus Lane (“on the Belle Haven peninsula” the listing advises), is a funny-looking house built in a hill that seemed nice enough when I first saw it in January, 2008, but clearly wasn’t worth the $3.850 its owners were asking. Now, two brokers and 19 months later, its down to $2.950, which is an improvement over the original price but still far above its assessed value of $1.9. I understand owners trying to get as much as possible for their house – I would, too, but at some point there has to be a reality check. I suggest than 19 months with no sale is just such a check and knocking off a half-hundred thousand every couple of months will only ensure that you follow the market down. Bold strokes are needed here.

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What drugs were people indulging in this weekend?

Something sure happened to short circuit some brain cells this Labor day. I mentioned that 8 Wyckham Hill raised its price today and now 82 Buckfield, a perfectly nice house way up in the back country that hasn’t sold since it started at $4.0790 back in 2005 has jumped from $3.195 on Friday to $3.795 today. Ah, okay.

And, of the dozen price cuts today, none were for the houses priced $2 million (and more) above their worth. Instead, it’s just bitty incremental cuts on the plain vanilla homes that aren’t selling, period. I had hoped that, with the beginning of the fall market, we’d finally see some significant price cuts that would move houses but it looks as though we’re not going to. It’ll be a long winter if this keeps up.

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Obama gives school speech, world does not end.

What a relief! Sort of like waiting for that doomsday super-collider to start up and drop the world into a black hole. Still, wasn’t it fun to see the ruckus? The more we can keep these guys on the defensive, the less time they’ll have to work their mischief.

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Better to be first born, second wife, third broker

188 Lexington

188 Lexington

Sometimes being the second broker works, too. This dump was originally listed a year ago for $2.1 million and its lucky broker got to pay to advertise it, show it and doubtless field angry calls from the owner inquiring why it hadn’t sold. In July a new broker got it and dropped it to $1.180 million (it had already suffered a number of price cuts over the year, but was still a few hundred thousand over this new price) and today she has a contract. I wonder if there’s a lesson in that?

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Buy me or I’ll raise again!

8 Wyckham Lane

8 Wyckham Lane

This is a nice house whose owner paid $3.3 million for it in 2006 and sunk a pile of money into redecorating and renovating, then put it back on the market this year for $4.995. It didn’t sell – Wyckham backs up to the Merritt Parkway and lots there, especially this one, tend to have small back yards leading to swampy woods and the highway noise is … noticable. The owner showed great flexibility in the face of market conditions and kept slashing her price, getting as low as $3.495 this summer, which at least approached its assessed value of $2.866. But now she’s gone and raised it back up to $3.975 million, which may give her the same warm feeling experienced by nocturnal bed wetters but probably won’t accomplish the desired goal of selling the place. But we’ll certainly see, eventually.

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The trouble with the new “reformed” mortgage appraisal process

This article by “The Mortgage Professor” details the problems I’ve been reading and hearing about the appraisal process these days. The author is a professor (emeritus) of finance from Wharton so he wouldn’t appear to be a simple flack for the lending or real estate industry. Here’s an excerpt:

The objective of HVCC was to insulate the appraisal process from influence by any of the parties with an interest in the outcome. Mortgage brokers and realtors could no longer have any contact with appraisers, and lenders had to obtain appraisals in some manner that prevented them from exercising any control.

The problem with this well-intentioned rule is that it was issued in December 2008 to become effective May 1 of this year, or squarely in the middle of the worst housing market since the 1930s. With house prices declining, the upward bias in appraisals that had prevailed during the bubble had morphed into a downward bias. Many deals are not getting done because appraisals are coming in too low, and HVCC is seriously aggravating the problem.

To protect themselves from liability, most lenders are ordering appraisals from appraisal management companies (AMCs), which intermediate between the lender and the appraiser. The AMC selects and pays the appraiser, receives and evaluates the appraisal, and passes it to the lender, who has no direct contact with the appraiser.

Because AMCs operate nationally but do not have appraisers everywhere, more appraisals are being done by appraisers who are not familiar with the local market. Appraisers working for AMCs are also paid less per appraisal than independents, which may induce them to invest less time. Less knowledge by appraisers means more scope for bias, and in a declining price market, the prevailing bias is toward lower values.

Intermediation by AMCs also lengthens the period required to complete purchase transactions. People involved in the process tell me that it can add an extra week. In an increasing number of cases, the paperwork doesn’t get done by the contracted due date, or the buyer’s mortgage lock expires, either of which can derail the transaction.

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Down by the river

436 Valley Road Cos Cob

436 Valley Road Cos Cob

This is a charmer, sort of, across from the water company’s filter plant on Valley Road. It sold (foreign broker, foreign buyer) for $734.000 in 2006, from an assessed value of $561,300. The buyers put it back up for sale in the spring of this year for $639,900, which seemed like a reasonable recognition of market conditions but to no avail. Today it’s listed as a relocation company house (so the home owner dodged this bullet) and asking $545,000. And the beat goes on.

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Jim Himes speaks on ObamaTalk

Himes Disappointed with New Canaan Parents
 
By Teri Buhl
Congressman Himes isn’t happy with New Canaan teachers and parents enforcing a school wide decision to opt-out of Obama’s speech tomorrow. So much so that he dragged his wife and two young daughters to stand on the steps of New Canaan’s town hall and listen to him hold a press conference (with TV cameras) touting that fact he is “deeply disappointed and even frightened’ about the towns decision.
 
On Friday, Superintendent David Abbey sent a letter to all New Canaan parents notifying them a school wide assembly to watch the President’s speech wasn’t going to happen.
http://www2.newcanaan.k12.ct.us/education/sctemp/b2c2f5e561aa31865bb67d6c7356444a/1252358327/090904_Mr._Ponteroto.pdf
 
Today, Himes who arrived in jeans and a preppy pink-stripped oxford spoke with zealousness and passion.
“We should embrace a chance to let our children hear their President talk and are missing a unique teachable moment,” says Himes. In New Canaan registered Republicans out number Democrats two to one.
 
FOUR local cops were there to police a crowd of only 50 residents, including at least 10 elementary school kids.  Maybe officials thought Himes would come up against rowdy opposition; but unlike last week’s town halls on health care, there were no shouting constituents and very few had questions for Himes. Why would they, considering he’s not a resident and doesn’t play a role in local school decisions?
 
One parent who did speak out freely, Roy with a daughter at the middle school, told Himes, “Why isn’t Obama’s speech happening at night? So I can sit there and discuss it with my daughter instead of her teachers.” Roy was glad the school system chose to allow parents to opt-out of the event.
 
Not surprisingly Ginny Apy, chair of New Canaan Democratic Town Committee, was handing out a statement expressing frustration that New Canaan’s decision had drawn the eye of the national press.  She wrote, “We find it detrimental to be drawn into national spotlight, on this issue.”  Yesterday on Meet the Press, MSNBC’s David Gregory quoted from New Canaan’s letter to parents.
 
What was surprising was the fact Himes didn’t ask New Canaan’s superintendent David Abbey to attend the press conference — luckily he showed up on his own accord. To clarify any misconceptions parents might have regarding whether their kids will be required to do school work for Obama. Abbey reiterated this was a decision by the teachers and principals and not solely his or the Board of Education’s.
 
After Himes scooted away from the crowd Abbey told parents, “Look, all that’s going to happen in most schools is Obama will give the speech, some kids will clap, and they go back to class.” Abbey added that it concerned him that the speech has become a political event instead of a learning event.
 
Jim Kurcharczyk, member of New Canaan Board of Education said, “Even though I only heard from about 80 parents (there are 4,000 students in New Canaan’s school system), the majority were against forcing their kids to listen to Obama’s totalitarian views.” Kurcharczyk pointed out that this is really a special event and not a part of a regular curriculum – with special events parents are usually given the chance to opt out.
 
In letter sent to the media that is addressed to school superintendents and parents of Himes district, he writes, “As a Democrat, I might be charged with fighting to promote the President’s point of view. Nonsense.”  Looks like New Canaan parents thought what was non-sensical is President Obama coming through our school systems to spread his message to our kids.

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Another Richard Harris project going nowhere, slowly

128 Butternut Hollow Rd

128 Butternut Hollow Rd

My favorite Canadian builder bought this bit of swampland awhile ago and used his usual skills to design a strange, post-and beamish (perhaps, “an ironic reference to post and beam”?) monster that has an approach through a swamp (the house itself sits on a builder-made bathtub of fill, which may, or may not, drain into the swamp), is flanked by two Tobacco Road hovels, the owner of one of which uses his backyard and this house’s front yard as a trash heap, and the roar of Merritt Parkway traffic as a constant companion. In short, it’s the housing equivalent of Canadian ketchup cake.

I’d be hard pressed to come up with a figure that someone could pay for this house and obtain a reasonable value but the bank that now owns it pegged it at $3.995. The market’s laughter could be heard even over the traffic noise so today it’s been marked down to $3.495. If only.

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Palmer Hill Condos and the dodo

As recently as January, 2008, the developer of these units was boasting that he’d seen no downturn, no downturn at all. In a press release that month, the following glowing progress report was passed out for the use and reliance upon by potential buyers:

Stamford, CT – Starting the new year with 33 homes sold, Palmer Hill’s numbers defy the recent decline in condominium and home sales nationwide. The luxury community boasting 114 townhouses and 81 condominiums has over $25 million of sales since opening in late summer 2007.

“We have not seen any decline in traffic or demand at Palmer Hill, in spite of the negative housing reports nationally,” said Bob Dale, Managing Partner, Buckingham Partners. “If anything, the quality of our traffic has improved, as evidenced by three new sales this past weekend.”

The developer (who I believe has been replaced) must have been using a different data set than the one I have access to. Using the Greenwich MLS, I see that, out of 195 units built or to be built, there have been four contracts, stretching back as long ago as 2007 and never closed, 5 pending, never converted to full contracts, let alone sold, 3 units sold, and two rented, at under $5,000 per month. That’s not 33 but again, there may be another super secret double probation set of books that shows different.

That same press release, by the way, anticipated the first buyers moving in by June 2008. I don’t believe anyone is there yet except for a bored sales staff.

UPDATE: Here’s the project’s home page, which promises, among other things, that the vistas here will “inspire visions of Nantucket and Martha’s Vineyard”. These guys not only use a different set of books, they use different islands than those I’m familiar with. They promise 5% financing from Wells Fargo, by the way, but you might want to double-check that – last update to the page that I can find is March, 2008.

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Stamford highrise condo project Highgrove in trouble?

The developer of Stamford’s Highgrove condos is being sued in Florida by that state’s attorney general for failure to complete a project in Boca Raton.

Ceebraid-Signal Corp. was named in a lawsuit filed Friday in Palm Beach County Circuit Court along with Jason Schlesinger, a principal of Ceebraid who works in Stamford.

Schlesinger led Ceebraid’s development of Highgrove, a 92-unit building on Forest and Grove streets that includes condos priced in the multimillion-dollar range. It is slated to open this fall.

In Florida, Schlesinger’s company marketed and sold condos at a four-building project called Eden Condominium. The development was only partially completed, and about a year ago, Florida Attorney General Bill McCollum opened an investigation into the company and its owners.

The resulting lawsuit contends the consumers and 27 owners “suffered significant financial damage as their units are unsalable and otherwise of minimal value,” according a story published Friday in the Palm Beach Post.

Schlesinger could not be reached for comment last week. But Mark Bideau, an attorney for Ceebraid, denounced the charges.

“We were surprised by the lawsuit,” Bideau said in a telephone interview Saturday. “It really has no merit. It’s legally and factually wrong. We are going to defend against it vigorously.”

That’s encouraging on its face but the details that follow are gloomier.

Bideau said that instead of condominiums, Ceebraid was now planning to build apartments, eventually.

 The company has contracts to buy out the 27 owners at the prices they each paid.

 “Financing is not easy these days,” Bideau said. “As soon as they get the financing, that’s the plan.”

However, the lawsuit will make it more difficult to get the financing, he said.

In Stamford, Highgrove is said to be nearing completion, though sales are reportedly slow. Designed by famed architect Robert A.M. Stern, the building is expected to set a bar in high-end design and luxury amenities, including a 24-hour concierge service.

This past spring, Highgrove tried enticing buyers by offering rent-free living accommodations in nearby rental apartments owned by the developer as they await completion of construction.

But the market for such luxury condominiums has collapsed, according to Martin Nirschel, a local real estate agent for Sotheby’s International Realty.

“There has been such a shift in the dynamic of the market that this has become an awfully hard sell,” Nirschel said. “The recent spate of bad publicity certainly doesn’t help the cause.”

The condo market in Boca Raton is different from Stamford’s, or it used to be, but this can’t be encouraging news for those who have put down money on the HighGrove project. And, while on the topic, a reader who visits Stamford more frequently than I (anyone who travels to Stamford once a year visits there more than I) reports that the F.D. Rich/Trumps condos near Bloomingdales seem to have stalled. Any news on that? And how’s that Havemeyer Lane thing doing? They seem to still be building, but no reports of sales reported on the Greenwich MLS in ages. Hmmm. 

UPDATE: Here’s a blogger who expressed skepticism about Trump’s prospects back in April. The comments are dubious too, but so far as I can see, no updates since then. WARNING – JUST INFORMED THAT THAT LINK TO “MR. STAMFORD BLOG” HAS A VIRUS ATTACHED. I’ve broken the link, and I apologize. It didn’t show up on my Mac so no alarms went off. If you hit the link earlier, please beware.

UPDATE II: No sooner do I say that I’ve seen no sales activity reported on the Havemeyer project than one unit is reported as “pending”. Now you can take this with two grains of salt: one, “pending” is not “contract” – someone has signed a piece of paper loaded with contingencies that may or may not be met. Two, a suspicious mind in this office suggests that, under the terms of most commercial construction loans, some sales activity must be evidenced each quarter to keep the loan from defaulting. Was the last “sale” reported three months ago? I’ll go check.

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Too hungover to fight

After U.S. General McChrystal was unable to raise any officers at NATO’s  ISAF (“I Saw Americans Fight”) headquarters to respond to and investigate that air strike on the fuel tankers, he has banned all alcohol. U.S. forces are already forbidden alcohol while in the country – our allies, however, have been running a boozy headquarters while sheltering from hostile fire.

After a Nato airstrike killed as many as 125 people last week, General Stanley McChrystal was keen to get the situation under control — fast.

When he tried to contact his underlings to find out what had happened, however, he found, to his fury, that many of them were either drunk or too hungover to respond.

Complaining in his daily Commander’s Update that too many people had been “partying it up”, General McChrystal, head of International Forces in Afghanistan (Isaf), banned alcohol at his headquarters yesterday, admonishing staff for not having “their heads in the right place” on Friday morning — a few hours after the deadly attack.

What was an oasis of coffee shops and bars where commanders could enjoy a beer or three will now be a dry area.

[snip]

The row mirrors tensions inside the Nato-led international force over the two-tier nature of the coalition, where a handful of the member nations do the lion’s share of the fighting.

American soldiers, who have one of the strictest work ethics, joke that Isaf stands for “I Saw Americans Fighting”.

US troops are banned from drinking and British troops are allowed to drink only at official functions with special permission. Soldiers from the rest of the 42-nation alliance are governed by divergent national guidelines on alcohol consumption.

The Isaf headquarters is only half a mile square but it has at least seven bars that serve tax-free beer and wine — including a Tora Bora sports bar complete with flat-screen televisions and football memorabilia, the Gravel Pit, which has a snooker table, a German beer hall, the 37 Club and a Nordic Palace.

One insider said: “Thursday nights are the big party nights, because Friday’s a ‘low-ops’ day. They even open a bar in the garden at headquarters. There’s a ‘two can’ rule but people ignore it and hit it pretty hard.”

A group of Macedonian guards were sent home this year because they were discovered drunk on duty, while protecting the back gate.

The problem became so acute that military police started breathalysing drivers and pedestrians around the base.

And there’s this:

Rear-Admiral Gregory Smith, the top US spokesman in Afghanistan, accused German troops of waiting too long after the blasts to investigate the scene. When General McChrystal flew north, the local German commander, Colonel Georg Klein, told him that it was too dangerous to visit the blast site, four miles outside their camp, because they might get shot at.

This will not end well.

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