Credit crunch ripples into mega-mansion market

By Jason Szep

GREENWICH, Connecticut (Reuters) - There's an indoor lap pool, eight-car garage and four-storey elevator. But the 26,000-sq ft (2,415-sq meter), Tuscan-style home features something even more unusual in this ritzy suburb of gated estates and mansions -- a $3 million discount on its price.

As the credit crisis started to shake global financial markets in August, the owners of the 22-acre (9-hectare) estate at 309 Taconic Road in Greenwich, Connecticut, cut their price to $19 million, showing turbulence in the U.S. housing market penetrating the wealthiest strata of American society.

"People are looking instead of buying, maybe since the second week of August," said Julianne Ward, director of fine homes at broker Prudential in Greenwich, a coastal town of 61,000 about 30 miles from New York City.

Until recently, the nation's most extravagant homes had defied the two-year slide in prices and surge in foreclosures roiling the broader property market, where existing home sales are down more than 20 percent from a 2005 peak, according to industry data.

Ultimate Homes, a publication that ranks the nation's 1,000 priciest homes, began its survey in 2005 with the cheapest on the list at $7.9 million. That jumped to $10 million this year with a record six homes now selling for $100 million or more.

"In the last couple of years the most expensive home on the market has gone from $75 million to $165 million," said Rick Goodwin, the magazine's publisher. "This market is still very strong. The rich are doing very well."

The nation's wealthiest communities were largely unscathed by turmoil in the broader housing market through the second quarter of this year, according DataQuick, which analyzes data on real-estate markets nationally.

In California, for example, the number of homes that sold for $10 million or more rose nearly 40 percent between the first quarter and second quarter, while the number in New York grew 15 percent and Connecticut's more than doubled, according to public records examined by DataQuick.

DataQuick mines records where a price or loan amount is available, which means there can be some gaps, but the numbers are a reliable indicator of trends, said DataQuick analyst Andrew LePage who compiled the data for Reuters.

"Certainly through mid-summer it appears to be holding up just fine, and faring better than most other segments of the market," he said of homes selling at $10 million or more.

CREDIT CRUNCH STIRS CAUTION

Like the Bel Air section of Los Angeles and many other exclusive coastal communities, Greenwich has a long association with wealth. Its typical family earns more than $120,000 -- more than double the national average, while its investment bankers are among the country's highest paid, taking home on average $23,846 a week -- 28 times the national average, according a recent government survey.

But the global credit crunch is stirring caution among its newest crop of wealthy elite. Greenwich is the unofficial capital of the U.S. hedge fund boom. More than 100 of the private investment pools for the wealthy have set up in the town. That worries economist Edward Deak at Fairfield University in Connecticut.

"The hedge funds, private equity firms are taking a hit," he said.

"I'm concerned about what the mortgage meltdown is going to mean for bonus incomes coming into Connecticut in January '08 and also January of '09."