Subprime crisis forces McMansions to take McBreather

By Nick Carey

HINSDALE, Illinois (Reuters) - If you want to sell a mansion in this upscale Chicago suburb, this is not the best time.

"People are afraid, and that is driving the mood of the market right now," Bryan Bomba, principal of local realty the Bryan Bomba Group, said while touring a house here. "You can still sell, but it takes hard work and a lot more time."

Welcome to Hinsdale, an affluent village in demand from doctors, lawyers and executives for its proximity to the city's heart -- 30 minutes by train in rush hour -- with good schools, polite wealthy neighbors and leafy quiet streets.

Across the United States even in wealthy areas like this -- Hinsdale's median asking price for a home is $1.5 million -- residential property sales have been slowed to a crawl by the subprime mortgage crisis.

"It's a harsh reality out there for all of us right now," said Dave Hanna, managing partner of Prudential Preferred Properties CRE, which has offices in Chicago and Hinsdale.

The house Bomba was showing is a 6,000-square-foot (540-square-meter) property. Far larger than average homes and often mass-produced for large gated or semi-private neighborhoods, houses like this are called "McMansions" -- a satirical term for excess that references popular fast food giant McDonald's Corp (MCD.N).

McMansions have come to be associated with the swollen wealth of the lucky winners of the last decade, dating to the Internet boom of the 1990s through wealthy taxpayers made even richer by U.S. tax cuts under President George W. Bush.

Bomba said the asking price for the five-bedroom, three-story house is $1.85 million. It has been on the market for more than two months and, granite kitchen counter tops and red oak floors notwithstanding, may be available for some time more.

Hinsdale houses are now taking six to nine months to sell, compared with four to six months during 2004 and 2005. There are 69 active listings in the town priced at $2 million or more.

"At the current rate of absorption, it would take two and half years to work through that inventory," said Bomba. He said his own business has slowed even as a client base he has built over 18 years has cushioned the blow.

Real-estate businesses are hurting. Uncertainty about the U.S. economy and tighter mortgage financing in the fallout from the "subprime" credit crunch have reduced buyers.

"In more than 30 years I've never seen so much inventory," said Julie Deutsch of Coldwell Banker Residential Brokerage serving the North Shore, Chicago's premium property market.

Deutsch had sales of around $63 million in 2006 and said "I'll consider myself lucky if I see $30 million in '07."

SHAKY FOUNDATIONS?

Hanna said one way to view the U.S. property market was to picture it as "a pyramid, where subprime forms the base."