Monthly Archives: January 2008

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.