boulderwoodgroup

Housing Market Blues

2009-06-23T12:56:00.002-04:00

I know it's that season when transactions should be occurring and yes, there has been a little bit more activity but we are far from the end of the crisis.

The stock market showed glimmers of hope this morning in anticipation of some positive signs in the real estate market but that reversed when the numbers were released.

Read here for the numbers.

Let's keep at it...after all life is almost always about "showing up."

Is the Housing Market Thawing?

2009-05-06T13:15:00.002-04:00

It's been a long and very cold winter.

Has spring brought a thaw? I am not so sure. Banks are still very clingy with their cash (not that this is a bad thing), some sellers are still in denial, and people are still nervous.

I read a great article that might shed some light for the future. The arguments seem to make sense. My gut - housing is still softening, will eventually bottom and base there for a fairly long time.

Read this: http://www.bloomberg.com/apps/news?pid=email_en&sid=aiiT.sNeq2YQ

You ask, "How's the real estate market?"

2009-02-25T14:04:00.002-05:00

Read this.

Need I say more!!

The Entrepreneurial Spirit

2009-02-21T14:53:00.002-05:00

There is hope.

I just heard from an old friend. He's developed a technique to turn sewage sludge into usable energy that is cleaner, cheaper and environmentally friendly versus the current methods of incineration, trucking to land fill, or worse spread onto farm land (YUCK!).

He needs $1 million of seed capital. Now here's capitalism at work. An engineer invents a system that solves a major problem. He now need to take his idea out to potential investors, convince them of his value proposition and build these new systems.

My point is - isn't it wonderful that even in this economic environment, we have great people thinking up solutions for problems that can become tomorrows big industry. This call made me happy and hopeful. Even in bad times you can't crush the spirit of an entrepreneur with a viable idea.

I love this and if I had a million, I'd invest in solving an environmental hazard!! And by the way, the name of the company is called Clean Recovery, Inc.. Unfortunately there is no website, yet!!

If anyone wants info, I'll send you the powerpoint!!

Viva la entrepreneur!!

Paradox of Thrift - Part II

2009-02-17T09:52:00.004-05:00

The following article blog in the NYT does a nice job on the topic: http://economix.blogs.nytimes/2009/02/17/if-you-got-money-its-time-to-spend-some/?partner=rss

The Paradox of Thrift - To Save or Not to Save?

2009-02-16T15:44:00.005-05:00

I can't believe that I am now reading a phrase in the newspaper that I learned 25 years ago and by the way viewed as a mere theory. But the concept is now relevant. And how ironic. We all need to save more and saving is what will get us out of debtor hell. However there is a resounding BUT....and that BUT is we need to spend to help the economy from tailspinning into a deeper recession. So, now do you get the paradox!!

But there is a near-term solution - it's government spending. For anybody complaining about government spending - Here's the equation you need to know:

GDP= C(Consumption) + I(Investment by businesses) +G(Government Spending) + X(exports) - M(imports). If C goes down because savings is going up, then there is one clear place where the spending needs to come from - it's government.

The reality is far more complex but you get the gist!! So keep saving wisely but don't forget to live while you're living!!

Old Fashioned Fun - And another reason why I love the Berkshires!

2009-02-08T18:39:00.004-05:00

Last night friends and family strapped on snow shoes and head lamps and took off into Beartown Mountain State Forest. It was a balmy 42 degrees and the moon broke through the clouds to provide a glow and shadows along the trails. It was truly magical - the combination of bringing a group of diverse ages and backgrounds together to walk in the snowy woods and then capping the evening off with food, drinks and a roaring fire in the fireplace is priceless.

And priceless it was in more ways than one - the walk in the woods -- FREE.

But let's think about it further. We live in the Berkshires. We have access to nature. During these tough economic times, combining sport, connecting with friends and family and a simple dinner is old fashioned fun. No fancy bells and whistles.

An investment in snow shoes can be anywhere from $50 - $300; I also suggest getting some adjustable poles. You wear your hiking boots and voila - you are ready!! I also use my snow shoes when showing land during the winter.

So, instead of fretting about money - call some friends, get out in the woods, cherish nature and appreciate why we live in the Berkshires - I did - and I feel fantastic!!

Reflections

2009-01-25T16:06:00.002-05:00

What's clear to me is that things have really changed. The party as we've known it for the last 25 years is over. But I am OK with that - I never really understood how things could keep going. And of course I doubted myself for thinking that the buying and building frenzy were fueled by easy credit not earned income.
So now that the proverbial chickens have come home to roost, how do even the sane among us cope with the sea changes ahead!! The secret is simple - don't spend beyond your means, save your pennies, conserve everything (gas, energy, time, money) whenever possible. I hear my grandmother and now her words are being channeled through me.
As for the real estate market - it really goes back to the old rules too - buy a house you can afford and plan to live in - it's not a buy and flip asset.

It's a struggle to adjust to the "old" realities but it's a relief as well. To a simpler, less cluttered life where the emphasis is on relationships, family, home and community.
I promise to write more this year - it's been difficult during these challenging times to get inspired. I'm back!!

Real Estate vs Stocks

2008-12-12T17:35:00.003-05:00

I was reflecting the other day on some very interesting thoughts. For argument's sake, stock are down about 50% since last year - that's pretty disastrous, I'd say. And real estate is down on average, 22-25%. So why is everyone focusing on the decline in housing as the major drag on the economy? Stock are twice as bad as housing assets.
In fact, I would argue that real estate is the better performing asset, except, of course for cash. And we all know that cash will be a terrible investment a year or two from now because all the economic stimulus needed to boost the economy will begin to create massive inflation.
And, if I go back to my finance text books, I was taught that the best assets to own as hedges against inflation are real estate, stocks and gold. (Did you know that the Saudi's are now requiring to get 10% of their payment in gold - what does that tell you??)
I'd be buying all three if I had cash. I think that real estate will begin to bottom and people will stick their heads up out of the bunker and begin to plan for the coming inflation. Start looking for those values, be opportunistic and of course when it comes to real estate - locattion, location, location!!

Belt Tightening and Helping Each Other

2008-11-11T18:17:00.000-05:00

I can't help but think that these are the times in our lifetime that tests all of our mettle. This is a time when we should all take stock of the importance of family, friends and community. We've all been buying stuff for years that ends up in the landfill after we found more stuff with which to replace it. I love to shop and love stuff BUT not more than I love taking care of people that I love who are in trouble.
So this blog posting is nothing more than my humble words urging all to help your neighbors, your friends, be kind and pay it forward. Good Karma pays off and in this economy it may be our best currency!!

The bad news keeps on coming...

2008-10-24T15:23:00.002-04:00

Here's a sobering bullet that I read on the "Seeking Alpha" news feed:

•Home prices spiral. U.S. home prices fell the most in at least 17 years and are under continued downward pressure from the highest foreclosure rate on record. According to Federal Housing Finance Agency data released yesterday, home prices are down 5.9% from the previous year while Q3 foreclosures rose 71% from the previous year. Every quarter another 250,000 houses enter foreclosure, with each foreclosure pulling down the value of nearby homes by a total of $220K.

And sadly foreclosures are even up in the Berkshires. As a seller, you must be cognizant of this information. As a buyer with good credit and cash - what an opportunity!! Stay tuned as this marketplace continues to unfold. I am now calling it a rolling crash as it's been coming for months and may continue for months.

Credit Freeze-Credit Thaw and the Yo-Yo Stock Market

2008-10-22T17:56:00.004-04:00

I was re-reading my blog entries from last winter and spring and boy did I call it. We are in a recession - gee what a surprise!!

But it's not a garden variety recession - it's one caused by the biggest credit bubble in history and the consumer is not likely to buy the US out of the recession any time soon. The consumer was also lured into cheap credit both taking equity out of their houses to spend beyond their means and amassing huge balances on their credit cards. So not only do the banks,hedge funds and corporation have to de-lever BUT so do the consumers. This is bad and good. Bad because there is no quick fix and we are likely to be stuck in a recession for a good year or so. The good news is we may become SAVERS!! And saving is a good thing!! It keeps money in the banking system, it takes the burden off of our children's futures and it helps avoid the types of problems we now face.

So, the US government has helped thaw the credit markets and lending is beginning to happen again but the Stock Market is behaving like a yo-yo, not even a roller-coaster. I think it's because there is uncertainty about the magnitude of the recession, uncertainty about the outcome of the election and uncertainty over the future of the US capitalist system. We have never experienced the Fed as the lender of first resort - is it a bailout or a movement toward socialism?? I wish I knew. I am however an optimist and I believe we will work things out and happy days will be here again.

Noticeably Silent and happy to be in the Berkshires

2008-10-09T19:12:00.003-04:00

Hello friends. Where have I been during this mess? For one, I've been staying calm and remaining very focused and working very hard. The pundits are working 24/7, the central bankers are wringing their hands, and Iceland (yes the Country) has declared bankruptcy. What happened? Everyone was drunk on the excess of extremely loose credit and no amount of aspirin is curing the headeache and the puking.

And then I open the local paper, the Berkshire Eagle, and as clear as day Greylock Federal Credit Union has advertised on an entire page - "We have $100 million to lend" - They are solvent and thriving!! Wow - this local thing really does make sense - they didn't sell their mortgages, loaned money in a market they understand and are happy to loan money to people they know. Seems so simple.

So as the world financial markets spin out of control, the Berkshires seems to function in its own orb. I hope it continues.

Pricing Strategy to Sell Your Property

2008-06-16T19:03:00.002-04:00

Last week I cut out a piece from the Wall Street Journal titled "Get Real With Your House Price" and of course because it caught my eye, I wanted to share it. For a long time I have felt like a salmon swimming up stream when discussing pricing with sellers in this market. My advice is: "How you price your property is how the marketplace perceives your desire to sell it."

For instance, I just closed a sale last week. My seller had listed her property with another agency and had no success. When she called me, I had to give her the bad news that despite the fact that she bought her house in February of 2006, she stood no chance of selling at a profit. The market had gone down since then and if she really wanted out, I said list it at the price at which you purchased it and you will broadcast that you really are a seller!! And voila - we had many showings and a purchase price just $1500 below the asking price.

So, back to the Wall Street Journal article - it asks a simple question - "How can sellers tell if their homes are overpriced? Look for the following signs:
1. Not Enough Showings.
2. Some showings, but no contract.
3. Similar homes are now selling for less.
4. Repeated negative feedback
5. You've cut the price but not enough."

I didn't write the article but it resonated with me like I had. If you are a real seller or are thinking of selling, pay attention to the pricing!!

Conflicting Information

2008-05-20T19:12:00.002-04:00

Winter's over. The days are longer. Things feel better. Is it the vitamin D or are we emerging out of the depth of the bust? I'd like to believe that things are basing.

What I've noticed in the real estate market is that sellers (and I mean real sellers) are reducing their prices and are telegraphing that they want offers. Buyers (and I mean real buyers) are making offers on these properties and transactions are happening. Additionally, I have a May 6th Wall Street Journal article pinned on my bulletin board boasting "The Housing Crisis is Over". And I believe that it is a well-reasoned article grounded in sound statistical information.

So where's the conflict - it's the economy stupid!! Gas prices are still making new highs, inflation is really showing up in the data and a myriad of other indicators are spelling RECESSION. So I might suggest that we all hold onto to our hats and get ready for a wild ride.

Don't be greedy, be realistic. Get a bicycle. Plan ahead for the coming winter and pay attention to the election campaign.

Ding-a-Ling

2008-04-01T16:36:00.003-04:00

Who says they don't ring a bell at the bottom? Have we hit the bottom in the real estate market?
Well, I'd like to think that we are close.

Here's how I suspected we were at the top:
1. When everyone, and I mean everyone, I knew was talking about real estate.
2. When every other person I met was getting into RE Development and/or had sold a piece of real estate for a sizable profit.
3. When HGTV had a show called "Buy it and Flip it".

And yes, the housing bubble resembles the Internet bubble if only in that during that period everyone I knew was abuzz about which dot com stock they just made $100/share. So when your butcher is all of the sudden a stock picker or a real estate developer its a sign we are at the top.

So let's take the flip side of the euphoria. If we get one more daily dose of depressing news, I'll scream. And don't we all feel down? And aren't we all talking doom and gloom? And the media is just piling on the bad news. I think we've all capitulated....why don't we just close our eyes and pray it ends soon.

OK - so isn't this the opposite of the top? Have we hit bottom? Is it today, maybe. Next week or next month, maybe. But isn't it when it's the darkest that the light shines brightest. We all want to see the glimmer on the horizon...Perhaps the time is now and if so blue skies can't be far!!

And remember - Price and Proof are never available at the same time (A lesson well-learned in graduate school !!)

Definitions

2008-03-26T13:37:00.003-04:00

Back in 1993 I experienced a small meltdown in the fixed income/mortgage backed securities market. Fortunately I worked for a money management firm that focused on neutralizing risk and adding incremental value through security selections which provided yawn-evoking enhanced returns over a stated benchmark. In 1994 our team successfully raised close to $15 billion in assets - my mantra, "Bonds are Boring."

Now let's get down to reviewing definitions:(all will be quoted from Merriam-Webster)

FIXED Pronunciation: \ˈfikst\ Function: adjective Date: 14th century
1 a: securely placed or fastened : stationary b (1): nonvolatile (2): formed into a chemical compound c (1): not subject to change or fluctuation

INCOME \ˈin-ˌkəm also ˈin-kəm or ˈiŋ-kəm\
Function: noun
Date: 14th century
1: a coming in : entrance, influx
2: a gain or recurrent benefit usually measured in money that derives from capital or labor; also : the amount of such gain received in a period of time

If we pay attention to how these types of securities are defined we wouldn't expect anything more from them. If you want equity-like returns, stick to equity.

Now let's apply this to Real Estate. In previous blogs, I reiterated real estate's traditional role as an inflation hedge and store of value with little liquidity. Not a buy and flip asset or an ATM machine.

REAL Pronunciation: \ˈrē(-ə)l\ Function: adjective Etymology: Middle English, real, relating to things (in law), from Anglo-French, from Medieval Latin & Late Latin; Medieval Latin realis relating to things (in law), from Late Latin, real, from Latin res thing, fact; akin to Sanskrit rayi property
Date: 14th century
1: of or relating to fixed, permanent, or immovable things (as lands or tenements)
2 a: not artificial, fraudulent, or illusory

ESTATE Pronunciation: \i-ˈstāt\ Function: noun Etymology: Middle English estat, from Anglo-French — more at state Date: 13th century
b (1): possessions, property; especially : a person's property in land and tenements (2): the assets and liabilities left by a person at death c: a landed property usually with a large house on it dBritish : project 45British : station wagon6: farm, plantation; also : vineyard

Real Estate is tangible. We are not growing more of it (other than developments and high rises.) But it is not equity and does not promise double digit returns. It promises something that's physically existent.

Buy real estate because you need a house to live in and can afford it, or land for farming or passive enjoyment because you can afford it, or commercial building because it makes sense for your business to own real property. It's real, hang onto it if you can.

Bum Stear (Making Sense of the Current Craziness)

2008-03-18T13:24:00.004-04:00

During my days in financial services we jokingly called Bear Stearns, Bum Stear...little did we know how true that would turn out to be. I also really wanted to work for the venerable investment house in the mid-1980's. Back then the chairman was Ace Greenberg - he ran a tight ship and was known for his "Paper Clip" memo - basically chastising any employee who wasted firm resources and threw out paper clips. What a difference 20 years makes.

Between this, Eliot Spitzer and countless other recent disappointments, how does one rationalize all this news and move forward with optimism. We all need to wake up and review some general truisms and principles by which to live!! Firstly, if something seems to good to be true (like repackaging crappy mortgages into A or better-rated mortgage-backed securities ) it usually is too good to be true!! Secondly, if you don't understand it, and big, complex words are used, don't automatically think you are stupid - it probably isn't logical so avoid it like the plague. Thirdly, stick to value when investing in stocks, real estate and consumer goods - for stocks look for companies with real year after year earnings and cash flow, for real estate, look to areas that have not been over-developed and locations with few or no foreclosures, and for consumer goods - stick to the basic necessities. And lastly, work hard and stay focused and positive!!

Find the Good in Everything

2008-03-11T15:52:00.003-04:00

My Current Reading List has some interesting themes. The last three books I read are: What is the What by Dave Eggers, Agent Zig Zag by Ben MacIntyre, and Three Cups of Tea by Greg Mortenson and David Oliver Relin.

The main themes that I gleaned were: Natural Resources, Fanaticism and Humanity. And why should I write about this and anyone care - well - it's because I think these themes will continue to have an impact on us. Fanatics will always seek power and try to dominate whether it's Hilter, Osama bin Laden, Elliot Spitzer or any fundamentalist sect. The fight for natural resources for one's national security will always dominate the national agenda. And the heart warming part of this is that humanity and goodness find a way to prevail.

What is the What is a novel about the lost boys of the Sudan and one boy's recollection of the horrors of being a refugee. Imagine the peace loving Dinkas being ousted by the oil grabbing Muslims; imagine witnessing your village annihilated and then living in a tent city for 10 years and surviving to want to return to build schools and educate. WOW!!

Agent Zig Zag is about a real double agent British spy during WW II. He was a crook with a heart. He helped the British collect information about the Germans and through it all he developed a father-son-like relationship with one of his German handlers. Despite all the horrors, Zig Zag still had compassion and saw the humanity in this one German.

And my absolute favorite, Three Cups of Tea is just plain inspiring. An American building schools in tribal, Muslim Northern Pakistan pre and post 9/11. Greg Mortenson elevates the notion of unbiased education to new heights and against all odds raises money to build schools to help many tribal villages learn about modern life. It is his belief and the belief of many of the tribal elders that education can fight the Taliban and fanaticism. I can go on and on...you must read this book to fully embrace all three themes.

For me, I am inspired to appreciate the good that is all around me, to shun fanatics and to explore ways to educate and promote tolerance.

Goldilocks and the Berkshires

2008-02-20T18:10:00.002-05:00

I just returned from a 10 day vacation to Taos, New Mexico and Lake Tahoe, NV. While the natural beauty of both places is awe-inspiring, the skiing phenomenal and the weather quite lovely for February, I realized I felt as though I were in a fairy tale. I was Goldilocks and the three resort areas - Taos, Tahoe and yes the Berkshires.
Taos Ski Valley is quaint, yet remotely situated up a long canyon. The town of Taos is 20 minutes from the ski area and offers amazing art galleries and artisans and shopping. It's a great place BUT you are there there!! For Goldilocks it was too little - too little people, too hard to get to, perfect for a 5-7 day vacation.
Tahoe on the other hand offers skiing, lake sports, gambling and lots of glitz, cheesy characters, hummers, excess etc. The vistas were spectacular, but all the people, traffic and hoopla detract from the views. The sounds of nature are muffled by the traffic and by the way we were staying in a home tucked above the highway with pristine views of the lake and world class snow shoeing out the back door. So I am not complaining, but again, for Goldilocks it was just too much!!
Once back home in the Berkshires, I sighed an "ahhhhhhhhh." The Berkshires is just right!! We are near 2 world class cities (NY and Boston), we have some pretty darn good veiws, decent skiing, great culture, artisans, shopping, lakes etc. I am so lucky to be here.

The sub-prime mess - Do you ever just wonder why.....

2008-01-31T11:08:00.000-05:00

the obvious solutions aren't even considered?
I was just thinking....if a homeowner had one of those ARMs that were ratcheting up, up, up, and as a result had to "default", wouldn't it make sense as a lender to go back to all your ARM holders and FIX the rate to the level where they could afford it? Wouldn't this save the dislocation of many and save billions in written down debt due to foreclosure sales worth pennies on the dollar??
OK - I'll get my head out of the sand - the original originators of the loans sold them to become repackaged as mortgage-backed securities. So, it is really a big giant impersonal mortgage machine that is so systematized that it would never be able to use common sense or logic to unravel the mess. There are actually California banks that own foreclosed homes in New England and admit they have NO IDEA WHAT they own!!
Somehow I think going back to the days of a community banker that kept the loans on their books might be a better way. They are involved with the people, understand the market and have a vested interest. Look at the Berkshires - there are very low foreclosure rates from the local lenders and why is this? While during the boom they were chastised as VERY CONSERVATIVE because they required potential homeowners to produce a 10-20% down payment, they are now proving to be prudent lenders. I think I'll stick with the bank where when I enter the lobby, they know me by my first name!!

Why I love the Berkshires - Part II - I can raise chickens!!

2008-01-28T10:42:00.000-05:00

And Happy Chickens produce Amazing Eggs!!!
One of my favorite chickens is named the “Growler” for her distinct growly voice. She has found her own nightly perch in the rafters of our horse shelter. She lays blue eggs. Upon rising, she jumps down and greets me at the back door for her special treats – stale bread, strawberry hulls etc before I open the chicken house and feed her sisters (all named, of course).

The Growler and her sisters roam freely (at their peril) all day – scratching the underbrush, eating bugs in my flower garden, and in particular, love the horse pasture – especially the worms in the manure. They run up and down the hills, take long luxurious dust baths and drink from a natural spring.

Why do I tell you all of this? Because real free-range chicken eggs (better stated as "pasture-raised" chicken eggs) are AMAZING!! Their flavor is robust; their yolks the color of the setting sun; and their shapes, sizes and color are all unique.

Try one of my favorite recipes handed down from my mother: Cheese Soufflé
Ingredients:
1lb grated cheese (preferably cheddar)
4 oz. flour
12 oz. milk
6 egg yolks
6 egg whites
4 oz. butter
salt and pepper
Directions: Preheat oven to 400 degrees. Make a white sauce with the flour and milk. Add grated cheese, salt and pepper to taste. Beat egg whites in a separate bowl. Then add the yolks 2 at a time to the cheese mixture. Fold in the stiffly beaten egg whites. Place in a buttered soufflé pan. Place pan in another pan of hot water and bake for about 20 minutes or until golden brown. Serve immediately. Excellent with a salad.

Treat Real Estate like, well, Real Estate

2008-01-23T18:50:00.000-05:00

.....not cash, a liquid asset or a guarantee of instant or near-term capital appreciation but a long-term store of value.
Why buy real estate? Or better stated, what is your objective? Is it
1. A home in which to raise your family?
2. An income property as an investment?
3. A commercial property for your business enterprise?
4. A piece of land with development potential?
These reasons and I am sure there are others will not disappear. The key is to understand your objective, your time horizon, and current market conditions. Don't be afraid to buy or sell real estate right now, just don't have unrealistic expectations. Easy cheap credit is over. Buy it and flip it is over.
My advice: Adopt a sensible long-term time horizon for your real estate transactions and you will weather this period of uncertainty.

Interior Design Economist

2008-01-20T17:51:00.000-05:00

I received a faxed notice the other day from one of my vendors that imports goods from Italy notifying us that there will be a price increase due to the declining value of the dollar. And of course, I thought here's that inflation creep - imported goods are becoming more expensive among all the other increasing prices.
So for anyone that believes that playing with pretty fabrics and color has nothing to do with economics, guess again!! I am just flabbergasted that inflation is at every turn. The cost of importing those gorgeous fabrics from Cowtan and Tout, Brunschwhig & Fils, Colefax and Fowler, Pierre Frey etc have increased every year since I have been designing (over 10 years now) and this past year has been the most dramatic.
So what do I do about it - for my more price-sensitive customers we use the imports as accents, we extend our budget time horizon or I say get what you love and compromise somewhere else!!

The "R" word(s) and the Berkshires

2008-01-11T18:25:00.000-05:00

OK - people - like it or not - a recession is looming. How could it not be. The once cash-flush consumer (yes that same person that used their house as an ATM) is now credit-crunched; the equity value of housing is falling; commodity prices are sky-rocketing and are eating into our disposable income at every turn - at the pump, in the grocery store, our heating and electric bills - PHEW - it's depressing, exhausting and scary.

BUT - there are other "R" words that provide some hope. They are the "R" words spoken by a generation of Boomers: Retirement, Recreation, Restaurants and Real Estate. These are the 4 areas where the largest demographic are spending their money and the Berkshires is one of the places that offers amenities that the Boomers want - access to recreation (both cultural and physical - check!); access to great restaurants - check! But more importantly this retiring generation is downsizing. In the Northeast, they are generally buying 2 smaller low-maintenance style homes - one in a warmer climate and one near Boston or NYC.

And which area in the Northeast is essentially equidistant to both? The BERKSHIRES!! I think I like the "R" words.