Hat tip to Theo.

Asking price: $28,000,000. Location: Old Saybrook, Connecticut—An old coastal town in Eastern Connecticut, not conveniently close to anything. Built: 1939. 15 rooms, 6 bedrooms (3 suites), 7.5 bathrooms, private dock, beach, and pond, on 2.87 acres. Estimated mortgage payment: $164,633/per month.

20 photos.

My guess is that they won’t get anything remotely resembling that asking price.

A gamer recently sold a virtual property, existing only in the context of an on-line game, for serious money.

Yahoo:

Think the rent is, in fact, too damn high? Then stay as far away from online world Entropia Universe as possible, because its real estate prices will drive you insane.

Take, for instance, what just went down on Planet Calypso, where one of Entropia’s wealthier players has sold off his interests in a “resort asteroid” for an eye-popping $635,000.

The seller is Jon Jacobs, also known as the character ‘Neverdie’. He originally purchased the asteroid in 2005—eventually converting it into the extravagant resort ‘Club Neverdie’—for the then-record price of $100,000. For those keeping score, that’s a gain of over $500,000 in just five years. In nerdier terms, that’s an ROI of 535%. Match that, Citibank.

Most living Americans, including now approaching geezerhood Baby Boomers, have never seen anything like the current economic hard times. When I go out out of doors, I sometimes feel a bit surprised that the world is actually in color, not in black and white, and no one is dressed in 1930s styles.

But, on the whole, most of us have been facing current adversities with grim good humor. It’s our turn, we tend to reflect. We’ve had it good for so long. Sooner or later, government was bound to screw things up seriously.

But, we shrugged, we can survive. Our parents did. And the world has changed. We have vastly more education, more skepticism and sophistication. The peasant mentality that permitted the Great Depression to drag on for over a decade as the result of one socialist monkey wrench after another thrown into the engine of the economy and the Smoot Hawley Tariff just can’t happen today.

We’ve learned a lot. The policy errors of the New Deal have been exposed and its economics debunked. Today’s American population will not sit passively by and let Washington drive the economy into the ground year after year after year. The democrats will get slaughtered in 2010 and our Kenyan Caliban will be sent packing in 2012. A conservative Republican will take office in 2013 and the land will heal.

But, I have just read two news items in the Wall Street Journal which give me pause.

1) Despite the fact that the newspapers are full of foreclosure auction notices, and we all know people moving and abandoning homes to the banks, we tend inevitably to think that real estate disaster is well along and that we can look forward to the end of all that within an endurable interval.

We may be wrong.

This WSJ article from yesterday ends, I think, with whistling in the dark.

Housing markets began to stabilize early last year as low prices and government interventions broke the downward spiral. Policy makers spurred demand for homes by holding down mortgage rates, offering tax credits for buyers, and extending low-down-payment loans through the Federal Housing Administration.

The government also attacked the supply problem. Regulators relaxed mark-to-market accounting rules, giving banks more flexibility in valuing certain real-estate assets and removing some of the impetus for banks to quickly foreclose. Meanwhile, the Obama administration put in place an ambitious program to modify mortgages.

The Home Affordable Modification Program has fallen short of its goals. So far, fewer than 500,000 loans have been modified, below the target of three million to four million. Yet the program served as a “closet moratorium” on foreclosures that stanched the flow of bank-owned homes to the market, said Ronald Temple, portfolio manager at Lazard Asset Management.

The result: The share of distressed sales fell by November to 25% of home sales, and prices stabilized. After rising in the winter, the distressed share fell to 22% in June, before bouncing to 30% in July.

The problem is that these measures are wearing off. Demand plunged this summer after tax credits expired, and unsold homes are piling up. More foreclosures could move onto the market as borrowers fall out of the loan-modification program.

“We see the perfect storm brewing with rising supply and falling demand,” said Ivy Zelman, chief executive of research firm Zelman & Associates and one of the first to warn of trouble five years ago. She estimated that distressed sales could account for half of the market by year-end if traditional sales didn’t rebound.

The market does have some tailwinds: Housing starts are at all-time lows. Banks have hired more staff to manage problem loans and government entities such as Fannie Mae and Freddie Mac that own a growing share of foreclosures are less likely to deluge the market.

The next leg down in prices “isn’t going to be the foreclosure-induced freefall where you just had inventory coming out the wazoo, and it was going to be sold one way or the other,” said Glenn Kelman, chief executive of Redfin Corp., a real-estate brokerage.

Prices also have come down so much already they have less distance to fall. During the housing boom, prices inflated much faster than incomes rose, thanks to speculation and lax lending. The ratio of home prices to annual incomes reached 1.6 at the end of June, which is below the ratio of 1.88 from 1989 to 2003, according to Moody’s Analytics.

By those metrics, prices are actually undervalued in markets that have already seen huge declines, such as Las Vegas, Phoenix and Los Angeles. But Moody’s data show that prices remain “significantly overvalued” elsewhere, including Boston; New York; Seattle; Orange County, Calif., and Charlotte, N.C. Markets in both camps face supply imbalances that will pressure prices for years.

What I see is houses being offered for sale at significantly lower prices which are not selling, and a huge, absolutely enormous backlog of not-yet-foreclosed, not yet fallen out of the Home Affordable Mortgage Program houses yet to hit the market.

Who would be crazy enough to buy at any price in the current, totally unpredictable circumstances?

It is easy to find experts venturing predictions that home prices may fall another 10%. Why not another 30%, another 50%, or even 90%?

The market is flooded with homes. An enormous number more are somewhere in the pipeline headed for distress sale. Money is tight. People are still out of work, still losing jobs. Mortgage rates are low, but it is very difficult to get a mortgage. And, in the final analysis, who is going to buy now? Who will not believe that the market is still going down?

How low can we go? No one knows. People my age have lived through a period in which government policies lifted home prices into the stratosphere by arranging for 30 year financing for everyone. When I was a boy, working class families bought $5000-$12,000 houses, paying cash or arranging for two or three years of seller financing. The same kind of homes were selling for as much as $500,000 near Eastern cities a few years ago, and for $1,000,000 or $1,200,000 near San Francisco.

There is a very long way down between the prices of homes decades ago and recent prices. And deleveraging is just not happening. That backlog of unliquidated defaulted properties is sitting there, still unprocessed, like a ticking bomb.

2) Then, I read in the same WSJ of internationally-designed new banking rules intended to reduce risk by reducing liquidity and dramatically raising banks’ capitalization requirements.

The focus of the agreement is on the amount of “capital” banks are forced to hold. Capital is what banks use to absorb losses. Regulators and analysts typically believe that banks with more capital have a lower risk of failure or insolvency.

Regulators agreed to require banks to hold a specific level of a basic type of capital known as “common equity.” Common equity is considered the most effective type of capital because it is used to directly absorb losses. Officials agreed large, internationally active banks will have to hold levels of common equity equal to at least 7% of their assets, much higher than the roughly 2% international standard or 4% standard for large U.S. banks.

Who said governments in our time would not undertake “reforms” that reduce credit, constrict economic growth, and preclude recovery?

Remember Japan? Back in the late 1980s, everyone was afraid that Japan was going to replace the United States as the world’s leading economic power. Then along came recession, and Japan responded with the same kind of policies we see being applied right here today. Japan is still in recession, and nobody has been afraid of Japanese economic performance in years and years.

We have been saying to ourselves that housing prices may drop another 10% and that the real beginnings of the recovery may take another year, or maybe two, to arrive. We could be wrong.

The rich are different from you and me”, says Nick Carraway in Scott Fitzgerald’s Great Gatsby, prompting Hemingway to retort: “Yes. They have more money.”

But even the rich are not immune from the impact of the current recession and the real estate market collapse.

The New York Times reports that the price of William F. Buckley, Jr.’s splendiferous Manhattan pied-a-terre has been slashed by slightly more than half.

THE worldly and the clever gathered at the dinner parties that William F. Buckley Jr. and his wife, Pat, gave in their Park Avenue maisonette. Yet even though the chairs in the formal dining room are still covered in chartreuse leopard print, it has been quite a while since anyone but a broker or a prospective buyer has spent much time there.

Mrs. Buckley, a socialite and mainstay of the charity circuit, died in 2007, and Mr. Buckley, the writer and godfather of modern conservatism, followed 10 months later in early 2008. Their 10-room duplex came on the market at $24.5 million in May 2008, but there were no takers; in early 2009, as the real estate market was choking, the estate decided to take down the for-sale sign.

Now, more than a year later, the apartment at 778 Park Avenue has been relisted at $12 million, less than half the original asking price. And it is not the only listing in the building to have had to, ahem, adjust its price. The late Brooke Astor’s 15th-floor duplex, with 14 rooms and 6 terraces, started at $46 million in May 2008 and is now being offered for $24.9 million.

Ms. Del Nunzio is quick to point out that the apartment has “the most extraordinary suite of entertaining rooms that you could find,” with a private entrance on East 73rd Street and an 18-foot-long marble entry hall that opens onto a 27-foot-long gallery, leading to a living room, a library and a dining room.

“This is the place,” Ms. Del Nunzio continued, “where all those conversations and dinners with statesmen and political figures, not to mention film and television stars, with a quiet family dinner thrown in here and there, happened. This is a rare opportunity to acquire a piece of New York’s intellectual history.”

The listing, with additional photos.

Jim the Realtor from California describes a house being offered in Brooklyn.

Occupying what used to be a driveway, it’s a 1br/1ba home on a parcel of land 7.25 feet wide and 113.67 feet long. The interior area is just under 300 square feet: ...ONLY $479,900!

I can remember a similar packing crate sort of residence located on top of Belmont Heights in San Francisco, in need of complete renovation, selling to a surgeon for $450,000 a few years ago.

Hat tip to Walter Olson.

Correction, August 6:
John brings to my attention in his comment a Daily News story debunking all this:

The house is actually in Toronto, and the price is only $179,000.

It was probably built in Kenya, too.

Kate, at Small Dead Animals, merely posts a quotation from New York Times editorialist Thomas L. Friedman’s June 30th “Just Do It” column demanding that Americans support the democrats’ Cap-and-Trade Bill.

(T)his bill’s goal of reducing U.S. carbon emissions to 17 percent below 2005 levels by 2020 is nowhere near what science tells us we need to mitigate climate change. But it also contains significant provisions to prevent new buildings from becoming energy hogs, to make our appliances the most energy efficient in the world and to help preserve forests in places like the Amazon.”

and links a photo of Mr. Friedman’s house.

Hat tips to Greg Pollowitz and Mark Steyn, who remarks:

(O)bviously, being a renowned expert, Thomas Friedman, like Al Gore and the Prince of Wales, needs a supersized carbon footprint. But you don’t — you can get by beating your laundry on the rocks down by the river with the native women all day long.

“Environmentalism” is a government restraint on economic advance and, therefore, social mobility. In other words, it’s a way to ensure you’ll never live like Tom Friedman.

North Dakota, Wyoming, Alaska, Texas, Hawaii, and South Dakota all managed modest increases (1.9-.2%) in home prices, while California real estate insanity exacted a ferocious toll not only within its own borders (-25.5%), but also in the neighboring California refugee destinations of Nevada (-28.2%) and Arizona (-20.6). Florida, of course, traditionally always jumps on board any real estate collapse and also came in the top ranks of disaster (-24%).

Recently, when I was living in the Bay Area in California, I was appalled to find 1500 sq. ft. two bedroom, one bathroom, ranch houses on postage stamp lots, needing complete renovations, selling for half a million. In some fashionable communities out there, the worst house in town was selling for well over a million dollars.

How did this happen?

In the old days, mortgages did not grown on trees. Banks lent money grudgingly and only successful people with very stable jobs could obtain long-term financing. Ordinary people had to save the money to pay all cash or find a motivated seller willing to hold a mortgage for a few years. Of course, that meant you might get a five year mortgage if you were very lucky. More likely, you’d get three years. Nobody was going to give you 30 years financing.

Then along came the government. The federal government supplied the leverage which allowed idiots all over America to bid up prices of houses, offering to pay major chunks of their income for 30 years. And Voila! people a bit older than me who bought nice homes in booming areas for a few tens of thousands found the value of their investment multiplied astonishingly over a couple of decades. I know one executive couple from Bedford, NY, who often told me ruefully that, though they had worked hard and saved and invested all their lives, the only thing that ever earned them serious money was the decision to buy their house.

Of course, the windfall avalanche of gold that came to the lucky homeowner who purchased in the old days was really just a wealth transfer from members of a younger generation facilitated by our obliging uncle.

Younger people didn’t really mind backing up the pickup trucks full of dollars in the driveways of that older generation and pitchforking out the money, because they all believed the party would continue. Real estate prices would just keep on growing to the sky, and their own turn would come. Some fine day, members of a generation still younger would come along, this time with box car loads of dollars.

Pity that the music recently stopped. No more growth to the sky. No generational wealth transfer for you.

Steven Malanga, of City Journal, says that government-sponsored housing booms have happened several times before, always followed by busts. We’ve just forgotten, and you know what Santayana said: Those who fail to learn from history are condemned to repeat it.

I don’t think that it is only a belief that home ownership inspires the bourgeois virtues that causes government to subsidize housing. Housing subsidies serve large, deeply interested constituencies and are inevitably popular.

WSJ:

The story starts in 1994, when the Senator became one-third owner of a 10-acre estate, then valued at $160,000, on the island of Inishnee on Galway Bay. The property is near the fashionable village of Roundstone, a well-known celebrity haunt. William Kessinger bought the other two-thirds share in the estate. Edward Downe, Jr., who has been a business partner of Mr. Kessinger, signed the deed as a witness. Senator Dodd and Mr. Downe are long-time friends, and in 1986 they had purchased a condominium together in Washington, D.C.

Mr. Downe is also quite the character. The year before the Galway deal, in 1993, he pleaded guilty to insider trading and securities fraud and in 1994 agreed to pay the SEC $11 million in a civil settlement. The crimes were felonies and in 2001, as President Clinton was getting ready to leave office, Mr. Dodd successfully lobbied the White House for a full pardon for Mr. Downe.

The next year—according to a transfer document at the Irish land registry…—Mr. Kessinger sold his two-thirds share to Mr. Dodd for $122,351. The Senator says he actually paid Mr. Kessinger $127,000, which he claims was based on an appraisal at the time. That means, at best, poor Mr. Kessinger earned less than 19% over eight years on the sale of his two-thirds share to Mr. Dodd. But according to Ireland’s Central Bank, prices of existing homes in Ireland quadrupled from 1994 to 2004. ...

In his Senate financial disclosure documents from 2002-2007, Mr. Dodd reported that the Galway home was worth between $100,001 and $250,000. However, Mr. Rennie reports that in 2006 and 2007 the Senator added a footnote that reads: “value based on appraisal at time of purchase.”

Mr. Dodd had good reason to add the qualifier. Senate rules call for valuations to be current and anyone who looked into the estimate would immediately spot Mr. Dodd’s lowballing. A June 17, 2007 feature in Britain’s Sunday Times did just that. “Diary” observed that in Roundstone “a two-bed recently made E680,000 ($918,000) and a cottage is currently on offer for E800,000.” Noting Mr. Dodd’s estimate of his property—between E75,000 and E185,000.

Toby Harnden at the Telegraph:

Original story

Well, what do you know? It seems the side yard parcel purchased by Mrs. Rezko wouldn’t appraise, and the bank appraiser who rejected a $625,000 valuation was fired and a new reappraisal mysteriously substituted for his estimate of no more than $500,000.

They call that bank fraud.

The Washington Times has the story.

The New York Times quarterly real estate magazine, Autumn edition, features a pair of cautionary tales in which two astonishingly different dream homes turn into war zones occupied by divided families.

The Dobsons of Duncraig Castle

The Taubs of Borough Park

The disputed Taub home in Borough Park

The LA Times notes that the foreclosure market is working for some home-seekers.

A family of bobcats (Lynx rufus) has taken up occupancy in an empty (bank-owned) house in the Tuscany Hills development of Lake Elsinore, California.
————————————————————
Hat tip to Karen L. Myers.

Charles Bremmer reports from Paris, in the London Times, that Russians are not only gobbling up real estate in the Republic of Georgia. Let’s hope they overpay just as much for that Caucasian real estate.

A mysterious Russian billionaire has trumped his big-spending rivals and broken a world record by splashing out €500 million (£392 million) on one of the most sumptuous villas on the French Riviera.

The price of the Villa Leopolda, a Belle Époque mansion on the heights of Villefrance, has amazed estate agents but fuelled local worries that the invasion of Russian money on the Côte d’Azur is getting out of hand.

Since the early 1990s, Russian oligarchs, drawn by memories of the Riviera-mad old Russian aristocracy, have been piling into seaside properties at Cap Ferrat, Cap d’Antibes, Saint-Tropez and the other great playgrounds.

None, however, has come near the price with which the unnamed Russian clinched the Leopolda deal with Lily Safra, the widow of Edmond Safra, a Lebanese banker who was killed by an arsonist’s fire in Switzerland in 2003.

Mrs Safra was said to have held out for months as the buyer raised his bid for the villa, between Nice and Monaco, which King Leopold II of Belgium acquired in 1902.

The previous record for a house was said to be the £57 (JDZ: reported as £117) million that Lakshmi Mittal, the steel tycoon, paid for a property in Kensington Palace Gardens in 2004. The macho spending contest by Russian oligarchs. ...

Russian excess is feeding discontent among poorer people. Pierrette, a housekeeper for one Russian, said: “I attended a party where the guests had fun throwing burning €500 notes into the air while everyone split their sides laughing. The domestic staff were later told to collect the ashes. It was sickening.”

House photos.

Johns Hopkins Professor Phyllis Piotrow wanted to sell her brick five-bedroom house next to Hillmead Park in Bethesda, Maryland and retire to New Hampshire.

She had been hoping to sell her house with 1.3 acre lot to a developer, but Montgomery County fought development plans until the real estate market softened, then cajoled Piotrow into selling the property for a below-market price of $2.5 million to be incorporated into the neighboring park.

Then, somebody had an idea, as Marc Fisher reports in the Washington Post, 6/8:

The parks commission had planned to demolish Piotrow’s 1930s house, at a cost of about $65,000. Instead, staffers at Montgomery’s housing agency wondered, why not spend about twice the cost of demolition to renovate Piotrow’s five-bedroom place and use it to house a large (mother with 13 children -DZ) homeless family? After all, finding housing for large families is notoriously difficult, the county already shells out about $100,000 a year to keep a homeless family in a motel and at least six other houses in county parks are being used in similar fashion.

You will not be shocked to learn that the good people of Montgomery County thought this a very poor idea.

The same Marc Fisher recycles the same story into a blog editorial with a title which wonders indignantly: Is This House Too Nice for the Homeless?

(I mean, really, what kind of person could possibly think that?)
———————————————————-

Residents of the Hillmead neighborhhood evidently could, and did, think un-PC, uncharitable thoughts.

Examiner.com

Washington Post 3/23:

As the Montgomery County Council put the finishing touches on a $2.5 million plan to buy more land for a Bethesda park, council member Nancy Floreen lobbed what has turned out to be the equivalent of a neighborhood cluster bomb:

Why not house a needy family in the 1930s-era home on the property in the Hillmead neighborhood and expand the park at the same time? ...

Residents of Hillmead, a leafy community about three miles from downtown Bethesda with small Cape Cods and large McMansions selling for more than $1 million, say they only recently learned of the county’s plans and think officials did a poor job of keeping them informed. ...

The Hillmead residents insist that their opposition does not stem from antipathy to poor people. Those leading the fight say it’s a debate about how the county chooses to spend its $4 billion budget in tough economic times, and about due process for communities. ...

“This really isn’t about having a homeless family living in a house that is bigger than probably 90 percent of the houses in the neighborhood,” said Brett Tularco, a developer who lives in the neighborhood and has offered to tear down the house to save the county the expense. “Our kids are going to school in trailers and then this homeless family would be living in a $3 million estate. That money could have been spent on housing tons of people instead of one family.”

He said he is also worried about public safety if the homeless family moves on and the county then uses the house to shelter mentally ill residents or drug abusers.

“That really isn’t who we want our kids playing next to,” he said.

Councilmember Nancy Floreen’s website

The Onion reports that the a new upscale trend, fueled by increasing affluence and the limited supply of urban housing, has appeared, of even more alarming character.

Hat tip to Frank Dobbs.

John Murrell explain:

You don’t get to be one of the richest men in the world by being a pushover, so it was no surprise to see Oracle CEO Larry Ellison bring his boardroom combativeness to bear when he felt the property tax assessment was too high on his 23-acre Japanese-style compound in Woodside. Ellison’s aptly named Octopus Holdings bought the property in 1995 for $12 million, and over the next nine years Ellison built it up in the style of a Japanese emperor’s 16th century country residence. The estate consists of a nearly 8,000-square-foot main house, a guest house, three cottages and a gym. The landscaping includes a 5-acre man-made lake, two waterfalls, two bridges and hundreds of cherry and maple trees, redwoods, pines and oaks. It’s the kind of place where a Zen monk would feel comfortable, assuming he won the Powerball.

Including the cost of delays, overruns and change orders, Ellison put about $200 million into the compound. Based on the reproduction cost — without those added expenses — the San Mateo County assessor’s office listed the value at $166.3 million in January 2005, and that’s where it’s stayed. Octopus Holdings, however, had the estate on the books at $64.7 million, and took its case to the appeals board, claiming the property’s unique nature would put it at a disadvantage on the open market. The appeals panel agreed — given the limited market for luxury homes, particularly in the 16th century Japanese style, the “overimprovements,” and the expense of keeping up the “excessive” landscaping, the board said the property is suffering from “significant functional obsolescence.” The board knocked $100 million off the valuation for the last three years and will pay Ellison a refund of about $3 million.

Unfortunately, Ellison’s gain is the rest of the community’s loss. Almost half of the refund comes out of Portola Valley School District funds, and the property’s lower valuation means the district will be short $250,000 to $300,000 in annual revenue starting next fiscal year. “It’s a significant chunk,” said Assistant Superintendent Tim Hanretty. “It’s a permanent, ongoing reduction.” Other losers are the county general fund and assorted cities and redevelopment agencies.

Hat tip to Karen Myers.

Poor Reverend Jeremiah Wright has led a life of constant victimization by White America’s racism and discrimination. Denied opportunity all his life, now he will be condemned to live in retirement in the above dreadfully tacky $1.6 million 10,340-square-foot, four-bedroom home in suburban Chicago, currently under construction in a gated community, with a $10 million line of credit, presumably intended for furniture and other incidentals.

Fox News

Typically, this New Yorker essay ridiculing the super-rich manages to combine with its satire a very characteristic note of complacent self-identification with the supposed target.

I feel sorry for people who still think of their places in terms of square feet. My partner, Scott, and I recently purchased Wyoming, which we are in the process of having renovated, and, yes, I do know the square footage (something like two trillion seven hundred and thirty billion square feet, give or take). But that’s just not a very practical type of measurement when we’re dealing with all the plumbers and contractors and security staff and reporters and other non-wealthy service personnel we have to give instructions to. ...

Basically, we are looking at this purchase as a tear-down. There’s really not a lot here you’d want to keep, except one or two of the Wind River Mountains and some old nineteen-twenties Park Service structures in Yellowstone. Scott and I bought for the location—it’s convenient to anywhere, really, if you think about it—and for the simplicity of line. We wanted someplace rectangular, a much easier configuration from a design point of view, and we won’t have to fuss with panhandles and changeable riverine property lines where we’re going to get into disputes with the landowner next door. Spare us the headaches, please! We’ve had plenty already, with the former occupants (thank heavens they’re gone) and all the junk they left behind—the old broken-down pickup trucks, houses, eyesore water towers, uranium mines, the University of Wyoming, Yellowtail Dam, Casper. I’m a thrower-outer. I believe we must first clear everything away, then see what we’ve got. Scott is more sentimental. He thinks we should leave the North Platte River, for example, and work around it. I haven’t said yes or no. I’m secretly hoping he changes his mind.

Read the whole thing.

I sometimes wonder what self-hypnosis has led the well-to-do citizens of New York, for the last seventy-five years, to accept the quarters that are offered them with the idea that they are doing well by themselves. Apparently those of them who have chosen to remain in New York instead of migrating to the suburbs have forgotten what a proper domestic environment is. Lest someone think that my notions are fancy ones, let me put down what seem to me the minimum requirements for anyone’s living quarters. Whether the structure is a single-family house or a thirty-story building, the first necessity is that every room have light and air. Rooms that are in fairly steady daytime use should be oriented to get the maximum amount of winter sunlight. In this latitude, that means that the major exposure should be a southern one, a fact that Socrates discovered twenty-four hundred years ago. To insure enough light and air, the distance between buildings should increase with their height. Our municipal setback regulations make a hypocritical acknowledgment of this principle, but since they were framed to keep land values high rather than buildings low or widely spaced, they have never come within shooting distance of achieving an ideal. The space between buildings should be dedicated to gardens and lawns, partly for beauty, partly to compensate for our tropical summer heat, partly to purify and sweeten the air. Bedrooms should have cross ventilation, or at least through ventilation, and should never face a street. ...

The common row houses, such as those built in the Washington Square district before 1860, met most of these requirements, but the standards have been gradually whittled away…

$155 million. Ouch! And I thought we paid too much for our new house.

Appropriately named “The Pinnacle,” it’s yours for $155 million…

So what justifies the “most expensive” asking price?

To begin with, the 10-bedroom, 53,000-square-foot, yes—53,000-square-foot—home will sit on the most coveted piece of property in the resort. The 160 acres ought to provide ample elbow room for someone who has it all.

The home, which includes four guest cottages, will be built in the center of the ski resort and commands dramatic views in all directions…

Jerry Locati, the Bozeman, Mont., architect who heads up Locati Architects, spent the last year designing the home and gave ABCNEWS.com an exclusive interview about what he calls “an incredibly unique, one-of-a-kind house.”

“It’s an adult, well, actually family-oriented home, a sort of Disneyland scale home for someone who is not afraid to spend money,” he begins as he searches for superlatives. “It will have the usual home theater but will also include a bowling alley, an indoor-outdoor pool and an amazing wine cellar.”

The house, which has a rustic exterior crafted out of stone, hand-hewn beams and ample floor-to-ceiling glass, includes a huge underground garage.

“You’ll be able to park 30 or 40 cars,” Locati says. “Perfect for someone with a car collection and of course the ideal service entrance for caterers.”

Locati says he was encouraged to “think outside the box” by timber and real estate billionaire Tim Blixseth, who is developing the property.

Blixseth is also the developer of the Yellowstone Club resort.

One of those “outside-the-box” ideas is three elevators.

“You enter as you would a lodge. There will be lockers for ski equipment and clothing,” says Locati.

“Every aspect has been incredibly well thought out,” he says. “We’ll have hand-carved fireplace mantles, and we have succeeded in bringing the outdoors indoors while still maintaining a warm feeling.”

Perhaps one of the more unusual features is a private-covered gondola that will whisk skiers from a ski run to the home.

How do you keep the other fellow (who actually owns the land) from doing anything with it that might deprive you of the pleasure of looking at it undeveloped? You just come up with an appropriate worthy cause: protecting some purportedly endangered amphibian, rodent or weed; avoiding sprawl; maintaining open space; and voila! You get to keep out the riff raff, and be spiritually enlightened too.

Today’s Wall Street Journal describes the plight of the Mexican immigrant worker in Monterey County renting out a room in the 1000 sq. ft. house that cost him half a million dollars, and still spending 70% of his income on his mortgage payment.

Meanwhile, Reuters describes the accelerating middle class exodus from idyllic coastal California to the baking hot interior Central Valley (renowned for its 110 degree temperatures) in search of affordable housing.

OAKLAND, California – Father Mark Wiesner has grown accustomed to wishing parishioners bon voyage as they flee the San Francisco area’s high housing costs for California’s Central Valley, where developers are increasingly transforming farms and ranches into a new suburbia.

“So many young couples I marry have to go to Modesto or Tracy to start their married lives,” said Wiesner, a Catholic priest in Oakland on the San Francisco Bay. “They simply can’t afford to stay here in the Bay area and to buy a single-family dwelling.”

Tracy and Modesto are 50 and 80 miles east of Oakland respectively. Both have seen blistering growth in recent years amid a middle-class exodus from California’s famed coastal urban centers in search of affordable housing.

Analysts say the middle-class flight will press on even if coastal home prices sag amid a national housing slowdown. Home prices near the state’s coastline would need to collapse to make buying a home there possible for many households.

Barring a collapse, ever more Californians will call the state’s Central Valley home because homes there are relatively affordable. July’s median home price in San Francisco was $771,000, compared with $438,000 in San Joaquin County roughly 60 miles to the east, according to real estate information service DataQuick Information Systems.

Southern California is seeing a similar exodus to Riverside and San Bernardino counties, known as the region’s Inland Empire, from Los Angeles, Orange and San Diego counties.

“Having been in the house market in Los Angeles, I can tell you a house with little bit of privacy and space to call your own is pretty hard to come by,” said economist Christopher Thornberg of the consulting firm Beacon Economics. “For many people getting out to that Inland Empire is the only way to really have a backyard for the kids.”

Homeowners in a single congressional district in California, the 14th District in Silicon Valley, took more in mortgage interest write-offs than all the residents of six states combined. Homeowners in the 14th—which covers most of San Mateo and Santa Cruz counties, plus part of Santa Clara County—claimed $3.2 billion in mortgage interest deductions during the year covered by the study, compared with $2.9 billion by all the residents of Vermont, Wyoming, West Virginia, Alabama and North and South Dakota. The average deduction in the 14th District was $35,000, compared with an average of $9,500 for homeowners nationwide.
—Residents of a single congressional district on Long Island wrote off more in real estate property tax deductions than all the homeowners from seven states combined. Owners in New York’s Third District took $1.25 billion in deductions—more than the $1.2 billion total claimed during the same period in Hawaii, Wyoming, Arkansas, Delaware, the District of Columbia and North and South Dakota.
—The average New Jersey homeowner claimed $6,005 in real estate tax write-offs—more than five times the average deduction by residents of Hawaii ($1,126). New Yorkers claimed an average $5,181 in property tax deductions, followed by the residents of New Hampshire ($4,830), Illinois ($4,129) and Vermont ($3,845).
—The average California homeowner wrote off $14,217 in mortgage interest deductions, while the average homeowner in Oklahoma wrote off $5,710. Washington, D.C., homeowners took an average $11,759 in mortgage interest deductions, while the average homeowner in North Carolina got $6,808.

Higher federal deductions mirror the impact of liberal governments. Home prices (and mortgage deductions) are far higher where new development is intensely regulated and curtailed, and liberal states and municipalities impose (naturally) the highest real estate taxes resulting in the largest local tax deductions.

Thus, the cost of bad government in San Francisco, Manhattan, and the District of Columbia is shared with residents of low regulation, low tax red states.