Daily Archives: July 8, 2008

Daily Rant
I heard a perfectly rational-sounding fellow on Connecticut NPR yesterday discussing all the wonderful new energy sources that will power our state and, by extension (pun intended) our country. Wind, solar, electric cars, you name it, it will all be along soon to keep us warm and scurrying about. In the meantime, of course, there must be no new production of energy sources from “old” technology, such as coal, oil or natural gas. I look forward to the day when we can tell our Arab friends to pound sand but experts like the one on NPR never address one basic question: how is all this great stuff going to be delivered to our state and who will tolerate (and pay for) the necessary infrastructure?
Connecticut has fought, and defeated,mostly, every effort to bring more energy here. We don’t want gas pipelines running across our fields or Long Island Sound; no new transmission lines, anywhere, no liquid gas barges six miles out and, of course, no nukes! So okay: somewhere in Texas, they’re planning a million acre plus solar energy installation. Good for Texas, but that leaves us in the dark. Plug-in electrical cars would be wonderful, but where is the electricity to charge them?

In South Africa, gold mines are shut down, bakeries are closed, schools are operating in the dark because of periodic, daily blackouts that come and go at unpredictable times. The country’s leader admits that there have been warnings of exactly this happening for the past 11 years, but the country found other uses for its limited funds. Now those funds are even more limited, because gold mining was a huge source of income.

The folks in charge of predicting the Washington D.C. – Baltimore region’s energy needs – not mouthpieces for the energy industry but honest-to-God citizens – said last week that in less than 3 years the region can expect the same sort of blackouts now afflicting South Africa because no one will even begin to consider a permitting process to bring in more electricity from the west. We’re not talking about the actual location of such transmission lines-that’s whole’nother fight – just the concept itself-a beginning of a discussion. I can only hope that Washington goes dark and its politicians go home but the howling from down there will certainly reach us here in Connecticut, especially because our own TVs and radios will have shut down,I-95 will be traffic free, and we’ll all be living in blissful buccolic quiet.

Go have a talk with a Green and ask them how they propose to power the country. They’ll tell you of the wonder of wind farms, ignoring the fact that the wind don’t always blow and Teddy Kennedy and his ilk won’t let them be located anywhere nearby. They like the idea of hydrogen cells and ignore the sad fact that to make hydrogen you’ll need some form of energy, perhaps from those non-existant wind farms. They’re happy to tell you what they don’t want: no more oil drilling, either offshore or onshore, no Canadian oil from the oil sands and again, no coal, no nukes, no gas – it only encourages Big Oil and encourages them to keep up their evil ways. Biofuel is turning into an embarrassing mess (as predicted in this column repeatedly over the years)but something is bound to turn up, just in time – wait and see (I actually heard a caller complain yesterday that Detroit has sat on a super-secret engine that yields 120 mpg for 30 years, just to force Detroit’s customers to pay more for gas. That same rumor has been around all of my life and, according to my mother, at least since 1930, so I guess it must be true). Greens believe in pixie dust and fairy magic and what’s scary is that they seem to be prevailing. I don’t much care that 53%of Americans believe that the US government attacked the World Trade Center on 9/11 and a larger percentage think Elvis is alive but when that same horde shuts down our economy’s engines, there will be hell to pay and we’re all going to be forced to make that payment.

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Filed under Buying/Selling Greenwich Real Estate

More on pricing per square foot
A reader asks (see comments) “So land is not a variable in the square foot method? Where does it fit it, or is it added as a premium to the overall price?” Not quite, but when I’m using the method as a rough tool for measuring value, I just lump the land value into the total asking price and see what turns up. Again, though, you have to be sure you’re comparing apples to apples. For instance, a building lot in Havemeyer that would support a 4,000 sq.ft. house might sell for $750,000 (sad news for Havemeyer residents who a few years ago might have expected as much as $900-$950K, but that’s what’s happening). A similar lot in Riverside, south of the Post Road on a decent street might sell for $1,350,000. That’s a land cost of $187.50 per sq. ft. for the former, $337.50 psf for the latter. Assuming (dreaming, perhaps) that you could sell that Havemeyer new construction for $2,000,000, total cost for a 4,000 sq.ft. house would be $500 per sq. ft., including the land value and a $2,750,000 house of the same size in Riverside (ignoring the fact that buyers of new construction in Riverside prefer 5,000 sq.ft. and up) would cost $687 per sq.ft. for what I am assuming is the identically-constructed and finished house. So land value does play a role, but if you’re comparing two new houses in Havemeyer or two new houses in Riverside, you can (sort of) ignore the land value.

But builders don’t.I’ve seen houses in Havemeyer priced at $950,000 being pitched as ideal building sites. The math won’t work for a builder. Figure $200 per square foot construction costs and $100,000 soft costs – interest, lawyers fees even, God bless them, real estate commissions – that’s $900,000. Add $950,000 in land cost and the builder’s up to $1,850,000 before he even tries to sell his project for that hypothetical $2,000,000. Consider the likelihood that he’ll have to sell for less than he’s asking in this market, and he’s risking a huge sum for a small gain. So, not surprisingly, land values are dropping. Not to nothing,but dropping all the same. My advice for now is, if you aren’t in a rush to sell, postpone.


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