Daily Archives: July 4, 2009

I may have to retract my kind words

Former GAR head Russ Pruner has weighed in to refute my data and says that there were “156 transactions completed this year” and that prices were “only 12% below 2005 values”. I wasn’t all that shaken, because the market value soared in the years 2006-2008 so if the average has fallen just 12% below 2005’s prices, that would indeed amount to a 30% drop overall.

But my numbers have shown a far worse drop than that so I was going to go back and check my math. I didn’t get farther than that most basic number, though, sales this year. Instead of Russ’s claimed 156, we have 93 single family (which is what most of us track) and even tossing in co-ops and condos, which have been clobbered, we still get to only 125. If Russ can’t get that number right, why waste my time? So I won’t.

It’s the GAR, by the way, that continues to hide sales price declines by producing a sales statistic they call “sales to asking price” that, always, shows a 94-96% ratio. This astonishing figure is pure bullshit because, at the insistence of real estate brokerage firms, the Association uses the last asked price instead of the original price, which is often 25-50% higher, or worse. The same GAR ran another, similar scam, with a “days on market” statistic that brokers could reset by relisting their old tired pieces of over-priced crap. So what a deal – price something at $8 million (just to use a real example), let it sit unsold for four years, pull it, renew it at $4 million and sell it for that the same day and you have a wonderful statistic showing the vibrancy of the Greenwich market: wow, 100% of ask! In one day! Where can I get me some of this here Greenwich real estate? This particular fraud was ended after my own two year campaign to embarrass the board but the sales to ask scam persists and even days on market is being distorted again as brokers learn new tricks.

All of which is to suggest that Greenwich real estate brokers do not all share a committment to transparency – far from it, in fact. I know that they believe this will keep prices up and their commissions robust, but I think they’re harming buyers and sellers.

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My goodness, here’s a real estate denier who didn’t get that way by reading my blog

The Ol’ Perfesser Glenn Reynolds has some choice bits on real estate follies nationwide. He links to a show called Real Estate Intervention that sounds fascinating.

THE HOUSING COLLAPSE: As far as I can tell, it’s caused in no small part by idiots. At both ends.

I’ve learned this by watching HGTV. On the one hand, I saw a rerun of a show on people buying their first house the other night. It was from 2007. The buying couple paid pretty much the asking price for an overpriced home. (Wife: “I think we’re getting ripped off, but I really like the house.”) Then at the closing they did a 100% loan.

Meanwhile, today on Real Estate Intervention, we see people who want way too much for their houses resisting any suggestion that they should drop the price, and hence having trouble selling. Watching them argue with the expert is simultaneously hilarious and infuriating.

People who paid too much for irrational reasons. People who ask too much for irrational reasons. Not surprising that things aren’t going well.

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This could prove interesting

Tax appeals burying municipalities. In theory, a town-wide reevaluation should hit everyone equally and a new, shrunken Grand List shouldn’t affect a Greenwich property owner one way or the other. In theory. But in practice, the next tax bills will be based on the value next October 1st and our budget will reflect that. I’ve been highlighting here the many, many sales of houses at their old assessed value, which is supposed to be 70% of market value. If we’ve dropped (at least) 30% in value and the new assessments don’t reflect that, there should be a flood of appeals and, if successful, our town is going to owe some huge refunds. That will cause a painful retrenchment, I’d guess.

UPDATE: Here’s an excerpt from the Time’s article that pught to give every Greenwich resident pause as he contemplates Hartford’s intentions for the Gold Coast:

New Jersey, which has the nation’s highest property taxes, has been besieged by tax appeals from homeowners like Peggy Tombro, whose rambling home in Bound Brook is assessed at a value of $1.8 million but is languishing on the market with an asking price of $1.3 million. Her taxes are increasing to $53,000 a year.

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Something new worth catching in the Sound

Here Flipper!

Here Flipper!

Dolphins swim into Long Island Sound chasing bunker and bluefish.

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Shhh! Don’t say a word.

Dirty Laundry in public view

Dirty Laundry in public view

My participation in a New York Times Magazine pictorial, “Ruins of the Second Gilded Age” has drawn flack from a number of readers, including Russ Pruner, head of Shore & Country Real Estate. I like and respect Russ and I especially like the team of professionals he’s attracted to his firm, so I’m not happy that I’ve upset him.

But his complaint that I am letting people in on the big secret that we have a large inventory of untold homes is a little ironic because it’s his firm that has compiled a thorough statistical database that anyone who’s interested can access and see what’s happening. I’m not just “telling it like it is” – I’m telling it like  Russ says it is. So where’s the beef?

The Greenwich real estate business operates in a time warp, shaped by the world of just twenty years ago, when all information about houses, prices and inventory was hoarded by agents and passed along to customers on an as-needed basis. There was no multi-list, no central repository of information accessible to the public and, not surprisingly, realtors liked it that way. If you wanted to buy a house, you had to do it through a realtor and she would tell you whether it was on a good street (always), a good buy (always) and whether there was anything comparable (usually not).

The MLS and then the Internet changed all that – information became free and everyone could get it, despite the best efforts of the Greenwich Association of Realtors to prevent it (did you know that Greenwch’s MLS is available only to members, and that agents from other towns can’t access it unless they pay thousands of dollars annually to join our membership?). These days a buyer checks out Zillow, Trulia, Realtor.com and any number of other sites to learn what’s for sale. They can check RealtyTrac or Foreclosures.com to see who’s in trouble, they can use Russ Pruner’s statistics (or Raveis.com) to learn whats available, what’s selling, for how much, and how sales are doing compared to years past. If realtors are to survive, they will have to transform themselves from being mere keepers of the keys to being providers of information unavailable on the web, and a source of expert opinion on value. I think a lot of my peers are uncomfortable with that prospect.

Clients of mine recently received an email from another agent who had signed them up last year as buyers at an open house. That agreement expired and the buyers asked me to accompany them back to the same house, still for sale, and to represent their interests. The first agent was heartbroken and confused. “Didn’t I answer all your questions?”, she demanded, “wasn’t I there to unlock and show you the house whenever you asked? What part of my hard work on your behalf don’t you appreciate?”

Well, several things. The buyers wanted to know what had happened to prices since they’d bid on the place six months ago. The agent couldn’t tell them. They wanted to know the impact of several near-by “municipal improvements” and the agent couldn’t, or wouldn’t tell them. When I walked them around the house, I pointed out that this “new” house, vacant for two years, was already rotting and crumbling, that the builder had used interior plywood on the crawlspace ceiling and it was already delaminating. The first  agent never mentioned the rot and I doubt ever entered the crawlspace in the year she’s had the listing. So her value was limited to having a keypad to unlock the door. An untrained monkey can accomplish that, and doesn’t demand $50,000 to do it.

So if we agents want to keep earning large paychecks, we have to provide value. A part of that value, as I see it, is telling the truth about market conditions. A Pollyannish insistence that everything is fine, there are no troubles in beautiful Greenwich and everyone should buy right now at the price so carefully selected by the seller and his agent contributes nothing and is worth nothing.

As I mentioned, the irony here is that Russ Pruner is exactly the new type of agent who does bring value to a transaction, so I can only surmise that his miffed reaction to my spilling the beans is based on his past role as President of the GAR and not on his personal philosophy. Whatever, the agents who are angry at me are a doomed breed. As a very good spec builder who, sadly, will be building decks instead of houses for the next few years as he recovers from the bust told a mutual friend, “I used to hate Chris but damn it, he’s been right about everything he said would happen.” I claim no special knowledge, just an ability to compare inventory with sales and economic data and draw logical conclusions. Lots of agents can and do do that. Those who think that the key to their survival is to continue attending Greenwich Garden Club luncheons and telling their friends that everything would be just fine if nay-sayers would just shut up will, I hope, find themselves with much more time to tend to their gardens.

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