Pleasant Rowland, the founder of doll company American Girl who spent six years and millions of dollars restoring much of Aurora, N.Y., has put both of her houses there on the market.It must be noted that former Mattel CEO Jill Barad signed the $700M check.From 2001 to 2006, Ms. Rowland renovated town buildings owned by Wells College, her alma mater. Some townspeople criticized the renovations as too extensive. "I just simply saved a town that was crumbling," Ms. Rowland says now. "My work there is completed." She says the dispute isn't her reason for leaving town.
One of the houses in Aurora, which is 46 miles southwest of Syracuse, is a 10,000-square-foot Queen Anne lakefront mansion built about 1902 with six bedrooms. It could use some interior renovation, Ms. Rowland says, and comes with 200 feet of frontage on Cayuga Lake, a dock and a boathouse. The two-acre property is listed for $2.2 million. The other house, an 1830 Federal-style home of 4,000 square feet with three bedrooms, is restored, Ms. Rowland says. The four-acre property is listed for $2 million.
In 1985, Ms. Rowland founded American Girl, which Mattel bought for $700 million in 1998. These homes represent the last of Ms. Rowland's recent ties to Aurora. Last week, she sold Aurora-based MacKenzie-Childs, a decorative-tableware and home-furnishings company. She's based in Madison, Wis. Paddington Zwigard of Brown Harris Stevens has both home listings.
In our last issue of the Real Estate Market Source, we predicted a slow fi rst quarter for residential closings, followed by an uptick in the second quarter (see www.starkhomes.com for back issues of the Real Estate Market Source). Well, we were certainly correct about the soft fi rst quarter. However, an increase in customer inquiry and showing activity after spring break gives us reason to hope that the second quarter might also meet our projections.
It appears closings will be off roughly 25% from the first quarter of 2007 in the combined Dane, Sauk, and Columbia markets. We admit that this is an even bigger drop than we anticipated. However, we also didn’t anticipate a record snowfall year, when many weekends in January and February were virtually wiped out as far as showings go. The earliest possible Easter didn’t help either, as activity is always reduced in the weeks before and after the holiday for academic spring breaks. Excuses aside, this was a rough quarter.
On the brighter side, since late March, we’ve seen a noticeable increase in activity on our web site, in open houses, and in our showing volumes.Showings on our listings were off 18% in January and February, but were even with last year in March, and are on pace to be over 20% ahead of last year in April. Offer activity is picking up as well. Pending sale data in the MLS is notoriously unreliable and always late in being reported, so we won’t really know until May or June if the market overall is taking a real turn. But the traffic signals are certainly positive.
BBC:
The US sub-prime mortgage crisis has lead to plunging property prices, a slowdown in the US economy, and billions in losses by banks. It stems from a fundamental change in the way mortgages are funded.Traditionally, banks have financed their mortgage lending through the deposits they receive from their customers. This has limited the amount of mortgage lending they could do.
In recent years, banks have moved to a new model where they sell on the mortgages to the bond markets. This has made it much easier to fund additional borrowing,
But it has also led to abuses as banks no longer have the incentive to check carefully the mortgages they issue.
THE 1946 MOVIE IT'S A WONDERFUL LIFE has become a holiday favorite for many Americans. The heart-rending story of George Bailey (played by Jimmy Stewart), who in his hour of despair is vouchsafed a glimpse of what the world would be like if he'd never been born, holds great meaning for many Americans. So does the drama played out between George and his father, Peter, and their professional nemesis, rich old banker Henry Potter (Lionel Barrymore), which provides a vivid look at the dramatic changes that had taken place in American finance in the years leading up to the time the movie was made.The recent problems in the mortgage market bring the story and its characters to life once again. The Baileys and Old Man Potter disagreed about a number of things, but principally about the credit-worthiness of what Potter calls "the riff-raff," the average citizens in their home town of Bedford Falls. The Baileys believe they are credit-worthy, and Potter generally does not.
Potter remembers the recent past, when lenders made the rules, insisting on repayment in gold coin or its equivalent, on big down payments and short terms. Most important for middle-class folks, Potter sees residential real estate as illiquid, mediocre collateral. George and Peter Bailey and their Building & Loan envision a future of suburban development, of small down payments and decades to pay. When George looks at the world had he never been born -- and sees a vacant field instead of the Bailey Park housing development financed by the Bailey Building & Loan -- he is looking at what would have been Pottersville.
Dave Stark: [432K PDF]
My, my, this was certainly an interesting quarter of activity in the South Central Wisconsin real estate market! For a while there, it was looking like we might start to see an uptick in activity compared with the 3rd quarter of 2006. In fact, note that single family home sales for the third quarter in the combined Dane, Sauk, and Columbia markets are off only 1% from the same quarter of 2006. For the year, they’re off only 3%. Condo sales are off a little more, falling 14% for the quarter and 11% for the year. As we said in our last edition, the market appeared to have settled into a groove, down roughly 10-12% from the unrealisticallyfrantic 2005 pace.Dave Stark is a longtime friend and client. www.starkhomes.comAnd then, in mid August, the Great Sub-Prime Fiasco hit the national media like a nuclear bomb, and things changed dramatically. Within the third quarter numbers, reported closings in September are off nearly 24% from last September (as of this writing*). That shows you just how drastically things changed in mid-stream. The sensational reports speculating that Countrywide might go bankrupt seemed to throw the market into a kind of paralysis, and buyers scuttled to the side lines again just when they seemed to be finding the courage to come back onto the field.
Unfortunately, as has been the case throughout this period, the perceptions the public is being left with range from overstated to just plain wrong. While the events of August were real, our experience is that most local home buyers and sellers don’t understand what it means for us. The media has done a very poor job of distinguishing between what’s going on nationally and what’s going on here locally. The impression many people have is that foreclosures are skyrocketing, foreclosed homes are flooding the market, driving up inventories, lenders are going out of business so that home loans are no longer available, interest rates on the few loans that are available are rising, and home prices are plummeting. None of these things are remotely true in our local market. But as the September closing numbers suggest, these perceptions do have an influence on people’s behavior in the short run. Yes, something is going on, but what is it, really?
As we pass the half way point in 2007, the underlying forces that are driving the South Central Wisconsin real estate market are starting to define themselves, and as they do so, the future course of things is coming into
focus. After a year of confusing and often contradictory signals, the market seems to be settling into a somewhat predictable groove. The bad news, if you choose to view it that way, is that it’s looking more and more apparent that we won’t be returning any time soon to the go-go market of a couple years ago. On the other hand, demand is remaining relatively constant, and that should set the stage for a return to equilibrium.In Dane County, single family sales were down 4% in the second quarter, and only 2% year to date, but they’re off 13% year to date from their 2005 high. Sauk and Columbia Counties are off slightly more on a percentage basis, but because they are smaller markets, they don’t change the overall percentages much. If we add in condos, sales for the first half of the year are down about 5.5% in this three county area compared to last year, and down about 11.6% from the 2005 record. So, as predicted, sales have stabilized in the first half of 2007, and we’re expecting the rest of the year to follow a normal seasonal pattern. Prices remain firm in all markets.
The second half of 2006 was much slower than the first, so it will be interesting to see how the second half of 2007 compares. Based on current offer activity, we’re backing off our earlier prediction that the second half of 2007 will be up 5 to 10 percent over 2006. But we don’t expect much falloff either. In other words, we seem to have found a new level of activity, about 10-12% below the record, and unsustainable, pace of a couple years ago.
Dave Stark [480K PDF]:
So far, 2007 seems to be unfolding pretty much to form. In our last newsletter (4th Quarter 2006), we predicted that closings reported in the first quarter of 2007 would run slightly behind closings for the first quarter of 2006. As of mid April 2007, sales reported to the South Central Wisconsin MLS for the first quarter trail last year by 8%. This probably overstates the drop, since stragglers will continue to report closings for the next few months. It wouldn’t surprise us if another 100 or so sales will be on the books when we look back next year. Nonetheless, there are a number of very positive, and underreported, trends at work behind those numbers that bear analyzing.The report includes a useful look at Sub-Prime Lending. Dave Stark is a friend and long time customer.Inventories: In the chart below, you see that inventories have risen slightly from the same period a year ago, although not nearly as much as they did the year before that. However, if you compare both inventories and the pace of sales to 3 months ago, you’ll see that the number of days of inventory on the market have actually fallen for both single family homes and condos (see chart, p.2). Condo inventory on the MLS hasn’t grown at all since the 4th quarter, although it remains stubbornly high. Building permits are down even further this year than they were last year, which will continue to hasten the fall in inventories.
New Construction vs. Resale Housing:For all of 2006, single family sales fell 7.8% for the entire South Central Wisconsin market, and 11.1% for Dane County. However, if you break those sales up into new and used, you see a different picture. Single family resales were down only 5.5% for the entire market, and 6.2% in Dane County. New construction, by contrast, was down 20.1% for the entire market, and 27.2% for Dane County. For the first quarter of 2007, resales are down only 1.4% for the entire market, and are actually up 1.5% in Dane County. New construction sales, however, were down 30% in Dane County for the first quarter of 2007 compared to a year ago.
There is always a 30 to 60 day lag between offers and closings, so the numbers you’re seeing for the first quarter reflect activity from the holidays and January/February, always the slowest time of the year for offers. So far, offers have tracked pretty closely with a year ago, which is good news, because the first half of last year wasn’t that bad. If we have a “normal” second half of 2007, we should have a much better year than last.
Dave Stark [450K PDF]:Regular readers of this newsletter will know that 2006 was, to put it mildly, a strange year in real estate. Despite continued record low interest rates and a relatively strong economic and employment picture, it’s well known that housing sales in South Central Wisconsin took a breather in the second half of the year.Dave Stark is a friend and long time customer.
What was particularly startling was how sudden and pronounced the change was from the first half of the year to the second. The good news is that, at least as of this writing, it appears that the recovery could be equally as sudden, and perhaps as dramatic.
For the year, sales of single family homes and condos were down roughly 8% in the area covered by the full South Central Multiple Listing Service. However, for the first 6 months of the year, sales were basically flat, down about 1%. For the second 6 months, sales were down 14.5%. In Dane County, the slowdown was even more dramatic; sales were down 4.7% in the first half of the year, but down 19.2% in the second half. For the year, Dane County was off roughly 12%. In Sauk and Columbia Counties, sales were actually up almost 4% in the first half of the year, but down almost 10% in the second half, and off about 3% for the year overall.
The question this all begs is: Why did this happen? And, perhaps more important: When will things turn back up?
Those who skied Kirkwood 20 or more years ago found a typical day lodge with a cafeteria and slow lifts. It was the mountain people came for. They still come for it, only now they don't have to make the 40-mile trek into South Lake Tahoe to spend the night.I was one of those people who skied Kirkwood years ago. A Squaw Valley ski visit always included Jaguars and Mercedes-Benz (Oh Lord, Won't you buy me a Mercedes-Benz), while a fun outing to Kirkwood found the Jeep / 4-Runner crowd enjoying the mountain. It is nice to stay on the mountain, but miles of condos in the valley certainly changes the alpine views.
Off Highway 88 where Alpine, Amador and El Dorado counties meet, the Kirkwood Valley is growing up. Whether it grows with grace will be decided in the next few years.
Even with all the hammering and sawing, Kirkwood remains laid-back -- and growth has come relatively slowly. Ten years ago, the first phase of the village opened with 19 condominiums. The resort installed its first high-speed quad chairlift in 2001, with its second in operation last ski season. Dining choices are still sparse, but more diverse. Pretentiousness is unheard of. The 2000 Census tallies Kirkwood's population at 96 and Tim Cohee, president of Kirkwood Mountain Realty, says full-time residents still number fewer than 100.
We are currently witnessing a phenomenon that I have not seen in my nearly 30 years in real estate brokerage. For the first time in anyone’s memory, we are seeing a noticeable slowdown in sales despite continuing record low interest rates. I’ve experienced many soft markets before; most (1980 – 1982 particularly) were far more severe than this. But all of those were precipitated by rapidly rising interest rates. This one seems to be occurring even though rates have actually fallen (that’s right, fallen) over the past 60 to 90 days by nearly two thirds of a percentage point, remaining near all time lows. At this writing, 30 year rates are around 6.375%. What’s going on?
I’ve heard many explanations offered, and many have some validity. For starters, the Federal Reserve has raised short term interest rates steadily over the last two years. This has probably led many consumers to assume that mortgage rates were rising too. They did rise a little, but not much… they’re still within a percentage point or so of their lows. It’s also true, as you see below and on the following pages, that inventories have continued to rise, leading many to assume that the market is “slow,” since they see more for sale signs than they’re used to. Perhaps most importantly, the media has been relentlessly predicting a “bursting real estate bubble” for two years now, and they’ve seized on any evidence of a slowdown to fuel the gloomy predictions. While fears of a bursting bubble are utterly unfounded, especially here (see page 2), we’re hearing that many buyers are afraid to buy, thinking that real estate has become a bad investment on which they’ll lose money. A self fulfilling prophecy if ever there was one. Add in the fact that the fall is normally the slowest time of year anyway, and the market appears just plain tired after a sizzling 5 year run.
“Life consists with wildness....The most alive is the wildest...In Wildness is the preservation of the World." Henry David ThoreauJim Schneider, a UW Grad and Drexel Burnham Lambert alum is behind MaHunt intellectually and financially.
“There are certain things that cannot be enjoyed by everybody. If everybody tries to enjoy them, nobody gets any pleasure out of them.” Robert Marshall
“Hunting partakes directly in Nature’s sacrament --- transcending a vacuous voyeur to a guiding guardian.” James A. Schneider
“Everybody knows, for example, that the autumn landscape in the north woods is the land, plus a red maple, plus a ruffed grouse. In terms of conventional physics, the grouse represents only a millionth of either the mass or the energy of an acre. Yet subtract the grouse and the whole thing is dead. An enormous amount of some kind of motive power has been lost.” Aldo Leopold
“The sweetest hunts are stolen. To steal a hunt, either go far into the wilderness where no one has been, or else find some undiscovered place under everybody’s nose.” A Sand County Almanac by Aldo Leopold
“Remember that with large corporations and rich individuals gobbling up property to keep everyone out and conservancies, big government and its agencies devouring land through purchase and eminent domain condemnations to let everyone or no one in, there must be places preserved for "everyman/everywoman" plus one human companion to use unbothered by his/her brethren.” James A. Schneider
“Perhaps the hunter is the greatest friend of animals hunted, not excepting the Humane Society.” Henry David Thoreau
The chickens came home to roost a little bit in the second quarter of 2006, as sales of both single family homes and condominiums were down in all markets and price ranges when compared to the same period last year. However, if we look at the full year thus far, we see that the pace of sales is still roughly the same as it was two years ago in 2004. Overall residential sales were down 9.3% for the full MLS, and down 12.1% in Dane County. Inventories have continued to rise as well. The problem, particularly for sellers, remains the same; inventories are double what they were two years ago, and 50% to 70% higher than last year.Dave Stark is a long time friend and client.
Days of inventory remain much the same as they were after the first quarter. However, it’s interesting to note that the number of days of active inventory rose very little from 2004 to 2005, then nearly doubled between 2005 and 2006. Even though inventories started rising last year, the rising pace of sales kept average selling times and absorption rates fairly level. This year, even the relatively modest downturn in sales has caused inventories to really back up.
Even though Donald R. Matthews put his sprawling new residence in the heart of rice country, he is no farmer. He is a 67-year-old asphalt contractor who wanted to build a dream house for his wife of 40 years.
Yet under a federal agriculture program approved by Congress, his 18-acre suburban lot receives about $1,300 in annual "direct payments," because years ago the land was used to grow rice.
Matthews is not alone. Nationwide, the federal government has paid at least $1.3 billion in subsidies for rice and other crops since 2000 to individuals who do no farming at all, according to an analysis of government records by The Washington Post.
Some of them collect hundreds of thousands of dollars without planting a seed. Mary Anna Hudson, 87, from the River Oaks neighborhood in Houston, has received $191,000 over the past decade. For Houston surgeon Jimmy Frank Howell, the total was $490,709.
 | Dave Stark, a friend and long time client has published the first of what will be a quarterly look at the Madison area real estate market [1.2MB PDF]:There could be no better illustration of the confusing nature of today’s discussions about real estate than the market in South Central Wisconsin in 2006. quarter. Despite relentless stories about the “bursting real estate bubble,” and “rising rates taking the steam out of the real estate market,” our local market remained robust in the first quarter. |
Its mild climate, stunning scenery and proximity to several national parks have helped make Washington County one of the five fastest-growing counties in the nation. But like many rural Western counties, it has little room to expand: 87% of its land is owned by the federal government.
Now, Utah's congressional delegation has a plan to remedy the problem, one that is being closely watched by nearly a dozen Western counties with similar growing pains. The plan is also being scrutinized by conservationists who warn that it would set a dangerous precedent, making thousands of acres of public land available for private development as well as offering a windfall for local agencies and special deals for politically influential officials and property owners.
Marilyn Raschka spends many of her weekends driving around unfamiliar neighborhoods, knocking on doors and talking her way into strangers' basements. Once downstairs, she breaks out her flashlight and shines it along exposed beams, hunting for a letter and some numbers that are each no bigger than a thumbprint.There are some Sears homes around Madison.
The 61-year-old resident of Hartford, Wis., is part of a small cadre of historians and passionate amateurs on a mission to identify and protect homes made by Sears, Roebuck and Co. About 70,000 to 100,000 of them were sold through Sears catalogs from 1908 to 1940. Distressed that the houses are falling victim to the recent boom in teardowns and renovations, their fans are scouring neighborhoods across the country, snapping pictures and sometimes braving snakes and poison ivy to poke around basements and attics for the telltale stamps that mark the lumber in most of the catalog homes. Because people can be shy about the state of their basements, Ms. Raschka brings along photos of her own messy cellar to persuade them to let her in.
THE casual atmosphere and laid-back state of mind are what Mike Moses finds most appealing about Lake Geneva, a popular weekend destination in southeastern Wisconsin, about 80 miles from Chicago.
Sitting in Chuck's, a popular gathering place in nearby Fontana, Mr. Moses, a Chicago accountant, noticed a $200,000 Lamborghini parked next to a beat-up old Jeep. "The beauty of Lake Geneva is that no one could've guessed the driver of the more expensive car," said Mr. Moses, who bought a two-bedroom 1937 Cape Cod cottage in Lake Geneva two years ago. "Everyone's wearing jeans and sweatshirts. No one is flashing their wealth."
Crossroads not only stands at one of the town's most prominent intersections, it's a convergence point for wealth, power and mountain-sized egos, for small-town politics with big-city politicking. The official arguments may focus on topics like height and zoning, but citizens on both sides of the debate see the struggle as more epic, as a fight between Vail's old-time founders and its younger newcomers for what the town is and what it should become. Emotions are high, and the stakes are huge. Because despite its theme-park attributes, Vail is a real place, with real residents who live and work here, who are born and die here, and who love and hate each others' guts -- all within town limits.Reminds me a bit of the local Whole Foods / Hilldale / Sentry Foods battle.
Like the facades of many of Vail's early buildings, Crossroads is faded and cracked after decades of exposure to sunlight and snow. Built in 1969 on the East Meadow Drive corridor, the 60,000-square-foot, horseshoe-shaped complex wraps around a parking lot with three stories of condos sitting above a ground floor of retail. The two biggest tenants -- Clark's Market and the Crossroads Cinema -- both pulled out last month, citing slow business and deteriorating facilities.
Regulators are concerned about heavy commercial real estate exposures and risky mortgage lending practices at U.S. banks, Federal Reserve Board Governor Susan Bies said on Thursday.
"There are certain rapidly growing business lines in banking operations that are placing pressures on risk-management systems," Bies told a financial services industry conference as she outlined guidance regulators have issued on commercial real estate and so-called nontraditional mortgage lending.
In discussing the guidance on exotic mortgage products, such as interest-only loans, Bies repeated that government regulators were concerned risk-management practices had not kept pace with the risks that these widely available loan products could present.
A couple of hours before the council meeting in the same room, they attended a presentation about the City of Madison Comprehensive Plan. This plan, mandated by state law, and a work in progress over the last couple of years, will serve as a long-term roadmap for the city's infrastructural future. It is also up for a vote on Tuesday, Dec. 13 by the full council, though it is likely to be referred to a subsequent meeting in early January.
Calculated Risk:
The recent Flow of Funds report showed that household mortgages increased a record $289.5 Billion in Q3 2005. Using a simple formulation for Mortgage Equity Withdrawal (MEW), MEW was $171 Billion in Q3.
Mike Beebe, Arkansas's attorney general and a Democratic gubernatorial candidate, said some complacent things about the state property rights after Kelo. Republican Asa Hutchinson pounced. The tussle suggests that takings will be an issue in the campaign, with each candidate trying to demonstrate his property rights bona fides. The Arkansas Democrat-Gazette reports:
Dane County residents want to see planned growth within their borders, according to a survey conducted this spring by the Comprehensive Planning Steering Committee.The survey of 500 county residents shows a majority of those surveyed want Dane County government to be involved in planning rather than letting local municipalities have full control or just letting the market decide where growth takes place.
Full survey results: Comprehensive Planning Survey (PDF)
IF Racine, Wis., is not yet the Hamptons of the Midwest, it's not for lack of effort.Racine Map. Madison based Gorman & Company, developer of the Mitchell Wagon Factory Lofts is mentioned in Sharoff's article.
This formerly gritty industrial city roughly 70 miles north of Chicago and 30 miles south of Milwaukee on the shores of Lake Michigan has been trying for much of the last decade to reinvent itself as an artist's colony and tourist destination.
The efforts have included the opening of the $11 million Racine Art Museum on Main Street in 2003 and the creation of a gallery district centering on nearby Sixth Street, currently home to about a dozen galleries.
Herron put no money down for her tidy one-bedroom, borrowing the entire purchase price of $211,000. To keep her monthly payments as low as possible, she got an adjustable-rate mortgage that won't require her to pay any principal for three years.Thanks to her "interest-only" loan, the 911 police dispatcher was able to afford, barely, her first home. She now has a stake in California's sizzling real estate market. As her home increases in value, she plans to use some of that equity to pay down her credit cards.
Philip Greenspun summarizes his ideas for a reasonably low-cost standalone house.
Peter Maller writes about P. Richard Schumann's efforts to purchase farmer's development rights while they continue farming:
Schumann is preparing an advisory referendum for the November ballot asking residents in the Town of Hartford if they are willing to pay higher property taxes to fund such purchases of development rights.The goal is for the land to remain undeveloped.
"I think we have very strong support," said Schumann, founder and president of the community's newly organized Town Preservation Committee. "Keeping the style of life we have, preserving farmland and green space, is very near and dear to people's hearts."
Sarah Lonsdale asks: "Where better to rest in peace than in a converted mortuary or burial chapel?"
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FLORENCE WILLIAMS writes about those who have learned to live on the cheap amongst some of the world's most expensive real estate. (I like the yurt....)