Daily Archives: May 4, 2009

Rage, rage against the dying of the light

79 Dingletown

79 Dingletown

A reader points out that 79 Dingletown is back on the market just 18 months after being purchased new (11/07) from BSF.

BSF makes a nice house, even if you can usually find your way around all of them once you’ve been in one of them, but I wonder whether the market will agree that this house is worth $332,000 more than it was in late 2007. It will certainly be a case of apple-to-apple comparison, so I’ll be curious to see what happens.

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Too bad Monica’s publicist didn’t show the same perspicacity

Newly discovered manuscript tells how Charles Ponzi’s publicity agent blew the whistle on him.

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Two steps forward, seven steps back

We started the day with 724 single family homes in inventory. Two went to contract today and we ended up with an inventory 0f 729.

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Lawyer fraud

A commentator mentioned today that the late owner of a new listing had once run Combustion Engineering and expressed regret that the owner never lost his house to the noble trial lawyers representing asbestos “victims”. Well the tort bar has run its bloody way through every single company ever connected, no matter how remotely, with asbestos, and bankrupted most of them and tossed tens of thousands of workers from their jobs. Water under the bridge, I suppose, but readers who admire those lawyers should be sure to read this Wall Street Journal article on what they’ve been up to lately.

The same crooks who plundered good companies in the 80s and 90s, having exhausted their food supply, turned their attention to sand, and, using the same victims, the same doctors and even the same X-rays, initiated a new round of class action law suits against anyone ever associated with silica (that would be sand). here’s what John Ulizio, CEO of U.S. Silica, accomplished:

In 2003 alone — the year he took the company’s top job — U.S. Silica was served with nearly 20,000 lawsuits claiming it had caused silicosis — a serious, if rare, lung disease. The tort bar saw silica as the “new asbestos,” says Mr. Ulizio, and he had visions of his century-old concern going bankrupt, along with dozens of others.

Instead what ensued was a legal thriller, in which the defendants not only beat the suits, but exposed a mob of lawyers and doctors who were fabricating cases, and who are now under investigation. This year his company has been hit by only one silicosis claim. “We hoped the truth would prevail eventually,” he says, back in the conference room of the company’s modest headquarters. The realist adds: “It worked, but it didn’t have to.”

What will happen to the lawyers who perpetrated this fraud and indeed, the asbestos fraud before it? Nothing – lawyers run the judicial system and trial lawyers run the country. Noone will touch them.

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Paradigm shift

Last September 15th Lehman Brothers failed and Merrill Lynch sold itself for pennies. Most of my Wall Street customers see that as the day the world changed, permanently. Most home sellers in Greenwich view it, instead, like Black Friday, October 1987, when Wall Street collapsed and came roaring back within a year. It’s these two differing views that are causing our current “problem with communicating” because the two contrasting views can’t accommodate each other.

If the economy has shifted, particularly the financial services industry, and there will no longer be thousands of rich young people coming to Greenwich with money to burn, then the market for huge, multi- million dollar  houses has dropped off the cliff. Spec houses now for sale will linger and slowly fall to bargain shoppers, one-by-one, dragging down the prices of everything around them. When that inventory is gone so too will the builders, and it will be a long time before another grand spec house rises from the mud. So, perhaps a few years from now, we’ll see a recovery of sorts as big houses, if still desired, will have a replacement value based on custom building rates, far higher than the discounted prices of today. Regardless, people  who think that September 15th was a watershed are not willing to pay anything close to present list prices, even if those prices may look cheap by 2015.

People in the other camp (almost entirely current homeowners, which should tell you something about their objectivity) seem to believe we’ll be back in business by fall, so, in the words of one commentator on this site, they’ll “hunker down” until then. I don’t think hope is a good strategy and I see no objective data to support their hope. But perhaps they do, and perhaps we will again see 20% price increases each year as we did in 2004-2007. I think that was a fluke, never to be repeated – they call it normal. I think I have the better side of this argument.

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Here are some high end new listings

62 Vineyard Lane

62 Vineyard Lane

This is a gorgeous old Twachtman house on 5 acres on one of the prettier streets in town. A similar house, same era, sold for something close to this one’s asking price of $11.1 million, but that was in a stronger market. Will someone who still has money (and there are plenty of such people) ignore the market, pay asking price and throw in an additional – oh, I don’t know, $5 million? – to bring it up to date? Maybe.

And not quite new – it was originally listed in February but is coming back now as another brokerage’s listing after the demise of Country Living – is land at 471 Lake Avenue, 3 acres at $5.6 million. I know other land owners in that general area who also think their building sites are worth that much, but I don’t know any buyers who agree. Perhaps other agents do.

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Put this in your comparable pipe and smoke it

477 Riversville Road

477 Riversville Road

This spec project on Riversville is reported as under contract today for around $4.75 million. A client of mine almost had it for a price that would make this one look like a gross overpayment, but regardless, this sale is not going to be good news for other spec builders. Six acres, 8,000 sq. ft. above ground, at least 3,000 more in the walk-out, finished (with fireplaces, theatre, nanny quarters, etc. basement), high quality construction and all in all, a very nice house. When a spec house on Beechcroft sold for $2 million less than another spec house across the street, the agent for the higher- priced house was furious at my suggestion that his listing had just taken a serious hit. Well, that higher-priced house isn’t quite so high now – it was reduced a week or so ago, and it remains unsold. And now comes this. Appraisers have to use actual sales when calculating the value of a specific property, and as sales like this join the data bank, they’ll crowd out all the hoped-for asking prices of similar houses available from other builders.

By the way, at this price, the builder will be lucky to pay off his $4 million mortgage and recoup a tiny fraction of the extra millions he put into the project. He’s got another house, also listed for sale, at 223 Stanwich Road and I wouldn’t be all that surprised if that, too, goes at a very low price. Which again, isn’t going to help prop up Greenwich house prices.

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Keep trying

44 Husted
44 Husted

This is an okay house on Husted – dated, but nicely maintained and in a good location. It sold for $2.5 million back in 2000 and that buyer, perhaps a bit too exuberant over the march of prices here in Greenwich, tried to get $4.395 for it in 2006. When that didn’t work, he did some modest work on it and finally sold it for $3.1 million in April 2007. The next owner, clearly delusional, listed it for $4.595 million in August that same year. Now, several price cuts and brokers later, it’s asking $3.795 million. Well, it’s better – priced than it was.

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When they came for the hedge funds I remained silent

Reader LM sends this link to Zerohedge about the threat by the White House to destroy the business of a Chrysler bailout holdout. For those of my liberal readers who can’t grab the significance of this, try to imagine it was the Bush White House (throw in Cheney and Rumsfield too, if it helps) threatening to destroy Planned Parenthood using a complacent White House press corp to do it. If they can do it to businessmen, they can do it to you.

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More on the great disconnect

As of this writing, we have 724 single family homes offered for sale in Greenwich. This compares to 542 in 2007 when, as you may recall, houses were actually selling. The 2007 market easily absorbed 724 houses in the year, whereas, unless we see a sudden and dramatic turn-around, we’re looking at about 4 1/2 years of inventory. And come September, the start of the traditional fall selling season, you can expect to see more houses added to the inventory as sellers who have been waiting for a better market will (some of them) lose patience.

So, faced with this reality, you might think that we’d be starting to see a number of houses come on for sale that were priced to sell. With rare exceptions, we are not. So we’ll all just sit around here, waiting for Alice’s Restaurant to come around again on the guitar …..

This irrational phenomenon can be blamed, I think, both on sellers, who can’t give up the memory of what their neighbor’s house sold for three years ago and simply refuse to admit that the market changed completely last September, and realtors who have the same rosy memories of the past. I keep hearing from my colleagues that it’s the buyers who are out of step, expecting fire sale prices when there’s been no fire.

I’m with the buyers – I look around and see nothing but charred acres. But so long as sellers and their qagents deny this, we’re in a standoff, and maybe we’ll stay in that standoff for the next decade, with a few houses selling as their owners hit financial difficulties, or divorce, or change jobs, and everyone else sitting on the sidelines, waiting for the other guy to flinch. If so, I’ll have time to resume my novel writing, which will please me.

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Light blogging today

Busy setting up the new, luxurious offices of Scum Sucking Bottom Feeders Realty in Old Greenwich. We’ve gone all out on impressing clients with our decor, using nothing but Ikea’s best and a few highlights from Tarjay. Cool.

I did notice one new listing today, 13 center Road in Old Greenwich, a 1965 house on 0.14 acre, 1,200 sq. feet, untouched for 44 years, asking $950,000. It raises the question, what, exactly, is the basic shelter value of a house in this section of Old Greenwich? This one’s asking $800 a foot, which seems steep to me, but it’s a house, on a pretty nice street. I have clients in this price range but I can’t recommend it because of both its price and its size, but for a single person, maybe this works. We will see, as always.

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A crisis is a terrible thing to waste

The New York Times reports on the wonderful use the Obama administration has made of the so-called “financial crisis” – trillions of dollars used to take over banks and the auto industry are just a start.  Now comes word that Swine flu is about as serious as a summer cold, yet the WHO and governments around the world are still stirring the pot, warning that, by gosh, we’d all better be ready for Round Two. 

I’ll admit to a touch of cynicism here, but it’s based on a lifetime diet of scare stories concocted by people with an agenda and whipped to a frenzy by their  willing accomplice, main stream media. We’ve been warned of the coming global ice age, global warming, nuclear Armageddon, famine, disease, economic disaster and always, always, the only salvation lies with more governmental control. I think I see an agenda here and I don’t necessarily think it’s time for my tinfoil hat.

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Where’s Walto?

The Bernie Madoff fraud Trustee has sent “claw-back” letters to Madoff investors who have received money from Bernie over the years, and those investors are hopping mad. Fair enough, though I’m not all that sympathetic with one “victim” who pulled out $440,000 of other people’s money and now resists paying it back, but what I’m really wondering is, has a claw-back letter been sent to Walter Noel?  I mean, why chase down $20,000 in misappropriated funds when Walt’s Fairfield Greenwich Group made hundreds of millions of dollars? Yes Walt, I know, you were a victim too, but that doesn’t seem to count for beans with the Trustee or the applicable law. I’m looking forward to a number of new listings on Round Hill Road showing up son..

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At least for now, people don’t have to buy crappy cars

We may have been forced to pay billions of our tax dollars to keep the United Auto Workers union viable but so far, no one can force a consumer to buy a Chrysler and thus, sales are nonexistent. Look for that to change. Topolino’s coming, and you will buy one!

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