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A Stupid Amount Of Money Compared To What It’s Worth

A report from the Berkshire Eagle in Massachusetts. “Even as local real estate values strengthened in 2018, one leading indicator of distress glowed red. The number of scheduled foreclosure auctions in the Berkshires increased last year over 2017, as borrowers’ troubles continued to put home ownership at risk for hundreds.”

“Last year, 277 properties in Berkshire County were set for auction due to nonpayment of loans, 45 more such listings than in 2017 — an increase of 19.3 percent. ‘That’s not nearly as much improvement as statewide,’ said Timothy Warren, CEO of The Warren Group of the Berkshire numbers. ‘Things are tough. It’s the story of the country as a whole — unequal distribution of pain.'”

The Baltimore Sun in Maryland. “Who doesn’t love a good discount? Late author Tom Clancy’s former penthouse at the Ritz-Carlton Residences in Baltimore is now on the market for less than half its original asking price. The 12,000-square-foot condo is currently listed for $5.9 million.”

“The home was first put on the market in October 2015 for $12 million by TTR Sotheby’s International Realty. The price dropped in February 2016 to $10.9 million and again in May to $8.7 million, Shawn Breck, vice president of Sotheby’s, told The Baltimore Sun that year. In 2017, the asking price dropped to $7.9 million.”

“Clancy and his wife first purchased the four units and combined them into one for $12.6 million in 2009. ‘It’s priced to move. They want to sell,’ said Angel Stevens, the agent who is selling the property.”

The Edmond Sun in Oklahoma. “The total housing inventory in Edmond at the end of January 2019 rose to 1,063 existing homes available for sale versus last year’s 968 homes. The market experienced downward momentum with the decrease of median price this month. Prices decreased to $225,250 versus the previous year at $243,000. The median days on market increased to 63 compared to last year’s 61.”

The Wall Street Journal on New York. “Alan Wilzig, the race car driving banker known for inspiring a character in Martin Scorsese’s film ‘The Wolf of Wall Street,’ is in contract to sell his New York townhouse for $12.65 million, dramatically less than its original nearly $44 million asking price.”

“Mr. Wilzig admitted that the price cut had less to do with the downturn in the high-end real estate market in New York than with his ‘pie in the sky’ pricing strategy when he listed the property in 2014. He said at the time he hadn’t wanted to sell but had been motivated by some of the aggressive price-tags he’d seen in the area. He wanted to ‘see if some Chinese billionaire wanted to live in Tribeca bad enough,’ he said.”

“Mr. Wilzig said he didn’t get serious about selling the property until he lowered the price to under $20 million in 2017, following his divorce. Until then, he wouldn’t have sold ‘without being paid such a stupid amount of money compared to what it’s worth,’ he said.”

“In the end he made out okay. Mr. Wilzig paid $3.35 million for the roughly 6,500-square-foot home in the mid-2000s and put roughly $1.5 million into building out the interiors, he said.”  

This Post Has 93 Comments
  1. ‘The median days on market increased to 63 compared to last year’s 61’

    Yeah, people are slashin prices so they don’t have to hold out the 2 extra days.

    Eeee-bola Edmond!

  2. ‘he hadn’t wanted to sell but had been motivated by some of the aggressive price-tags he’d seen in the area. He wanted to ‘see if some Chinese billionaire wanted to live in Tribeca bad enough’

    Everybody was fishing for dumb Chinese money.

    1. “Everybody was fi$hing for dumb Chine$e money.”

      Mayee next time they’ll $nag it using a crappie jig. The Ba$$ Pro Shops Maribou Jig might be one of the oldest, most well-known crappie bait$ out there. It’s a favorite of many crappie fisher$. With a feather tail and a little furry body …

    2. He wanted to ‘see if some STUPID Chinese billionaire wanted to live in Tribeca bad enough,’ he said.”

      Fix it for ya

      1. It’$ all ’bout$ ca$h $afety.

        U$ Real E$tate … or … Chinese Governmint$ hybrid Communi$t-Capitali$t $avings account.

      2. Beside$, they are working on American ed.a.catin’ their millions & millions of youngsters in financial $marts!

        This Chinese ‘Little Buffett’ summer camp costs $8,600 per child

        Krystal Hu |Reporter |Yahoo FinanceMarch 5, 2019

        “The camp includes three different routes across the country: the East Coast, the West Coast and the Middle America. All participants will spend the last three days of their trip in Omaha, Nebraska, Buffett’s hometown, to study at the Omaha Value Investing Center, an organization founded to teach Chinese people how to invest. Activities also include touring the perimeter of Buffett’s house, and eating at his favorite restaurant Gorat’s Steakhouse.”

        At the end of the trip, participants will receive investment projects and they are encouraged to “start their own investment fund and report their returns periodically.” They can also take advantage of free U.S. college application services, a common practice among Chinese students that could cost a few thousands of dollars

    3. ‘he hadn’t wanted to sell but had been motivated by some of the aggressive price-tags he’d seen in the area.’

      The local mls is littered with these types and their “make me move” prices. They’re steeped in pure fantasy, and the “owners” have no intention of moving unless they hit that jackpot. Some of these houses are priced more than double the current value.

    1. A closer look at the numbers changes the analytics..

      Yes, the median sale price is down – but so is the house size (2,362 sq ft year ago vs 1,541 today) – a decrease of… wait for it… 32% (see how that works?)

      Also, the average days on the market decreased from 343 days (whoa.. a year!) to 55 days (less than 2 months) and this is also considering an increase of over 8,000X in inventory.

      Without looking deeper, I would say this is a situation where a developer has created some large single family developments (unit amounts, not house size) and is now selling them – this would account for the increase in inventory, reduced prices, etc…

  3. ‘Last year, 277 properties in Berkshire County were set for auction due to nonpayment of loans, 45 more such listings than in 2017 — an increase of 19.3 percent’

    All of these articles compare today’s defaults to the peak of yadda yadda. It’s irrelevant. As I posted a while back, the lowest foreclosures in Florida were immediately before the largest increases in foreclosures in history. Why? Because lending is goofiest then. So why not drill down and figure out who is defaulting, when did they borrow and what caused them to stop making payments? Instead they brush it off with “everything is still awesome!” journalism.

    1. I got this in an email from AEI this morning:

      ‘First time buyers continue to incur larger and larger amounts of debt to buy a house—in November, 2018, 40 percent and 12 percent of agency first time buyers had a total debt-to-income ratio above 43 percent and 50 percent respectively. Forty-three percent is the maximum level set by the Bureau of Consumer Financial Protection (BCFP) for private lenders. So how is it that government agencies like FHA, Fannie Mae, and Freddie Mac can ignore the BCFP’s 43 percent rule? The answer is that the same day the BCFP promulgated the 43 percent rule in January 2013, it also issued the “patch” which exempted government agencies from the rule. Since then, FHA, Fannie, Freddie, and the VA have taken advantage of their exemption. For example, FHA’s exception percentage has risen from about 40 percent to 60 percent.’

      ‘The house price boom, now well into its 7th year, has been driven by 2 punchbowls: Easy monetary policy which applied equally to all types of buyers, and: Loosening mortgage underwriting standards by government agencies, which has almost exclusively been aimed at first-time buyers.’

      ‘The result; unsustainable house price increases, particularly for entry level buyers.’

      As a poster here said once: dear government – please stop helping.

      1. The more telling statistic would be what percentage of the income in the ratio is even real…because last time around fake income was routine and almost no one was held accountable. So plenty of those fraudsters are still in the business.

        1. PennyMac, headed by former No. 2 at Countrywide, files for IPO – latimes
          articles.latimes.com › Collections

          Feb 8, 2013 – PennyMac Financial Services Inc., the 5-year-old mortgage company … to Countrywide Chief Executive Angelo Mozilo, the lender’s co-founder.
          Dueling Jobs (and Big Paydays) – The New York Times
          https://www.nytimes.com/2013/05/19/…/at-pennymac-dueling-jobs-and-big-paydays.ht…
          May 18, 2013 – Shareholders of PennyMac, a real estate investment trust, have profited since it … The year before founding the REIT, Mr. Kurland established a …

          Countrywide: It’s baaack | Fortune
          fortune.com/2012/10/02/countrywide-its-baaack/

          Oct 2, 2012 – Last month, PennyMac (pmt, +1.10%), a finance company run almost entirely by alumni of Countrywide Financial, opened its first retail branch.
          Stan Kurland – Founder, Chairman, and Chief Executive Officer …
          https://www.linkedin.com/in/stan-kurland-9b9847a4

          Moorpark, California – ‎PennyMac Financial Services
          Founder, Chairman, and Chief Executive Officer. PennyMac Financial Services. January 2008 – Present 11 years 3 months …

          Countrywide Execs Get New Home At PennyMac – Forbes
          https://www.forbes.com/…/pennymac-countrywide-update-markets-equity-cx_ra_032…

          Mar 24, 2008 – PennyMac will acquire loans from financial institutions seeking to … Highfields Co-Founder Jonathon S. Jacobson said although there has …

          1. Take “IndyMac” change a few letters and start over. When this one goes belly up, they will be back in a few years time with “CountryMac” or “Pennywide”.

          2. Take “IndyMac” change a few letters and start over. When this one goes belly up, they will be back in a few years time with “CountryMac” or “Pennywide”.

            I’m waiting for Pennywise.

        2. last time around

          People who actually could pay the mortgage defaulted in droves when they became underwater on the house.

          1. ” …underwater on the hou$e. ”

            What’$ the hou$e price difference$ (loan amount$), between then (2008) … & … Now (thee.current.era)?

        3. “what percentage of the income in the ratio is even real”

          And how much real debt is not reported? Plus, how much more debt are buyers taking on after the loan goes through?

  4. which metro over 500,000 pop is scking the worst?
    NYC?
    I’m betting it will be chighetto soon
    17% raise for teachers =much higher RE taxes
    =mega death

    1. One, can you provide a link or a search hint as to the Airbnb you manage? It sounds like it might be a good Spring break destination for my family.

  5. “The 12,000-square-foot condo is currently listed for $5.9 million.”

    “The home was first put on the market in October 2015 for $12 million by TTR Sotheby’s International Realty. The price dropped in February 2016 to $10.9 million and again in May to $8.7 million, Shawn Breck, vice president of Sotheby’s, told The Baltimore Sun that year. In 2017, the asking price dropped to $7.9 million.”

    “Clancy and his wife first purchased the four units and combined them into one for $12.6 million in 2009. ‘It’s priced to move. They want to sell,’ said Angel Stevens, the agent who is selling the property.”

    Real estate only goes up. Don’t give this away!!!!

    1. Real estate only goes up. Don’t give this away!!!!

      This ^^^. Everybody wants to live in Baltimore.

    2. Those who strike it rich in the arts or entertainment fields seem particularly prone to sinking buckets of money they will never see again into overpriced homes they will never be able to sell for what they paid.

      1. Might bee they is “over-compen$ating” for the digs/hood of their youth. Easy on the mind to era$e such memories bye waking up each new morning gazing out the window of a man$ion e$tate.

        1. Also I think at least some are trying to be smart. Everyone is telling them not to spend it all on hookers and blow and real estate is seen as a safe and smart place to park money.

    1. I think “rental net income” has been negative across the greater Seattle area for many, many, many years except for the long-time property owners with no mortgage.

  6. When it comes to Uber and Airbnb, do conservatives want more gov control and regulations or less? I am confused. The good thing about choices is, u can choose and ignore what u dont like.
    I like competition. When do i get less gov and less spending? 😉

    1. Conservatives love choice and competition right up until the moment they face with the brutal reality that not everyone shares the same morals. When that happens the gloves come off.

    2. ‘u can choose and ignore what u dont like’

      It’s only been explained dozens of times. Say I own a shack. My neighbor decides to turn his into a party house. Can I ignore it? I can have the local government shut it down, if it hasn’t been bribed or isn’t tied up in litigation paid for by endless rounds of “funding.”

      And why doesn’t a hotel open next door? It’s illegal! It’s not zoned for hotels. How curious that what’s illegal for one industry is wide open for some silicon valley deep pockets. I’m a libertarian. Sure, minimize unnecessary regulations. But like with taxis, is it really progress that the drivers are making sub-minimum wages? Yes, the municipalities were taxing too much, but there’s got to be a better way than simply breaking the law, again, done by silicon valley snake-oil.

      Here’s a question: why didn’t these companies lobby for the change? Cuz they wouldn’t get the near monopoly they wanted. It would have been subject to public debate, and most importantly, once changed, anyone could have entered the market. Does that sound like they really want competition?

      It’s all fudged up and they don’t care about the long term, because when it all falls apart, they will have made off with their IPO billions and could care less. And that isn’t what businesses do. Real business strives for long term sustainability.

      1. ” …they will have made off with their IPO billion$ and could care le$$”

        footnote: 220+ IPO’$ e$timated for 2019

        (The Bra$$ Bull on Wall $treet, is still $tanding!)

          1. There are many path$ that lead to $urviving & Pro$perity in the “Biddne$$” $phere

            “Microsoft waited 11 years before going public, primarily because Gates wanted to retain as much control of the company as possible. It helped that Microsoft was so profitable that it didn’t need outside money in order to grow.

            Since Gates had begun $elling $hares and offering $tock option$ to pro$pective employee$ in order to entice top talent, though, Microsoft President and Chief Operating Officer Jon A. Shirley projected that, by 1987, enough people would own Micro$oft $tock that the company would be forced to register with the $EC. Gates finally acquiesced to the idea of an initial public offering because the IPO would create a much wider, more liquid market for the company’s $hares.

          2. It helped that Microsoft was so profitable that it didn’t need outside money in order to grow.

          3. “Since Gates had begun $elling $hares and offering $tock option$ to pro$pective employee$ in order to entice top talent$,”

            Iffin’ you $ub$idize compen$ations$ to obtain top indu$try talent$, one would expect you to bee profitable, right?

          4. $elling $hares and offering $tock option$

            Ownership is a very effective compensation tool and not what I would consider a subsidy.

          5. that it didn’t need outside money

            How true this is, I do not know. It may very well have received money from In-Q-Tel, the CIA’s venture capital arm. In which case, that would be a government subsidy.

      2. Real business strives for long term sustainability.

        Via profitability, not business models predicated on illegality and reliant on subsidies and/or other Ponzi financial schemes.

        1. ” …reliant on $ub$idie$”

          Don’t tell that to people who add “$ugar” to their favorite$ Kool-Aide

          1. Thus my reference to Kool-Aide$ …

            Opinion: The U.S. spend$ $4 billion a year $ubsidizing ‘Stalinist-style’ domestic $ugar production

            Published: June 26, 2018 | MarketWatch

            In the United $tates, fewer than 4,500 farm busine$$es produce sugar. Yet they co$t taxpayer$ up to $4 billion$ a year in $ub$idie$.

            The U.$. $ugar program is a Stalinist-style supply control initiative that limits imports through quotas and domestic production through what are called marketing allotmen$.

          2. sugar

            I suspect corn/ethanol absurdity dwarfs sugar. When I was in Louisiana, they were making ethanol out of cane sugar, so I guess the madness overlaps somewhat.

      3. I too am a Libertarian, I believe you get paid what you are worth, no need for a minimum wage. If someone with very little skills or education can only sweep for $5 and hr, let em.

        A party house making a lot of noise is a different problem.

      4. The faster the Silicon Valley ponzi scheme collapses, the better. Some cities now have to deal with the mess caused by rent-a-scooters (Bird and Lime) all so the founders and vulture capitalists can swindle gullible ‘investors’ in an IPO or acquisition.

      5. there’s got to be a better way than simply breaking the law

        I wonder how many of these AirBnB operators collect and pay hotel occupancy tax.

        1. Airbnb automatically collects and remits hotel and occupancy tax for jurisdictions where this is required. This is the case in Utah.

    3. I’m all for capitalism and free markets.

      What I am AGAINST, is my neighbors turning my suburban neighborhood into a row of hotels with drunk people coming and going at all hours of the night and parking 30, 40, 50 cars on the street.

      If that makes me a an anti-American commie, fine, I’m a an ant-American commie who doesn’t want to see my neighborhood destroyed. Happy?

      1. And also Westworld, you’re confusing Conservative and Republican with the snide comment about getting less spending. You, like most lefties are under the illusion that Republican = Conservative. Maybe that nominally true 25 years ago. Today there is the uniparty, that is leftist and loves to spend my money.

        1. Westworld, you’re confusing

          Doubtful he could be as confused as he acts. Just a silly $hit disturber.

      2. We already have laws in place for most of that mess. Have you confronted those neighbors in person? I would as a Libertarian.

      3. WestWorld5 is all but a self-proclaimed (?) socialist so, no Doomed, you’re not the anti-American commie.

      4. I agree with this sentiment too. Airbnb and other short-term rental sites need to be regulated. Capitalism and markets need regulation too.

  7. “When it comes to Uber and Airbnb…”

    Pole.a.tic$ ain’t the i$$ue.

    democrapt, repubican, p$haw! … $ee, there’$ lot$ of way$ to make monie$ from “Disruptive Innovation$”!

    The$e guy$ are whatcha call “Injury $pecialist$:

    “Whether you were injured in an Uber, Lyft or Taxi, our Los Angeles ride$hare attorney$ have the knowledge to help you get the compen$ation you de$erve.”

    1. I bet they do while living in their overpriced new subdivision marketed to Californians and sending kids to school with other Californians and only shopping at Californian approved stores. It might get a little dicey on the old side of town though.

      1. Are they poor “inland” Californians or wealthy coastal? It is a very big state with a diverse population. From Skinheads to Berkeley.

        1. Are they poor “inland” Californians or wealthy coastal?

          In my industry they are mostly tech workers going to Micron HQ. Plus some retirees. By Idaho standards I think both would qualify as wealthy even though they wouldn’t think so. Don’t know about the inland refugees.

  8. Nothing to see here, just a 30% price drop…I mean “slowing appreciation.” I think I can hear the silent screams of realtors through their clenched teeth.

    DATE EVENT PRICE
    3/5/2019 Listed for sale $425,000(-8.6%)
    1/1/2019 Listing removed $465,000–
    10/16/2018 Price change $465,000(-4.1%)
    9/12/2018 Price change $485,000(-7.6%)
    8/29/2018 Price change $525,000(-12.5%)
    8/4/2018 Listed for sale $600,000–

    https://www.zillow.com/homes/for_sale/295-Teller-St-Lakewood,-CO,-80226_rb/

    1. I agree that the pricing on that house is beyond ridiculous. What’s valuable is not the house, but the land and zoning. R2 allows a second housing unit to be built on the property.

  9. “unequal distribution of pain.”

    Oh, don’t worry, there’s plenty of pain being made to go around.

    1. This kind of makes me ill. So much waste and trash. The market won’t fix it, so we are just going to have more landfills and more garbage unless a comprehensive solution is put forward. Negative externalities are good targets for taxes and subsidies.

        1. We can always hope. It will take an administration, senate, and congress that cares about regulation and the environment enough to adjust the market incentives in order to curb the pollution and waste epidemic. As long as it is cheap to dump garbage in landfills, we will continue to do so.

          1. landfills

            Or, build expensive houses on top of them, like Snob Hill in New Iberia. The only high ground in town. One man’s trash is another man’s treasure.

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