Daily Archives: February 6, 2009

Prediction: home prices will bottom out at end of 2009, 2010 or 2011

That’s pretty safe, eh? But this Moody’s report predicts that those areas already hardest hit by foreclosures and lowered prices will hit bottom in the last quarter of 2009 while other markets just entering the morass (that would be Greenwich) will continue to decline until 2010 or longer. Attention Greenwich/Naples residents: Moody’s predicts Naples prices to settle 70% down from their peak. Owie.

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From CityFile – FGG’s Murphy’s Townhouse for sale

Fairfield Greenwich Group partner and Round Hill neighbor of Walt Noel, Chuck Murphy, must be feeling the pinch as legal fees mount and nasty former clients show up demanding their money back. So he’s put the former mental institution/ townhouse he just recently purchased back on the market for sale. Will he join his cook out here in Greenwich and live happily ever after, or are the rumors true that he’ll be spreading a sleeping bag on the floor of the Noel garage until all this blows over? We’ll let you know as soon as we hear.

Here’s the townhouse. It’s just $37 million so you know it’s priced to sell and sell quickly. Interesting, taxes are only $76,000. Is that because of the lack of a long-overdue reassessment or are city taxes lower than I thought? 

Warning on the Sotheby’s link above. The site promises 10 pictures of the townhouse and delivers on that promise, sort of: there are only three different shots, repeated. I believe that reflects the new austerity program at Realogy/Sotheby’s in which only houses listed for more than $50 million get the full marketing treatment. Paupers’ palaces have to make do with less, as is appropriate.

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Shutting down talk radio

Democrats want to shut Rush Limbaugh down?    I had dismissed this as the paranoid delusions of right wing radio hosts but by golly, every day brings another Democrat to the fore promising to do just that. Here’s today’s. Her husband ran Air America, the left wing talk show network that failed and I guess she’s still sore about it. It’s all on a par with the college students who shout down conservative speakers and run conservative students off campus under “free speech” rules which, of course, like any communist propaganda, means exactly the opposite. I understand that the average mush-for-brains college student doesn’t understand the issue here but clearly the ones in charge do, and they’re afraid. So afraid that they’ll stifle dissent. After all, as our former VP so famously said, “the debate is over.”

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Spec house inventory

Heading out, away from my computer (hey, it happens) so no blogging for a few hours. Here’s something to mull over while I’m gone:

We have 57 new (built 2007-2008) spec houses for sale right now asking from $3.2 million to $25 million. That doesn’t include new houses unsold since, say 2005 or even 2006, and there are plenty of those.

In the past 90 days, 2 spec houses in this price range sold and 3 went to contract. So 5 the past quarter and none even approaching $8 million. Now imagine that you’re a spec home builder with $45 million in debt outstanding, all personally guaranteed, and 4-5 spec houses sitting unsold. Would you sleep at night?

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1998: $1.6 mil (direct sale). Today: $2.125

19 Dingletown Rd

19 Dingletown Rd

And that latest number is just the asking price (dropped today from $2.495). Adjust for inflation for the past 11 years, the commission that wasn’t paid back then, a little negotiation on this new price, and it’s 1998 all over again.

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Charles Krauthammer: The Fierce Urgency of Pork

From the Washington Post, and you really should read the whole thing.

But what made this case intolerable was the perfectly legal dealings that amassed Daschle $5.2 million in just two years.

He’d been getting $1 million per year from a law firm. But he’s not a lawyer, nor a registered lobbyist. You don’t get paid this kind of money to instruct partners on the Senate markup process. You get it for picking up the phone and peddling influence.

And yet more damaging to Obama’s image than all the hypocrisies in the appointment process is his signature bill: the stimulus package.

It’s not just pages and pages of special-interest tax breaks, giveaways and protections, one of which would set off a ruinous Smoot-Hawley trade war. It’s not just the waste, such as the $88.6 million for new construction for Milwaukee Public Schools, which, reports the Milwaukee Journal Sentinel, have shrinking enrollment, 15 vacant schools and, quite logically, no plans for new construction.

It’s the essential fraud of rushing through a bill in which the normal rules (committee hearings, finding revenue to pay for the programs) are suspended on the grounds that a national emergency requires an immediate job-creating stimulus — and then throwing into it hundreds of billions that have nothing to do with stimulus, that Congress’s own budget office says won’t be spent until 2011 and beyond, and that are little more than the back-scratching, special-interest, lobby-driven parochialism that Obama came to Washington to abolish. He said.

Not just to abolish but to create something new — a new politics where the moneyed pork-barreling and corrupt logrolling of the past would give way to a bottom-up, grass-roots participatory democracy. That is what made Obama so dazzling and new. Turns out the “fierce urgency of now” includes $150 million for livestock (and honeybee and farm-raised fish) insurance.

The Age of Obama begins with perhaps the greatest frenzy of old-politics influence peddling ever seen in Washington.

After Obama’s miraculous 2008 presidential campaign, it was clear that at some point the magical mystery tour would have to end. The nation would rub its eyes and begin to emerge from its reverie. The hallucinatory Obama would give way to the mere mortal. The great ethical transformations promised would be seen as a fairy tale that all presidents tell — and that this president told better than anyone.

I thought the awakening would take six months. It took two and a half weeks.

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$13 million for this?

38 French Road

38 French Road

No, I’m just kidding. This was the house that sat, until last year, on 2.8 acres on French Road (off of Round Hill). It was a pleasant 1960ish colonial that gave some insight into what was being built in those days, even on Round Hill, but it no longer was desirable by 2005 – not in this location. It was first offered at $4.7 million, which was just silly, even in the bull market, but it eventually sold for $3.5 million and now it’s been replaced by a 13,000 sf house asking $13,000,000 million – even this math-challenged scrivener can figure that’s $1,000 per square foot. I haven’t seen the new house yet and I guess it’s still under construction but it sounds like a great house if you like this sort of thing. Super-insulated, by the way – maybe you’ll be able to afford to heat a wing or two. So, great location with what sounds like a spectacular house. It certainly would have sold in 2005, and I’m sure it will sell now. The question is, when, and for how much? It’ll be fun to watch and find out.

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Lower cost neighborhoods

8 Sunshine Ave. Rvsd

8 Sunshine Ave. Rvsd

8  Sunshine is a renovated house that’s been for sale since 2006, starting at $1.995 million and down today to $1.775. It is true that #5 Sunshine sold for $1.5 million in the glory days of 2006 but that was at the high water mark, I think. Sunshine is a perfectly nice street with some good houses on it but it’s north of the Post Road – in Riverside, that has never commanded a premium; in fact, quite the contrary. I suspect that this one will have to find some room to drop before it finds a buyer. And yes, I’m being nice here – it’s the new, kinder model blog.

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Back Yard, Keofferam

25 Keofferam

25 Keofferam

Of course, this picture was taken before a house was built all over the yard, but the listing claims “room for a pool” (you didn’t expect a pool for $6 million, did you?) so I assume there’s some ground left.

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Spec houses and their lenders

I just spent a fascinating time with a guy I know who shared some loan data with me on who owes what on which spec houses in town.Things are really getting interesting. There are a ton of spec houses out there with over-due mortgages in amounts that greatly exceed what the house is worth. Looking over the list, I was amazed that any sane banker would ever have loaned so much on marginal land, yet lend they did, and now aren’t they sorry.

Hudson City Savings Bank, for instance, whose president sounded so rational and cautious on the radio one day that I wrote glowingly about him here, has loans on dead houses in Greenwich that must have been made without ever consulting a knowledgeable real estate agent. Builders are always sure that they can bring a project home a winner, but any lender who listens to them and doesn’t get an objective opinion probably deserves what it gets, which will be a bad loan.

HCSB is not alone, naturally, and isn’t even the most exposed lender – it’s woes just caught my eye. The trouble with trying to get one of these buildings on the cheap is that, according to my friend, so many of their loans are cross-collateralized with other projects. Drop the price on one and the entire house of cards comes down. So the builders persist in clinging to their high asking price, knowing that they’ve signed personal guarantees that will wipe them out if everything due is called, and unable to unwind the mess one string at a time. Their bankers had better get busy making that untangling possible.

One doomsday scenario that I hope won’t happen: there are some very well financed vultures out there considering buying entire portfolios of bad loans from banks. They’d then foreclose on, say, 15 -20 spec homes and auction them off to the highest bidders. If this were to happen, everyone would suffer, first because auction don’t bring in top dollar and in fact often fail, driving the value of a house into the dirt and second, those that do sell will set a new comparable value so low that even loans that are current would fall outside their loan to value ratios and be declared in default, thereby triggering still more sales. Death spiral.

Any vultures who tried this would be cutting their own throats because they’d be destroying the value of their new portfolio of houses but as we’ve all witnessed, common sense and enlightened self interest are scarce in the housing/finance field these days. Hmmm.

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Price Cuts, price increases

249 Bedford Road was once new construction (4 years ago) built on land that cost $1.520 million in 2003. It was listed for $5.885 million in September, 2005 and has sat empty ever since. I blame the location, at least in part, as this is at the far northern end of Bedford Road within a stone’s throw of New York. There’s a limited Greenwich market for houses up there. In any event, it’s been slowly whittled down and today it’s been priced at $4.995 million. Still a tough location.

25 Keofferam, in Old Greenwich, does have a great location, on a well-liked street, but it came on in the fall at $5.995 million just in time to watch the market dry up. Today it was reduced to $5.550 million but I question whether that size price cut will have any effect. I’d suspect that potential buyers had already discounted the place, in their minds, at least that much, so a builder’s confirmation that he’ll take less than his requested $6 million isn’t going to come as news.

56 Havemeyer Lane

56 Havemeyer Lane

Then there’s this new construction on Havemeyer Lane. It started at $2.195 million in March of ’08, dropped to $1.895 in September and expired unsold in December. It’s back on the market today at $2.195. I know all about our traditional spring market but I think buyers will look at the September price and wonder where an extra $200,000 in value came from.

53 Park Avenue South in Old Greenwich, that crazy Victorian with just three bedrooms, didn’t sell at $2.777 and quite rightly, in my opinion. But today it was knocked down to $1.495. There’s got to be value there, at that price, no?

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