Daily Archives: February 2, 2009

You mean it wasn’t love?

in a story sure to shatter the illusions of dozens of former Greenwich IB hotshots, it’s being reported (sorry, someone tore a clipping from a paper and gave it to me – no idea where it came from) that the strip club Scores, now defunct, perhaps, has sold off its special label champagne and it can now be found at Warehouse Wine & Spirits on Broadway for $7.99 a bottle, a price far removed from the $250 the club used to charge for the swill, without  a lap dance. That’s a worse decline than you’ve suffered, so far, on your Round Hill house. So buddy, if you hadn’t figured it out by now, you were hosed. But given your present circumstances, this isn’t all bad news; pick up a bottle for 8 bucks, bring it home to that wife you don’t know (if she’s still there, you loser) and maybe she’ll put on some fishnet stockings and help you remember the glory days. Hey, Valentine’s Day is less than two weeks away.

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Palm Beach pawn shop selling off Madoff victims belongings.

Old silver, mink coats, it’s all for sale, reports CityFile. And if you missed out, CityFile says that the same joint’s unloading ex-Lehman executives’ prized possessions in a week or two. Plenty of time to get down there, but perhaps I can save you the trip: I stopped Monica Noel this morning as she was clambering out of her Range Rover, burdened with armloads of nice-looking men’s suits and a few couture dresses. I asked if she was packing the stuff off to Florida and she gave me a look she’d normally reserve for a Brazilian gardener who might dare to file a workman’s comp claim against her. “That is completely undignified,” she sniffed. “The Noels have always given our castoffs to the Greenwich Hospital Thrift Shoppe and we see no reason to stop now. Imagine, selling Walter’s used underwear. Hmmmf!” I did notice a sign in the Thrift store’s window promising cash for the newly-unemployed’s unwanted clothing but I’m sure Monica would never take advantage of that bit of charity. But if you want to see what she’ll no longer be wearing, stop on in.

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But is it true that he stopped?

Lehman bankruptcy judge arrested for beating his wife.

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Real estate can be tough

1-butternut1 Butternut Hollow Road has a tortured history. Listed as land for $2.4 million back in August 2003 the frustrated seller raised his price to $2.65 that November after no one would buy it at the lower price. That didn’t work, for some reason, so he eventually dropped all the way to an even $2 million in June ’04 and, naturally, a bidding war erupted and the current builder/owner bought it for $2.050 two weeks later. The existing property was razed and this one took its place, priced at $5.895 million in April 2005. it’s been begging for a buyer ever since. The builder dropped it 8 times without success so in November 2007 he raised its price, forgetting how well that had worked for the previous seller, from $4.450 to $4.650. This daring approach also failed so it was back to price dropping and the place ended up at $4.350 in June, 2008. Today it was withdrawn. Is the builder moving in himself? Turning the keys over to a lender? I don’t know, but the poor guy’s been carrying this place for almost five years and has yet to see a dime on his investment. I doubt he ever will.

UPDATE: This should read 1 Butternut Hollow (it does now, thanks to an alert reader) not 186. Don’t know how those last two digits crept in, but isn’t to “86″ something to toss it into the deep? Maybe that’s it. And brother Gideon informs me that the builder did see a few dimes from this place in 2006 when he rented it for almost $20,000 a month. That probably explains his price raise in 2007. After it had been lived in for a year and was broken in, it was worth more. Maybe he’s withdrawn it today in order to try renting it again. Unfortunately, rents have followed house prices down, but it will still generate some cash. Just not as much as before.

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Catastrophe bonds heading for disaster

Back in April 2007 Michael Lewis, one of my favorite financial writers, published a really good article in the NYT Magazine on “catastrophe bonds” what they were, how they worked and how they were an excellent free market alternative to ham-handed efforts by the government to provide insurance against hurricanes and other natural disasters. Unfortunately for Lewis and much of the rest of the world, few realized that “Cat Bonds” carried two risks: insurance and credit. Insurance, we got, but credit risk?

Turns out that was the biggest risk of all. Today Allstate announced that its about to default on the interest payments it owes on a series of cat bonds because its contractual agreement with Lehman that was to guarantee interest payments on those bonds is defunct. I’m not quite sure why the disappearance of Lehman’s guarantee caused Allstate itself to be unable to meet its obligations, but it all looks like quite a mess. Nothing’s simple, these days.

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Dipping below 2005 prices

186 Bible Street

186 Bible Street

This back lot cottage (1,248 sf) on Bible Street was purchased for $1.350 in February 2005 and in a fit of irrational exuberance put back up for sale 11 months later in January ’06 at $1.85 million. It expired unsold in June, 2007 and after a year-and-a-half of licking their wounds, the owners have tried again, this time listing it today for $1.295. Well, that’s better than $1.85 million, anyway.

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You can start the end of American hegemony clock now

Not long ago New York City, and therefore the Unites States, was the financial capital of the world. The city prospered by taxing the billions generated by Wall Street wizards and redistributed that money to the deserving and undeserving alike. Wall Street is gone and the city is reduced to taxing plastic bags to keep itself going. Will the last person to leave Manhattan please put out the recycling bin?

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It’s a little late now

A british warship lost in 1744 along with 900 men and 4 tons of gold has been discovered in the English Channel. That’s a cool story but how about this: rehabilitation for her captain and a maligned lighthouse keeper after 250 years:

In a telephone interview, Mr. Stemm called the find “hard to beat” in terms of raw history, lost treasure, and solved mysteries. The team found the wreck far from its reported resting place, and said the discovery had cleared the name of its commander, Admiral Sir John Balchin, whose navigation had been impugned after the catastrophic loss.

A hard gale scattered the British fleet shortly after it entered the English Channel, and on Oct. 5, 1744, somewhere off the Channel Islands, Victory went down with all hands. The flagship was the only member of the British fleet lost at sea.

The belief spread that ship had grounded on the Casquets, a group of rocky islets west of Alderney that protrude a few dozen feet above the water line. The rocks are called the “graveyard of the English Channel.” The lighthouse keeper of Alderney was court-martialed for failing to keep the lights on at the time of the ship’s disappearance.

I do hope the Admiralty can track down those sailors in their nursing homes and tell them how sorry it is.

UPDATE: No nursing home for Admiral Balchin – he went down with his ship, aged 75, according to this family history. Not surprisingly, given that it’s a history prepared by a descendant, the article is long on the man’s career and silent about any post-mortem inquiry. Interesting, though.

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Makes sense to me

Getting rid of bad assets is not the solution banks want.

John Carney at Clusterstock points out:

The problem is not that balance sheets are somehow “clogged” with bad assets. If that were really the problem, everyone would immediately agree to this deal: Clusterstock will take all the bad assets. Every single one of them. Give us your subprime mortgages, your second liens, your bundles of autoloans and student loans and credit card debt. If the problem is that you need these off your balance sheets, we’re here to help.

Any takers?

We didn’t think so.

As our little offer shows, the problem is not that there are no buyers for these assets or that the assets are clogging balance sheets. The banks don’t just want to get rid of the bad assets–they want to get rid of them by exchanging them for far more money than anyone is willing to pay. And there’s only one entity around that can force people to pay more than they are willing for something–that’s the government.

We’ve made this point before but it bears repeating. Any proposal to buy bad assets from banks means that the government will give the banks cash for trash. The “bad bank” will have to overpay otherwise the banks won’t take the deal.

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Gotta love staying power

8 Glen Court

8 Glen Court

This is a good house on a good street, close to town and with easy access to the hospital if you’re prone to heart attacks, say, or even recurring hangnails. The owners paid $1.3 million for it in 2001, renovated it nicely in 2003 and have been trying to sell it since 2007. They started at $2.4, raised it to $2.5, curiously enough, and have now dropped it back to $2.395. I admire the sellers’ determination to get what they want for their home, but I doubt they put $1 million into renovations and I’d suggest to them that two years spent at this price is strong evidence that buyers don’t value the house the way they do. File this one into the category, “houses not really for sale”, and hope for better times.

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Nice land on Quaker Ridge

The 4.5 acres on Quaker Ridge is back again, this time marked down to $1.95 million. That’s an improvement of its original price of $2.495 back in 2007 but its latest price was $1.99 million, so a $50,000 drop isn’t exactly stop-the-presses news. Plus, there seems to be a bit of a problem with the loan on this place so a more aggressive price cut would seem appropriate. But nice land, all the same.

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Well, who ever liked Monday mornings anyway?

The Dow is sulking. Perhaps it will perk up as the day wears on.

dow-monday

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Demanding times demand tough sacrifices

Congress limits its pay raise to just $93,000.00. “It’s the least we could do,” said Chris Dodd, “but don’t worry – we all have other sources of income – know what I mean? Know what I mean? Blink blink. Nod nod.”

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Stop me before I kill again!

Madoff feeder fund sues its auditors for not preventing it from doing something stupid. No, not Walt’s fund but that Darien group run by a Fairfield Greenwich alumnus. FGG made noises about doing the same thing to its auditors but has taken no such action. Not enough money to pay the legal fees involved, probably. I’m still looking for that yard sale at 175 Round Hill Road – any day now.

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It’s because they have too many kids!

London hit with biggest snowstorm in 20 years. Al Gore flees on private jet.

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Dumb listing headlines of the week

I thought a comment on a new listing last week that claimed “an over-the-top mud room” was as silly as I’d see for at least a few days, but then a new listing came on this morning promising a “remarkable 3-acre site at 2005 prices.” That’s not intended as a joke, as far as I can tell - you, the buyer, are supposed to be ecstatic at the possibility of paying peak pricing for an unwanted piece of land.

Which, given the pricing history of this property, perhaps you should be. It sold for $4.8 million in May, 2005, a surprising price even then, and the new owner, a spec builder, I think, proceeded to do a little site work and poured a foundation for a 17,000 sf house. He got cold feet and in June 2007 offered up his mistake for $8,500,000, for which, of course, you wouldn’t get an actual house, but would receive approved plans and, of course, that foundation. The market proved remarkably cool to this proffer during the ensuing two years and now it can be yours for what the guy paid for it in ’05, with the plans tossed in for free. That foundation, sized for a house that may be too large for current tastes, is your problem, but nothing a few days work with a bulldozer can’t cure.

Will this place ever sell? Sure - it’s premium land in a desirable development. But I bet it goes to another, better financed builder, and I bet it doesn’t sell for $4.5 million. But that’s just my opinion, of course. The seller and his agent obviously think otherwise.

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Will private school students go public?

I raised this issue last fall, when Wall Street first collapsed. At the time, the private schools were still reporting strong enrollments and many thought it unlikely that kids would leave, say, Brunswick for the mob scene at the GHS student center. Well, Wall Street has hardly improved and now the town is paying attention to the possibility of private school students washing up on the shores of our public schools. At $35,000 tuition, per student, per year, it’s within the realm of possibility that families won’t be able to afford three children in private school. I don’t know my readers’ experience but I’m learning almost every day of another friend who’s lost his job, and even friends who are in other fields than financial – IT, for instance – report that “it’s scary out there.” Things look bleak, at least right now.

While I’m sorry for any family that suffers financial reverses, sending the kids to Greenwich schools will not be the end of them. The schools have always been pretty good, and an influx of smart, ambitious kids, paired with parents who care about those kids’ education, can only improve them. Bring ‘em on, and sorry about your Caribbean vacation. Maybe next year.

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Median house ask vs. Median sale

My blogger friend and fellow realtor out in Tucson, John Schneider, has a great post on this subject in his own blog, The Tucson Foothills. The Tucson market is about our size : 550ish single families in inventory and few sales, so I was struck by John’s analysis of the gap between what the median price of sold houses was compared to the median price asked for the current inventory. Big gap.

I don’t have the exact figures but, inspired by John, I did make some rough calculations. Our median sale price for the last quarter of 2008 was $1.8 million, down from $2.1 in 2007. Our median ask price for the current crop of 573 houses is somewhere between $3.2 and $3.5 million (that’s a guess from some extrapolation but it’s close enough). Will prices have to drop to $1.8 million if a house is to move? That’s up to the market, but there’s no denying that, right now, what’s selling (few) and what’s for sale (many) are occupying different worlds. Prepare for a slow spring.

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