Greenwich House Sales Slump as $2 Million-Plus Homes LanguishBloomberg
By Oshrat Carmiel
Greenwich, Connecticut, home sales dropped 77 percent in February from a year earlier as Wall Street firms cut jobs and buyers retreated from multimillion-dollar purchases, Prudential Connecticut Realty said.
Seventeen homes sold last month, down from 75 a year earlier, the broker said in a report. Sales of houses priced from $2 million to $3 million fell 80 percent, with two properties selling last month. The median sales price declined 2 percent to $1.76 million.
“Greenwich, despite its imputed affluence, is still a part of the world, and like every place else, it suffers from buyers and sellers not agreeing on the value of illiquid assets -- one of those being real estate,” said Roger Pearson, a Greenwich real estate lawyer and former mayor of the town.
Banks, insurance companies and securities firms have cut more than 180,000 jobs in the Americas in the past year in the recession, according to Bloomberg data. Greenwich, a town of about 61,000 about an hour’s drive northeast of Manhattan, is a bedroom community for Wall Street and known as the U.S. hedge fund capital since more than 100 such companies are based there.
Banks have reduced lending in the credit crisis. Jumbo loan issuance slowed in the fourth quarter to $11 billion, or 4 percent of the mortgage market, the lowest quarterly amount since Inside Mortgage Finance started tracking that data in 1990.
Jumbo Financing Falls
In 2007, jumbo loans made up 14 percent of total U.S. originations, according to the Bethesda, Maryland-based publication. Jumbo loans start at $417,000 in most places and up to $729,750 in areas with higher home prices.
The median home price in Greenwich dropped the most in three decades last year as demand from financial executives slumped. The value of all real estate sold last month in Greenwich declined by 79 percent from last February to $45.3 million.
Only one home priced above $5 million sold in February compared with eight the previous year, said John Cooke, a broker for Prudential Connecticut who compiled sales data.
The inventory of unsold homes climbed 16 percent to 605 units at the end of February. Available homes between $2 million and $3 million climbed 19 percent to 102. For homes priced at $5 million to $8 million, there were 80 properties for sale at the end of last month, up from 66 a year earlier, Cooke said.
“Our connection with the financial world is very strong and historically it has been a driving force in our real estate market,” Cooke said.
Of all available homes this week priced $2 million and above, 81 were built “on spec” by the developer and have never been occupied, according to Julianne Ward, director of fine homes and new construction for Prudential Connecticut. Such homes are built without a buyer lined up.
Spec on Sale
With its dearth of open land and demand for new construction high, Greenwich has been a promising place for developers building such houses, said Louis Van Leeuwen, chief executive officer of Greenwich Construction LLC. The company sold its last speculative house in August and has ceased building them this year as demand slowed.
The median household income in Greenwich is $117,857, more than twice the U.S., according to a 2007 estimate by the U.S. Census Bureau. The median value of a home in Greenwich was over $1 million in 2007, compared with $181,000 for the nation.
Development costs are high in Greenwich. It cost up to $1.5 million last year to acquire a house on a quarter of an acre that would be torn down to make way for a luxury home, said Van Leeuwen.
“We were selling these homes to all young families coming out of New York for the most part,” Van Leeuwen said. “Most of the people were connected with Wall Street. These are the reasons you’re seeing these homes languishing.”
With homes sitting unsold, many sellers are slashing prices.
Big Price Cut
A 15,000-square foot stone and shingle house at 40 Zaccheus Mead Lane, built in 2007 with five fireplaces and an automatic gate, is now selling for $7.5 million, or 29 percent less than the original list price, according to Prudential Connecticut.
The house is built where a “home sized boulder” once stood and was blasted away, said Christopher Fountain, a broker with William Raveis Real Estate in Greenwich who specializes in negotiating discounts on speculative homes with the lenders who backed the construction........
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