August 27, 2004

The Market Sleeps
Not much going on in the market now and there won’t be until school starts, kids get settled into their routine and owners are ready to start showing their houses, probably the week of September 12th. Twenty-four new residences were listed last week and fifteen houses went to contract, the latter ranging in price from $2,990,000 (35 Keofferam Road, Old Greenwich) to $765,000 (19 Pleasant Street, Cos Cob). There were also thirty-four house closings but these reflect activity from May and June, when the market was more active, and the closing prices reflect it: a number of above-asking sales and even more full price sales. Until September, then, you’ll find most agents at the beach.

Realtor Bashing
A recent opinion piece in Slate, the on-line magazine, suggested first killing all the lawyers and then turning knives on Realtors who, the author argues, represent a relic from the pre-internet days before web-cams and email enabled buyers and sellers to interact directly. The author should try his hand at this business, I think, before concluding that real estate agents are over-paid. The typical five percent commission he rails against, for instance (as a former trial lawyer used to gnawing off a third of what I recovered, I consider five percent to be a horrible come down) is split four ways. That doesn’t amount to all that much for each player although admittedly, the seller doesn’t care who gets what so much as how much she pays, total. So what does the commission buy a seller? Exposure to the multi-list and the number one house-buying site, Realtor.com, obviously, plus print advertising, but also much more. A solid opinion of price, for instance. I was consulted recently by a home owner who had been trying unsuccessfully to sell her house herself and wanted my opinion on why it wouldn’t sell. There was, it turned out, nothing wrong with the house itself; no need for “staging” or otherwise improving its appearance. What was wrong was that she was asking almost half a million dollars more than the street would support. That doesn’t work, with or without a Realtor. Another benefit, the value of which depends on the seller’s valuation of her own time, is customer vetting. Those of us who try to earn a living at this business try not to spend three weeks with people who merely want guided house tours, so we learn who they are, where they work, what they can afford and so on. There’s a pretty good chance that, if your house is shown to a potential customer by a real estate agent, that customer is truly looking to buy a house here in town, in your price range. When I was selling my own house in Maine years ago in order to return to Greenwich I tried to sell it myself for several months. I would leave my law office, drive to the house to show the property and discover, again and again, that I had interrupted my day for the curious and the penniless. A discouraging process that only ended when I listed it with a brokerage firm. They sold it within a few weeks.

Buyers benefit from using a real estate agent, too (as they should, since the commission is usually built into the price that they’re paying). We can give an objective opinion on a house’s asking price. The Slate author argues that we’d never do this because. “the higher the price, the higher the commission”. Leaving aside the fiduciary duty a buyer’s agent owes his customer, I’d point out that the agent’s share of, say, an extra $100,000 amounts to about $1,250,000. It would be stupid to jeopardize a relationship (buyers eventually become sellers, after all) for such a relatively small sum. A good agent has seen every house in a buyer’s price range and can advise on the merits of each; location, condition and price. Touring houses with an agent should not be a mutual voyage of discovery—you should be receiving the result of tens, even hundreds of hours of that agent’s preparation.

Will Ebay replace real estate agents? I suspect that it will, which is why I pursue an alternative career as a writer. Pricing information is no longer secret; buyers can learn on the internet, instead of through a real estate agent, what’s for sale and who is asking what. That kind of transparency will ultimately result in more and more direct deals between buyers and sellers. I’m not convinced, however, that either group will find this an unmitigated blessing, just as deregulation of the airlines did little to improve flying conditions or airline food. Still, price usually conquers all, so I suppose that this ruminative column is more of an obituary than a stirring defense of the real estate business. I just hope the change holds off until my kids are through school.

August 20, 2004

Another One Bites the Dust
Sue Connal brought a new listing on Bramble Lane to the market just last week. I was surprised how much I liked it because, as a rule, split-levels don’t hold much appeal for me. But this one was nicely maintained on a good yard and a good street and well priced at $1,399,999.00. I recommended it to a couple of clients but it was gone by the weekend, sold, I hear, to a builder. Before my email in-box is flooded with demands for correction let me say that I do not know for certain that this particular house is destined for the dumpster. I mention its possible fate solely to illustrate a trend in our real estate market: end users (people who intend to live in the house they buy) are increasingly losing out to builders in the under $1.8 million range. A building lot in many parts of town: mid-Greenwich, Riverside south of the Post Road and Old Greenwich south of the Village, for example, is now worth somewhere between $950,000 and $2,000,000. A cute little Cape Cod that might see service as housing for yet another generation is instead coveted for the land it sits on. When a young family stretching to afford a house meets a builder who expects to triple his money, the builder often wins.
New Math?
The old saw in real estate development is that your land should cost a third of the eventual selling price: a third for the land, a third for construction and a third for overhead and profit. I’m not sure that still holds true in Greenwich because the land prices have soared so high but I notice a number of new homes on the market priced as if it were. These are houses that, in my admittedly often-wrong opinion, should be asking something under $2.5 million but are instead priced at $2.9 and above. I’m curious about their prospects and will be watching to see what befalls them. There is currently no shortage of buyers out there for the right house: one still under construction on Arch Street overlooking Binney Park recently sold, I’ve heard, for more than $4,000,000, but the houses I’m writing about are on inferior lots or less desirable locations and I just don’t know how the market will react. So we’ll see. As an aside, I notice that another lot on that same Arch Street is asking $2.6 million. Triple that price and its obvious that this land, at least, is not going to be sold to a builder because Arch Street is still a long way from supporting a $7.8 million house. I think.
Greenwich Point Conservancy
My plea for more information about this organization produced a number of leads, all of which culminated in the person of Chris Franco, a life-long Riverside resident (he says that, although younger than us, he’d “heard about the Fountain boys”. From the tone of his voice I felt obliged to assure him that we’re really are much nicer now). In any event, the Conservancy is a newly-minted non-profit that, working with the town, wants to document the history of and restore the old buildings at Tod’s Point (Chris’s article on one of those buildings, the Innis Arden Cottage of “Queen Anne building” was published in Greenwich Magazine last June, and has some fascinating, long-lost photographs depicting the building when it was new). The group’s membership is already diverse, encompassing over two hundred members who also are affiliated with the Old Greenwich Boat Club, the Historical Society, the Audubon, the Land Trust and so forth. They hope to expand that reach still farther in September when the Conservancy initiates its first fund raising campaign. First goal is $1,000,000 of which $50,000 has already been raised; considering their under the radar status to date, that’s pretty good. From what I understand, the old Tod buildings, including the Cottage and the Chimes building are in sore need of repair and maintenance with water leaks, rotting rafters and all the ills associated with old age and neglect. The town Parks Department does its best but has a limited budget already stretched thin, so this is more a matter of contributing funds to the Department rather than telling it what to do. If the Conservancy can meet its goals these buildings with their unique architecture and real historical value can be kept standing for many years to come. Just hope that no builders hear about them. You can reach the Conservancy at their web page (due to be expanded next month) at Greenwichpoint.org or write to them at P.O. Box 377, Old Greenwich, CT 06870.

August 13, 2004

No News
August is not the month to write a real estate column, at least so far as breaking news is concerned. The following comments are vaguely real estate related, I suppose, and must suffice until the town comes back to life .

Best Kept Secret in Town?

While biking around Tod’s the other day I noticed a car sporting a decal depicting the boot that comprises the park. Turns out the sticker is part of a fund raiser for the Greenwich Point Conservancy which seeks to preserve the old buildings at Tod’s like the bell tower. That seems like a good idea and the stickers have, I think, more cachet than the oh-so-plebian Fisher’s Island and Nantucket ACK Euro-ovals, but I was unable to find a means to contact the Conservancy in time for this article’s deadline. If someone will provide that information, I’d be happy to publicize such a good cause. In the meantime, you’ll have to make do with your tired old Martha’s Vineyard beach permit, the proper display etiquette for which is patiently explained in my earlier work, “The New Millionaire’s Handbook”.

Speaking of the Point, I was heading that way on my bicycle recently when I was ridden down by a member of the Greatest Generation. Don’t worry about not stopping, Gramps—once I mopped the blood out of my sunglasses and from my ears my sensory perception was again far better than yours. I do hope this guy heads for Florida when school starts, though.

Meet Me at the Wrecking Ball
An article in Greenwich Time reports that this year has already seen more old (older than sixty years) houses torn down than in all of 2003. Not surprisingly, this is a trend that upsets members of the Greenwich Historical Society and many residents, including myself. But, while the process may have accelerated, turning our backs to history is hardly new. It has always puzzled me why Greenwich, settled in 1640, has so few old houses compared with other coastal towns of the same vintage. For whatever reason, Greenwich residents have never seen fit to preserve the old—perhaps because real estate has always been more valuable here? In any event, out with the old, in with the new.

In defense of the busy builders, it is becoming increasingly difficult to sell old houses to young buyers. The tyros not only want new, they demand nine-foot ceilings, bathrooms for each child, kitchens sized to safely land F-18s, and so forth. Yards are passe; it’s the house that matters, and that house better be pretty darn big, Buster, or they ain’t buying it! Trying to fight the market does no good and inevitably causes a lot of economic grief, as a refresher-read of Friedrich Von Hayek’s Road to Serfdom will remind you. It’s still a darn shame, however.

Life in Greenwich
Despite us all living in a permanent construction (and destruction) zone, there are still some good things to enjoy here. I’ve had the pleasure recently of keeping company with someone who grew up in Greenwich but left for boarding school before she ever fully explored our town. Seeing the Secret Garden at Tod’s Point and exploring by bicycle some of the quiet neighborhoods in Riverside and Old Greenwich through her eyes has reminded me of how nice this town can be and why there’s more to it than the mess that is Greenwich Avenue or, worse, the Whole Foods parking lot. As an example, I offer our experience of last week: on a hot humid late afternoon we set out for Tod’s but, on a whim, I detoured to the Island Beach Ferry and purchased two tickets for the last ride out to the island for all of $4.00. The boat didn’t leave until 7:00 so we repaired across the harbor to the Delamar Hotel’s restaurant and dined on fried calamari in a light batter, a delicious pot of coffee and great bread, all served in time to make the boat. We cruised out of the harbor into a cool sea breeze, examined Victor Borge’s house (still undeveloped—is that law suit still going on?) and reached the island with just enough time to disembark and touch our toes in the water before returning. When we did, we discovered a free concert in Roger Baldwin park featuring a so-so band playing covers of 1960’s bands best left undisturbed—the Monkees, for instance—but had a great time dancing, greeting friends, recalling long-lost lyrics and watching a swarm of five-to-eight-year-olds doing a better job at moving to the music than your clumsy correspondent (I speak solely of myself—my friend can dance). The whole evening out: dinner, boat ride, concert, cost twenty dollars and we never left town. I don’t know if that justifies Greenwich housing prices, but it’s a start.

August 6, 2004

Low Priced Houses
A reader recently wrote to complain about the poor showing of Realtors at her broker open house. It was suggested to her (not be me) that agents can’t be bothered with showing listings under one million dollars. When they do show up with a customer they are seeing it for the first time and merely pace through the house, blind to its features. There is a grain of truth to this but it’s not, I think, the whole truth. There are certainly agents in town who only leave their clubs to view mansions, but they aren’t serious about the business. They use their license as a kind of personal house tour conduit and, if they sell anything at all, they sell a house every couple of years to one of their social circle. We tend to ignore them. As an aside, it costs approximately $4,000 a year to comply with all the licenses and regulatory fun associated with this business which seems like an awful lot to pay for a house tour, but boredom is a heavy burden, for some people.

On the other hand, there are some extremely dedicated agents—I’d estimate a hundred or so out of the nine hundred licensed with the Greenwich Board of Realtors—who you will see at every open house in every area of town, all the time. Not surprisingly, these are the people who sell most of the real estate in town. They know the market: what’s on, what’s selling and what’s over-priced, and they impart that knowledge to their customers. They also aren’t too proud or too stupid to neglect houses under one million dollars. Buyers of these ‘starter homes” (and what else would a $895,000 house be?) tend to buy more houses in the future. Those agents who are this for the long run treasure such buyers and try their best to serve them well. So my advice to my disgruntled reader is to ignore the agents who ignore her or who venture into her house with a client on a first-time voyage of discovery and to relax: the real agents are aware of her house and will sell it for her if the price is right.
New Listing
The slow market continues but houses are still selling and some good new ones still pop up now and then. Joan Epand (Shore & Country) just listed a very nice five bedroom house at 36 Deepwoods Lane in Old Greenwich for $2,150,000. It’s part of a development of new homes built in 2000 that, when built, were scoffed at by people like me for their “outrageous” asking prices in the $1.3 range. They sold out instantly and have appreciated about 12.5% every year since. With good reason; the houses were well built and the developer, new to Greenwich, heeded his Realtor’s advice and put in top quality kitchens and baths, used hardwood floors upstairs (he’d been tempted to cover plywood with carpet, which would have been a major mistake) and so forth. That Realtor, Bob Jensen, I think, told me that he’d had a hard time getting Greenwich agents to show these houses (see above) but New Yorkers started coming out to see them. One couple asked what was going up between the model house and another house under construction. “Another house”, Bob admitted, and the New Yorkers replied, “great! We hate this ‘Little House on the Prairie’ feeling!” A shift in marketing to focus on urbanites followed immediately.

The neighborhood still appeals to city folks buying their first suburban home and the houses still sit on smallish lots (this one is on 0.28 of an acre) the houses are standing up well, a real feeling of community has developed and, all in all, Deepwoods is looking good. The area is in the Dundee School district, it’s an easy walk to the train and there are lots of kids around. That’s an excellent combination in this town and the prices of these houses reflect it.
Charity Begins Away from Home
Former Old Greenwich resident Susan Henshaw now teaches in Bridgeport (as well as Greenwich Country Day Summer Camp) and is affiliated with a community group, Groundwork Bridgeport, that, among other activities, creates pocket gardens in the city and trains young people the entrepreneurial skills required to start their own landscaping businesses. They need money, material and volunteers. You can reach Sue at (203) 332-1721 and she’ll tell you more. Perhaps instead of sending that contribution to Ralph Nader’s campaign you can do a little good locally.