Daily Archives: June 1, 2009

How low can he go?

I thought that when it was listed at $1.349 million back in March, the listing agent for 49 Cutler Road had done an excellent job of pricing it to move. The 1952 ranch on the land isn’t much, but 4.33 acres of decent property has to be worth something, even all the way out on our west coast, right? Not right. At least, we haven’t found its value yet. It’s a short sale now, down to $899,000 and still looking for a buyer. There are a lot of properties on Cutler with houses that are pretty dated and don’t add much, if any value to the land. This one’s dropping so far below a million must be discouraging for everyone on the street who once paid more. Owie. I was about to suggest that this illustrates how fringe areas in town always get hit the hardest in bad times, but Belle Haven, without a sale in five months and only one sale in all of last year, makes Cutler look like a veritable hotbed of activity. So I’m left with the observation that things are tough all over.

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Where have all the house sales gone?

Gone to rentals but not every one. Thanks to a question raised by Frankie Futter, I checked the rental activity for single family houses during the past few years, excluding from the count summer rentals. Interesting – we’re up 67% from the peak years of the sales boom

Rentals year -to-date: 167 (with 237 left in inventory)

Same period, 2008: 125

                            2007: 98

                             2006: 100

This switch to rentals won’t solve the problem of unloading a house one can no longer afford, but I expect to see more of it anyway.

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Statisticary

We have as of this first day of June, 2009, 765 single family homes for sale and an additional 93 that have gone to contract this year. Taking that later number and extending it, we’re on track to sell 223 houses this year, compared to 460 in 2008 and 726 in 2007.

Using statistics compiled by Shore & Country Real Estate, those 93 contracts for this portion of the year compare with 194 in 2008, 322 in 2007 and 308 in 2006.

Inventory of 765 compares with 631 in 2008, 564 in 2007 and 531 in 2006.

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The Bourke trial begins today

No news yet, but here’s a preliminary story, reported at the FCPA blog. This should prove entertaining. By the way, a supporter of Mr. Bourke wrote in to complain that we’re not mentioning all the charitable works Bourke has done. I guess I just am not impressed (he, Hiram, is there a contraction for “am not” – like “am’t?” ) by such deeds. The greatest crooks in recent financial history gave away millions of stolen dollars: Bernie Madoff, his partner in crime, 96-year-old Carl Shapiro, every penny stock king and no doubt Ken Lay. In fact, it’s usually the first line of defense – how could this person steal money when he cared so little about it that he gave it away? The answer is, it feels good to get buildings named after you and  be the belle of the charity ball – if you can achieve that giving away other people’s money, so much the better. Why do you think politicians are so popular in their home districts?

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Attention, free riders

I treasure the Wall Street Journal and have no problem paying for an on-line subscription (although I’m not going to renew the print version, as I no longer even unwrap it). But many of the stories I link to are for subscribers only. I’m reluctant to past the entirething here because it’s a violation of copyright law but here’s a go -around, perfectly legal, for getting the content free: when directed to a story that’s blocked, copy the headline and paste it in Google search. The WSJ wants the traffic Google generates so the stories are accessible through that means. I have used this method myself for all sorts of lesser papers that require registration – even if free, why bother with registration hasels when you can just go in via Google?

An elaboration on all this can be found here.

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Real estate I understand – you Wall Streeters are on your own

Zero Hedge reports that Lear has entered pre-bankruptcy proceedings and defaulted on its debts yet the stock is up 10% today. GM did declare bankruptcy today, its shareholders will be wiped out – zero, nada, nothing – and it’s up 15%. There aren’t that many crazy stupid private investors left, I don’t think, to drive prices like this, so that means the big boys are up to something. What, I have no idea.

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Here’s some bad news for sellers

Two contracts and two sales have been reported today, none of which will offer much comfort for sellers. 37 Midwood Drive, asked $1.750 originally, was marked down eventually to $1.395 before it went to contract today, presumably for even less (it also answers the question, posed earlier this morning, of what a one acre lot is worth). 10 Greenway, on the western side of town, sold for $2.0255 in a bidding war back in 2006, and went to contract today after being marked down to $1.869. And finally, for those of you who have been waiting for condos at Lyons Farm to peak and begin to drop, your wait is over: 4 East Lyon Farm, listed for $1.850, sold today for $950,000.

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Surrender is not an option

Now you tell me California's a community property state?

Now you tell me California's a community property state?

But when the divorce lawyers get hold of you, retreat can be wise. 124 Old Mill Road drops down $10,000,000, to $29,750,000. Here’s your chance for 74 acres, with sheep.

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Slim pickings

I’m reviewing a list of tomorrow’s open houses and I don’t think I’ll be spending much time at them. One house has come on asking $16 million without justification, in my opinion. Another, asking $3.6, is on a street whose highest sale, ever, was $1.250 (that was achieved last year after it sat 410 days on the market). I understand that this house is new construction, but if everything else on a street is now worth probably less than a million, would you pay $3.6? I wouldn’t. Another house, on a very nice acre in a good location wants more than $2 million. It’s been marked down from almost $3 million but the house itself, a tired old ranch, has no value, and I don’t think an acre of land, where this one is located, is worth that kind of money. Nor does the town, by the way, who pegs it at $1.6 million. Even that’s too high, these days.

So with nothing selling or going to contract that I can write about and no new listings that are worth seeing, I guess I’ll spend the day beating up bankers over their dead and dying loans. There are  some good pickings in their portfolios – they just aren’t quite ready to give them up – yet.

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A sale! A sale!

72140_101_1219 Kenilworth Terrace, asking $1.6 million since February, went to contract May 22 and closed May 29th for $1.375. This tells us that no mortgage was involved and that the “70% rule of thumb I’ve been using – using the town’s assessed value which is 70% of what the town appraised the property at in 2005, is in good working order. Assessment here is – was – $1.302. Also of note, perhaps, is that the owners tried selling this in 2000 for $1.595 million, dropped it to $1.395 and then gave up. They were nine years ahead of their time in terms of pricing.

(Bet you didn’t know we had snow here in Greenwich last week, did you?)

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It’s a sunny day for Texas taxpayers

Its legislature turned down a massive funding scheme for solar energy and the issue is dead for the immediate future (the politicians, whose past behavior inspired the saying, “no man’s wife or cattle are safe while the Legislature’s in session”, convene just every two years). Solar advocates treat this as a defeat but I’m impressed that there is still one legislative body that looks at costs and decides, no matter how noble the cause, the taxpayers can’t afford it. Fans of profligate spending can simply move to California. Those Californians who do pay taxes seem to have already left for Texas and its balanced budget, leaving plenty of space for the propeller beanie crowd.

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Don’t try this at (your own) home

Saturday night while with a very experienced Greenwich real estate agent  I pointed out a house recently put up for sale and asked him to guess its asking price. He gave it some thought and said, “$3.75 million?”. When I told him no, they were looking for almost twice that amount, he laughed out loud. Unless you’re in the entertainment business, that is not the reaction you want when someone views your house.

How did it get priced so high? From what I heard before it was listed, the owner wanted a certain price “or wasn’t going to sell it.” So he got an agent (we have listing wars just as buyers used to have bidding wars) and he got his asked-for price, but I don’t think he’s going to sell it. Oh well.

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No one’s going to steal these houses!

Two high-end houses, both very nice, havere-upped after their listings expired May 30. Each is back where it has been since at least January and, while each has dropped $1 million off its price of a year ago, I’m not at all sure that there’s a robust market for houses in the $9 – 13 million range. In fact, I’m sure there is not. So are these offered by serious sellers? Possibly, but I’d lump them in with the bulk of houses in our burgeoning inventory, the “I’ll sell if you meet my price, otherwise, take a hike” category. The fact that we have so many houses offered by sellers with that attitude is a testament to the staying power of the average Greenwich homeowner, I suppose, but it does nothing to move houses off the market.

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Just like house sales, if you want less of something, raise the price

Congress and Administration pushing to increase the cost of drilling leases and halve their term. I’m not worried, pixie dust will see us through.

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The customer’s (often) right

There’s a new price reduction on a house today – I can’t reveal details without disclosing old negotiations, but I think it’s okay to say that a year ago, a client of mine offered 87% of what is now the new price. At the time, the offer was a much lower percentage of the ask: 64%, I believe, but the seller has now paid taxes and maintenance on an empty house for a year only to reach a price that was within easy negotiating reach of the buyer then. Of course, the buyer has moved on, and the sellers now have to deal with the next potential buyer, who will use the new price as a starting, not ending place. There’s a lesson here, somewhere.

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Ever eat a pine tree?

The Wall Street Journal reports that Grape Nut cereal sales are constipated.

When soaked in milk, the final product is mildly sweet brown stuff. But if Grape Nuts lovers don’t know what the stuff is, Grape Nuts sellers have no doubts. Carin Gendell, who was its senior brand manager in the 1980s, remembers how her staff described it. “Grape Nuts,” she says, “was people eating advertising.”

Since people haven’t been eating nearly as much of it as they used to, the latest Grape Nuts ad campaign, running now on MSN’s Web site, is trying a new tonic: It consists of skits in which male milquetoasts get droll advice on “looking cool while driving a minivan,” or “letting your in-laws move into your house.” The slogan — “That takes Grape Nuts” — implies that the stuff enhances virility. C.W Post might have written it himself.

The founder of Postum Cereals not only cooked up Grape Nuts in Battle Creek, Mich., around 1898, but also concocted some of the earliest mass advertising to peddle it. A 1910 ad said Grape Nuts had “phosphate of potash” for building “brain and nerves.” It didn’t. Another said the Panama Canal couldn’t have been dug without Grape Nuts because it “keeps almost indefinitely in any climate.” Other ads claimed it prevented malaria and appendicitis. It doesn’t.

By 1914, when Mr. Post apparently killed himself — shortly after an appendicitis attack — Grape Nuts had cut its curative claims to one: constipation. Yet the ads kept coming: In the ’60s, a boy grabs a woman in a swimming pool; she’s his girlfriend’s mom. “Oh, no, Mrs. Burke!” he exclaims. “I thought you were Dale!” In the ’70s, woodsman Euell Gibbons asks, “Ever eat a pine tree?”

If Grape Nuts were wood chips, nobody minded — the stuff was the seventh-biggest cold cereal in the land. But Mr. Gibbons died and the land became less earthy. Sales slid and never regained ground.

Grape Nuts wandered in the wilderness as the Post operation passed from General Foods to Phillip Morris to Kraft — and wound up in 2008 as a division of Ralcorp, a maker of knockoff store brands. Cereals containing sugary objects like “Honey Bunches” dominated Post’s line. In 2005, four Grape Nuts ovens in Battle Creek were scrapped, leaving just the one here in California. With a share of the cereal market below 1%, the stuff was tilting toward crunchtime.

“We need to bring it back to life in a relevant way,” says Kelley Peters, the “insights” director who charts Grape Nuts psychographics for Ralcorp’s $5 million resuscitation attempt. Her target: men 45 years old and up. “Men aspire to it,” she says. “It’s strong and stern, the father figure of cereals.” Her marketing chief, Jennifer Marchant, points out: “It tends to break your teeth sometimes.”

True, but Grape Nuts loyalists don’t all welcome the focus on maleness. Sylvie Dale, 38, an editor in New Jersey, and a woman, says: “The rhythmic crunching that reverberates around your skull could be ambient sound meditation. To have the patience to get through a bowl, you have to practice mindfulness.” Ms. Dale adds: “I have a special place in my heart for this cereal.”

David Smith does, too, though he says, “I don’t want Grape Nuts and testosterone in the same sentence, ever.” As a teenager, he biked cross-country, eating the stuff out of a saddle bag. At 52, he sells flooring an hour’s drive from Battle Creek. His devotion to Grape Nuts remains constant. “It’s a cereal that doesn’t require much from me,” he says. “I guess it isn’t a real relationship.”

When Ms. Peters conducted psychological interviews for the ad campaign, she was sometimes asked how Grape Nuts are made. “I asked back,” she says, “how do you think they’re made?” Mr. Smith’s guess: “Wheat, barley and nuclear fusion.”

Fission is more like it.

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