Daily Archives: February 21, 2009

4 dead bodies but shhh! We can’t tell you about that

A Washington D.C. house where a mother killed her four children and lived with their corpses for more than a year is on the market but languishing, even though its price has been marked down to $90,000. No one is supposed to know about the dead children, though:

District real estate experts say laws such as the Fair Housing Act forbid real estate agents from disclosing information about crime in a neighborhood or a home. Real estate lawyer Brian Kass said it’s up to the buyer to ask the agent whether “anything unusual” has occurred in the house. Otherwise, the agent needn’t divulge.

“It’s illegal to reveal that type of information,” said Brookland-based Long & Foster agent Andi Fleming. “In the eyes of the bank, it doesn’t affect the value of the home.”

Give the price history, even in this market, it seems safe to assume that agents are ignoring those laws, thereby demonstrating that common sense is not yet entirely extinguished in our nation’s capital.

The home’s asking price has been sliding faster than the Dow.

It is assessed at $220,610 according to 2009 District tax records.

In September, it was listed at $163,000. In October, the bank lowered the price to $152,200. Nine days later, the price was lowered to $139,900. In December, the price was lowered to $100,000. On Feb. 6, the price was lowered to $90,900.

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The New York Times sends bad news from Greenwich and didn’t interview me!

Greenwich: Where are the buyers?

LORY GAMBRILL put her colonial-style house here on the market in September, the day after the government announced its takeover of the mortgage finance companies Fannie Mae and Freddie Mac. At $1.75 million, it was considered well priced for the neighborhood, which boasts newer, larger homes — and Carlos Delgado of the New York Mets among the neighbors.

She expected it to be snapped up. “My broker told me it wouldn’t even make it to the open house,” Ms. Gambrill said.

Seventy real estate agents attended the open house in October, but over the next five months it was shown only seven or eight times, she said. She rejected an offer of about $400,000 below asking price. “It’s impossible — no one is buying anything,” she said recently. This month, Ms. Gambrill asked her broker to take the house off the market temporarily.

The article’s chock full of my optimistic colleagues like Bill Andruss, who sees a rush of buyers flooding the market. The only flood I’m seeing is would-be buyers peeing on our inventory, but perhaps Bill has a different clientele. An economist quoted says that “adjusted for deflation, prices haven’t dropped as badly as in other areas of the country.” Adjusted for deflation? Other than that, Mrs. Lincoln, how was the play?

UPDATE: Ms. Gambrill’s property may be this home on 34 Thunder Mountain Road, bought in 2000 for $1.125 million. If someone really offered $1.350 for it, rejecting that bid might have been a mistake.

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So don’t mow lawns

Earlier this week we posted the story about a fellow who claimed to be an investment banker (probably works at Citibank) who was offering to mow lawns. If that career doesn’t charge you up, the Times reports on other options, from butlers to nannies to personal assistants.  

The best news comes from Gary Pincus, owner of “Send in the Clowns”: “We’ll hire clowns from Wall Street,” he said. “No problem.”

But what will he do with them all?

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How stupid, exactly, are bankers?

That’s tough to measure but we can tell this about Citibank: they fell for a Nigerian swindle! Must have been a really cool email.

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Here’s an old idea and still a good one

Stop giving money to Africa. The leaders’ Swiss bank accounts are full and they don’t need any more.

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Lies, damn lies and statistics

Ken Edwards, real estate columnist for the Greenwich Citizen (they don’t put him on line so no link) reports that our colleague Gary Silberberg has prepared a statistical analysis proving that Greenwich real estate is a whiz-bang investment. According to Silberberg according to Edwards, the average Greenwich home price is up 5% over 2006. Wow, that’s great!

Except it’s hogwash of the highest order. Show me  house that was purchased in 2006 and sold this year and I’ll show you a homeowner who lost money, and I don’t care what Gary’s statistics say. Gary himself has had a spec house on the market since he built it in 2005. When, after a year or so, it still hadn’t sold he raised its price. I teased him about that and he responded by sending me pages of statistics “proving” that. per square foot, his house was the best value on the market and was actually worth more than he was asking for it. “If all that’s true, Gary,” I asked, “how come it hasn’t sold?” That was in 2006 – you can still find it for sale, although he has since dropped its price. 

I like Gary and appreciate his trying to put a good face on things but if he convinces sellers that the only problem, is, as he claims, “buyer skittishness” rather than the prices of our inventory of unsold houses he’ll just have helped prolong this moribund market. Or so I think. Gary Silberberg, obviously, disagrees.

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Long term trouble for housing

Congress, as warned about here some weeks ago, is drawing closer to imposing cram downs on home mortgages. Essentially, bankruptcy judges will have the power to rewrite mortgage contracts as they see fit.

Lenders have long fought against cram downs, which they fear judges will use aggressively to shrink loans for troubled homeowners. That could boost losses not just for lenders, but for investors in mortgage securities. Some bankers also contend that allowing cram downs will cause mortgage interest rates on future loans to rise because lenders would demand larger yields to compensate them for greater risks.

The Mortgage Bankers Association reiterated its opposition to cram-down legislation. “Any borrower who cannot stay in their home under [the Obama foreclosure-prevention plan] will certainly not be helped by cram down,” said David Kittle, chairman of the trade group.

And the U.S. Chamber of Commerce said Wednesday that cram-down legislation will “create hundreds of separate mortgage modification policies and will extend uncertainty in the housing market, ultimately raising interest rates.”

Proponents of the legislation say it is too early to tell whether mortgage rates will go up and, in any event, banks helped to create the current mortgage crisis. Rep. John Conyers Jr., a Michigan Democrat who has sponsored cram-down legislation, has argued that banks haven’t been able to move fast enough to stem the foreclosure crisis. “It is high time the Congress decisively addressed this destructive practice” of foreclosure, he said in a news release this week.

The Obama administration said Wednesday that it favored applying cram-down provisions only to loans that fall within the size limits that apply to loans that can be purchased by government-backed mortgage investors Fannie Mae and Freddie Mac. Those limits are $417,000 in most parts of the country but can run as high as $729,750 in the most expensive areas, such as much of California. Along with loans owned or guaranteed by Fannie and Freddie, that would include many other loans within those limits that are held by banks and investors.

For some holders of mortgage securities, cram down could mean heavier losses. Mortgage bonds are divided into “tranches,” ranging from triple-A-rated down to ratings below investment grade. Losses from loan defaults are initially borne by holders of the lowest-rated tranches, protecting the triple-A and other senior tranches unless losses rise.

John Conyers, if you haven’t heard of him, was, until the Democrats gained control of Congress two years ago, a relatively harmless fool known only for his introduction, year-after-year, of a slavery reparations bill. The reparations bill is now alive and, if he has his way with this bill, his constituents will need them to pay for higher interest rate mortgages. The rest of us, of course, will be out of luck. 

I do like the argument that, “well okay, mortgage rates will go up, but this whole mess is the bank’s fault”. So would-be homeowners will be forced to pay higher rates, sellers will get lower prices for their houses and this will punish the banks? The scariest part of this whole financial meltdown? Realizing, as last week’s Congressional “investigation” of banking CEOs demonstrated, that our politicians are complete utter fools with absolutely no clue about finance. When the brightest among them thinks that a probing question is asking whether or not a particular banker took a train to Washington, it’s time to worry for our future.

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No loss here

The New Haven Register declares bankruptcy. I’ve never read the paper but if the Wall Street Journal has the story and the Register itself does not, say good bye, guys.

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Hold the eulogies, Kennedy says

mary_jo_kopechne_3

“I’ve lived a blessed life.”

Mary Jo Kopechne was unavailable for comment.

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Obama – Here’s a novel idea: raise taxes on the rich

I applaud the man for wanting to reduce our deficit but I’d have more hope for our future if he proposed cutting spending, rather than increasing spending and taxing hedge fund profits. What happens, by the way, if there are no hedge fund profits to tax? And here’s an interesting concession to reality:

Mr. Obama will also call for letting the Bush tax cuts on income, dividends and capital gains lapse after 2010 for individuals who make more than $250,000 a year. As a candidate, Mr. Obama called for immediately repealing those tax cuts; he decided instead to keep them in place through 2010, as scheduled, reflecting the widespread belief that raising taxes further depresses economic activity.

Raising taxes depresses economic activity? Who’d ever have believed it. But if I understand the Obama plan correctly, he’s going to impose a massive increase in spending on health care, bring back welfare to its bloated, pre-Clinton days, do nothing about social security and slam us with an energy “policy” that will triple its cost. He does all that, plus raises taxes to further kill the economy and again I ask, who pays, if there’s nothing to tax?

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Greenwich Land for sale

51 Mooreland

51 Mooreland

It’s a slow Saturday afternoon so I thought I’d check and see what we have in inventory as land. Not much. We do have 94 listings but they’re almost all ridiculously overpriced, in awful locations or both. Some that caught my eye,  regardless of their price, include the following:

38 Khakum Wood, 3 acres, asking $4.8 million. Good location going for it, if nothing else. The owner paid $4.8 million for it in May 2005, put in a foundation to accommodate a 17,000 sf house and then panicked and put it back up for sale for $8.5 million in 2007 (I kid you not). It’s now back to where he started, but you’d have to rip out that monstrous foundation and start again plus, this is not 2007. Serious price negotiations are in order here.

38 Langhorne is very pretty property (4 acres?) , even if you have to drive by Antares’ 35,000 sf flop to get to it. The builder (Jordon Saper) paid $1.250 for it in January, 2007, leveled it, installed a septic system and re-listed it a year ago May for $4.5 million. That dream didn’t work out so he’s lowered its price to $2.65 million. How much does he want to get rid of this property? You might toss the original price at him and find out.

51 Mooreland Road, just up the street from Langhorne, is almost 10 acres of fields and nice views. Originally $9.5 million, it’s now $8.5 million. That price is supposed to reflect the presence of two building lots, but why would you want to do that to this nice piece of land? Try half – all they can do is say no.

508 Round Hill is four acres of meadow with a house on it that the owner, anyway, thinks is worth $5 million. Nice house but no longer suitable for this location so this is a land deal. The owner, by the way, is the very same Dom Devito I trashed on this blog several times. I’ve now had coffee with Dom and discovered that he’s a very pleasant guy. I hate when that happens, but I still think he’s wrong on his pricing here. Great land, though.

228 Round Hill, 4 acres in the 2 acre zone has been praised here before. I think it’s the best land, considering location, beauty and neighboring property, currently on the market.

112 Field Point Circle, the four acres where Victor Borge’s house once stood, is exceptional land. Deep water dock, lawns that swoop down to Long Island Sound and probably the most prestigious address in Greenwich. I don’t have $28 million burning a hole in my pocket right now but considering recent sales of waterfront property, this is not a crazy price. I suspect it’s not going anywhere soon but that’s a reflection of everyone’s caution these days. When things pick up, I’ll bet someone buys this for somewhere near its asking price. It’s unique, and it’s Greenwich. But we’ll see.

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The End of Civilization?

Reader Krazy Kat, concerned perhaps that I was spending too much time worrying about real estate matters, sends this link to NY Magazine describing hedge funders who are worried that the financial system is about to collapse. They’re stockpiling food, ammo, inflatable rubber rafts on which to evacuate Manhattan and buying farms in remote locations.

Can’t say that I worry about such things but I met this morning with some very close friends in a non-real estate-related setting and several of them were frightened. That’s the word they kept repeating: frightened. While I guess I wouldn’t describe these men as captains of industry they all hold some very powerful jobs on Wall Street, and if they’re scared, that’s (almost) enough to frighten me, and I don’t worry much about material loss.

But social stability is a nice thing to have. Hmmm.

I’ll admit to a slight, nagging worry that I have no ammunition for any of the various hunting weapons in my house. Will I do anything about that? Probably not. But still ….

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Retired IB’r on bailing out housing

All this makes a lot more sense to me than the drivel I’m hearing and reading elsewhere. Does this blog have the smartest readers or what?

This is something I just penned to a friend on the topic of house price corrections and the current government approach. It is long so feel free not to publish:

Housing is going to find its clearing price. It is only a question of over what timeframe the correction will happen. The government, with all its misguided policies on housing, WILL NOT stop the ongoing re-pricing of housing stock. All they will do is cause the process of price adjustment to be prolonged. They are hoping wage inflation will bail them out if they can only keep people “dancing” in their houses long enough to generate said wage inflation. I do not think they will get wage inflation in this environment of negative feedback loops (think rising unemployment). Moreover, the process of creating wage inflation has been made more difficult with the globalization of the labor pool. Finally, I believe the housing market is too big and too diverse for the government to succeed in propping up. The only thing they (policy makers) can do is find ways to slow the process, spreading the adjustment over time.

In any case, I do not think you have to take my word as to the likely success of these policy initiatives: you need only look to Japan. Housing prices (and the stock market and pricing levels in general) have fallen for fifteen years (and counting) after their real estate/credit bubble burst despite their mighty efforts to the contrary. And why did they not succeed, because they endeavored to prop up the economy through government intervention to forestall the self-correcting mechanisms of the markets. The very policies we criticized the Japanese for pursuing, we are, at least at this point, following as well.

In my view, which is obviously not shared by the current policy makers, the best approach is to deal with the pain of the current mess by ripping the band aid off quickly (instead of slowly) and then pick up the pieces, which renewed growth (which will only come when the markets reach equilibrium) will help deal with. Bad debts have to be recognized as such and written off. They only question is who takes the pain: do we privatize profits and socialize losses (our current approach) or let the private sector investors take the losses and then reconstitute the banks afterwards.

There is no hiding from the enormous pain the past sins of easy credit are afflicting on the world’s economies. The sooner we flush out the bad debts/unsustainable behaviors (both public and private) the sooner we can get back on track. Everything else is just slowly pulling off the band aid and will lead to more pain in the long run.

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Where to donate your stimulus rebate

AntiWar.com is having to lay off staff now that Bush and Cheney have left and the Messiah is running things. The new guy may be a Nazi fascist McChimp (oops! Can’t use that last derogatory term any more) but he’s our Nazi Fascist and thus, must not be opposed. These poor guys may have to shut down and find real jobs – with ACORN, no doubt – but they’ll be in for hard times for a few weeks until their next welfare check arrives, so please: have a heart.

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Steyn on Obama

Wouldn’t it have saved time if Obama had just named Bush the anti-terrorism czar? In addition to keeping rendition as a policy, holding Gitmo prisoners until the end of hostilities and concluding that conditions in Gitmo do in fact meet Geneva Convention standards, there’s this: Obama expanding missle strikes in Pakistan. The other day I heard an Obama spokesman, trying to explain why certain Gitmo terrorists couldn’t be released or brought to the United States for trial, say, “it’s a lot more complicated than it might first appear.” Well duh – the only people I saw who had a simple solution were politicians with no responsibility for keeping our country safe. Now that they’ve assumed that burden, things aren’t so easy. There must be some interesting things in those daily intelligence briefings our new president receives in the morning.

Update: Now the One’s embraced Bush’s policy on Afghan detainees too! “Mongo feel great  pain between ears.”

mongo

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More on Ferdinand Steyer, Master Builder

I can say good things about my friend, but here’s a comment from Karen Feeney  chiming in with her own experience:

Ferdinand Steyer (ferdinand@mountainworks.biz) is without a doubt, the most incredible woodworker/contractor/home improvement guru that I have ever met!!! He took our shack of a home in VT (infested with only he and God knows what) and made it into an unbelievable escape for our family of 7. He built an amazing deck; rebuilt the entire bottom floor; added heating (a brand new fully efficient furnace and hot water unit) and all new electrical units… an entire bank of beautiful windows; a fully tiled bathroom; a tiled mudroom…..and much, much, more. All was finished with woodwork of the highest craftsmanship. He also put in a new floor on both levels and new windows (including new openings on both levels.) I could go on and on but suffice it to say that Ferdinand was extremely reliable and on the job every day until is was complete. I would, without a doubt, hire Ferdinand again and again for ANY job we may need to done. He is a man of many talents!!! How rare and wonderful it is to have one person who can do plumbing, electric, carpentry, finishing…and much, much more…and Ferdinand is that man. Thank you Ferdinand!!!!!

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Jumbo Mortgage default rate rises

Well if the market decline continues, we won’t have to worry about this! See? I’m looking for the silver lining.

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Here’s sad news

Greenwich Time reports that Silvermine Tavern is closing. Over the many years I’ve visited there the quality of the food varied considerably with the chef of the time, but it was always a beautiful setting and when I was much younger and susceptible to late Saturday nights, the perfect place for an early-afternoon Sunday brunch. I haven’t been up there in a long time but my mother Leatrice always found it to be a nice spot to take out-of-town guests for lunch and I know her guests, at least, will be disappointed when they discover that her new preferred venue is McDonalds. Too bad.

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There’ll always be an England – just different

Surveillance cameras to monitor liquor sales in the jolly old country.  Let’s see – they ban anti-muslim speakers, keep muslim terrorist on welfare, ban playgrounds and fox hunting, and now they’re going to observe the alcoholic consumption of the poor old blighters who just want to blot out what’s happening and dream of days gone by?

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They should have listened to public television

Activists “shocked” by Obama administration dumping human rights overboard in China dealings. Just before the inauguration an Obama apologist (I use to term to differentiate between an Obama supporter and someone already named to his administration) explained on PBS’s News Hour  that, in contrast to Bush’s naive, futile approach, Obama would bring a much more “realistic mind set” to our dealings with foreign countries. In Afganistan, he said, we’d move away from concern for unproductive concerns about the rights of women and deal with “the reality” of warlords and conservative Muslim men, who really ran things there.

So I wasn’t surprised when Hillary renounced our worries about human rights in China. Hey, it’s not personal, it’s business! Politics, for a change.

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