Housing Slump Spreads to New York’s Richest Suburbs

The housing slump has hit New York City’s richest suburbs.The average price in Westport, Conn., home of chief executive officers Herbert Allison of TIAACREF and Jeffrey Kindler of Pfizer Inc., and actor Paul Newman, fell 8.2% to $1.56 million in the first four months of 2007 from the same period last year, according to multiple listing service data. In Chappaqua, New York, where President and Senator Clinton live, properties sit on the market an average of seven months before they sell, up from five months a year ago.Wealth and excellent credit have until now spared bedroom communities in New Jersey, Connecticut, and New York’s Westchester County from declines in home prices. Now the tightening of credit in response to rising subprime defaults has disrupted the real estate food chain, bringing the national housing slump to Manhattan’s doorstep. Prices fell as much as 18.8% this year in 15 of the 24 areas in which data was collected.“People who may have bought their first home may not be able to do so now, and that stops some of the movement,” a broker at William Pitt Sotheby’s International Real Estate in Darien, Conn, Doug Werner, said. “Whales eat plankton. If the plankton disappears, what will happen to the whales?”Data on home prices and time on the market for January 1 to April 30 were obtained from listing services in New York, New Jersey, and Connecticut. Realtors report sales to the listing services and the listing services then share those numbers with the Washingtonbased National Association of Realtors. The realtors group will release its data for April on May 25.Home prices continue to climb in the wealthiest California suburbs, at a much slower pace. Since 1998, values in the Silicon Valley counties of San Mateo and Santa Clara increased 110% and 129%, respectively. That growth slowed to an average of 3% in the two counties in the first quarter of 2007 compared with the year-earlier period, the chief executive officer of RE InfoLink in Campbell, Calif., which provides multiple listing services for the area, Jim Harrison, said.While million-dollar homes aren’t typically financed with subprime mortgages, which are given to borrowers with bad or incomplete credit histories, buyers in all price ranges have been scared off by the drumbeat of bad news about defaults by subprime borrowers, the CEO of Red Bank, N.J.-based Hovnanian Enterprises Inc., the state’s largest homebuilder, Ara Hovnanian, said.“In these markets, there aren’t going to be buyers concerned about subprime mortgages, but psychologically it’s one more bit of news that’s negative and it causes hesitation on the part of buyers,” Mr. Hovnanian said.The portion of subprime loans more than 60 days delinquent or in foreclosure rose to a seven-year high at the end of 2006, according to data compiled by Friedman Billings Ramsey Group Inc. of Arlington, Va.Nationally, the 2007 median price for an existing home probably will decline 0.7% to $220,300, the first year-over-year drop since the National Association of Realtors began keeping records in 1968. It may be the first drop since the Great Depression, an economist with the organization, Lawrence Yun, said.

Housing Slump Spreads to New York’s Richest Suburbs

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