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Isn't this guy supposed to be smarter than you and I?

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June 03, 2009 – Comments (19)

Treasury Secretary Tim Geithner is struggling to unload his million-dollar manse located in a posh New York City suburb. And like so many other Americans, he'll probably lose money on it when he does.

Geithner and his wife Carole put their 5-bedroom Tudor-style home in Larchmont, New York on the market for $1.635 million in February, just days after he was tapped by the Obama administration to help lead the nation out of the worst economic crisis in a century.

The Geithners paid a premium for the house when they bought it in 2004, plunking down $1.601 million after a bidding war. The "exquisitely renovated" home was originally built in 1931, according to a listing for the 0.2 acre property.

It's a familiar story as the housing crisis unfolds across the country. Indeed, after Geithner's house sat unsold for nearly 3 months, the price dropped to $1.575 million. Still there were no takers, so Geithner listed it as a rental for $7,500 a month, and has since found a tenant.

But it's unlikely that even such a steep rent will be enough to cover the mortgage, in addition to the $27,000 in annual property taxes. Of course, no one should feel too badly about watching Geithner take a loss. As Treasury Secretary he's earning $191,300.

Even Tim Geithner can't sell his house

For some reason I found this really funny.  Add one more to the list of people who didn't see the bousing bubble for what it really was.  Ahhhh, isn't this guy supposed to be smarter than you and I?  I guess not.  No wonder he's trying to prop up housing prices :).

Deej

19 Comments – Post Your Own

#1) On June 03, 2009 at 6:11 PM, blake303 (29.20) wrote:

You have to give him credit for finding a renter willing (stupid enough?) to pay $7,500/month. Depending on how much he put down, that may cover his mortgage payments.

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#2) On June 03, 2009 at 6:12 PM, AdirondackFund (< 20) wrote:

I know the neighborhood well.  It isn't worth 1.6 Million.  Not on .20 acres.  But it is Geithner's house, so that's a celebrity bonus price.  It's also why they jacked him on the buy price.  Bidding War?  I'd love to see the details on that one. 

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#3) On June 03, 2009 at 6:15 PM, rd80 (98.30) wrote:

Ahhhh, isn't this guy supposed to be smarter than you and I?

I don't know, he couldn't figure out how to work Turbo Tax, so catching the wrong side of the housing bubble isn't really a big surprise.

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#4) On June 03, 2009 at 6:22 PM, TMFHelical (98.71) wrote:

If he sells at a loss, at least he won't have to worry about taxes : )

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#5) On June 03, 2009 at 6:29 PM, FleaBagger (29.24) wrote:

If he sells at a loss, at least he won't have to worry about taxes : )

Nice!

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#6) On June 03, 2009 at 6:32 PM, Tinka82 (86.90) wrote:

TMFDeej,

I don't think being a part of this administration requires intelligence, or even skills pertinent to the job; simply the right connections.  

I find it funny that the listing price includes unwarranted optimism.  Fits his MO, doesn't it? 

 

 

 

 

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#7) On June 03, 2009 at 7:37 PM, tonylogan1 (27.88) wrote:

$7500 a month is not unreasonable if the house could actually sell for 1.6Million. Equates to about a 5.5% return on 1.6 Million if you could put it in the bank (or long term treasuries)...

 Trouble is he obviously can't sell it for that much, so the renter overpaid (That often happens to people willing to pay $7500 in rent)

That being said, I would love to see someone with too much time on their hands like TMZ follow up on the renter and be sure that he has ZERO financial incentive for bailing out Geithner. Also, make it clear that they will keep following up on this guy for the rest of his life to be sure we did not get scammed.

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#8) On June 03, 2009 at 7:58 PM, starbucks4ever (97.80) wrote:

How about collecting that $1.6M for Geitner so that he won't have to push for quantitative easing? :)

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#9) On June 03, 2009 at 8:18 PM, ajm101 (31.86) wrote:

Deej, this required very little detective work:

http://www.coldwellbankermoves.com/real_estate/New_York/Westchester/Larchmont.htm

Average listing is $1.6M, average 5 bedroom listing is $3.1M.

Here's an alternate source:

http://www.zillow.com/homes/map/larchmont,-ny_rb/

It's limited comparison, but 1.6 is just shy of the midpoint of the other two comparable houses on the market that Zillow has data for.

http://www.zillow.com/homes/map/larchmont,-ny_rb/#/homes/for_sale/map/larchmont,-ny_rb/sf_type/4-_beds/7500-10000_lot/40.938668,-73.732456,40.917658,-73.773483_rect/13_zm/

I don't know why it's odd that 1.) he would have a nice house, 2.) it would cost a lot being a suburb of NYC when he was the president of the NY Fed, 3.) he'd have trouble selling it when the high end real estate market in NYC has been crushed w/ the financial crisis, and 4.) that someone would rent it at a fair price (as someone above calculated) instead of going through the difficult process of getting a jumbo loan right now.

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#10) On June 03, 2009 at 8:21 PM, AdirondackFund (< 20) wrote:

No, no, no, no, you don't know the neighborhood.  ALL of the houses are in the million range.  The house even looks familiar to me, I am quite sure I have driven by it several times.  It is a LAND VALUE and 'location' speculation.  Now,  there is nothing more dangerous than investing in a property with a fully appreciated LAND VALUE.  How do I know this?  Because I lived nearby and I've been through the wringer with these properties before.  The rents in that neighborhood are all going to be $7,500, some higher for the truely greedy.  He'll clear flat renting it and buy himself time.  If he can't fix the economy (and he probably can't) he's gonna get hosed.  It's just that simple.  All the houses will go down in value in that neighborhood, especially if Banking goes down the chute, which it is already.  Having lived in that neighborhood for 40 years, I am marvelling at the irony and karma of the whole story.  Maybe the greatest fool is our Treasury Secretary.   Now, when I bought my house in that same neighborhood, they tried to put me in a bidding war.  You know what I did?  I told them 'no thanks'.  I met the guy who 'outbid' my non bid and we became immediate friends....after he bought the house, of course  We even laughed about it.  I ended up buying another house right around the block for less money (always the trader, you know).   Here's the hook.  The TAXES on that piece of spit 1.6 Mill are $30-40,000 per year simply because of all the crap that's been thrown at the community over many generations.  Bond Issues for this, that and the other unneccessity.  Talk about living beyond your means?   It's insane.  The whole scene is insane.  From the Cops that hit on your wife and teenage daughter (yes, there have been statutory rapes in the neighborhood, perpetrated by the POLICE themselves), to what you get to pay for the priviledge of allowing them to act as such.   This is actually how stuff goes down in Southern Westchester, and it is BEYOND THE PALE. 

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#11) On June 03, 2009 at 8:23 PM, Tastylunch (29.23) wrote:

don't ask question you don't want the answers to. :(

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#12) On June 03, 2009 at 8:48 PM, Alwayzwrong (93.03) wrote:

I hope he did a thorough background check on the tenant, or the tenant is a very close friend of his.  Either way, I can see a "freak" lightning stike burning it down in 6 months.  He seems to like the insurance industry almost as much as housing.

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#13) On June 03, 2009 at 8:58 PM, AdirondackFund (< 20) wrote:

Not in that neighborhood, they write the loss off on their taxes and the taxpayer gets stuck with subsidizing the loss.  I've done it myself.  How do you like them apples? 

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#14) On June 03, 2009 at 9:01 PM, russiangambit (29.17) wrote:

Unbelievable. By the looks of it the house would fetch only 350K in Houston. Why people live in New York? It is cheaper to fly for a couple weekends a year to visit museums and Broadway.

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#15) On June 03, 2009 at 9:17 PM, AdirondackFund (< 20) wrote:

Yup, gambit, you are right.  The internet has changed everything and these properties are now an albatross around the Federal Neck because of the deductions that are allowed to evade income tax and guarantee the investor some return, even if it's sraped out of the after tax barrel.  This is your future.  Brought to you by ........ (have some fun and fill in the blank)

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#16) On June 03, 2009 at 10:21 PM, portefeuille (99.60) wrote:

so houston + internet + flights "for a couple weekends a year to visit museums and Broadway" = nyc ... interesting ...

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#17) On June 03, 2009 at 11:19 PM, EnigmaDude (92.88) wrote:

I learmed a long time ago that wealthy people are not always intelligent!  In fact, I am starting to believe that there is an inverse relationship. 

If Ignorance is Bliss then perhaps Poverty = Contentment (except in the USA)

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#18) On June 04, 2009 at 1:52 PM, anchak (99.84) wrote:

Deej..of course you get the rec ...but more so because of comment # 16 from Hans - that's the funniest equation I have seen....of late at least!

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#19) On June 07, 2009 at 10:32 PM, AdirondackFund (< 20) wrote:

Yes Port, it is interesting.  There is actually a term/theory/explanation for it too.  It is called the MRTS Curve.  That single idea is what is causing a great deal of the dislocation that is occurring today in Financial Markets.  I believe it to be actually the major cause. 

I sold my .18 acre piece of Tax Haven Sh*t four years ago after buying a 100 acre Tree Farm which had already paid for itself. 

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