Real Estate

The Real Estate Shakeout Hits Greenwich, Conn.

Holy subprime mortgages! Even hedge fund heaven can’t escape the real estate downturn.

Home prices in Greenwich, Conn., dropped 7 percent in 2008, the biggest decline in three decades, as job cuts and turmoil in the highly troubled financial industry took their toll. Prudential Connecticut Realty told Bloomberg News that the number of single-family houses sold last year fell to 460 from 726 a year earlier.

“We are directly affected by the financial world — and that’s suffering,” said John W.M. Cooke, a Prudential real estate broker who keeps track of home sales and prices. “So that was the biggest factor in our house sales last year.”

Even with a 7 percent decline, however, the median price of a home is still $1.95 million in Greenwich, a favorite spot for many hedge funds and their multimillionaire and billionaire managers. One in particular, Steven A. Cohen, who runs SAC Capital, has been seeking to expand the 35,000-square-foot house he bought for $14 million in 1998.

Last year’s drop in the average Greenwich home price was the biggest since at least 1977, Mr. Cooke told Bloomberg News. The number of sales at the top end of the Greenwich market, those houses priced above $5 million, fell by more than a half, to 53 last year, from 113 in 2007, Prudential said.

Real Estate Agents Flock To Help Others In The Community

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FlamingosHere is a great story of Utah Keller Williams agents raising money for a cancer patient in their community with a bit of humor.

The agents are placing a lawn full of plastic pink flamingos in fundraisers lawns as a prank that does a great deal of good.

Someone got a “flocking” Monday night in Lehi. Just before 9:00 p.m. several intruders – some disguised as giant, pink birds — sneaked onto to the snow-covered front lawn and planted a flock of 3-dozen pink, plastic flamingos along with a sign from the K.W. Cares Foundation. The sign says you’ve been flocked for charity.

The covert team did its deed quickly and silently. But before they left, they could not resist tipping off the unsuspecting homeowner. In unison the screamed, “You’ve been flocked.” Then they jumped in their waiting cars and took off.

“Flocking” is just one of the fundraising tools of the Foundation. The Keller Williams Westfield Real Estate Network established the Foundation. Shae Goodwin said, “K.W. Cares is a program designed by real estate agents to help real estate agents in need. That’s what this is about – helping others.” via ABC 4.com.

The bigger picture here though is that real estate agents as a group do a disproportionate share of community service. The stereotype of agents is often at odds with the service record they fulfill.

I wonder how we can change this perspective?

The USC Lusk Center for Real Estate has issued a forecast saying that the commercial market won’t grow for two years.

Lusk Center Chairman Stan Ross reported that “a lack of liquidity remains the major obstacle to a recovery in the commercial real estate markets at least until the end of this year.”

Ross projected that real estate markets, both commercial and residential, will start to recover in Q4 ‘09 — but only slightly — “with another full year before they grow again.” Factors responsible for depressed growth include retail bankruptcies, bank closures, unemployment and an oversupply of office space, he said.

“We will also see a curtailed supply of new construction, more focus on cash flow, new incentives for tenants, greater equity required of borrowers and increased government regulation,” Ross said.

Ross predicted that many office, retail and condo projects will go back to lenders this year because cash flows have declined and, more importantly, debt coming due cannot be refinanced while credit is scarce.

Borrowers can avoid foreclosure with creative restructuring, giving the lender an equity position in return for a lower interest rate or getting a temporary moratorium on principal payments, Ross said. Borrowers should demonstrate a willingness to take action by selling assets to raise cash or getting new equity investors.

“Now is the time for building owners to carefully weigh each project’s risk and return, tallying the long-term keepers versus the ones slow to recover. Some projects should be resized. Sometimes the right product type in the right location should be frozen so it can be ‘unwrapped’ when the conditions are right.”

Lusk’s Director Richard Green added that now would be a good time for developers in a strong financial position to buy up such building materials as wood, steel and concrete to take advantage of falling prices. Green and Ross added that the slow market also provides an opportunity for well-capitalized opportunity funds to buy distressed assets or debt at a deep discount:

Infrastructure Opportunities in India are great.