Home prices in the Hamptons, the oceanside getaway of celebrities and Wall Street financiers, plummeted in the first quarter as the financial crisis cut demand for vacation properties.
The median price fell 23 percent from a year earlier to $675,000. Sellers offered average discounts of 11 percent off their asking price, up from 9.6 percent in the year-earlier quarter, New York appraiser Miller Samuel Inc. and broker Prudential Douglas Elliman Real Estate said today in a report.
“The primary reason is linkage to Wall Street,” said Miller Samuel President Jonathan Miller. “You’ve got job loss, anticipated job loss, as well as lower compensation and anticipated lower compensation. There’s less of an urgency for people who aren’t affected by that to buy.”
About 23,300 Wall Street employees lost their jobs in the year through February as banks worldwide posted losses and mortgage-related asset writedowns of $1.3 trillion. The credit crisis that claimed Lehman Brothers Holdings Inc., Merrill Lynch & Co. and Bear Stearns Cos. also pushed bonuses down 44 percent in 2008, state Comptroller Thomas DiNapoli said.
The number of homes for sale in the Hamptons, about 100 miles east of New York City, rose 15 percent to 1,673 properties in the first quarter, the largest year-over-year increase since Miller Samuel began keeping records in 2004.
The Hamptons are known for multimillion-dollar beachfront estates and homeowners there have included comedian Jerry Seinfeld, real estate developer and publisher Mortimer Zuckerman and billionaire Ronald Perelman. The area is comprised of more than a dozen towns and villages including Amagansett, Water Mill, Bridgehampton and Sag Harbor.
Damon Liss, a Manhattan interior designer and real estate broker for the New York-based Corcoran Group, has been trying to sell a three-bedroom East Hampton cottage since January.
Liss renovated the house, added a swimming pool and new oak floors and then listed it for $1.33 million. In April, he cut the price almost 10 percent to 1.2 million.
“The lower the price the more likelihood it’s going to sell,” he said.
Motivated sellers will follow, Dottie Herman, chief executive officer of Prudential Douglas Elliman, said in an interview.
“In January and February there was basically nothing going on,” Herman said. “There are probably people in the financial sector that really have to cut back.”
In the three months ended March 31, transactions declined 54 percent to 145 properties in the Hamptons. Prudential’s data covers the South Fork of Long Island from Westhampton to Montauk.
In neighborhoods that are close to the ocean where properties sell at a premium, the median home price dropped 45 percent to $637,500 from the year earlier quarter, Miller Samuel said. That’s the biggest decline among all Hamptons neighborhoods and is known as “south of the highway.”
Homes north of Route 27 declined 8.7 percent to $685,000. The median price of homes east of the Shinnecock Canal declined 37.6 percent to $760,000.
The overall drop in sales is the biggest decline since at least 1992, said George Simpson, owner of real estate data company Suffolk Research Service Inc.
“It’s not a very happy place out here,” Simpson said in an interview.
The dollar value of all Hamptons transactions in the first quarter plunged 62 percent form a year earlier to $298 million, according Suffolk Research.
In the luxury market, the top 10 percent of all sales, the median price slid 25 percent to $4.09 million. The number of sales fell to 20 from 40 in the prior year and there were 470 luxury properties on the market in the first quarter.
In a separate report issued today, Miller Samuel and Prudential said the median sales price in New York’s Nassau and Suffolk counties fell 13 percent to $355,000.
The number of sales declined 18 percent to 2,872 and homes stood on the market 134 days before being sold. The data excludes the Hamptons. In Nassau county alone, the median price fell 12 percent to $396,000 and in Suffolk it declined 13 percent to $315,000. To contact the reporter on this story: Oshrat Carmiel in New York at firstname.lastname@example.org.
Friday, April 24, 2009
Thursday, April 23, 2009
By SAMANTHA YOUNG
California air regulators on Thursday adopted a first-in-the-nation mandate requiring low-carbon fuels, part of the state's wider effort to reduce greenhouse gas emissions.
The California Air Resources Board voted 9-1 to approve the standards, which are expected to create a new market for alternative fuels and could serve as a template for a national policy that has been advocated by President Barack Obama and Democrats in Congress.
Gov. Arnold Schwarzenegger said the rule would "reward innovation, expand consumer choice and encourage the private investment we need to transform our energy infrastructure."
"I think we're creating the framework for a new way of looking at automotive fuels where no longer will gasoline derived by petroleum be the only game in town," board chairwoman Mary Nichols said.
The rules call for reducing the carbon content of fuels sold in the state by 10 percent by 2020, a plan that includes counting all the emissions required to deliver gasoline and diesel to California consumers -- from drilling a new oil well or planting corn to transporting it to gas stations.
Transportation accounts for 40 percent of greenhouse gas emissions in the state.
"The emissions from this sector have traditionally grown in California at a rate that exceeds even our growth in population," Nichols said before the vote. "It has led to a host of environmental problems."
Representatives of the ethanol industry have criticized the rule, saying state regulators overstated the environmental effects of corn-based ethanol. They also have criticized the board's intention to tie global deforestation and other land conversions to biofuel production in the United States.
The board has said Brazil converted rainforest into soybean plantations as a result of the growth in corn-based ethanol in the U.S. A formula being considered by the board would take into account the destruction of forests and grasslands elsewhere to grow fuel crops for U.S. demand.
The ethanol industry also said it was unfair to penalize it for agricultural land changes abroad.
"We are not convinced expansion of ethanol in the U.S. has caused or will cause land use changes," said Geoff Cooper, vice president of research at the Renewable Fuels Association.
John Telles, the dissenting board member, said before the vote that he had a "hard time accepting the fact that we're going to ignore the comments of 125 scientists" who questioned the agency's decision to estimate the emissions tied to land-use changes.
"They said the model was not good enough," he said.
Representatives for BP PLC and Chevron Corp. said their companies supported the new standards, with the caveat that the board periodically review the standards. The air board agreed to ensure that the most up-to-date science is incorporated into the rule and that the alternative fuels have become available as expected.
Under the low-carbon fuel standard, petroleum refiners, companies that blend fuel and distributors must increase the cleanliness of the fuels they sell in California beginning in 2011.
The petroleum industry warned that the state was moving too quickly without assurances that the alternative fuels they will be required to sell would be available for the market. Representatives asked the board to delay a decision until next year.
"It's frankly unclear to us how we will comply with this regulation," said Catherine Reheis-Boyd, chief operating officer of the Western States Petroleum Association.
The statewide efforts come two years after Schwarzenegger directed air regulators to develop a rule that would boost the amount of renewable fuels sold in the state.
Nichols said Thursday that a low-carbon mandate would reduce California's dependency on petroleum by 20 percent and account for one-tenth of the state's goal to cut greenhouse gas emissions by 2020. From Businessweek.
I am not an environmental nut job but I have gotten out of the BAD habit of using plastic bottles and no longer us my private jet to fly to China for good food. Seriously, this vote and policy is a great move forward for clean energy. Take care and make it a great day.
Sunday, April 12, 2009
Simpsons Season 12 No Loan Again, Naturally.
After too many years of financing Homer’s annual Mardi Gras party on home equity loans, Homer and Marge’s adjustable-rate mortgage skyrockets.
Friday, April 10, 2009
The endless bailout line gets longer -- and why we're going about this the wrong way
The seemingly endless line of companies looking for taxpayer-funded bailouts just keeps getting longer, and the folks in Washington show no sign of forcing anyone out of it. This morning, we've learned that life insurance firms will receive aid from the TARP.
From the Wall Street Journal:
"The Treasury Department has decided to extend bailout funds to a number of struggling life-insurance companies, helping an industry that is a lynch pin of the U.S. financial system, people familiar with the matter said.
"The department is expected to announce the expansion of the Troubled Asset Relief Program to aid the ailing industry within the next several days, these people said.
"The news will come as a relief to a number of iconic American companies that have suffered big losses made worse by generous promises to buyers of some investment products. Shares of life insurers have fallen more than 40% this year. Their troubles led to a string of rating-agency downgrades that, in a vicious cycle, made it more difficult for some insurers to raise funds.
"The life-insurance industry is an important piece of the U.S. financial system. Millions of Americans have entrusted their families' financial safety to these companies, so keeping them on solid footing is crucial to maintaining confidence. If massive numbers of customers sought to redeem their policies, it could cause a cash crunch for some companies. And because insurers invest the premiums they receive from customers into bonds, real estate and other investments, they are major holders of securities. If they needed to sell off holdings to raise cash, it could cause markets to tumble.
"The decision by the Treasury Department adds a third industry to the banks and auto companies that have already received bailouts from the government. While American International Group Inc. is a major insurer and is the biggest recipient of government money, its problems weren't caused by its life-insurance operations, but derivative bets that went bad."
You know what my biggest problem with all these bailouts is? No one seems to be denied! Money is given to almost anyone and everyone. What we SHOULD be doing is what nurses and doctors do in the ER -- triage. Figure out which institutions are too weak to survive and euthanize them. Deny them bailout money. Let them fail. Then let their stronger competitors pick over their carcasses. Bolster those stronger companies with aid if need be.
Washington isn't doing that, though. Take the banking industry "stress test." Policymakers have already said that if any institution fails the test, they'll get time to raise money or will be injected with government capital. Huh? What's the sense in that? Why aren't we weeding out the weak, allowing them to fail and parcelling up their businesses to their stronger, surviving brethren?
It's like having two people showing up to get their driver's license -- one of whom gets a 100% on the computer-based test and passes the driving portion with flying colors ... and another who shows up drunk, crashes into the curb twice, and spends the rest of the time hitting on his instructor. Should both people really be given a license? Wouldn't it make more sense to pass the good guy and fail the other -- or send him off to jail? I just don't get this attitude where every institution is above average (or treated that way). By the way,(cue:shameless promo music) the line to get a jumbo mortgage is long but folks are locking in low 5% on 5Y and 7Y ARMS and mid 5% 30Y Fixed jumbo mortgage rates. Have a great weekend.