The Housing Crisis Is Over?

Is it time to start house hunting? Cyril Moulle Bertaux opined that April 2008 marked the bottom of the U.S. housing market.

And in his R.O.I. columnWSJ’s Brett Arends makes a similar argument. He looks at the data on housing starts since 1972, which shows that new housing starts slumped below the one million mark in March. Every time that has happened in the last 50 years, Mr. Arends writes, it proved to be the bottom of a recession.

“It’s bottom-fishing time, I think,” says Wellesley College Prof. Karl E. Case in the column. Mr. Arends says that he is one of the leading experts on the housing market in the country. “There’s got to be bargains in Florida, Arizona and Nevada.”

Mr. Arends points out that Bill Wheaton, a legendary real-estate professor at the Massachusetts Institute of Technology, has also suggested that fears about the real-estate crash were overdone. And he points to a private portfolio manager in London, who said the homebuilding stocks on Wall Street were at last a “buy.”

In the Journal editorial, Mr. Moulle-Bertaux suggests that the housing market will revive, as more first-time buyers are lured in by falling prices and lower mortgage rates. “Homes on average are back to being as affordable as during the best of times in the 1990s,” he writes. “Numerous households that had been priced out of the market can now afford to get in.”

To be sure, as Mr. Arends points out, there is no guarantee that this downturn will follow the patterns of the past. And he notes that prices in many areas are far from a historic bargain. And where there is a glut, prices — obviously — are likely to stay lower for longer. But in many areas, prices are low and buyers may be tempted.

Readers, are you tempted?

This Churn

Hi Derek, you may already know of the cyclic trend of the below. I have seen the below happen almost every 5-10 years during my lifetime of business. This should be good for your business with "the churn" in properties. You should learn how to take advantage of "this churn" by knowing how to pick up listings and moving properties quickly for people that get hard pressed for cash without their high paying jobs --- secondly, knowing when things to "get better" (what trends to look for) for the banking folks, as they all will be looking to relocate/upgrade their homes sites. Love ya, Dad


Troubled Wall Street firms handing out pink slips

Posted Mar 24th 2008 10:47AM by Zack Miller
Filed under: Management, Citigroup Inc. (C), Goldman Sachs Group (GS), Economic data, S and P 500, DJIA, Bear Stearns Cos (BSC), Recession

As investors, we've been bombarded over the past couple of months with negative news coming from Wall Street banks that either underwrote, invested in, or had clients who invested in bad mortgages or some derivative of them. While these firms have written down billions in assets on their balance sheets, investors like Joe Lewis, the Australian billionaire who put $1 billion into Bear Stearns (NYSE: BSC) and promptly saw his investment drop almost 100%, have been left holding the bag.

Bloomberg is out this morning with an article which details some of the fallout from this process. According to Bloomberg, after the Internet bubble burst, 39,800 jobs at big banking firms were eliminated during the same period. The number climbed to 90,000 in the next two years, according to the Securities Industry and Financial Markets Association.

While not everyone cries over millionaire bankers losing their jobs, there is certainly fallout that hurts everyone dependent on a healthy economy. One recruiter interviewed by Bloomberg predicted that the total headcount reduction could be more than 100,000 in a few years. Lawyers, realtors, and mortgage brokers are feeling the heat.

According to Bloomberg, the biggest cutters have been:
Citigroup 6,200
Lehman Brothers 4,990
Bank of America 3,650
I tend to think that from a cycle point of view, Wall Street cuts harshly only to rehire when things pick up.

New Developments

A crane towering over a high-rise construction site on the East Side of Manhattan collapsed in a roar of rending steel Saturday afternoon, raining death and destruction across a city block as it slashed down on an apartment building, broke into sections, crushed a town house and cut away a tenement facade.

At least four people were killed and more than a dozen others were injured, and damage was expected to run into the millions of dollars in what the authorities called one of the city’s worst accidents — a calamity that turned a neighborhood near the UN into a zone of panic, pulverized buildings, wailing sirens, evacuations, searches in the rubble and covered bodies in the streets.

Many residents of the neighborhood around the site of the collapse — 51st Street between Second and First Avenues — said they had been worried for months about the possibility of a collapse, calling the crane, looming higher each week, a menace, particularly because so many residential buildings were being put up in the area with remarkable speed: several floors a week at times.

Christopher Bianchi, 40, of Manhattan, owner of Crave Ceviche Bar on Second Avenue, said he saw three bodies on stretchers in the street. “Their heads were covered,” he said. “One of the police was giving last rites.”

Mayor Michael R. Bloomberg arrived at the scene hours later, surrounded by an army of police officers, firefighters, city officials and reporters. “It’s a sad day,” he said, as the lights of scores of emergency vehicles revolved and flashed. “Our thoughts go out to those who were killed, and we pray that those who were injured will recover.”

As people were evacuated from a half-dozen buildings and rescue workers using dogs, listening devices and thermal imaging cameras searched the rubble for victims — taking care to cause no further collapses — the mayor said the four known dead were believed to be construction workers on or near the crane. The injured included at least three civilians taken to hospitals in critical condition.

One man was pulled from the debris nearly four hours after the collapse.

The dead, all believed to be members of Local 15 of the Operating Engineers Union, were identified as Brad Cohen, Aaron Stephens, Anthony Mazza and Wayne Bleidner.

The cause of the accident on a sunny, windless day was unclear and under investigation by city, state and federal agencies. But Stephen Kaplan, an owner of the Reliance Construction Group working at the site, told The Associated Press that a piece of steel had fallen and sheared off one of the girders holding the crane to the building.

A construction worker on the 15th floor, Ismael Garcia, said he saw something fall and strike one or more of the girder ties, weakening or breaking the connections. “Out of the corner of my eye, I saw a piece falling,” he said, and then the crane pulled away.

The collapse occurred, the mayor said, as workers attempted to jack up the crane, raising its height to enable work to continue above the 19th floor of a planned 43-story building. Builders had city permission to raise the crane, and the crane had been inspected on Friday, with no violations found.

The collapse occurred at 2:22 p.m. as the crane, about 22 stories tall and attached by girders to the apartment tower under construction at 303 East 51st Street, east of Second Avenue, broke away from its anchors and toppled south, across the block between 51st and 50th Streets, as workers at the site and people in high-rises for blocks around looked on, stupefied.

Witnesses told of a rising, thundering roar and clouds of smoke and dust as the crane — a vertical latticed boom for its base, topped by a cab and jib, the swinging arm that lifts building materials — fell across 51st Street and onto a 19-story apartment building at No. 300, demolishing a penthouse and shaking the building with the force of an earthquake.

Mike Shatzkin, a resident of the 17th floor, said he was talking on the phone when it hit. “All of a sudden, I felt a very violent shake, and stuff fell off the walls, and my wife said a bomb went off.” After discovering that their building had been struck by the crane from across the street, he said, “We worried about this crane every day.”

The upper reaches of the crane — including the cab and the extended swinging arm — broke away from the boom, which was left leaning against the facade, and hurtled southward across the block toward 50th Street, tumbling in the air, some witnesses said.

The crane’s blue cab and white jib, itself a latticework of steel, made a direct hit on a four-story town house at 305 East 50th Street, a modern stucco structure with apartments upstairs and a bar called Fubar on the ground floor. The building, on the north side of 50th Street, was demolished.

The bar was not open, and the owner, John P. LaGreco, who had been the proprietor for a decade, said that Juan Perez, 38, a Queens resident and the father of three children, was in Fubar at the time, preparing to open about 4 p.m.

Mayor Bloomberg said one or two people were in the building at the time. The fire commissioner, Nicholas Scoppetta, said that a man, apparently referring to Mr. Perez, was taken alive out of the collapsed town house shortly before 6 p.m. He said there had also been reports of a woman in the building, and search efforts continued late into Saturday night.

In addition to the collapsed town house, the toppling crane jib sheared away the side of a six-story gray tenement building at 301 East 50th, just to the west, exposing tiers of apartments and haunting images of shattered homes: a pink suitcase dangling from the sixth floor, a mattress, a rack of shoes, broken bookshelves.

Debris also damaged buildings on the south side of 50th Street, and bricks demolished parked cars — a dark blue BMW flattened, a Mini Cooper battered with debris.

In the immediate aftermath of the collapse, stunned people rushed into the streets from restaurants and shops, from apartment buildings in the surrounding blocks, many of them unaware of what had happened and fearing the worst.

Within minutes, an armada of fire engines, police cars, ambulances and other emergency vehicles converged on the scene. Water from broken mains was gushing into the street, and an odor of gas was in the air. City and Consolidated Edison workers quickly moved in to cap the leaks and prevent explosions. Throughout the afternoon and evening, traffic was blocked off for blocks around the site.

Some residents of the area saw or heard the collapse from their apartments. Bruce Silberblatt, a retired building contractor who lives at 860 United Nations Plaza, said: “I heard this big double bang. Bang! Then, bang! The first bang must have been the crane hitting the first building, then the second must have been everything else going into the street.”

Scores of evacuated residents from at least a half-dozen damaged or imperiled buildings were offered shelter at the High School of Art and Design, at 228 East 57th Street, the mayor said.

A Fire Department spokesman said that 13 people were injured and taken to area hospitals. Three had critical injuries and two were listed in serious condition, while the rest, including five firefighters, had minor injuries. Four other people were treated at the scene, the spokesman said.

Mayor Bloomberg identified the site’s principal developer as James P. Kennelly, a former firefighter, and the construction company as RCG, an apparent acronym for Reliance Construction Group. He said the crane owner was the New York Crane & Equipment Corporation. The manufacturer, he said, was an Australian company known as Favco, which makes a tower crane with an eight-ton lifting capacity.

“There are no words to describe the level of devastation we feel today as a result of this tragic event,” Mr. Kennelly said in a statement. While the mayor and other city officials said that there had been a relatively small number of violations issued against the construction site in the more than two years since work began, many residents questioned the safety record at the building site.

“We had been very unhappy with the way he was doing his work,” said Mr. Silberblatt, a member of the Turtle Bay Association, a civic group. He cited debris in the streets, a lack of a sidewalk bridge, and other faults.

According to records from the New York City Department of Buildings, the agency has issued 14 violations against contractors doing work at the site, 10 of them against RCG. The citations were issued between Jan. 17, 2006, and Feb. 8 of this year. The violations included failure to safeguard the public and property and failure to provide roof protection on adjacent property.

A Buildings Department spokeswoman, Kate Lindquist, said that of the 14 violations, 13 remained “open” — meaning that a court date is pending or the company did not appear at a scheduled court hearing and the violations are in default status.

Ms. Lindquist said that Buildings Department inspectors performed an inspection of the site Saturday morning in preparation for predicted high winds. Upon inspection, she said, a partial stop-work order was issued to halt all concrete operations at the site. The order was issued because inspectors found material stored too close to the building’s edge on several floors. The order did not apply to the extending of the crane, which was under way at the time of the accident, she said.

The last major crane collapse at a construction site in New York occurred in September 1999, when a 383-foot crane fell at 24th Street and the Avenue of the Americas, crushing a carpenter and injuring three other people.

Poor Gov. Eliot Spitzer and wifee Silda Wall

The Fed's worst nightmare

Ugly retail sales and a somber forecast from CFOs point to recession, but rising oil and gold prices and a weak dollar show inflation. What's Ben Bernanke to do?

By Paul R. La Monica, CNNMoney.com editor at large

Last Updated: March 13, 2008: 12:48 PM EDT

NEW YORK (CNNMoney.com) -- It's days like today that will make many investors wish they stayed in bed.

And they're not the only ones. Something tells me that Ben Bernanke and the rest of the Federal Reserve's policy-making committee would like to run and hide as well.

Where to begin? Retail sales for February were shockingly weak, with sales falling 0.6% during the month compared to economists' forecasts of a 0.2% gain. Those numbers put dents in the argument that consumers would keep spending in the face of the housing downturn.

Wall Street is also digesting some sobering results from a survey of chief financial officers released by Duke University and CFO magazine late Wednesday.

According to the survey of more than 1,000 CFOs, conducted last week, three-quarters of the respondents said the economy is either in a recession already or will hit one this year, and nearly 90% of CFOs surveyed said they didn't think the economy would rebound until late 2009.

So this means the Fed should slash interest rates at its next meeting on March 18, right? After all, according to federal funds futures, investors are pricing in a 72% chance of a three-quarters of a percentage point cut.

But not so fast.

Gold hit $1,000 an ounce for the first time ever Thursday morning. Oil is slouching towards $111 a barrel. And the dollar hit a 12-year low against the yen and a new record low against the euro. Can you say inflation?

 Actually, it's worse than mere inflation. The combination of rising commodity prices and the weakening growth forecast for the economy has people worried about 1970s style stagflation. I hope Bernanke can dig up a pair of old bell bottom pants. Do the hustle!

"Clearly, the Fed needs to switch to Plan B," noted Duke professor Campbell R. Harvey in a release about the CFO survey.

But what is Plan B exactly? It's difficult to figure out just what the Fed can do other than let the credit markets and housing markets work themselves out, and hope the actions the central bank has already taken stimulate the economy at some point.

Time may be the Fed's only ally

Even though the Fed's series of rate cuts since last September - as well as the hundreds of billions in cash and Treasurys that the central bank has pledged to loan capital-constrained financial institutions - have failed to encourage more lending just yet, investors and consumers need to realize there is a lag effect of several months before Fed policy moves have an impact. History shows that Fed easing will eventually work their magic.

Hopefully, the rate cuts will encourage more banks to loosen their lending standards again, and will spur consumers and corporations to start spending more by the end of 2008 or early 2009.

Plus, even though there is a debate about whether the tax rebate checks that consumers will receive in the next few months will really help the economy that much, it's hard to see how the rebates can hurt.

But as I've said earlier this week in this column and numerous times before that, the Fed cannot drop the ball on inflation even if there are more signs of severe economic weakness. On Friday morning, we'll find out how much consumer prices rose in February.

Economists are predicting a 0.3% rise in the headline Consumer Price Index (CPI) number and a 0.2% increase in the so-called core number, which excludes volatile food and energy costs.

If the CPI figures are higher than expected, the Fed may have no choice but to disappoint Wall Street next week and only cut interest rates by a half-point, or perhaps even only by a quarter-point.

A quick fix for the economy is not what's needed. The Fed has to ensure that its actions don't lead to the type of double-dip, or W-shaped recession, that some economists and market strategists are now talking about.

Harvey indicated this could be the longest slowdown since the double-dip of 1979 to 1981. But if the Fed holds firm and doesn't stoke even greater inflation by lowering its key federal funds rate that much further, perhaps there's a chance this slowdown will turn into, at worst, just your garden-variety recession - and not an unwelcome rerun of what happened in the 1970s.

MADISON SQUARE PARK

6.234 acres in NYC

Madison Square Park is named for James Madison (1751-1836), a Virginian who was the fourth President of the United States (1809-17). Madison earned the title "father of the Constitution," from his peers in the Constitutional Convention. He also co-authored The Federalist Papers (1787-88) with New Yorkers Alexander Hamilton and John Jay. Madison was Secretary of State from 1801-09, serving through both of President Thomas Jefferson's terms. As President, he was Commander-in-Chief during the War of 1812 with the British. Madison was the rector of the University of Virginia from 1827 until he died in 1836.

The largest parcel of this land was first designated as public property when Royal Governor Thomas Dongan revised the City Charter in 1686. Since then, this area has been used for a variety of public purposes. A potter's field was established here in 1794, and then was moved in 1797 to Washington Square. By 181 1 the land was home to a United States Army Arsenal (1806) and laid out as part of a military parade ground (named for Madison in 1814), bounded by 3rd and 7th Avenues and 23rd and 34th Streets. The arsenal fell out of military use, and served as a "House of Refuge" for juvenile delinquents from 1825 until 1839, when it was destroyed by fire.

After being leveled, sodded, and enclosed, Madison Square Park opened to the public on May 10, 1847, with boundaries of Fifth Avenue and Madison Avenues and 23rd and 26th Streets. Citizens quickly claimed the public park as their own. Their protests against plans to erect the Crystal Palace here in 1853 resulted in its relocation to Bryant Park. Nevertheless, the park has been host to grand celebrations, replete with temporary decorative arches, to commemorate historic occasions and anniversaries such as the centennial of the signing of the Declaration of Independence in 1876 and the triumphant return of Admiral Dewey from t he Spanish American War in 1899.

The original Madison Square Garden was located adjacent to the park at Madison Avenue and 26th Street. It was owned by William Vanderbilt, and opened in 1879. The building was razed in 1899 and replaced with a Moorish style building designed by Stanford White. The second Madison Square Garden stood until 1925 when it was demolished and replaced by the headquarters of the New York Life Insurance Company. Promoter Tex Rickard built the third Garden that same year at 8th Avenue and 50th Street. to read more go to:

http://www.nycgovparks.org/sub_your_park/historical_signs/hs_historical_sign.php?id=10764

Remember the co-op

March 2, 2008

Reducing the Tax Bite on Apartment Sales

By JAY ROMANO

MOST co-op and condominium owners know they get income-tax deductions for the mortgage interest and property taxes they pay on their apartments.

But what they may not know is the full range of tax breaks available when their apartments are sold.

“As a starting point, many owners of co-ops and condos overstate their profit when they sell because they understate their tax basis,” said Julian Block, a tax lawyer in Larchmont, N.Y. “And that is because they fail to take into account improvements made to the building itself and in the case of co-op owners, their share of the amortization of the building’s mortgage.”

At present, Mr. Block said, owners who sell their houses or apartments can exclude up to $250,000 in profits on the sale, provided the home was their principal residence for two of the five years before the sale. (For married couples filing jointly, the exclusion is up to $500,000.)

The profit — or capital gain — is calculated by subtracting the tax basis of the home and the costs associated with the sale (broker’s commission, lawyer’s fees, transfer taxes) from the sale price. The tax basis is the acquisition price plus the costs associated with the purchase and any capital improvements.

Co-op or condo owners are covered by these rules, just as any other homeowner is. So, for example, an apartment owner who completely renovates the kitchen can add the cost to the tax basis. But an owner who simply paints the kitchen walls cannot add that cost to the tax basis because routine maintenance is not considered a capital improvement.

What is unique for owners of co-ops and condos is that they can include in their basis their proportionate amount of the money spent for buildingwide capital improvements.

“Over the years, this can amount to a significant amount of money,” Mr. Block said.

Co-op owners get an additional tax break. Along with an annual deduction for interest paid on the mortgage on their apartments, co-op owners also get to increase their tax basis for their share of payments that reduce the principal of the building’s mortgage. This does not apply to condo owners because there is no mortgage on the building itself.

“And there is yet another way for a co-op or condo owner to reduce capital gains,” Mr. Block said. Many co-ops and some condos impose flip taxes, often a small percentage of the sale price. Since the flip tax is really a transfer fee, the seller can subtract it from the sale price as a cost of the sale, thereby further decreasing the gain realized.

Joel E. Miller, a Queens tax lawyer, said that since co-ops and condos keep detailed financial records, it should be fairly easy for owners to determine their share of qualifying capital improvements made over the years — as well as their share of the amortization of the underlying mortgage — by getting the information from the managing agent.

But he added that it was up to individual owners to keep accurate records of capital expenditures made in their own apartments.

Go RedBull

March 1, 2008

The Art of the Save, for Goalie and Investor

By PATRICIA COHEN

When it comes to choosing what to do, sometimes the best thing is nothing.

Consider Radek Cerny, the No. 1 goalkeeper for Tottenham Hotspur, who was facing off against Manchester United’s exuberant young midfielder, Cristiano Ronaldo, for a penalty kick during the recent fourth round of the Football Association Cup in Britain. As Ronaldo’s foot swung back for the kick, Cerny leapt to the left expecting a sharp shot to that corner. The ball barreled into the lower right.

Goal!

Cerny’s mistake, in Ofer H. Azar’s eyes, is that he moved to one side instead of remaining in the center, where he would have had a greater chance of stopping the ball.

Mr. Azar is not a coach or a goalie. Actually, he does not even play soccer. He’s a lecturer in the School of Management at Ben-Gurion University of the Negev in Israel. Mr. Azar, however, is interested in decision-making, and the split-second response of goalies to penalty kicks struck him and several of his colleagues as a perfect real-life test case of why people sometimes make irrational decisions.

Classical economists often criticize experiments on how emotions influence financial decisions because they do not involve meaningful monetary rewards. Examining professional soccer players seems to solve that problem.

“Incentives are huge,” Mr. Azar and his collaborators argue in a paper that appeared not long ago in The Journal of Economic Psychology. What’s more, “goalkeepers face penalty kicks regularly, so they are not only high-motivated decision-makers, but also very experienced ones.”

The Israeli scholars are not looking to break into the Premier League. Their point is that a preference for action over inaction can play a significant role in all kinds of economic choices.

When the economy has been doing poorly, officials are more likely to “be tempted to ‘do something,’ ” they argue, even if the risks outweigh the possible gains. “If things turn bad, at least they will be able to say that they tried to do something, whereas if they choose not to change anything and the situation continues to be poor (or becomes worse), it may be hard to avoid the criticism that despite the warning signs they ‘didn’t do anything.’ ”

That sort of thinking can affect whether managers stick with their firm’s current strategy or change course. And, apparently, whether goalkeepers stand still or take a leap.

The soccer field has turned out to be a popular laboratory among economists, with penalty kicks a particular favorite.

Awarded after certain kinds of fouls, or sometimes to decide a championship match, a penalty kick pits one player against the goalkeeper. (Mano a pie instead of mano a mano, though, since the goalie is allowed to use his hands.)

Standing just 36 feet away, the kicker sends the ball hurtling at the goal at 60 to 80 m.p.h., giving the goalie just 0.2 to 0.3 second to respond. Given the speed, the goalkeeper has to decide what to do even before observing the direction of the kick. Stopping a penalty kick is considered one of the most difficult challenges in sports. Not surprisingly, 80 percent of all penalty kicks score.

For their study, Mr. Azar, along with Michael Bar-Eli, a sports psychologist; Ilana Ritov, a psychologist; and two graduate students, scanned the top leagues in the world, collecting data on 311 penalty kicks. Then they computed the probability of stopping different kicks (to the left, the right or center) with different actions (jumping left, right, or staying put) to see which one “maximizes his chance of stopping the ball.”

According to their calculations, staying in the center gives the goalkeeper the best shot at halting a penalty kick — 33.3 percent, instead of 14.2 percent on the left and 12.6 percent on the right.

Yet when the group analyzed how the goalkeepers had actually reacted to these penalty kicks, they discovered the goalies remained in the center just 6.3 percent of the time.

The reason, Mr. Azar contends, is rooted in how the players feel after failing to block the ball.

Their soccer speculations build on the work of Amos Tversky and the Nobel Prize winner Daniel Kahneman, who explored the idiosyncrasies of decision-making. In a landmark study, the two psychologists found that people had more regrets when they lost $1,200 because they chose to act, (in this case, change an investment), than people who lost $1,200 because they left their investments untouched.

What Mr. Azar and his collaborators wanted to show was that in certain situations, those results could be reversed: when acting was the standard response — like a goalkeeper’s jumping to one side on a penalty kick — not acting would make someone feel a deeper emotional pang. The result is an unconscious bias toward action.

To check, they asked 32 goalkeepers in Israel’s Premier League and National League to rate how bad they felt on a scale of 1 to 10 after missing penalty kicks. As it turned out, about half of the group said “10” no matter where they stood.

Of the remaining 15, 11 felt worse when they remained in the center instead of jumping to the side. Nothing definitive, the authors acknowledge, but it does at least suggest “that goalkeepers feel worse about a goal being scored when it follows from inaction (staying in the center) than from action (jumping).”

Outside the stadium, Mr. Azar and company argue that “action bias” can influence not just goalies but also investors as they decide to sell their stocks (action) or leave their portfolio untouched (inaction) during a downturn, and whether a worker chooses to look for a better job or stay put.

Marcel Zeelenberg, a social psychologist at Tilburg University in the Netherlands, has found that a bias toward action or inaction often depends on whether a previous result was good or bad. After a team has a big loss, for example, the expectation is that the coach should replace the starting players, whereas after winning, leaving the lineup unchanged is considered the normal response.

In an e-mail message, Mr. Zeelenberg said he thought the Israelis’ “paper is convincing because it uses real, already existing data to test a theory that was recently developed and tested only in the lab.”

Paul Romer, an economist at the Graduate School of Business at Stanford University, said the study illustrated an important point about economic decision-making.

“How people feel about various kinds of activities means a lot about what they decide to do,” Mr. Romer said. “In many situations, we just look at the narrow monetary payoffs and we forget about the effects of preference or feelings.”

For instance, going to school for an extra year will mean higher wages in the long run, Mr. Romer said, but “going to school can be very rewarding and satisfying for some, and very painful for others.” By looking solely at the financial rewards, “you might miss the single most important factor in determining that decision.”

Shame, humiliation, feelings about one’s competence — all of these emotions play a huge role in decision-making.

“There is a very large social component to feelings,” Mr. Romer said. “Economists typically assume that people understand what makes them feel good,” but “people actually don’t always understand what makes them happy.”

So what do the men on the field think?

Danny Cepero, a goaltender with the New York Red Bulls, said he could understand the emotional downside of doing nothing. If you stay put because you think a ball is coming straight up the middle and miss, he said, “you look like a fool.

“Definitely it’s more acceptable to pick a side and just go.”

Still, Mr. Cepero was skeptical that staying in the center makes the most sense. “You rarely see a goalkeeper stand in the middle and make a save,” he insisted.

To Des McAleenan, the Bulls’ goaltending coach, no computer analysis can capture the complexity of players’ responses. “Now, everybody’s got extensive dossiers on the opposition,” he said.

The journal article does point out that the center strategy is not an absolute rule; if goalkeepers spend more time in the middle, penalty kickers would undoubtedly shift their strategy and their aim.

But for the moment, Mr. Azar’s team would advise those who play soccer or the market that nothing is sometimes better than something.

Home Prices Post Broad Tumble

...
According to Two Key Indexes
By MAYA JACKSON RANDALL and JOHN FLOWERS Wall Street Journal
February 26, 2008 11:23 a.m.
Two closely watched gauges of U.S. home prices showed broad-based declines in the prices of existing single family homes, marking 2007 as a full year of declining home prices.
U.S. home prices fell 0.3% in the fourth quarter from a year earlier and declined 1.3% between the third and fourth quarters of 2007, the Office of Federal Housing Enterprise Oversight said Tuesday. That decline was much greater than the 0.3% decline between the second and third quarters.
In December alone, prices declined 0.2% across the U.S., on average, marking the sixth consecutive monthly decline, according to the agency's monthly data. Overall, prices have fallen 2.4% from an April 2007 peak, it said in its seasonally adjusted purchase-only house price index. The index tracks average house price changes in repeat sales or refinancings of the same single-family properties.
"(Two-thousand-and-seven) showed the first four-quarter decline in the purchase-only index since its earliest data in 1991," said Ofheo Director James Lockhart.
Meanwhile, home prices in the fourth quarter were down 8.9% from a year earlier, according to the S&P/Case-Shiller home-price indexes, released Tuesday by credit-rating firm Standard & Poor's. That was largest decline in the measure's 20-year history. The 10-City composite also set a new record, falling 9.8% in 2007; the 20-city index fell 9.1%.
The Ofheo index relies on data collected by Fannie Mae and Freddie Mac, which Ofheo regulates, so it excludes loans too big for Fannie and Freddie to guarantee (those exceeding $417,000) or too shaky (the riskiest of the subprime). Case/Shiller includes those, but its data are limited to 100 major markets because it relies on the costly process of going to local property records for data.
"Wherever you look things look bleak, with 17 of the 20 metro areas reporting annual declines and the remaining three reporting flat or moderate growth rates," said Robert J. Shiller, professor at Yale University and chief economist at MacroMarkets LLC. Shiller added 14 of the metro areas are also reporting record declines, with eight being in double digit decline.
Miami remains the hardest hit of the major cities, posting an 18% annual decline. Las Vegas, Phoenix and San Diego all experienced price drops of 15%.
Charlotte, Portland and Seattle are the only three metro areas measured by the index still not seeing year-over-year price declines.

to bury St. Joseph upside down

When It Takes a Miracle To Sell Your House Owners, Realtors Bury Statues Of St. Joseph to Attract Buyers; Don't Forget to Dig Him Up
By SARA SCHAEFER MUÑOZn October 30, 2007

Cari Luna is Jewish by heritage and Buddhist by religion. She meditates regularly. Yet when she and her husband put their Brooklyn, N.Y., house on the market this year and offers kept falling through, Ms. Luna turned to an unlikely source for help: St. Joseph.

Some choose to bury St. Joseph upside down. The Catholic saint has long been believed to help with home-related matters. And according to lore now spreading on the Internet and among desperate home-sellers, burying St. Joseph in the yard of a home for sale promises a prompt bid. After Ms. Luna and her husband held five open houses, even baking cookies for one of them, she ordered a St. Joseph "real estate kit" online and buried the three-inch white statue in her yard.

"I wasn't sure if it would be disrespectful for me, a Jewish Buddhist, to co-opt this saint for my real-estate purposes," says Ms. Luna, a writer. She figured, "Well, could it hurt?"

With the worst housing market in recent years, St. Joseph is enjoying a flurry of attention. Some vendors of religious supplies say St. Joseph statues are flying off the shelves as an increasing number of skeptics and non-Catholics look for some saintly intervention to help them sell their houses.

Some Realtors, too, swear by the practice. Ardell DellaLoggia, a Seattle-area Realtor, buried a statue beneath the "For Sale" sign on a property that she thought was overpriced. She didn't tell the owner until after it had sold. "He was an atheist," she explains. "But he thanked me."

Existing-home sales fell 8% in September to a seasonally adjusted annual rate of 5.04 million units, the lowest level in nearly 10 years, according to the National Association of Realtors.

Statues of St. Joseph sold online can be as tall as 12 inches. One, made of colored resin, portrays St. Joseph cradling the baby Jesus. Yet most home sellers favor the simpler three- or four- inch replicas -- most of which are made in China and often depict St. Joseph as a carpenter.

Most statues come in a "Home Sale Kit" that is priced at around $5 and includes burial instructions and a prayer. One site, Good Fortune Online, recently added another kit with a statue of St. Jude -- known as the patron saint of hopeless causes -- "to help those with a difficult property to sell," the site says. Another site, Stjosephstatue.com, takes orders for its "Underground Real Estate Agent Kits" at 1-888-BURY-JOE.


Demand for the statues has been growing. Ron Weissman, who sells the statues at Good Fortune Online, says about six months ago he switched to online transactions because the increase in calls -- from about two a week to 25 calls a day -- was too much to handle. Richard Weigang, owner of www.catholicstore.com, says he sells about 400 statues a month, double the amount he sold a year ago.

In Catholicism, St. Joseph, a carpenter, is honored as the husband of Mary and foster father of Jesus. Representing a humble family man, he is the patron saint of home, family and house-hunting, according to the Rev. James Martin, a Jesuit priest and author of "My Life With the Saints." Popular belief holds that people who wish to enlist St. Joseph's help in selling a house should bury his replica upside-down in the yard. (Apartment dwellers are advised to put him in a potted plant.)

Methods of burying the statue vary. Instructions in one package give buyers several options, including burying it upside-down next to the "For Sale" sign, burying it three feet from the rear of the house and burying it next to the front door facing away from the home. Phil Cates, owner of stjosephstatue.com, says: "I've seen it buried in all types of places with all types of ceremonies." He says the detailed burial instructions are largely intended to prevent people from forgetting where they put their St. Joseph. (His kits advise burying it facing it away from the house, to symbolize leaving.)

Theologians say there's no official doctrine that calls for the statue's interment. The practice may have stemmed from medieval rites of land possession, in which conquerors claimed land by planting a cross or banner, says Jaime Lara, associate professor of Christian Art and Architecture at Yale Divinity School. Mr. Lara also suggests that the tradition may have gotten mixed up at some point with folklore surrounding St. Anthony. St. Anthony, known as a matchmaker, would often be held ransom, upside-down, until he found a husband for someone's daughter, he says.

Some clergy aren't sure how St. Joseph would feel about his replica ending up on its head in the dirt, and suggest displaying it somewhere in the house instead.

"I think it's much more respectful than burying the poor guy," says Msgr. Andrew Connell, the archdiocesan director of the Pontifical Society for the Propagation of the Faith in Boston. Some retailers, such as Mr. Weigang, owner of www.catholicstore.com, also encourage buyers to put the statues in the house.

"We don't advocate burying," he says. "Some of those statues are quite beautiful."

Catholic leaders also say that faith and devotion are necessary, in addition to burying a statue, otherwise the practice amounts to little more than superstition or magic. But they are also enjoying the saint's newfound popularity. "If they have a good result and they think it was St. Joseph, it might inspire them to practice more," says Msgr. Connell.


The St. Joseph "Underground Real Estate Agent Kit" from www.stjosephstatue.com
Once someone's home sells, the custom holds, the statue should be dug up and put in a place of honor in the new home. That's what Ms. Luna did after she and her husband sold their house shortly after burying St. Joseph. She put the statue in her office in their new home in Portland, Ore.

But not everyone is aware of the follow-up step. Trudy Lopez and her husband buried a statue of St. Joseph when they were trying to sell their condo, even though Ms. Lopez is Jewish and her husband is a nonpracticing Catholic. They sneaked out late at night, worried they might be breaking a condo association rule.

"And I'm thinking, 'If my family knew what I am doing, they'd die,' " she says.

Soon they got an offer, but didn't realize they were supposed to bring the statue with them to their new home.

"I'm afraid a lot of the statues won't be unearthed and someone will go over St. Joseph's feet with a lawnmower," says Father Martin

QUICK CHANGE NEW YORKERS ADJUST TO THE NEW MARKET

By MAX GROSS, New York Post October 18, 2007 -- THERE'S something of a Twilight Zone dynamic to New York City real estate. While the rest of the country writhes in mortgage agony, much of New York seems to be bouncing like a carefree 8-year-old on a trampoline.
This is especially surprising, given how dire the future seemed just a month ago. People were holding their breath, tightening their belts and preparing for Armageddon. It never came. (Or, at least, it hasn't come yet.) And it won't
When we recently canvassed several top brokers at major real-estate firms, many reported that the rug hadn't been pulled out at all - and some even said business has improved.
"I'd say traffic has more than doubled than this time last year, which is beyond comprehension," says Prudential Douglas Elliman vice chairman Dolly Lenz.
"The interesting effect on the market is that it truly made the - well, it's hard to say 'low-end' because it really isn't low-end - but less-expensive buyer jump to buy," Lenz says.
"It used to be that buyers could put down 5 percent or 10 percent and, provided they were employed and provided they were breathing, they could get a loan. Now, it's at least 20 percent down and income verification. And so for things that are up to $6 million, people are [buying quickly] because the fear is that now it's 20 percent - next it'll be 30 percent. Next 40 percent."
With buyers like this in the market, sales appear to be brisk.
"I'd say the pall has lifted," says Barbara Fox, president of Fox Residential Group. "All of a sudden, things that we hadn't been able to sell over the summer are selling."
"We had 45 percent more sales than the same time last year," says Hall Willkie, president of Brown Harris Stevens, of his firm's third quarter. "Prices are up in every category, and the market has been very strong."
Of course, most of the third-quarter sales figures were for properties that went to contract before the subprime market melted down, but Willkie notes that Brown Harris Stevens has seen roughly the same number of signed contracts last month as the firm did last September.
And it's difficult to argue with the numbers: Market data that came out last week showed that Manhattan condos had reached a record average price of more than $1.6 million.
Things are heating up in the outer boroughs as well.
"I am busier than ever!" says Brooklyn broker Rodolfo Lucchese, who works out of the Corcoran Group's Fort Greene office. "Bidding wars, all-cash offers."
Late last month, Brown Harris Stevens opened the sales office for Hunters Point Condos, a new development in Long Island City, and sold 40 units (20 percent of its inventory) on the first day.
But no statistics or anecdotes can speak for our entire diverse market. It would be foolish not to acknowledge that some things have changed. And there are, no doubt, would-be buyers who've adjusted their expectations or temporarily taken themselves out of the game.
"I've had several buyers who reduced their price range," says Prudential Douglas Elliman broker Tamir Shemesh, "but I've always had that . . . If someone was looking at about $10 million, now they're looking in the range of $6 million, $7 million. One client looking to upgrade decided to hold off."
But Shemesh adds that inventory is still incredibly tight and that he's seen bidding wars.
NYP Home also spoke to numerous buyers about their confidence in the market and how their plans have been altered. Here are their stories.
Bite the bullet
Some buyers who started the process in the middle of the summer had to grin and bear the subprime market's blowup, even if they weren't subprime borrowers.
James Moore and Sara Nardi signed a contract for an Upper East Side two-bedroom for $995,000 back in June. But as they waited to close, they saw rates shoot up like crazy.
"We were a little panicked," says Nardi. "The banks got really tight and until the 12th hour they were examining everything with a fine-tooth comb. We had to have letters signed from our parents and financial statements."
Moore and Nardi had not locked in their rate when the meltdown hit, so they bit the bullet and locked in . . . at exactly the wrong time. When the Fed lowered rates, the rate they had secured didn't look so good anymore.
"We were actually in a position of locking in a rate and then when the rates went down, having to buy points [to lower their rate]," Nardi says. "We wound up spending an additional $17,000 to buy two points - but we did the math and it evens itself out over four years."
Summer panic aside, Nardi and Moore are confident that they got a good deal on the apartment they found with Halstead Property broker Jill Sloane.
"It's close to the East River, it's got a doorman, the lobby's completely renovated and in the back they're renovating a huge garden," says Nardi. "I only wished they allowed pets."
Time to rent ... a condo
Lucia Panzarella wanted an apartment with outdoor space and more room than her Midtown apartment. She and her husband were going to buy last spring, and began touring apartments on the Upper East Side and Upper West Side before taking a break from home shopping in the summer.
When the summer credit crunch came, they decided to rent instead. They found a 2,200-square-foot duplex penthouse condo in Harlem through their Halstead Property broker, Julia Boland. The owners had originally wanted to sell the home but couldn't find a buyer. Panzarella and her husband signed a one-year lease.
"I definitely think things are starting to appear to be stabilizing," says Panzarella, who has taken herself out of the market for the foreseeable future.
"We're definitely going to be watching the market," she says. "If it works more in our favor and we find something similar to this place, we could buy."
In the meantime, she loves her rental.
Make an offer ... that could be refused
"My offers will be below asking price," says Ben Schaye, a lawyer and recent transplant from Chicago, who is actively looking for a one-bedroom somewhere in Midtown/Hell's Kitchen.
Schaye, who has been looking on his own and with Manhattan Apartments broker Farrah Mogh, figures that things are still somewhat overpriced. "In a month or two months time [my offers] are probably going to be what they're asking for ... The asking prices haven't begun to reflect what the apartments are really worth."
So far, Schaye has been making offers as much as 15 to 20 percent below asking prices and, surprisingly, he has gotten nibbles from sellers. One of his offers was rejected out of fear that the co-op board wouldn't accept it, but the seller seemed satisfied with the proposed figure.
"I kind of welcomed" the credit crunch, says Schaye with a laugh. "I mean, I didn't think I would be much of a credit risk, and it would knock out some of the competitors."
Play the waiting game
"I was looking to buy - and I'm still looking to buy - but I think it's time to be cautious, to do homework," says Scott Berger.Berger, a recent transplant from California, had originally planned on purchasing something in the West Village or SoHo. He and his broker, Christina Vescovo of Halstead Property, spent much of the summer going to open houses during Berger's business trips to New York. But as his moving date approached and the credit crunch intensified, Berger decided there was really no need to hurry. He thinks that maybe a few months, or even a year, out of the game might be a good idea, giving him time to sit back, study and observe the market.
In the meantime, Berger has taken a one-bedroom rental in the East Village.
Think outside the box
Some buyers, like Michael Roggow, have decided to look outside their dream neighborhood.
"I wanted to move to Chelsea," says Roggow, who sold his house in Kew Gardens, Queens, earlier this year and began looking at properties. "Chelsea was a lot more expensive than I remember it. So what was I going to do? Live in a 350-square-foot studio? That was OK when I was 21 and just out of college, but now?"
Roggow and his broker, David Culver of Citi Habitats (above left), have decided to check out cheaper neighborhoods like Washington Heights and are waiting to see if the market will go down in the winter.
Damn the torpedoes, full speed ahead
Buyers and sellers each have separate anxieties about the market, but for somebody like Deborah Colitti, who is both a buyer and a seller, there is a kind of preternatural calm.
Colitti found a two-bedroom penthouse in the Village back in July that she closed on last week. (She won a bidding war to get it.) And she just put her current apartment - a one-bedroom at 720 Greenwich St. - on the market with Tamir Shemesh from Prudential Douglas Elliman.
"It's been on the market 10 days, and I've already got multiple offers," says Colitti.
And Colitti says that her experience has been extremely good, all things considered.
After the subprime crash, "all the banks were frozen for that four- to six-week period," she says. "They were dotting every 'i' and crossing every 't.'"
But in the end, there were no real problems. "It just took a lot of paperwork."
Colitti is now planning a renovation for her penthouse and sifting through the offers on her old apartment.

Big builders set to converge on far West Side

September 2007
Major players gobble up Hudson Yards sites

By Lauren Elkies

Development of the Hudson Yards area is still in its infancy, but big builders have been amassing large swaths of land on the far West Side with plans to infuse the area with major residential and commercial projects.

This month, The Real Deal set out to take a detailed look at what many see as the area of Manhattan poised for the greatest amount of development going forward, with a block-by-block chart and map of projects planned for the neighborhood as well as recent property sales.

Of course, the big boys of development -- including Vornado, Related, Brookfield, the Moinian Group, Rockrose and Extell Development -- have accrued sizeable holdings in the area, stretching roughly between 30th and 42nd streets from the Hudson River to Eighth Avenue.

Comparatively smaller players -- names like Circle Properties and Lalezarian Developers -- are also snapping up buildings and development sites.

Extell may lead the way with the greatest number of large planned projects, bids or recent buys, with a total of five. The firm has already completed one condo building in the area, the Orion; has plans for a mixed-use tower and an office tower; is bidding on a massive hotel project; and just purchased a tract of land on 34th Street.

But it's the Related Companies, Brookfield Properties and Vornado Realty Trust that may end up covering the widest amount of land, even with fewer total projects in the works.

All three companies are among the bidders to develop the massive 26-acre Hudson Rail Yards, owned by the MTA, which run from 30th to 33rd streets and from 10th to 12th avenues.

In addition, Vornado and Related are the companies planning to develop Moynihan Station, which includes rebuilding Penn Station and Madison Square Garden on the site of the Farley Post Office.

For its part, Brookfield is planning four office towers that would total 4.7 million square feet on Ninth Avenue between 31st and 33rd streets.


Just the beginning

Even with all the goings-on, there are still available sites in the Hudson Yards district.

"All the top developers in the city are looking in a very detailed way at what's going on in the neighborhood," said Robert Knakal, chairman and founding partner of Massey Knakal Realty Services.

While deals and projects have been in the works, there has been little by way of tangible results.

"It's an area that's going to be a major development site, but it's at the beginning," said Richard Bassuk, president of the real estate finance and brokerage firm the Singer & Bassuk Organization.

The Singer & Bassuk Organization has been in discussions with clients about development options in the area.

"Nothing's gotten built in that neighborhood ... because much of [the] zoning is commercial and it's not clear how to make that work yet," said Gary Barnett, president of Extell.

His company is developing a site at 31st Street and 10th Avenue. There will be an office and gallery on the bottom floors, a hotel in the middle and condos above the hotel, Barnett said.

On the site of famed Copacabana nightclub on 11th Avenue between 33rd and 34th streets, Extell plans a new, 1.5-million-square-foot office tower.


Twelfth Avenue freezeout

Some developers have become gun-shy because of the many unknown factors in the Hudson Yards area. A walk around the Hudson Yards reveals a district filled with derelict industrial buildings, vacant parking lots, functioning automobile shops and cordoned-off blocks of construction.

Some major public and quasi-public projects have yet to start. In addition to the rail yards, another major project for which the state will select a developer is the building of a headquarters hotel for the Jacob K. Javits Convention Center.

Meanwhile, the expansion of the Javits Center itself has yet to get under way. The Spitzer administration is now considering a proposal that would increase the new space from 300,000 square feet to 550,000 square feet -- and at $4 billion, double the cost of the overhaul proposed under Governor Pataki.

An even more massive public project yet to start is the extension of the No. 7 subway line to 34th Street and 11th Avenue.

On a smaller scale, there's also uncertainty about the future of the northern portion of the High Line, a one-and-a-half mile abandoned elevated railway that ends at 34th Street in the area of the western rail yards.

"There's a lot of wait-and-see attitude," said Jack Botero, a Manhattan-based associate director of the national multi-housing group of Marcus & Millichap.

Botero said he has been acting as a consultant to two successful parking lot owners in the Hudson Yards area who are trying to determine if they should hold onto their lots or sell them.

Brookfield Properties' CEO has said the company's plans on Ninth Avenue will be put on hold if there is no movement on the extension of the No. 7 train.

Meanwhile, Barnett said, "No one has a clear handle on what things are worth there."


Rentals aplenty

But there is no doubt that the Hudson Yards area is slated for major commercial and residential development, made possible by the 2005 rezoning of the area from a manufacturing district to a commercial and residential one.

Some developers are still proceeding with their plans.

Rockrose has started work on two projects in the area, which will have residential and commercial components. At 455 West 37th Street, which runs from 37th to 38th streets and from 10th Avenue halfway down the block to Ninth Avenue, the company has begun construction of a 394-unit rental building, according to Sofia Estevez, senior vice president at Rockrose.

On the west side of the street at 505 West 37th Street, the company has broken ground on a two-tower, 835-unit rental building, which will extend from 37th to 38th streets and from 10th Avenue halfway down the block to 11th Avenue.

Moinian has started construction on its rental and retail tower at 605 West 42nd Street.

Developers on the far West Side face a conundrum: In a market where construction and land costs are high, how do you keep rents low enough to draw tenants and retailers, but high enough to make a profit?

"People aren't going to take a less convenient location unless the price is right," Bassuk noted.

For the residential portions of its far West Side buildings, Rockrose is not planning on slashing rents dramatically to draw would-be dwellers to the still-remote location, Estevez said. Still, rents in the buildings will average $6 per square foot, or 10 percent less than at a new building in a more established area, such as at the company's 110-114 Horatio Street, where rents average $66 a square foot.

Rockrose is planning, however, to bring retail to the area at a slightly discounted rate, Estevez said. At 455 West 37th Street, there will be a supermarket and a high-end restaurant. (A Time Warner Center restaurateur is reportedly interested in the space.) Restaurant space will also be built at 505 West 37th Street.

"We'll decide what else the neighborhood needs when we're closer," Estevez said. But making room for those services will come at a cost. "I do anticipate we will have to subsidize" the rents, she noted.


Inn development

The far West Side also appears ripe for hotel development.

Moinian, Extell and Texas-based Faulkner USA are all jockeying for the right to develop the Javits hotel project.

Would-be developers of the hotel said they do not expect to adjust room rates because of the location.

"The pricing model is likely the highest convention center hotel rate in the nation. We made no concession for the location because we have determined that it is a high-value submarket in the city," Moinian's spokesperson said.

Moinian's current proposal calls for a massive 1,275-room hotel designed by architecture firm Gensler.

Barnett of Extell said that his company has proposed a 70-story-plus "iconic" Hyatt hotel with a more luxurious Grand Hyatt at the top, separated by a sky lobby.

The hotel market is faring well in the city, and if most hotels stay small and offer limited services, they will be easy to run and profitable on the far West Side, said Eric Anton, an executive director at Eastern Consolidated.

Extell is also including a hotel in its project at 31st Street and 10th Avenue. Prolific hotelier McSam Hotel Group, meanwhile, bought four parcels of land on West 38th and 39th Streets.

"Everyone's talking hotel, hotel, hotel, hotel," Anton said.