House sales at hedge fund capital decline
Bloomberg
Home sales in Greenwich, the southernmost municipality in Connecticut, 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 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 is a bedroom community for Wall Street and known as the U.S. hedge fund capital. 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.
In 2007, jumbo loans made up 14 percent of total U.S. originations, according to the Bethesda, Maryland-based publication. 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." Of all available homes this week priced $2 million and above, 81 were built "on spec" by the developer and have never been occupied, said Julianne Ward, director of fine homes and new construction for Prudential Connecticut. The median household income in Greenwich is $117,857, according to a 2007 estimate by the Census Bureau.