I want him as my congressman, too!

 

You snooze, you lose!

House Ways and Means Committee Chairman Charles Rangel not only cheats on his own taxes, he helps contributors do it too. He seems to come cheaply – how much do you suppose he’d charge for a simple provision in the next draft of the tax code exempting me from paying income tax?

Pricing in Westchester County

Surprise! According to The New York Times, Over-pricing hurts the chances of sale just as much across the border as it does here.

Bad news for sellers

Long ago and far away a bucolic little town basked in the exclusive rays of a very special sunshine, rays reserved solely for the town and its residents because it, and they, were special. When people came into the town seeking to buy a house the wise guardians of the town’s standards would escort them around various neighborhoods, not necessarily listening to what the buyers said they wanted but careful to limit the buyers’ views to houses priced within 10% of the buyers’ stated price ceiling. Why waste time, the guardians reasoned, showing more expensive houses when custom and tradition said that all houses sold for no less than 96% of their listing price (this wasn’t true, of course, but most of the guardians felt they’d be cutting their own throats encouraging buyers to demand significant discounts and so they didn’t). 

Today, despite what they may have heard on the news before quickly changing channels, many guardians still practice the “no higher than 10%” rule when showing houses. But the buyers, hearing the very newscasts the guardians refused to listen to, have become cranky and now demand to see houses priced at twice the buyers’ price limits because they intended to offer 50% of “asking”. The guardians are horrified at this boorishness and many refuse to participate. 

So houses have stopped selling in the pretty town. The sellers and the guardians are trying to hold the line against the barbarians clamoring at the gates, all while the world outside goes to hell. Buyers, sometimes assisted by a few feckless guardians, are sifting through the houses built on speculation because, they reason, the builders of those houses may not have the wherewithal to last until better times return, if better times return. Some deals are showing up and more will surely follow.

Would-be sellers of older homes are being hammered by this new behavior because, if a buyer can pick up an 8,000 sq.ft. house that’s brand new for, say, $5 million, why would he be interested in the seller’s charming old 1950’s house that, as the guardians say, has been “lovingly maintained”? Buyers are content to let those sellers just keep on maintaining their homes. They’re not interested, and until those older houses drop way, way down or happy days return, they will never be interested.

The news isn’t much better for builders of new homes, by the way. A recent review of 51 new houses in Greenwich priced between $5 and $10 million produced exactly no recommendations to a certain  buyer. Either the street was no good, the land was marginal or the size was simply too over the top, and in every case, the price was nuts; in the reviewer and his buyer’s opinion, of course. The sellers of these houses and their guardians obviously disagree or they wouldn’t have them listed where they are, would they? And certainly each buyer has different criteria so what may be unacceptable for one may be just what the other is looking for. Except for those prices.

So the sellers sit and seethe while buyers insult them by tossing 1/2 price offers at them. The buyers may be reaching too far – perhaps a 40% discount is the proper figure – but for now, no one is happy in that beautiful town. One day a prince will come and either convince sellers that they must lower their home’s price to levels they never dreamed of, or restore the nation’s economy and in particular, Wall Street, where multi-million dollar salaries will return and send the recipients of those salaries back to the little town, to buy houses at their old levels. 

And everyone will live happily ever after.

I never believed he drove the damn things anyway

GM, Tiger Woods part ways.

Today’s sales activity – small houses, 20% off

Two modest houses were reported sold today (which means they closed Friday). 81 Loughlin Avenue, in Cos Cob, asking $1.350, sold for $1.1 and 25 Lockwood Road in Riverside asked $1.399 since way back in January 2007 and finally sold for $1.125. That’s about 20% off in both cases. Notice that nothing big went off the market.

There were 11 price reductions reported. 2 were single family, including “Whispering Winds”, the 14 acres on North Street discussed earlier – maybe if they ditched that ridiculous moniker they’d have better luck – 2 were out of town properties and 7 were rentals. I keep hearing that the rental market is hot but I keep seeing price reductions. Something isn’t jibing.

“Do they have any idea how bad it is out there?”

That was asked of meby a friend who has access to sales statistics from the entire tri-state area, plus Massachusetts and Rhode Island. She doesn’t like what she sees. Here’s another person who isn’t as sanguine as most Greenwich homeowners, this blog’s most prolific and always-on-the-money commentator, CEA:

Chris, what % of sales are foreclosure or “forced” (spec builder, like 480 North) sales in the area, if that is the only thing selling?

I’m getting the impression most people reading this blog aren’t thinking “how much do I need to slash to sell my not-new place fast”, but “when will my house be worth what it was in 2006?”

The banking system is hanging by a thread (I maintain that it has collapsed, and the record will show that in a few years); layoffs are rampant, and the banks will never again be dishing out loans (510 Round Hill getting its entire construction loan in one big chunk?) the way they used to.

Just “smartening up” and not lending to convicted felons, or to people only putting 5% down, will take pricing down. Layer on the current economic environment and you have a recipe for – if not actual downward convulsion – then a flat pricing environment for quite some time.

This gives me little joy to say, as we bought our house after 2000.

I think she’s right. Bummer.

At this rate, they’ll pay you $2 million to take it in February

487 North Street

Here’s someone who is adjusting nicely to changing market conditions. This fabulous piece of property – 14 acres plus a grand old house in need of a complete renovation – came on the market back in April for $23.5 million. Neither the property nor its price went anywhere until October, when the price dropped $5 million. Today we see another drop of another $5 million, for an asking price of $13.5 million. $5 million a month, each month; by February ….

Is the sky falling?

I think not, although the real estate market in Greenwich is not looking so great right now, at least for sellers. Home sales are down nationwide and prices down 11%. Bloomberg (entire article linked above) quotes this fellow:

“Underlying demand appears very weak; it seems many sales are coming from cheap prices on foreclosed properties,” said Sal Guatieri, senior economist at BMO Capital Markets in Toronto, whose firm’s forecast of a 4.97 million sales pace was the closest in a Bloomberg survey of 67 economists. “Home sales will continue to fall over the next few months because of tightening credit conditions.”

It is true that credit is hard to come by, and I know of several sales that have fallen through when the buyer’s mortgage did. Right now, cash is king and if you can swing it, there are bargains to be had.

If sellers will cooperate. I wrote yesterday that I prefer dealing with builders rather than homeowners right now because to them, it’s just a business deal – how much is it going to get out from under a bad decision? (For the same reason, working with professional criminals was easier: they’d done the crime, and only wanted to know how much time they’d have to serve – amateurs were much more difficult, wailing that they were innocent, how they’d never do it again, did the prosecutor know who they were, etc.).

But I digress. A reader asked, how is the market affecting sales of older homes, and what should such owners do? Sales of older homes are suffering – buyers can get new houses for what these older homes are asking and, all things being equal, most buyers prefer new to old. As to advice on what to do, my answer is, walk like a builder. Divorce yourself from your emotions, forget how much you paid for your house, forget what your neighbor got for his place last year, what you’re going to tell your friends at the Club, etc. and make a business decision: do you want to get out of your house now? Do you want to, and can you afford to, wait, with the accompanying uncertainty of not knowing how long you’ll have to wait and whether prices will recover or sink to a new level and stay there?

Some owners can wait and are willing to. If you’re one of them, great. I’d take my house off the market and stick it out until better times return. Some “experts” are predicting a recovery by this coming summer or next fall – others aren’t so optimistic but if you can sit things out, I’d recommend you do so.

But if you can’t, or don’t want to, then cut your losses and either accept the first offer that comes in waving cash and a no-financing-contingency deal or slash your price to the bone and hope that stimulates a buyer. There are buyers out there – I’m working with a couple of them and I know that public open houses are drawing them in. Right now though, buyers and sellers are miles apart waiting for the other to blink. My money’s on the buyers because we’ve entered a buyer’s market – this stuff happens from time to time – sorry.

Quit Dreaming

According to today’s Greenwich Time, Veterans and Italians don’t like the idea of our schools remaining open on the two holidays honoring those groups. The schools say that there are too many holidays in the fall and the learning schedule is disrupted by closing and reopening so often; the folks who object see more important things at stake.

World War II Veteran John Macri said that having the children take the day off to attend the parades and hear from the veterans is much more meaningful than anything they would learn in school, from a text book or a teacher.

“It just makes a much bigger impact,” he said.

I hate to break it to Mr. Macri but I never attended a parade in veterans’ honor on November 11th and I don’t know any school kid who did. It may have been too cold to go fishing but we certainly spent the day off enjoying ourselves and not observing what should have been a solemn event. I doubt kids today are any different.

I am the child of two WWII veterans and I honor their service and the service of all veterans who served in any of our wars. But to be realistic about things, closing school for two days “to send a message” doesn’t accomplish much. I think my friend and World War II hero, Chuck Standard, has the right idea:

But World War II veteran Chuck Standard, 89, said that taking away the Veterans holiday is fine with him.

“When I was growing up, we all stood up in school on Nov. 11 and faced east for two minutes of silence. To me that’s just as good,” he said.

We could do the same thing for Columbus Day, too – after all, isn’t Spain somewhere to our East?