Daily Archives: June 25, 2009

Why no Greenwich real estate news?

Because there isno Greenwich real estate news. Not today, but perhaps tomorrow; I know of a few contracts about to be reported. Today there were no sales, two Putnam Hill contracts in the $3s and a quarter-acre land sale on Highview in Old Greenwich, asking an improbable $1.125 and selling direct (if the seller held out one buyer as an exclusion, that probably accounts for the high listing price – the broker had to try to beat the existing offer which, obviously, it didn’t).

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Yes, but do you have a pirate’s head?

Stephanie Brandt
Stephanie Brandt

trophy roomEvery back country home has the trophy room, replete with ex-wives, dead ibex, etc. But now you can go hunting for Somali pirates! Protected by Russian ex-commandos, armed with your own AK-47, ply the waters off Africa in a luxury yacht and when you lure in the pirates, fire away! Way cool. $5,000 a day, approx. but what cost being first with the mostest?

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A more balanced view of the new appraisal program

There was much criticism of NAR’s attack on the new federally-mandated program setting up a new appraisal program and using, unfairly, according to the NAR, the prices of foreclosed and distress sales to lower the price opinion of other homes. That is a dumb argument, I think, because if your house has to compete with bank-owned properties that are selling on the cheap well, that’s too bad, but that’s reality.

But it turns out that there is a much stronger argument against the program that was lost in the kerfuffle over NAR’s pr campaign: the feds have closed out real, independent appraisers by setting up a plan that pays so little for an appraisal that no experienced appraiser can afford to do the work. Now appraisal mills have steeped into that void, using incompetent, untrained dolts working for minimum wage and run by companies who were literally just shut down for mortgage broker fraud. That’s right, bunch of crooks can’t do business one way, they just regroup and come back for another bite of the apple. Tastes just as good, apparently.

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Just in time for the Fourth of July

We’ve got two heavy hitters from a local bank summoned to Washington today by the FDIC/OCC and readers have been guessing which bank is displaying its patriotism by visiting our nation’s capital just a day before Friday,  a day dreaded in bank circles as the day of the week failed banks are shut down by the government.

I am sworn to secrecy, of course, but a couple of readers have guessed that the troubled lending institution  might be Patriot National Bank and one even thoughtfully supplied this link to a compliance agreement entered into between the bank and its supervisors. Rumor has it that at least one bank around here received just last week a ‘cease and desist” letter from the OCC, freezing their commercial loan portfolio and otherwise constraining their ability to continue as a going concern. Whether that letter and today’s summons on the carpet are related will be seen shortly. The 22-page document is worth a read, especially the juicy bits about non-performing spec house loans, plans for liquidation, better supervision of suspicious cash transactions, etc. Worth your time if you want to see what a train wreck looks like just before it happens.

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Soft market doesn’t slow this Realtor!

Lady Realtor goes jewelry shopping with her keybox. Owners object.

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Old news

Scientists have found a bone flute that’s at least 35,000 years old in Germany. Neato.

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Health care for the rest of us

Members of labor unions will be exempt from paying taxes on their health insurance, while Senator Kennedy’s bill would exempt Congress, their immediate family members and all federal employees. One existing medical program already run by the government, the VA plan, is “in shambles”, according to veterans’ groups.

So who is left to suffer under this noble experiment? Us – the politically unconnected. If you think that you have a nice private insurance policy that will insulate you from what the Democrats have planned for us, think again: even Democratic Senators are figuring out that they’re going to kill off private insurance. 

I wrote some months back about my sampling what Connecticut’s Charter Oak insurance provides: clinics in poverty halls and that’s about it. Readers who derided me for paying just $250 a month for the insurance (which, considering it covers almost nothing, seemed expensive to me) should know what is in their own future. If Obama Care is so desirable, can you think of a reason for the politicians forcing it onto us are taking care to ensure that they and their families don’t have to use it? Just as these people kill charter schools in D.C. and trap poor black kids in decaying, awful schools while their wn children attend private institutions, they will rejoice when everyone has the same rotten health care – except themselves.

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Going my way?

(NY Post)

(NY Post)

Ruth Madoff is taking the subway these days. Notice the empty seats on either side of her, Walt? Plenty of room for Monica and you. The Fabulous Five can ride horsies above you on the street.

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I hope they take the Red Line

Which prominent local bank chiefs are in Washington today, summoned by the OCC? We may find out soon.

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Worst newspaper website in the world and we’ve got it

I realize that I can’t complain too much about a crappy website that I don’t pay for, but is there a more annoying one than Greenwich Time’s? It’s impossibly slow to load because of the video pop-up ads, it’s cluttered with pictures of the same pudgy-cheeked woman identified simultaneously, as a “Greenwich Mom” and a “Hartford Mom” and when the paper isn’t flogging fat loss, it’s pushing a “cure for yellow teeth”, again discovered by a mom. I love my mother, but I don’t think I ever sought out her advice on ab building or cleaning my teeth, so why would I listen to someone else’s mother? And what possible credibility is lent by attributing a product to its discovery by a mom? Are we supposed to believe than no mother would ever rip us off or endorse a product that wasn’t good for us and a sound purchase? Do these idiots think we never heard the multitude of Trump bimbos peddling bad real estate investments? Or never watched the care and loved lavished on her children by Leona Helmsley?

The paper is as slow to update news as it is to load. Stories appear hours after they’ve been reported elsewhere – even here, for God’s sake – and many never make it to the on-line version at all. I understand that to the extent the web version is a competent substitute for the paper edition, fewer people will pay for the paper, but get real – no one’s buying the damn paper anymore anyway. I don’t know a business model that will allow newspapers to survive but if there is one, it surely can’t include putting out a weak, incomplete version of a tabloid.

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Greenspan – no recovery until housing comes back, and that’s not for awhile

Mr. Greenspan’s legacy may be a bit tarnished these days but his views on housing seem spot on to me. The Wall Street Journal reports today that he’s feeling glum.

The U.S. economy won’t regain its strength until the price of houses stops falling. And that day hasn’t yet arrived.

“The crisis cannot end fully until home prices in the U.S. are at least stabilizing,” says Alan Greenspan, who continues to dissect housing data with as much interest as he did when he was Federal Reserve chairman.

 For the two-thirds of American families who own their homes, a house is their biggest asset. The lower house prices go, the less wealthy they are and the less they can or will spend and borrow. For home builders, the lower home prices go, the fewer new homes they will build and the fewer workers they will hire. And for many American banks and other financial institutions, mortgages, mortgage-backed securities and financial instruments that rest on mortgages remain a huge headache. The lower house prices go, the less these loans and investments are worth and the weaker the foundations of the financial system are.

Although sales of houses seem to be perking up, a good sign, home prices aren’t. The National Association of Realtors said this week that the median sale price of an existing single-family home in May — $172,900 — was 16.1% lower than a year ago. Prices of newly built homes in May were off 3.4% from a year earlier, the government estimated Wednesday.

More sophisticated, though not as timely, measures that compare prices of the same houses when they are resold show similar trends. The S&P/Case-Shiller indexes for 10 and 20 big metro markets are still falling. The latest readings show a nearly 19% decline between March 2008 and March 2009. The Federal Housing Finance Agency, which tracks only home sales with mortgages sold or backed by Fannie Mae or Freddie Mac, said prices in April were down 6.8% year over year.

The consequences of a further steep decline in house prices on the overall economy are severe because it would cut so significantly into the American middle class, the vast army of consumers, the ones with conventional Fannie- and Freddie-backed mortgages, dubbed “conforming” in the trade. Any equity that subprime-mortgage borrowers had in their homes is gone. But about eight million conventional mortgages were made for home buyers in 2005 and 2006. House prices have fallen significantly since then.

“The bulk of conforming mortgages made since 2005 are close to being underwater,” says Mr. Greenspan, meaning their mortgages are greater than the market price of their homes. Wow. Although many underwater homeowners will keep making monthly mortgage payments, they can’t refinance or take out home-equity loans — and are at greater risk of default and foreclosure.

“We can take another 5% decline in house prices without much macroeconomic impact,” Mr. Greenspan says. But if prices fall by 12%, more than four million additional homeowners will be underwater.

Last August, Mr. Greenspan was predicting that home prices would “likely start to stabilize or touch bottom sometime in the first half of 2009.” He now says that day will arrive about three to six months later than he anticipated. Fewer new households were formed than he anticipated, which meant less demand for housing. And new homes were completed faster than he anticipated, increasing the supply. As a result, the supply of vacant single-family homes for sale didn’t fall as rapidly as he expected. Until this measure — which he regards as the best summary of the glut of unsold houses on the market — comes down significantly, home prices will keep falling.

Lawrence Meyer, the seasoned economic forecaster and former Fed governor, says one of the most important differences between “people who are bearish on the economic outlook and those who are less bearish” is their prediction about home prices. Mr. Meyer is in the less-bearish camp. He sees a slowdown in the pace of home-price declines and expects the U.S. economy to be growing at better than a 2% pace by the fourth quarter, faster than many other forecasters.

Three things could prove Mr. Meyer and the like-minded wrong about their encouraging outlook: a sustained increase in the thriftiness of U.S. consumers, which would depress overall growth; a relapse of financial turbulence, which would do the same; and persistently steep declines in the price of houses.

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Ready the plows

June 25, 2009

June 25, 2009

Al Gore heading for Capitol today to speak on global warming

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Is the price you paid for a house irrelevant to its resale price?

15 North Crossway

15 North Crossway

Back in the good old days, when real estate prices were zooming skyward with seemingly no ceiling, I’d have argued that it was not. Excepting those buyers who tried to flip their purchases for a hefty profit within months, who cared what someone paid for his house four years before?

And that’s still true today, sort of, only in reverse. Market value is what a ready, willing and able buyer will pay you today, not what you paid for it in 2005 (I’ll post later today Alan Greenspan’s observation that anyone who bought a house after 2005 [corrected] is probably underwater, but that’s another story). But I still like to know what a buyer paid for his house, if only to gauge what they think their rate of appreciation should be. This new listing, for instance, was bought new in 2002 for $3.925 million and is listed today for $7.195. That really is irrelevant because it’s price depends on what other homes in Lucas Point are selling for these days, not what they sold for in 2002. But it’s interesting, all the same.

One observation about this listing: it shows the roof insulation as “R-10” and wall insulation as “R-30”. That’s probably a typo, as an R-10 rating can be achieved by laying out a thin blanket of mouse hair and newspaper, but even if it’s the walls that sport the R-10, that’s not much for a house near the water. By contracts, the new house at 38 French Road has R-59 in its attic and R-27 in the walls. That’s exceptional, like the rest of the house, but the new construction on Shore Road asking about this one’s price has R-38 attic, R19 in the walls. Just saying.

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