Monthly Archives: September 2008

More Ouch
Floyd Norris (NYT) calculates the loss in stock value occasioned by our financial mess. Here’s a hint: it’s already trillions.

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Phew!
For a moment today I thought that the King of over-pricing had actually brought a new listing to market at less than his client paid for it last year. If even the King is heading south, I thought, then this market is really in trouble. To my relief, I realized that I’d transposed a digit and the house was indeed priced so as to yield a hoped-for 5% annualized return. The seller won’t get that price, of course, but at least the King’s record is intact and all is right with the world.

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Ow

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Your house is on fire – do you care how it started?
Now that Congress has declined to put the fire out and we’re all waiting to see what happens next, we have the luxury of examining the causes of this mess. I wrote about this several times last week, with links to supporting documents, but here’s a better attempt by a better writer. Our conclusions are identical – you can’t, or you shouldn’t, blame our MBA from Harvard, George W. Bush.

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Oh, Dear
posted by Amanda Von Stuckel
Back from lunch at Valebellas! and what a scene. What had been a lively, fun luncheon break descended into pandemonium when news hit that the bailout bill had flopped and the Dow was going down, down down. Dickie Fuld was the only one laughing – when your stock shares are trading at 30 cents, do you really care? Dickie doesn’t, obviously.
Mel Gibson, just arrived from his spread at Malibu Colony, was eating with Ronnie Howard. Salad only for Mel – hope that was a non-alcoholic beer, buster – and a full 1 lb steak that only Manny V. can prepare so well, for Mr. Howard. Mel was going on and on, whining about being unable to sell his $35,000,000 hunk of plaster and timber on Old Mill Road, all while the real people of this town, the financial tycoons who have supported our charities, built our hospitals and made sure our private schools are the very, very best in the country were watching Bloomberg, mouths open, while their fortunes evaporated. I finally couldn’t stand it any longer and I came over to Mel’s table and shouted, “for cris’sake, Mel, get off the friggin’ cross – we need the wood!”

Mel didn’t think it was funny but Ronnie did. I do love that adorable little scamp!
More later,
Amanda

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20 Spring Street
This house sold last week for $1.6 million, roughly 80% of its original price of $1.950. It went to contract back in July, so I wonder what it would fetch today?

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Hold onto your hats!
Bailout bill fails. Dow down 700 points
This should be interesting.
Update:
This WSJ article was written just before the bill failed, but as it was becoming clear that it was going to. The reporter paints a gloomy picture of what’s ahead. Wanna buy a house today? I didn’t think so, but if you’ve been holding back from tossing a screwball, lower-than-low offer into the hopper, this might be the time to try it. You’ll either thank me in three years or you’ll be living in a cardboard shack in the Dust Bowl – who’s to say?

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83 Riverside Avenue
Sold!
I first praised this house this summer when its price was reduced from $1.750 to $1.599 million. I thought the first price was fair, the new price a bargain. It was reported sold today for $1.5 million or about 15% off its original ask. That’s a nice value for the new owner, I think. By the way, this place went to contract some time ago but news of that happy development was withheld (publicly) for 3-4 weeks, until the mortgage contingency was met. There’s nothing under-handed about that – I, too don’t disclose contracts until all contingencies are fully satisfied because once you report a house as under contract all showings stop, and if the deal later falls through, the seller’s been disadvantaged. I mention it only to point out that the days of gaining a mortgage approval in a mere matter of days are over, at least for now.

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Drinking the Kool-Aid
Governor Rell was delighted to announce Friday that she and her co-leaders in Hartford intend to shut down the economy within 40 years – her Global Warming Law goes into effect October 1st. I won’t be around to pick gleanings from the (organic) farm fields but I feel bad for my kids. Here’s our Gov:

“Our goal is to cut emissions 10% below 1990 levels by 2020 and 80% below 2001 levels by 2050,” Ms. Rell said. “We are committed to achieving this in the most cost-effective way possible and at the same time develop new opportunities for alternative energy. That is an important, emerging sector of our economy, one that will create jobs and enhance our quality of life.”

The scary part is that Rell and cohorts actually seem to believe this.

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Why you never want to let your Goldman Sachs competitor become Secretary of the Treasury
Or, how Lehman’s fall triggered collapse.

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OwlGore and Streisand heading for Bangladesh?
Well darn! The developed world’s cutting CO2 emissions but those pesky poor folks on the other side of the world insist on living!
Update (hat tip, Instapundit.com)European countries are cutting back on emission control efforts as their economies falter. We’re all Bangladeshians now, eh?

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Storm Clouds Over Miami?
This real estate consultant thinks that the market’s in the tank until 2011 and that big houses are dead. Does this apply to Greenwich? Different markets, but are the buyers different? I don’t know – I’m going to call a Bentley salesman and ask how things are going. Here’s the consultant:

Sherry expects the housing hangover to linger in part because mortgage lenders have returned to old-fashioned lending standards. In contrast to the no-money-down loans that were easily available during the boom, banks are likely to demand 20 percent down payments for years to come, he said.

Moreover, Generations X and Y – those born after 1964 – are making less than their Baby Boomer parents, carrying credit card balances and student loans.

“They’re going to have less money, and they’re going to have a hard time getting a loan,” Sherry said. “They’re not going to do what the Boomers did, which was every couple of years to move up, move up, move up.”

So good luck selling a McMansion to members of Generations X and Y, he warned. They’re pursuing what Sherry calls “frugal chic” – buying a small home but putting a big-screen TV in it.

“They’re not buying Mercedes, they’re buying Volkswagens,” Sherry said. “They’re not buying big houses, they’re buying small houses.”

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The Cavalry has arrived!
Business is so hectic these days that I’ve had a hard time keeping up with my postings. So imagine my delight when Amanda Von Stuckle, Greenwich’s top Realtor and speculative home builder, offered to join forces and provide her unique insight into the Greenwich housing market. Amanda grew up in Bedford but shopped on Greenwich Avenue, attended Rosemary Hall and Sweet Briar College, then returned to Greenwich to start up, in sequence, a biotech company, an internet provider of popcorn and pickles, and a dog walking service. After selling all three of those enterprises at an enormous profit in early 2000 Amanda went into commercial and residential real estate development here in town. She’s a fast friend of Greenwich Post’s new gossip columnist, Susie (in fact, they often tour the town together) so she knows everything about who’s who, who’s doing whom and what they’re buying. We’ll be hearing from Amanda on a regular basis but for now, here’s an introductory interview.

For What it’s Worth (FWIT): So, Amanda, tell us a little about yourself. Grew up in Bedford, and I see that you attended Rosemary Hall – that’s impressive.
Amanda Von Stuckle (AVS) Oh, not that much so – it was post graduate – they have a program for people like me, kids who, I guess took a few too many hits on the ol’ bong to really succeed in high school. They take you in after 12th grade, assign a smart student to take your exams and write your papers for a year and presto! You’re off to college. Choate has the same program but they mostly limit it to basketball and hockey players who are needed on a college team. Rosemary just requires a rich daddy, and I had one of those.
FWIT: Hmmm. Do anything notable at Sweet Briar?
AVS: Drank.
FWIT: Okay, so what about this real estate thing – how’d you get into that?
AVS: I know everyone who counts in town, and I know what makes them tick. That’s all I needed to land in real estate on both feet and start running. I sold $100 million my first year.
FWIT: That’s amazing – so, what makes these people “tick”, as you say.
AVS: Fear. Fear at losing what they have, fear of not getting what they want. Oh – and greed, of course. I play those emotions like Yehudi Menuhin and that’s all I need, baby.
FWIT: That’s all there is to it? Fear and greed?
AVS: For the people I deal with, sure.
FWIT: How’s that working out these days?
AVS:(coughs) Not as well as before, frankly. I’ve got the fear thing working but right now, these chumps are afraid of losing the house they have, rather than the house they want. Thank God my commercial ventures are doing so well.
FWIT:You were dumped out of that Stamford redevelopment project, I understand.
AVS: That’s a retrenchment, not a dumping. Now we’re going to concentrate on building an office complex at Bruce Park.
FWIT: The town’s going to let you pave the park?
AVS: Sure – once we agreed to leave a little playground for the cripples, we were in. Besides, we’ve got the Lowell Weiker precedent to guide us. Remember him? “I’m a Weiker Liker?” When he was First Selectman he sold the air rights over the railroad to his pal and campaign manager, Ashforth, blocked the view of Long Island Sound for everyone in town and there wasn’t a peep. Ashforth paid $15,000 to the town, God knows how much to Weiker and faster than you can say. “Greenwich Plaza” it was done.
FWIT: You’re not saying you’ve bribed Peter Tesei, surely.
AVS: Who’s saying that? Not me.
FWIT: Why don’t we leave it there for now, Amanda. We’re really excited that you’ll be posting on this blog and we can’t wait for your thoughts on what’s happening and what will happen in these turbulent times.
AVS: It’s going to be fun. I’m off to Valbella! for lunch – there’s been another Regis sighting – but I’ll be back with news later.

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Can you spell “schadenfreud?”
I’m not sure I can, either, but read this, and see if it doesn’t warm the cockles of your heart.

The “money quote”, so to speak, is this:

Not all Wall Street CEOs have escaped unscathed. Cayne sold a Bear Stearns holding once worth $1 billion for $61 million in March. Lehman’s Chief Executive Officer Richard Fuld, who made $165 million between 2003 and 2007, sold 2.88 million of his firm’s shares for 16 cents to 30 cents apiece, or less than $500,000, according to a regulatory filing.

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The next shoe?

Tom Wolfe, who coined the term “Masters of the Universe” to describe the hot young traders pillaging Wall Street in the 80’s says not to worry, Greenwich, all the smart young guys abandoned their trading desks, joined hedge funds and moved out to Greenwich long ago. Wolfe says that they’re ensconced on Round Hill Road and Field Point Circle and their manors are paid for.

We’ll see. Meanwhile, in the paper’s same edition, there’s this report that hedge funds are bracing for a massive capital outflow perhaps as soon as Tuesday. And there’s this fun quote:

One little-known hedge fund barometer is pointing to trouble, however. The alphabet soup of complex investments that Wall Street created in recent years — R.M.B.S.’s, C.D.O.’s and the like — includes C.F.O.’s, short for collateralized fund obligations. Virtually unknown outside the industry, these investments are the hedge fund equivalent of mortgage-backed securities: securities backed by hedge funds.

We live in interesting times.

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Stay or leave?
Interesting article from The Chicago Tribune on the pros and cons of staying in your house until it sells or clearing out. The reporter finds “experts” on both sides (that’s what real reporters, rather than this opinionated blogger are supposed to do) so read it and make up your own mind. My personal preference? It’s easier to sell an empty house but, then, I also think that staging is a waste of money and plenty of my peers disagree with me on that, too. Especially the ones who have a staging business on the side.

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It’s not just houses
According to the Wall Street Journal’s Robert Frank, Gulf Steam GIV jets are a drag on the market, with the used inventory up 3X from last year. Just like Greenwich spec houses until a few months ago, prices remain high in the face of declining demand but Frank quotes one dealer who predicts a 30% price drop in the coming year. Doesn’t builder Mark Mariani claim to own such a jet? I wonder if he still does.

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Hurricane headed for Maine

Now, I understand that Maine doesn’t have all that many people living on its easternmost edge, and I understand that a Category I hurricane doesn’t pack the punch of a Category III, but if more of this country’s citizens approached difficulty with this lobsterman’s equanimity, I think we’d be better off:

Many lobstermen moved their boats to sheltered coves to ride out the storm, said Dwight Carver, a lobsterman on Beals Island. Some also moved lobster traps from shallow water, but most were caught off-guard by the storm’s short notice.

”I’m sure we’ll have a lot of snarls, a lot of mess, to take care of when it’s done,” Carver said. ”It’ll take us a few days to straighten things out.”

The man must have missed the memo advising him to wait for FEMA’s help to arrive.

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Slappy the Happy Clown says …

It’s a quiet Sunday morning so I thought I’d look up some statistics (usually, I reserve this kind of scintillating behavior for soporific purposes, but ….)
There are 121 active listings for “new” – built 2005 and later – houses. Most of these, but not all, are spec homes waiting for their first buyer but, as they all compete with others in their price range, I’m lumping them together.
19 Houses are priced from $8 million to the top of new construction, $25 million.
12 between $7-8
14 between $6-7
14 between $5-6
15 between $4-5
14 between $3-4
17 between $2-3
16 between $1-2.
0 below $1.0

How are we doing getting rid of this inventory of houses? Not so well, I think. In the period of June 1,2008 through this past Friday, 18 new house went to contract. By my math, that’s a touch over one a week, which, barring any more new spec houses joining the party, would clear things out in oh, say 2 1/4 years.

One little fly in this otherwise-cheerful ointment: From August 1 to date, we’ve only moved 5 new houses. If that keeps up, figure 4 1/2, 5 years before some builders get their money. I can barely spell foreclosure, but I can smell it. But, as my fellow Realtors and Slappy the Clown like to say, “don’t worry, be happy!” No doubt something will turn up, eh? Until then, if you need your car washed, you’ll probably see some real estate agents (and builders) competing for your dollar with the GHS kids. Be kind. And generous.

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Wow!
If this article in The New York Times is accurate, one tiny segment of A.I.G., led by an arrogant, over-paid hot shot in London, brought ruin to a trillion dollar company. The article’s written by Gretchen Morgenson who, back in my lawyer days when I was chasing wicked stock brokers, always seemed to produce Wall Street reporting that was spot on – go read this one.

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