Daily Archives: December 4, 2008

I wasn’t from Dubai, so I remained silent…

Now Canadian real estate’s in the tank, too.

November was not a good month for greater Toronto’s real estate market, as sales dropped by half over the previous year, and prices continued to slide.

Things were particularly bad in the city of Toronto itself, with the average price dropping more than 10%, to $390,225 , over November 2007. Sales were also down sharply: only 1,523 houses changed hands, compared with 3,426 the previous November….

“It’s important for the public to understand that while sales activity has moderated in 2008, due to current economic conditions, the average price of homes has increased from 2006 still making real estate a solid long term investment,” Maureen O’Neill, president of the Toronto Real Estate Board, said in a statement.

Reassuring to see that real estate board spokeswomen are the same world-over.

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Can we get just one senator to admit he’s an economic moron?

Gas dropped below $44 a barrel today.

Veteran energy analysts were stunned as they watched light sweet crude dip nearly 7 percent, or $3.12, to settle at $43.67 on the New York Mercantile Exchange by early afternoon.

Just four months ago, crude rocketed close to $150 and the average gallon of gasoline went for more than $4 per gallon. Crude has fallen nearly $27 in just one month.

No one believed crude would lose $100 in value between July and December, said Tom Kloza, publisher and chief oil analyst at Oil Price Information Service.

Some analysts believe demand could evaporate further early next year.

“I think the traders are looking at that and they’re saying, ‘Well, December is OK, it’s relatively balanced here and there, but my goodness all of these layoffs after Christmas, the cold weather, the cocooning, the bills coming due after Christmas, January is just going to be awful,'” Kloza said.

Does anyone else remember those Congressional hearings where oil companies were pilloried and futures traders blamed for driving up the price of oil? It happened all the way back last summer and politicians can’t remember anything past the last news cycle but surely one of them can be man or woman enough to admit that if oil prices can drop despite the strongest desires of ruffians to see it do otherwise, then they can rise, too, all without blame. It’s called the law of supply and demand. And these guys think they can run an auto industry?

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Filed under Right wing nut rantings

Okay, how’s this grab you?

The chart below was sent to me by another agent who also informed me that some of my colleagues are complaining that I’m not saying chirpy things about the current market. I hope this chart was sent to them, too.

contracts

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Second homes

The NYT has suggestions on buying and selling that second home. The examples and advice come from the Hamptons but there’s nothing in here that wouldn’t apply to primary homes in Greenwich.

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“I won’t leave – I won’t, I won’t!”

Mummified body found in foreclosed home.

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But this one’s nice

180 Park Avenue is a new brick Georgian (really – no half-timbered crap here) that fits in well on its street and seems to be fairly priced at $4.850 million. I compare it to other new construction I’ve seen that’s priced at $7 million and even higher and I like this better. Not everything’s being given away these days, nor should it. Good price, good house and, if you like almost-downtown living, great location.

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Filed under Buying/Selling Greenwich Real Estate

The answer is no

Referring to a listing I mentioned earlier this morning (and saw later – a disappointment) a commentator calculates the salary of whoever could afford it ($500,000) and predicts that those types won’t be lining up to buy it anytime soon. “Do people realize that we are not playing with funny money anymore?” he asks. Judging from what I saw at today’s open houses, I’d say they don’t.

For instance, there’s a house on Indian Head Road that sits on a decent enough, if smallish parcel with a graveyard behind it. It was expanded rather badly some years ago with the result that the old and the new don’t blend and, in my opinion, don’t work. Two different houses, joined at the hip. It just dropped its price to $3.4 million after several months at $3.6. Just down the road a piece, on a full acre, set back from the road, with a swimming pool, is  15-year-old house that just sold for $3.2 million. It’s too late to buy it, of course, but anyone looking at the first house will compare it with what less money bought just a month ago and balk. I would. So what gives with the sellers? We’re in a declining market and they price their house above what a better house just sold for? This may make sense to them but their reasoning eludes me.

I could go on, detailing, again and again, houses I’m seeing that are priced at, say, $2.5 million when they’ll probably fetch $1.5, or $1.3 for a $750,000 building lot, etc. I’ve pretty much given up looking at owner-occupied homes and concentrate instead on builders’ spec houses. There’s no emotion involved, the builders know that they stayed too long at the ball and just want to get out of a bad situation for the least possible cost. Homeowners, by and large, are still so deep in denial that they can’t recognize a good offer when it bites them. So why waste my time or that of my clients?

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Filed under Buying/Selling Greenwich Real Estate, pricing

Deep Pockets

504 North Street
504 North Street

I was prowling some North Street listings this morning and was struck by the number of spec houses that, despite a demonstrated market indifference to their charms, are holding steadfast to their price. This 17,000 sf whopper on the corner of Dingletown, for instance, has been offered for sale since early 2007 yet has only dropped from $11.995 million to $10.595. Perhaps its builder thinks a 12% discount is sufficient; I don’t agree.

Just up the street is another spec house, also on since 2007 and also still priced pretty much where it started. God bless them, these builders are supporting everyone else’s property values by refusing to abandon ship but it’s got to be an expensive undertaking to be so principled.

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Filed under pricing, spec houses

Going down?

This condo at 71 Orchard is near Bruce Park – good, and I-95 – bad. It came on at $1.995 back in May, 2007 and has been dropping since. Two weeks ago it was clipped $50,000 to $1.450 and today it was reduced again to $1.4 million. The builder can’t seem to rent it – he dropped that price from $7,000 to $6,500 today, too – and so far, can’t sell it. He’s down 25% from his hoped for selling price and still going, I would imagine. There’s bound to be a market-clearing price for all the new construction in town but I don’t think we’ve reached it.

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Filed under pricing

Call me next year

Just received a call from an appraisal company – someone’s about to be foreclosed, I suspect. Could I do a drive by property opinion in the North West corner of town, supply three comparable sales, three photographs of the subject property and aerial shots of the subject property and its comps? “Uh, sure, I guess”. “And can you supply them by tomorrow afternoon?” “It will mean rearranging my schedule a bit but sure, I can do that”. “And we pay $60 for this – is that alright?” End of conversation.

Maybe next year but I’m not working for minimum wage, yet. What surprises me is that the caller was surprised that I wasn’t interested in the job for that pay. There must be more hungry real estate agents out there than I thought.

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Filed under Real estate agents

We must be looking at different houses

Another local real estate columnist says today:

Sellers are adjusting to the market and carefully pricing their homes and considering offers.

I haven’t noticed much of that going on.

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Filed under Buying/Selling Greenwich Real Estate, current market conditions, pricing

Testing the waters

64 Sound Beach Avenue

64 Sound Beach Avenue

This looks like a nice house (its first open house is this morning so I’ll find out). It sits on a half-acre (realtorese demands that it “nestle” on that land, but we’ll skip that) and was renovated about four years ago. Asking price is $2.195 which might prove high for this section of Sound Beach Avenue – north of the Village. Of course, the house across the street on the corner of Sound Beach Ave. and Lockwood sold for $4.0 earlier this year so in comparison, this isn’t a wildly-optimistic price, I suppose.

But that $4.0 house was purchased by an out-of-towner, which always makes me a bit suspicious that perhaps they over-paid. So we’ll see. It’s a convenient location, next to the park and the library and an easy walk to the train and its interior looks very nice in photographs so ….

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Filed under Buying/Selling Greenwich Real Estate

Something new to fight about

Divorcing couples now squabble over who has to take the family residence and its underwater mortgage. 

Now, in a twist on the classic divorce dispute, houses have become hot potatoes for couples divorcing during the downturn.

‘It’s like, ‘You take the house!’ ‘No, You take the house.’ ‘I don’t want it, you take it,'” said Drew Sheridan, a veteran divorce lawyer in Kendall, Fla.

Needless to say, the divorce lawyers are profiting from this unfortunate turn of events – they always do.

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Harry Reid: “Save us!”

Mr. Reid has admitted that the Democrats can’t pass an automobile bailout bill but suggests that President Bush do it for them. I think that the biggest mistake Bush made was providing cover for the Democrats, letting them pass resolutions demanding surrender in Iraq, for instance, while knowing that their president would step in and save them from their folly. It’s a little late, but I’m delighted that he’s leaving this one for them to deal with: deciding between offending union supporters and infuriating the American public that doesn’t want a bailout. The poor dears, what a quandary!

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From the “things are tough all over” department:

Dubai real estate boom goes bust.

The good news? We should see more of Tiger Woods in this country instead of the at the “Dubai Pound Sand Tournament.”

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4.5% mortgages and why they won’t help

Or so says this article.

“But a larger problem here is this: a 4.5 percent primary market rate essentially implies a current coupon of 4 percent, barring some other intervention mechanism. Industry color popping around after market close on Wednesday evening suggested that such a coupon would mean that most of the traditional buyer base for agency MBS would likely head elsewhere — leaving only the Treasury, and possibly the Fed, as the sole buyers of bonds under this sort of program.

“Domestic banks will find NIM [net interest margin] offered by new mortgage bonds too low to buy them,” said one trade desk’s note, noting that the all-in cost for FDIC guaranteed 3-year bank debt is above 4 percent at the moment, and some banks are offering a 3 percent APR on 6-month CDs. “A similar reasoning goes for … overseas investors and domestic money managers … for whom these bonds will be a lot less attractive than alternative asset classes in that they will not receive enough compensation for the negative convexity risk when they buy these bonds, all else being equal,” the trading note said.

There’s another problem, too: funding the MBS purchases, which — since only the U.S. government appears likely to be buying — would require putting more Treasury debt on the market.

“If the plan relies on investors buying 3 percent Treasuries to fund 4.5 percent mortgages, one has to ask how still additional Treasury supply is going to attract still more buyers of 3 percent Treasuries,” said Jim Vogel, an analyst with FTN Financial. “Demand is not infinite, particularly when risk begins to stabilize.”

The core problem with such a plan, according to a few secondary market experts HW spoke with, is that mortgage rates have little to do with the problems facing both borrowers in the primary markets and traders in the secondary market. “Leave it to the NAR to think that if we somehow lower mortgage rates, we’re on the road to recovery,” said one analyst, on condition of anonymity. “It’s like our government is trying a see-what-sticks philosophy to this mess.”

‘It’s like more of the same poison,” said another MBS/ABS analyst, via email. “I was reading some Bernanke blather with a sentence [regarding] mortgage credit drying up for borrowers with weaker credit, and I wanted to scream AS WELL IT SHOULD!! THEY HAVE PROVEN BEYOND A DOUBT THAT THEY DON’T DESERVE MORTGAGES!’ “

I don’t know enough to hazard a guess as to who’s right on this matter but I am suspicious of any plan hatched by the National Association of Realtors and other members of my new profession.

If they extend the program to re-finances, then the freed up income might stimulate other purchases, like cars, and that might help the economy. I suppose. But creating yet another group of lucky tax dollar recipients – this time, new home buyers – seems like poor social policy, regardless of whether the plan sells more houses.

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