Billionaire Larry Ellison’s $10.5 Million Newport, RI Beechwood Mansion

In 2010, Larry Ellison paid $10.5 million for the Astors’ Beechwood mansion on Bellevue Ave in Newport, RI not far from my office. And based on all of the heavy duty staging, Ford F-150s, and workers (that I can see) $10.5 mil is simply the price for admission. Larry’s going deep on this one. Meanwhile, homes in Newport have a median price of $421,000 according to Trulia.com. Who needs the Fed? Newport and other desirable markets like Manhattan are fine without the Fed. That raises the question; how much has the Fed really helped less desirable markets with all of its money printing?

The answer: Not much. With the trillions of dollars the Fed has created out of thin air, the real estate market is basically on life-support. Take a look at the 1959-current numbers for U.S. Housing Starts. Only now are housing starts reaching levels where they normally bottom out during a recession.

U.S. New Homes Sales look like the rocky edges of Brenton reef off Newport’s Ocean Drive. The negative 14.5 percent wreckage in March adds insult to injury. And real estate execs want lower prices. “We’d like to try to bring our [average selling prices] down across the country,” said Meritage Homes Corp Chief Executive Steven Hilton in a conference call. “They’re getting relatively high. I don’t see anything on the horizon that gives me a lot of excitement that the first-time buyer is coming back.”

And the last four out of five months have been terrible.

We’ve seen this play out for a while now. “Yes, there has been a measurable improvement, but a certain softness continues to prevail despite record setting injections of liquidity by the Fed. So are you impressed? You shouldn’t be. The little guy is tapped out, living on a debit card and maybe sans a job. Mortgages are still under water. Small business owners are justifiably reluctant to hire, and Americans, in general, are in a pretty foul mood…” wrote Dick Young in the October issue of Intelligence Report. To add insult to injury we have a new Fed Chariwoman, Janet Yellen chomping at the bit to prove herself worthy of the lofty title. She is hammering home a misguided Fed policy that was wrong from the very beginning going back to Greenspan and then Bernanke. This cannot end well.

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E.J. Smith - Your Survival Guy

Preparing your investments and family for when disaster strikes.

E.J. Smith is the Founder of YourSurvivalGuy.com, Managing Director at Richard C. Young & Co., Ltd., a Managing Editor of Richardcyoung.com, and Editor-in-Chief of Youngresearch.com. E.J. graduated from Babson College in Wellesley, Massachusetts, with a B.S. in finance and investments. In 1995, E.J. began his investment career at Fidelity Investments in Boston before joining Richard C. Young & Co., Ltd. in 1998. E.J. has trained at Sig Sauer Academy in Epping, NH, where he completed course-work in Practical and Defensive Handgun, Conceal Carry Pistol, Shotguns, Precision Scope Rifle and Kidnapping Prevention. E.J. plays a Yamaha Recording Custom drum set with Zilldjian cymbals. His first drum set was a 5-piece Slingerland with Zilldjians. He grew-up worshiping Neil Peart of the band Rush, and loves the song Tom Sawyer—the name of his family’s boat, a Grady-White Canyon 306. He grew up in Mattapoisett, MA, an idyllic small town on the water near Cape Cod. He spends time in Newport, RI and Bartlett, NH—both as far away from Wall Street as one could mentally get. The Newport office is on a quiet, tree lined street not far from the harbor and the log cabin in Bartlett, NH, the “Live Free or Die” state, sits on the edge of the White Mountain National Forest. He enjoys spending time in Key West and Paris. Please get in touch with E.J. at ejsmith@youngresearch.com. Sign up here to receive all the best content from Richardcyoung.com each week.