Archive for July, 2006


Happy 4th birthday to Luke, our oldest. I remember how weak in the knees I felt moments before he was born. How time flies.



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Imagine that you are a single income household. After years of renting, you and your spouse decide to buy a home. You get pre approved for a mortgage, find a home, make an offer, negotiate a deal, pay for a home inspection, pay for an appraisal, and then you get a peculiar call from the lender. Your loan has been denied. The reason? If you die, your spouse, currently a student, won’t be able to pay the mortgage. Could this happen? No, not a world where equal housing opportunity is the law of the land.

UNLESS…you are buying a co op. Co ops, you see, are the last bastion of Jim Crow in housing. How can this be? Because co op owners do not actually own the land or structure, but are instead shareholders in a private corporation, co op boards use their application process as a fig leaf to circumvent fair housing laws. Co op boards can determine what minimum down payment you’ll need, whether you can rent or use the unit as a 2nd home, and even make you pay extra for things like the use of an air conditioner. Does requiring a minimum down payment of 20% exclude otherwise qualified members of minority groups? Is the Pope German? Many boards still require an interview, where they can literally manipulate the complexion of who gets to live in the building.

Back to my opening scenario. I have clients, let’s call them Nick and Mortimer, who are going to their co op interview this week. A board member who has reviewed their application mentioned to Nick that Mortimer’s financials were  on the light side and told him that he would be asked what would happen should he die, since Mort clearly was not qualified to fly on his own. Nick, a first time home buyer, wondered aloud why this would be an issue; he has a more than ample life insurance policy with Mort as the beneficiary, and Mort earns his Masters this August and will enter the work world this autumn. Well, he was told, they will probably ask that question on the 17th. When I first heard from Nick that he should expect this question, I asked aloud if Ward Cleaver would ever be denied housing because June was a housewife. I think we all know that the answer is "no."

I dislike legislating special rights for some, and I dislike it when people play the victim card. However, I really abhor a double standard where the bar is arbitrarily raised for someone who is a little different. And if you are going to hide behind the small print of the law to be a bigot, I might just publish your name and company right here. And I might not stop there.

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Ann wished me a happy birthday this morning, reminding me that I am now 365 days away from turning 40. This was the first time I have actually felt a twinge of disappointment at being reminded it was my birthday! As a guy once said, soon it will time to start counting backwards.

This picture is of Mom, Dad, Paul, Jim and myself in the summer of 1978. Oldest brother Tom must have been in Jamaica at that point. Jim was just back from the Peace Corps in Guatemala and Paul was going into his junior year at Cornell. This must have been that tripod camera my father had with the timer, where he’d set it and run like hell back to the sofa before the flash bulb went off.


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The talk on the street is sometimes more of an indication of how things are than the reporting, although I blogged a few days ago that this was irresponsible journalism. A number of blogs have sprung up that are dedicated to the bubble/correction theme in the housing market. This one addresses my own area. If you are wondering what this guy’s take is on things, just check out the blogroll.

  • Northern Jersey Bubble
  • Housing Panic
  • Bubble Meter
  • The Housing Bubble Blog
  • House Bubble
  • Another F@$#&d Borrower
  • These forums have dozens and sometimes hundreds of comments from people who say they are sitting out buying property until prices come down. If that is any indication of the caution I am experiencing firsthand from the buying public, I don’t see house values increasing anytime soon.

    As I said yesterday, there is a certain amount of vitriol toard real estate licensees, and occasionally with good reason, but by and large I see the the slowdown issue as more related to raw affordability and massive taxation. Rates are still low, but only in the context of history, not the past 5 years. It all adds up to sellers having to understand that the thing had to slow down at some point.

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    Killing the Messenger

    The slowing down of the real estate market has gotten some people’s dander up toward real estate agents. Here is a quote and my response from one of the discussion forums of the local rag.

    I was wondering why we pay by commission. I mean is it more work to sell a more expensive house.When my house goes up in price why do you get a raise????

    I think agents and brokers serve a purpose, but this commission thing kinda bothers me. Especially when the price they tell you they can sell it for[appraisal] is just the price someone has already paid in your neighborhood. Not too difficult. I think most people know what the number is before they call.

    Being a RE agent is like a 40 hr course and real simple. I took it and passed with flying colors as did most people who took the course with me.

    My response:

    I agree and disagree.

    I agree that it is far, far too easy to get licensed. We have experienced 5+ years of amateurs entering and often botching up deals in the hot market. Problem is, efforts to make it harder or more expensive have been considered discriminatory. Catch-22.

    I edited your quote and know that you aren’t objecting that brokers get paid, but more about the ostensibly large numbers by percentage. Here is the deal I make with sellers if they want to pay me a modest fee for my guidance and expertise instead of a % commission: I’ll do that in a heartbeat. Just don’t ask me to advertise the house, because $400 NY Times ads are not in the budget. And those glossy 3 page color brochures you want in ample supply? No can do. Besides, the house down the road just sold and everyone must therefore know all about your house by osmosis, especially after the guy that sold it lied about his price at a cocktail party. You want me to recommend someone to help you remove 20 years of cat piss from your carpets? Here’s a phone book. What’s that? The variance hearing for your illegal shed is next Thursday? Good luck! You want to know why I didn’t get you an update at 8:30 am Friday after we spoke for 45 minutes 9:30pm Thursday? Here’s the update: Everyone went to bed and woke up.

    I could go on, but if you just bought or sold, look at your HUD-1 and look who got paid what just because they showed up besides the broker who held your hand through every piece of arcane minutiae for 6 months. I’d be more concerned with the attorney/government money grab, with Albany skimming 1% off the top for the NYS transfer tax, the attorney who collected 1000-1500 for taking a week to return your phone calls, the title insurance company charging you multiple thousands for a service that actuarial charts mandate a few hundred (just what are the odds that the Algonquins will come back to claim your 70 year old subdivision land?), and the town and county making you pay 3, 5, or 10k in taxes in advance. The lawyer/government/banker cabal often equals or exceeds commissions. Some states don’t even use attorneys for real estate, but every state uses agents. Go figure.

    I don’t sympathize with people who tell me "but my agent stunk. They didn’t do anything for their paycheck." Those people often should have known better than to entrust a $600,000 transaction to their cousin Mel or sister in law who just got licensed and learned the ropes on their backs. People who do their homework and get a good agent never complain about commissions.

    I could go on, but I am off to work.

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    I have blogged previously on the once a year money grab that is our local school  budget. My community passes the budget very year with no exception due perhaps to the high rental population who buy into all the doom and gloom threats if they don’t give the board what they want. Mahopac, a community in nearby Putnam County, is not so knee jerk and this year’s budget failed. So, Mahopac’s school board has made good on their threat to make the children pay for it.

    MAHOPAC — The Mahopac Board of Education last night stuck to its guns and adopted a $95.8 million contingency budget that does not fund sports or extracurricular clubs.

    The board also eliminated 13.5 positions from its initial $98.6 million proposal to keep the spending increase under 4 percent, as mandated by state education law.

    An estimated 500 people crowded the auditorium of Lakeview Elementary School to learn of the final plan and to hear what a community coalition formed after the budget defeat would do next.

    One parent, 47-year-old Monica Wyka, said it was a sad day for the children.

    "The taxes here are huge," said Wyka, a sales representative and caterer. "But you know what? If you want a Blue Ribbon School of Excellence for your child, then you have to pay."

    The eliminated positions include 3.8 administrators, 4.4 high school teachers, one elementary school teacher, 2.3 special-education positions, a library aide and a secretary.

    My heart goes out to that .8 of an administrator. I mean, to not only lose your job but also .2 of yourself must really stink. The purge continues:

    Instead of cutting an academic team at the middle school — which had initially been proposed — school officials trimmed spending on repairs, supplies, equipment and other noninstructional expenditures.

    Savings also resulted from eliminating adult education, cutting back on books and supplies for the library and reducing the amount for computer hardware.

    Also, the district will not send students to the Walkabout alternative education program.

    "The first priority is to maintain the integrity of our instructional program," Superintendent Robert Reidy said before presenting his plan. "Sports and clubs are absolutely critical for youth development. But they’re not the core of the mission that we have."

    A community coalition has been working on a strategy to keep clubs and sports in the schools — for a price. The coalition must raise a little more than $1 million to maintain all extracurricular activities.

    At a meeting Wednesday, coalition leaders presented the school board with a preliminary plan that would call for charging varsity athletes $432 per sport, while junior varsity, freshman and middle-school athletes would pay $144.

    Members of high school clubs — such as the yearbook, newspaper, drama and debate — would pay $169 to participate in each club.

    Even parents of younger children may have to pay a surcharge of $25 to participate in the Mahopac Sports Association, according to the proposal.

    The message is that NOTHING that can be trimmed from the budget that is waste or extravagance except some positions and extracurriculars. The school board members are the experts, right? These people examine multi-million dollar budgets for a living, right? Hardly. These are part timers with time to kill who won a popularity contest and have no other budgetary tool to ply except extortion. Their favorite excuse is the skyrocketing costs of teacher healthcare and pension benefits. I agree. Anyone who works as a teacher for 20 years must be set for life thereafter, and we must all pay for it.

    My hat is off to the taxpayers of Mahopac who said no to the money grab and whose children have to pay for the board’s ensuing temper tantrum. May they elect better board members next year. 

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