Category Archives: Uncategorized

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

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!!

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
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

…..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

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

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.

Hunkering Down during a Snow Storm

There’s something romantic and comforting about a snow storm when you don’t need to travel and you can sit inside and watch the snow blanket the landscape, see the birds hovering around the feeders and “hear” the wonderful silence of a snow storm.

With meetings cancelled and phone service down (thankfully my cable is still working), I began contemplating 2007. I’ve had some success in real estate with some sales and some new listings. The nice thing about real estate is that there is a market during good times and bad times. I’d suggest that the real estate market in the Berkshires is sluggish, trending a bit lower but not dire. Afterall, we are fortunately not overbuilt like south Florida and Las Vegas. I tip my hat to towns like Stockbridge that do not openly welcome change or encourage development. Seems like a blessing in this market.

I’ve also have been working on several interior design projects. One is a ground up construction where I am working with the client and their architect on space planning, kitchen and bath design and material selection and finishes – with 7 bathrooms and a large kitchen, we’ve been having some fun. And we’ve been exploring all different finishes for the cabinets and options for tile for the bathrooms. My favorite material thus far is Lava Stone – it’s real lava stone, it can be custom colored in an enamel finish and fabricated for your specific use – it is dynamite!!! And my NOW project which needs to be done by the end of December is the new Napa Wine Bar and Restaurant that will be opening on Main Street in Great Barrington soon!! We worked with a modest budget to warm up a space that was cold and dominated with stainless steel walls and bar. Come see the transformation yourself!!!

Although there’s much more to report….and snow storms are a welcome break and an opportunity to think, write and prepare, it’s now time to strap on the skis… See you at the slopes!!!

A Possible Silver Lining for Real Estate

Upon reflecting on what’s going on in the economy – and let’s face it, it doesn’t sound good, look good or feel good – so I thought there has to be another way of looking at the mess.

We are in a unique period in our economic history. There are rumblings by OPEC, China and the EU that the US dollar may no longer be the currency of choice. We are also told that our inflation rate is 2-3% a year. But do you really believe that stat?? I don’t. Everything around me is going up in price – gas, imported clothing, imported fabrics and wall coverings, food, wine, electricity, health insurance. When $40,000 buys you a year’s worth of college tuition or a middle-of-the-road car, I’d say we have mega-inflation.

So where am I going with this line of reasoning….tangible assets…..the perfect inflation hedge. And most of them are going up, up, up….Gold is at a 30 year high, fine art is appreciating by leaps and bounds, oil – well you know the story there. And, then there is real estate. As a student of finance, I was taught that real estate was viewed as an inflation hedge. It might not feel that way today as we live through the sub-prime mess, but wait, if inflation continues to creep, real estate will play its traditional role in the financial markets – not a buy it and flip it asset, but a tangible, limited resource that is a long-term storehouse of value. I say think location, location, location for long-term real estate plays!

Why I love the Berkshires – Part I – Access to CSA’s (Community Supported Agriculture)

“You are what you eat.” Food – a basic necessity – readily available in vast quantities and choices in the US – is one of my passions. I love to cook. I love to entertain. I also want my family and loved ones to be healthy. Read the Omnivore’s Dilemma by Michael Pollen or Animal, Vegetable, Miracle by Barbara Kingslover and get a window into industrialized food and the importance of food provenance.

In the Berkshires, I didn’t have to go far to find a solution to eating and buying local. This year we joined 2 CSA’s – one for grass fed meat, Moon in the Pond Farm and the other for vegetables, Farm Girl Farm. owned by Laura Meister. Essentially at the beginning of the growing season, farmers need working capital to get their farms ready to produce. Memberships are available to select farms whereby you pay a fee in the spring that “buys” you a share of the farm and each week from early June through mid-November, you go to the farm on your day (for us it was every Saturday from 10 -12) and pick up your share.

And what a great experience…we never knew what we were going to get!! Alas, I was beckoned to a time when people didn’t plan their menus before they shopped – they became inspired by the available ingredients to create their menu’s after they shopped. And what fun I have been having – what to do with sweet white turnips – do I have a gratin for you!! And rainbow Swiss chard – gorgeous and packed with anti-oxidants. But my favorite to use and look at were the garlic scapes – the long, curly, flowery stem of the garlic plant – packing all the garlic flavor well before the harvest BUT also providing the most beautiful and sculptural floral arrangement on my early summer table – guest were agaw and intrigued.

Sadly, the season came to a close last Saturday and I found myself missing my Saturday ritual yesterday and missing the food grown in soil I can see, by a farmer I can name. I’ve preserved some of the harvest and am dreading having to shop in the grocery store for many of the items I picked up at the farm all summer. The silver lining is the meat CSA is year-long and I am waiting with great anticipation to savor the heritage breed bourbon red turkey that I got from Moon in the Pond for Thanksgiving.

So thank you Berkshires for maintaining and preserving some of your agricultural lands, thank you to the farmers who toil in the fields and believe in producing locally grown food. Thank you Berkshire Grown for creating a venue to support and find these farmers and thank you Slow Food for taking on the mission to preserve food growing and eating traditions.

Green Living – Part 1 – start with the light bulb

Did you ever think that the incandescent light bulb, the symbol of a great idea, would be going the way of the kiwi bird? Well, it’s not extinct yet but it is moving in that direction and for good reason – it’s an electricity hog.

Energy usage in the United States continues to rise year after year. Power plants are keeping up with demand only by dipping into their “reserve” capacity, a resource that we’ve almost used up. Consumers in colder climates are facing staggering heating bills because of high natural gas prices driven by the electrical utilities increasing use of natural gas.

Conservation efforts are underway for each of the many uses of electricity, but lighting stands apart as one of the single biggest energy consumers (over 30% of the electricity in buildings goes to lighting).

So here’s what you can do – change all your incandescent light bulbs to compact fluorescents. I did. My electric bill dropped by 2/3rds – I was astounded and an instant believer!! And an added benefit – they last longer – so less waste!

Did you treat your home as an ATM?

I am not surprised that we have a credit squeeze and a sub-prime mortgage meltdown. For me. the first sign of the impending disaster was over 2 years ago when a young couple that I knew told me they were buying a house – no money down and no credit check. And I thought, “What bank would lend to them?? They live paycheck to paycheck, can’t even get a phone in their name….we are in BIG TROUBLE.” But the mortgage lenders kept giving out the loans with great teaser rates and life seemed good.

Not only did 100% financing become popular, but so did re-financing one’s existing mortgage. When home values were on the rise and interest rates were at all-time lows, it seemed like a no-brainer – increase the amount borrowed at a lower rate – wow – presto – your home was an ATM. You just had to go to the re-fi window whenever rates lowered by enough to cover the re-fi expenses, and presto more money!! ka-ching!! But worse, people were glomming onto ARMS (adjustable rate mortgages) by record numbers because their monthly payments would be lower but OOPS they forgot that rates can go up and so did those monthly payments.

Don’t get me wrong ARMS are great even now – BUT- only if it matches your time horizon for owning your house. What no one calculated was that interest rates might go up consecutively while real estate values were tanking. And the perfect storm for the mortgage meltdown began – while interest rates in ARMS were ratcheting up, house prices were ratcheting down. People who can’t afford to pay their new high monthly rates, need to sell their houses but their current value is less than their mortgage and….voila….one is stuck in the mortgage roach motel – one way in but no way out!!

Do I smell a buyers’ market?????