Fannie, Freddie, and the Glorious People’s Revolution

Okay; not exactly. But I’m a little geeked about this week’s Economist.

In a post last month I talked a bit about what I’m beginning to see as the Fannie/Freddie Scandal. Stephen Colbert, I’m trademarking “FanFredScan” right now. Also Fredgate, Fangate, and Scangate, just to be safe.

I’ve been interested in the recent history of the upstate NY real estate market. After September of 2001, real estate prices outside of New York City rose county by county as New Yorkers (who had no intention of fleeing the city permanently) bought up parcel after parcel and house after house. The stock market was in the toilet because of Enron and 9/11, and real estate prices as far north as the Adirondacks were fed by a) people’s needs to stash investment money and b) fear of another catastrophe leaving them homeless. And what’s a $75,000-$250,000 mortgage to a successful New Yorker? The payment for a lot of people was a small fraction of their rent.

The bursting of the bubble, because of gross mismanagement and under-regulation, stopped this market in its tracks just like everywhere else. Real Estate was no longer a sexy investment, so that sweet New Yorker money dried up. Buddy, it’s tough all over.

The more I learn about this mess, the more I see it as the second major economic scandal of this presidential administration. It isn’t as sexy as a cigar and a blue dress, but there’s a trail of lobbying and pandering and political influence behind it that makes one wonder why we aren’t all a bit more upset. It’s Enron II, but this time it wasn’t illegal.

I’m trying hard not to be too partisan; my Nana is a lifelong Republican, and even she’s fed up with it.

What geeks me is that the folks at the Federal Reserve — some of the stodgiest, most conservative suits around — have taken a break from their project to bring back the monocle and the celluloid collar, and one (Jeffrey Lacker, head of the Richmond Federal Reserve) is actively advocating nationalization of the mortgage behemoths if recapitalization (i.e. massive bailout) is necessary. And it looks like it will be, as the first attempt to prop them up hasn’t gone all that well:

“This is not what Hank Paulson, America’s treasury secretary, envisaged last month when he announced an emergency plan to rescue the twins. By pledging to invest in them if needed, he had hoped to calm markets and thus reduce the likelihood of a bail-out. That gamble looks ever less likely to pay off, however.”

Last month, The Economist pointed out that a bailout of the mortgage giants will allow the mis-managers to profit because there never was any risk — Fannie and Freddie took risks and paid like private companies, but we can’t afford to let them fail. So imagine being able to take your life’s savings to Atlantic City, knowing that someone will replace it if you tank. What incentive would you really have to avoid outlandish risks?

The article (“American Markets: Still Bleeding” from the August 20th issue) cites that investor (especially foreign investor) confidence in Fannie and Freddie’s debt is waning, and a lot of that debt is due to mature soon. Fannie and Freddie are F’d.

I’ve heard back from my readers on this — the “less government” crowd weighs in heavily against the bailout (any bailout) because we foot the bill. But (well) what do you folks think of nationalizing the damned thing? Isn’t that like socialism? Won’t it make us all play with dolls and do drugs and worship Satan?

Sure enough, we’re going to foot the short-term bill for any bailout; but these are historically very profitable institutions, considered by many experts to be too important to our economy to be left in private hands.

Case in point: right now.

So…can the government screw it up worse?

First, we’re in this mess because of under-regulation, not government interference. That said, I’d also have to say that deregulation (and the resulting consumer free-for-all) was partly due to political corruption; not as Sopranos-esque as HUD, but just as devastating, and a pattern we can easily see repeated down the line whether they remain private or are nationalized.. So, um….
Second, I feel like if I have to pay for it, I should be buying something. I lean hard left when it comes to Energy and Housing, but I can also be very personally conservative; it weirds me out that guys like Lacker and Paulson might be going my way.

At the very least, there ought to be some house-cleaning going on at F&F. I wouldn’t mind hearing about, you know, the responsible parties getting the sack. I’d even be up for some Enron-style scapegoating.

Image links to source.

Chinatown and the Combat Zone

Thanks to Universal Hub, a great video mini-history of Boston’s Combat Zone is making the rounds. John Keith in a post on his site, pointed out a line in the 80’s newscast stating the neighborhood changed, with “only thirty-five bookstores remaining…” I think all that remains today are an adult store, a club, and a few old marquees.

The part I find most amazing is how drastic the change is. When the Combat Zone disappeared, neighboring communities welcomed the relief. Although Chinatown wasn’t seedy like the Combat Zone, Washington Street activity often spilled over to the streets and alleys between Harrison and Hudson. It’s now safer than ever, with pimps, prostitutes, and drug dealers not operating as openly as before. It’s not perfect, but it’s a huge improvement.

Even Bay Village residents several blocks away noticed the difference. The quiet, secluded streets of the small neighborhood were perfect for illicit activity, but eventually the activity slowed, allowing residents to successfully scare away the rest of the passersby.

As the adult businesses of the Combat Zone folded, Chinatown quickly engulfed much of the old red-light district, making the area ripe for housing:

42-44 Beach Street, #10D
Chinatown, 02111
Beds: 1/Baths: 2
SQ.FT.: 876
$509,000
In the thick of the Combat Zone.

40-44 Harrison Avenue, #7A
Chinatown, 02111
Beds: 1/Baths: 1
SQ.FT.: 685
$359,880
Directly across the street from the above listing.

2 Avery Street, #19E
Boston, 02111
Beds: 3/Baths: 3.5
SQ.FT.: 3246
$4,250,000
Not sure if this really counts as the Combat Zone, but the block was definitely affected by Combat Zone activity.

Be sure to visit John Keith’s site for some then and now shots of Washington Street. Last year, I took my Mother-In-Law to lunch at Pho Pasteur at Washington and Beach, shown at the far end of the block in his pics. She couldn’t believe where she was. In her time, no self-respecting woman would consider a trip to Washington Street unless she needed to shop at Downtown Crossing. Chinatown and the South End were also places to avoid.

Hitting the Links

Boston Sweet Digs Home

Open Houses: 1000 square feet in Brookline

A 1000-square-foot condo is kind of like wearing a size 8 dress if you’re a woman. Sure, you could do better by pouring yourself into a size 6 (and wouldn’t it be nice if you could afford maybe, 1300 or 1400 square feet…) but let’s be realistic. A size 6 would mean starving yourself and 1400 square feet might mean eventual bankruptcy. And besides, in 1000 square feet, a single person has room to stretch out and a couple with two kids have just enough room to feasibly squeeze in, at least for a while.

Here are three Brookline condos just over 1000 square feet, that are large enough to provide for a second bedroom, a dining room, and sometimes even a second bath:

48 Loveland Road, #1
Brookline
BEDS:2/BATHS:2
SQ.FT: 1090
$479K
O.H. Sunday, August 24, 2008 12:30 – 2:00 PM

 14 James Street, #2
Brookline
BEDS:2/BATHS:1
SQ.FT: 1088
$492K
O.H. Sunday, August 24, 2008 1 – 2:30 PM

10 Auburn Ct., #1
Brookline
BEDS:2/BATHS:1
SQ.FT:1,110
$479K
O.H. Sunday, August 24, 2008 12:30 – 1:30 PM

More on Brighton, Brookline
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Salem Traffic Report: Kids In Wizard Hats Flood Streets

Driving through Salem right now is arguably worse than driving in Boston or Cambridge, because pedestrians in the Hub know the rules. While the weather remains nice, Salem gets colorful and pleasantly rowdy — lots of kids in Wizard hats, because it’s Halloween all year round….

Salem seems to be a day trip every kid in Mass gets taken on. The Witch Museum, The Wharf, coffee at Galu Galu for dad, The Willows, The House of the Seven Gables, scotch at the Old Spot for mommy, wizard hats all around, and back in the car. Quiet down back there.

This tourist trade, which does a fair bit to tie up 114 going into the city from Danvers, brings a lot of perceived prestige to Salem. Look at Derby Wharf, the beautiful and historic houses and condos that go for big money in Salem’s affordable market. The Wharf is a tourist center, and the tourist centers are convenient places to live in just about every other way.

Come up and look around this weekend.

10 Everett Road
Salem, MA 01970
Beds: 3/Baths: 1.5
SQ.FT.: 2200
$469,000
Open House: Sunday, August 24, 2008 1:30 PM – 3:00 PM

17 Cliff Street
Salem, MA 01970
Beds: 3/Baths:1.5
SQ.FT.: 1495
$319,000
Open House: Sunday, August 24, 2008 2:00 PM – 3:00 PM

4 Essex Street
Salem, MA 01970
Beds: 4/Baths:2
SQ.FT.: 1747
$ 279,900
Open House: Sunday, August 24, 2008 11:30 AM – 1:00 PM

24 Essex Street, #2
Salem, MA 01970
Beds: 4/Baths: 1
SQ.FT.: 2202
$ 279,500
Open House: Sunday, August 24, 2008 1:00 PM – 2:30 PM

11 Looney Avenue
Salem, MA 01970
Beds: 3/Baths: 2
SQ.FT.: 1,568
$ 349,900
Open House: Sunday, August 24, 2008 1:00 PM – 3:00 PM

Salem Under $300k — With A view!

Sweet Digs Boston Home

Image links to source.

Boston Homes Selling at 95% to 98% of List

We had another Red Carpet Event and home-buying class in Boston last night. Like always, we had hot, fresh pricing data, which you can also find below. Get the slides here.

Our next event is September 10th in Somerville, then in October we’ll head to downtown Boston. You  can RSVP here.

In Boston, most houses are selling between 95% and 98% of list, but buyers in Ludlow buyers are getting bigger discounts- houses sold at 92.5% of list price. Condos were in a similar range, except in Middleboro, where condos were selling on averave at a little over 100% of list- yow!

Boston Area House Prices, June 17 – August 17, 2008

Boston Area Condo Prices, June 17 – August 17, 2008

STRONG DOLLAR! Buy in USD, Sell in EUR!

My Freshman year of college, a friend of mine on the ski team coined the phrase “The Fromage Factor” to describe the dent a semester of foreign study would put in an athlete’s level of fitness.

And back then, a few months surrounded by rich, creamy foods, multiple-course meals, and food priced in “dollars” that only cost 89 cents could do some damage.

But the other day, another friend of mine returned from travel abroad some fifteen pounds lighter. To the glee of exporters and the dismay of xenophobic homesellers, the dollar has been very very, weak. And this has not gone unnoticed on either side of the Atlantic.

But check out the trend over the past few weeks. Despite some serious economic speed bumps in our future, the dollar seems to be accruing value against the Euro. What to do? Buy it now and then unload it in Euros, before the US government has to print its way out of the credit crunch. It’s the next wave in moving real estate: the Forex Flip!

175 Comm Ave #D
Back Bay, MA 02116
2 beds, 2 baths
1,940 sq. ft.
$2,190,000
Euro Price 6/6/08: 1,388,898
Euro Price 8/15/08: 1,491,828

64 Commonwealth Ave #9
Back Bay, MA 02116
0 beds, 1 bath.
595 sq. ft.
$419,000
Euro Price 6/6/08: 265,730
Euro Price 8/15/08: 285,422

69 Pinckney St #2
Beacon Hill, MA 02114
2 beds, 2 bath
1,001 sq. ft.
$839,000
Euro Price 6/6/08: 532,094
Euro Price 8/15/08: 571,527

Salem Under $300k- With a View

Boston Sweet Digs Home

Salem Under $300K — With a View!

Salem is a city on hold real-estate-wise, but I still believe in it. If I owned property there that I bought 5 years ago, I’d be frustrated and bummed out. But if I were a hub dweller wishing for a cheap, cool place to live within T range of downtown, I’d look at this slump as some sort of divine gift.

Imagine if you grabbed a piece of Cambridge in the days of rent control, or a house in The Haight when it was all crash pads and hippies. Salem might not ever be Haight Ashbury, but it has something that cities positioned to boom often have: a large population of artsy types and intellectuals, and prices low enough to attract the get-a-haircut crowd. More and more of Salem is young and up-and-coming, and the city has a lot to offer. Not the least of all, places with water views for less than you’d imagine. They’re often urban, partially obstructed views, but that doesn’t mean you won’t love watching the snow fall or the sun set from these purty windows.

27 Lemon is so, so close to the commuter rail — what you’re looking at in the pictures is the bike/walking path to the Salem Commuter Rail depot.

27 Lemon Street
Salem, MA 01970
Beds: 3/Baths: 2
SQ.FT.: 1398
$229,900

Even Derby Wharf is feeling the bite of a bad market; this is too cheap for that neighborhood, and I don’t expect it to last:

39 Daniels Street
Salem, MA 01970
Beds: 2/Baths: 2
SQ.FT.: 1120
$299,000

This barely a water view, but it’s a great place for an artist or small businessperson — a live/work space under $200k with no condo fees! The square footage is only the living area, not the shop space on the first floor.

19 Bridge Street
Salem, MA 01970
Beds: 1/Baths: 1.5
SQ.FT.: 672
$199,000

Photo (of the ship “Friendship” permanently anchored at Derby Wharf) courtesy of Jenn Marcelais and A Very Grave Matter, a site dedicated to the beauty and history of New England graveyards.

Redfin Sweet Digs Home
Are 40-Year Mortgages the New ARM? Or Our Way Out Of This Mess?

On the Market on Brainerd Road

As a child, Michael Bloomberg, the mayor of New York, lived on Brainerd Road.

But that’s probably about the only thing Brainerd Road is famous for — other than Saturday night parties and some colorful graffiti.

A long upward incline running from Harvard Street to Winchester Street, Brainerd Road, frankly, is not beautiful. Lined with brick apartment buildings, some industrial buildings and garages, a few multi-family homes, and more recently a few higher-end condos, it’s a real urban mix that sits right on the edge of Allston-Brighton. Go just one block over to Verndale, and it’s a whole different experience. The Brookline experience.

But for those willing to look past a little street grit, there are actually some nice little gems on the market in this little corner of Allston. Several condo buildings on Brainerd road offer a taste of luxury living, but the romance, as well, of garage bands and street artists. There’s the urban experience of tattoo parlors, ethnic restaurants and hipster boutiques if you turn left off of Brainerd Road into Allston Village. And if you turn right, you’ve got the intellectual stimulation of bookstores and cinema in Coolidge Corner. Go straight across Harvard from Brainerd Road and you’re in the TJ MAXX parking lot. Talk about convenience.

On the market right now on Brainerd Road are about a half-dozen properties, three have been sitting around long enough that their owners just might be willing to cut a bargain. Two of these older listings might make an ideal abode for hip singles or urban couples. The third is a single-family house that has been used as an investment property but that might just be renovated into a nice family home, or even split into two condo units:

59 Brainerd Road, #510
Allston
BEDS:2/BATHS:1
SQ.FT:994
$409,900

33 Brainerd Road, #312
Allston
BEDS:2/BATHS:1
SQ.FT: 902
$374,900

26 Brainerd Road
Allston
BEDS:8/BATHS:3.5
SQ.FT: 2371
$659K

Brighton, Brookline archives

Sweet Digs Boston Home

Happy Birthday, Subprime Crisis!

Yes, it’s tough to imagine; just over 13 months ago the stock market hit record highs, and our current state of affairs was nothing but a twinkle in some very happy short-sellers’ eyes. But only a month after that, things were not looking so rosy, and a year later, well, you know the deal. And it’s all the inflated housing market’s fault, they say.

But in retrospect, it really hasn’t been that bad. In fact, it hasn’t been bad at all. I suppose a plateau could be inferred somewhere in that chart, and maybe the record inflation over the past few months outpaced it, but as far as I can tell, that’s the closest Beacon Hill came to any sort of decline.

Sure, we could all be sitting on a massive alt-a bomb, or be bracing for some EPIC FAIL from two of the largest financial entities in the world, but I think there are as many voices saying we already bottomed out as there are suggesting we’re about to go over the falls.

And on the off-chance that the doomsayers are right, Boston seems like a pretty safe barrel to ride in.

29-31 Brimmer St #2
Beacon Hill, MA 02108
2 beds, 2 baths
$1,453 sq. ft.
$1,095,000

80 Mount Vernon St #8
Beacon Hill, MA 02108
2 beds, 1 bath
704 sq. ft.
$849,000

48 Beacon St #1R
Beacon Hill, MA 02108
2 beds, 1.5 bath
1,448 sq. ft.
$778,000

An Open House Circuit for the Weekend

Boston Sweet Digs Home

There ARE Some Real Dumps in Brookline

A few days ago, I had an enlightening discussion with a new resident, fresh from San Francisco, and searching for a home in Brookline. After visiting a number of houses on the market, she says she’s concluded many houses in Brookline are appalling (her word, not mine.)

For me, a West Coast native acclimated to East Coast dilapidation, it was a new and refreshing perspective.

I’m used to seeing some real dumps in Brighton. A lot of condos and houses in Allston and Brighton are rented to students, who aren’t exactly lavishing love on the 100-year-old buildings. But this was the first time I thought of the word “dump” in a Brookline context. Didn’t Money Magazine just name Brookline one of the top 100 places to live in the U.S.? Could one of America’s best towns be filled with dumpy houses?

I started thinking. On house-hunting trips to the South End, I saw condo after condo, fabulously updated. In Jamaica Plain, I noticed numerous triple-deckers tenderly restored. Even in Somerville, not the first town to come to mind for jaw-dropping homes, I had witnessed renovation fever with stunning results.

Then there’s Brookline. Out of the cobwebs of my mind, I began experiencing flashbacks….the condo on Westbourne Terrace with the poorly-installed sound-insulation covering the ceiling like a crazy quilt…. the Park Vale condo with the bad windows and the 70′s bathroom…. the expensive condo on Rawson Road that would have been perfect except for the crumbling kitchen floors.

Like an abuse victim, I wiped these horrors from my mind. Somehow, Brookline’s top-notch school system relieved homeowners of the need to pick up a hammer. Of course, homeowners in the South End or Jamaica Plain have never had the luxury of resting on the laurels of the schools.

Here’s my “Thank you” to the new Brookline resident who helped me recover those memories. Now that the slipcover is off the couch, maybe a few residents will open their toolboxes and start maintaining their homes.

Brookline, Brighton archives

Sweet Digs Boston Home