Daily Archives: April 14, 2009

Foreclosures resume

After laying off for awhile to see what Obama had to offer in the way of bailouts for homeowners, the major lenders have concluded, “nothing” and started in again foreclosing homes.  Fannie Mae, Wells Fargo and Chase have all resumed pushing foreclosures through the pipeline. Which will reduce prices but start restoring some sanity to the market.

Ronald Temple, co-director of research at Lazard Asset Management, expects home prices to fall 22% to 27% from their January levels. More than 2.1 million homes will be lost this year because borrowers can’t meet their loan payments, up from about 1.7 million in 2008, according to Moody’s Economy.com.

I won’t be at all surprised to see Mr. Temple join me in the principal’s office tomorrow morning. What a pessimist!

UPDATE: Sheesh, here’s another spoilsport!

New York Area Home Prices to Fall 15%, Rosen Says By Dan Levy

April 14 (Bloomberg) — Home prices in the New York City metropolitan area will fall as much as 15 percent as Wall Street firms cut jobs and slash bonuses, according to Kenneth Rosen, an economist at the University of California, Berkeley.

Luxury vacation markets such as the Hamptons on the east end of Long Island, New York; Lake Tahoe in California; and Aspen, Colorado will also suffer as the recession deepens, said Rosen, chairman of the Fisher Center for Real Estate and Urban Economics. Prices may fall 20 percent in those areas.

“These declines are happening but aren’t showing up in the data yet,” Rosen said in an interview. “Any place hit by the financial crisis will have substantial declines.”

The S&P/Case-Shiller index of prices in 20 U.S. cities fell 19 percent in January from a year earlier, the biggest drop on record. New foreclosures, a glut of unsold homes and eroding household wealth are driving down prices amid the worst housing crisis since the 1930s. The U.S. economy shed 663,000 jobs last month and the unemployment rate rose to a 25-year high of 8.5 percent, according to the Labor Department.

In New York City, apartment prices fell 19 percent in the first quarter from a year earlier to an average $805,000, the Real Estate Board of New York said last week.

Rising Unemployment

City Comptroller William Thompson predicted in March that 250,000 jobs would be lost in the five boroughs before the recession ends. New York City’s unemployment rate rose to 8.1 percent in February from 6.9 percent in January, a record month- to-month increase, according to the state Labor Department.

Across the U.S., Rosen predicted house prices will fall another 7 percent, with parts of California, Florida, Nevada and Arizona posting additional declines of as much as 15 percent as those states absorb record foreclosures.

The housing market’s cumulative price drop from peak to trough will be 25 percent with, a “bottoming” period that begins this year and may last two years, Rosen said.

“Job losses are large and the foreclosure inventory is rising,” said Rosen, who also runs Rosen Real Estate Securities LLC in Berkeley, a hedge fund with about $300 million in assets. “It’s going to get worse before it gets better, even with the best government efforts.”

 

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Barack? Oh Bomb’em

Pirates seize four more ships. Kill them all.

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Four contracts today

Like that robin, this hardly makes a spring market, but four in one day is more activity than we’ve seen recently. No big blockbusters and two that probably are selling close to what was paid for them five years ago, but that’s okay. Life.

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Take this, Walt!

Walt Noel has written in (in crayon, naturally) questioning whether there could possibly be any such thing as a “president” for that august body, The Greenwich Association of Realtors. We are as secretive as Skull & Bones and I’m sure to get in trouble by exposing this but I’m just boiling mad so the heck with it. Walt, here’s a picture of our past President, disguised as a mere member of the Loyal Order of the Water Buffalo. So there.

"Wilma, how do you price a Rembrandt?"

"Wilma, how do you price a Rembrandt?"

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mean ol’ bloggers

8 Sherwood Lane
8 Sherwood Lane

So I’ve been invited in for a chat tomorrow with the President of the Greenwich Association of Realtors. The exact nature of that talk wasn’t discussed but I have a strong suspicion that the subject of blogging will come up. My response will be polite, because I’m always a polite fellow, but I am not feeling terribly contrite and don’t think I’ll feel any particular remorse. But in advance, here’s an example of why I suppose so many real estate agents in town are angry at me. This house on Sherwood Lane was first listed in November 2007 for $5.8 million. I did not write about it – really, I didn’t – but it was clear, even to a moron like myself, that it was never going to sell for that price. And it didn’t. Today, one year and a few months later, it’s been marked down almost $2 million, to $3.995. Now I don’t expect flack from the original broker because I had nothing to do with the house not selling, but our inventory is jammed with over-priced houses and when I point that out, (some of) my peers explode and complain that I’m exposing the dirty little secret of Greenwich real estate. Airing the family’s dirty laundry. Hogwash.

Recently an almost-new house came up for sale asking $1.9 million. I mentioned it on this blog, saying that, while it was a well-built home, it was built into a cliff, had no yard and was located on a busy street. The builder, I noted, had originally tried to get the price that the sellers were now attempting and it was only after a year of effort and dropping his price substantially that he found a buyer. I wished the sellers well in achieving what their seller had been unable to do. I immediately received a complaint from their agent. These were nice people, she explained, who had to sell the place because they were moving out of state. All the more reason to price it appropriately, I would have thought, but the agent insisted that I was ruining the market for them. I don’t have that power, and the very experienced agent surely knows that.
Today, five months later, they dropped the price to $1.3. Did I do that, or did the market? I guess I’ll be discussing that tomorrow with the President of the GAR. I will blog about what happens, of course.

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Cool! According to the Dept. of Homeland Security, this is a rightwing extremist blog!

Gosh, I haven’t felt so honored since my Yippie days during the Viet Nam War, another government sponsored disaster. Making the rounds today is this report from our country’s DHS, which purports to identify and describe rightwing extremist groups.

Rightwing extremism in the United States can be broadly divided into those groups, movements, and adherents that are primarily hate-oriented (based on hatred of particular religious, racial or ethnic groups), and those that are mainly antigovernment, rejecting federal authority in favor of state or local authority, or rejecting government authority entirely. It may include groups and individuals that are dedicated to a single issue, such as opposition to abortion or immigration.

Do you remember – and I’ll bet you do, since it was only a few months ago when someone else was our president, that to dissent was to be patriotic? Now, it seems, that’s inoperative. Vote for change indeed.

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Land sale on Meadowcroft

17 Meadowcroft

17 Meadowcroft

Asked $5 million just a few weeks ago and under contract today. It’s a shame to see this meadow go but it least it yields some useful information as to what a building site (3 acres in the R2 zone) is worth.

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Who knew Bernie had Internet access in jail?

Bernie Madoff is finally showing his kinder, gentler side (no doubt his stay in the Manhattan Correctional Center is doing wonders in that regard) and has started up a website devoted to the defense of his friends. Walt sent me the link to this beautiful testament to friendship and I’m glad he did. It makes me warm all over, or at least, as Chris Matthews might put it, down my leg.

A Connecticut judge has frozen the assets of Madoff’s wife, Ruth, his brother and two sons, and has also frozen the assets of Sandra Manzke the founder of Maxam Capital and Walter Noel Jr. a partner at Fairfield Greenwich Group (FGG is also being sued separately in the case) both feeder funds to Madoff’s former operation.

Apart from, “normal living and business expenses”, everything is on pause for the entire family and even some of Madoff’s top business associates. Fairfield Greenwich Group was a “feeder-fund” which funneled approximately $7 Billion to Madoff. The court order was brought about after the Fairfield Pension Fund (which currently has 1,500 members) requested it – the pension fund had as much as $42 Million with Madoff placed through the aforementioned Maxam Capital. The lawsuits are alleging that both FGG and Maxam Capital were negligent in placing funds with Madoff and while they may not have specifically know that Madoff’s operation was a ponzi scheme they were certainly involved in the criminal actions as a related party.

I can see the courts freezing the family’s assets, but is it too much to freeze these firms’ assets as well? I think so. I think it’s a reach and, unless you can prove to me that these feeder funds actually knew what Madoff was up to then its not proper to throw them in his realm, as they are victims as well.

Madoff has proved to be a cunning liar and creative schemer who fooled the SEC, his investors, and others for decades. Is it a stretch to think that these other feeder funds were also lied to? Madoff’s key defense to questions about his operations was to either dodge the questions or just lie – that’s it! Let’s remember this guy was not a criminal mastermind, he was just a good liar who covered his tracks well and was able to get away with something for a long time. Also remember that for the last thirteen years he never actually invested a single dollar in any stock at all!

My fear hear [sic] is that the tar and feather routine will get out of hand. While its necessary and appropriate to punish those involved and who assisted Madoff in perpetrating his perpetual ponzi scheme it is not right, nor practical to blast the flame-thrower at everyone who was in Madoff’s vicinity. These feeder funds were lied to as well. They received fake information, or none in some cases, but chose to invest anyway because Madoff was supposed to be this “genius”. How many times have you bought stock on a friends tip and it backfired? The only reason you bought the stock is because you thought it was a “hot tip”

What I’m driving to hear [sic] is that the greed perpetuated the frenzy. The feeder funds wanted to make their fees for “managing” money and the clients wanted to get “in” to the markets and as long as they were being told they were making money no one really checked.

Everyone was negligent. It was negligence through greed. Should everyone be sued? Should you sue your own accountant who looked through the Madoff prospectus and didn’t ask a lot of questions? How about your friend’s cousin who turned you on to the hedge fund who, through another third party channeled money to Madoff? You see where I’m going, right?

Let’s hold the parties who are directly involved and truly responsible accountable and let’s not whip the revenge buzz-saw around because we’re all upset.

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They called us global warming deniers when we scoffed at cap and trade

No criticism of this boondoggle was permitted before because we who did so were not followers of the Church of Gore. Perhaps the idea of creating a whole new batch of Wall Street crooks feeding on people’s wallets will resonate better. From US News:

The cap-and-trade system being touted on Capitol Hill would create a multibillion-dollar playground that would, once again, create a group of wealthy traders benefiting at the expense of millions of average families—middle to low-income households that would end up paying more for food, energy, and almost everything else they buy.

Enron executives—before their well-deserved fall—did little to conceal their lust for cap-and-trade. In 2002, the Washington Post reported that “an internal Enron memo said the Kyoto agreement, if implemented, would do more to promote Enron’s business than almost any other regulatory initiative outside of restructuring the energy and natural gas industries in Europe and the United States.”

Of course, this will all be good news for Greenwich real estate, so why worry? All these newly-rich traders will want houses that reflect their importance and genius and where better than Greenwich to scratch that itch?

 

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I blew it!

So much for relying on the on-line docket for the Superior Court which showed no scheduled hearing yesterday for the Madoff/Noel asset lien. I forgot that these matters appear on the “write-on” calender and don’t necessarily show up on the other docket – hey, it’s been 15 years or so since I stopped litigating in court and switched to arbitrating cases down at the NYSE – so sue me.

In any event, the intrepid reporters at The New York Post weren’t fooled, or else they have a better line in with David Golub, and they knew enough to be in Bridgeport yesterday, damn them. Here’s the story

Yesterday, a state judge ordered the defendants, including Madoff’s brother Peter and the owners of some of the hedge funds that steered clients to Madoff, to put up the collateral in exchange for lifting an asset freeze that prevented the accused from selling their property.

It was the first asset freeze for the Madoff “feeder funds,” which have long maintained that they, too, were scammed by the Ponzi schemer. The concessions don’t acknowledge any role in the scam.

Bridgeport, Conn., Superior Court Judge Arthur Hiller ordered Walter Noel, co-founder of hedge fund Fairfield Greenwich, to put up $10 million secured by his family’s home in Greenwich, Conn., according to David Golub, the town’s lawyer.

Peter Madoff was ordered to put up $2.5 million secured by his mansion in Old Westbury, LI, while Sandra Manzke, founder of hedge fund Maxam Capital, is putting up the same amount, using a Vermont property. Noel partner Jeffrey Tucker is offering $2 million in cash or property.

Massachusetts Mutual Life Insurance Co.’s Tremont Group unit is putting up $2.5 million cash in escrow, Golub said.

“What the town did today is get a priority on specified assets” in case it wins its pending lawsuit, Golub said yesterday. “The issue in these cases is . . . are you going to be able to collect at the end of the day because everyone’s going after the same people?

“Half the world” is going after firms like Fairfield Greenwich, which suffered $7 billion in losses to Madoff, Golub said.

I don’t want to disturb Mr. Golub’s coffee dreams but Walt’s house on Round hill, while nice enough, won’t come close to selling for $10 million. $3.5 in a forced sale, maybe $4.5 if the market improves. But there’s always Mustique.

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State of the Greenwich market

20 Dewart Rd

20 Dewart Rd

There really are too few transactions to say with any certainty what’s happened to the market but the individual transactions do show: (a) there are some buyers out there and (b) prices ain’t what they used to be. The house here was reported as under contract today, which is good news, but its asking price was $2.850 million and it last sold in April 2004 (five years ago, for the math challenged among us) for $3.075. No word on final sales price yet but I doubt this place was the subject of a bidding war.

252 Milbank

252 Milbank

 

This house on Milbank has not been sold but its price was reduced again today to $5.895 million, down about 25% from its original (2007) asking price of $7.750. You can’t use this drop to determine that prices have fallen 25% though, because that first price was, in my humble opinion, ludicrous. And, because this new price may still not sell it, a 25% drop may not be the end of things. We’ll see.

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