Housing Market Slump Hits Even Wealthiest Suburbs

The U.S. housing slump has hit New York City’s richest suburbs.

The average price in Westport, Connecticut, home of CEOs Herbert Allison of TIAA-CREF and Jeffrey Kindler of Pfizer Inc., and actor Paul Newman, fell 8.2 percent 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, N.Y., where Bill and Hillary Clinton live, houses sit on the market an average of seven months before they sell, up from five months a year ago.

Established wealth and excellent credit have, at least until lately, 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 home loan defaults has disrupted the real estate food chain, bringing the national housing slump to Manhattan’s doorstep.

In fact, home prices fell as much as 18.8 percent this year in 15 of the 24 areas in which data was collected, reflecting the problems in the New York and Connecticut mortgage markets.

“People who may have bought their first home may not be able to do so now, and that stops some of the movement,” said Doug Werner, a broker at William Pitt Sotheby’s International Real Estate in Darien, Conn.

“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.

Meanwhile, home mortgage costs and real estate prices continue to climb in the wealthiest California suburbs, but at a much slower pace.

Since 1998, values in the Silicon Valley counties of San Mateo and Santa Clara increased 110 percent and 129 percent, respectively.

That growth slowed to 3 percent in the two counties in the first quarter of 2007 compared with the year-earlier period, as home sales continue to taper off, said Jim Harrison, CEO of RE InfoLink in Campbell, Calif.

The company, which provides multiple listing services for the area, shows just how dramatically California mortgage demand has fallen off.

Prices for the first fiscal quarter rose in Los Altos (2.5 percent) and Los Gatos (6.5 percent), and days that homes spent on the market before they sold increased in both towns.

In Atherton, which Forbes magazine called the wealthiest ZIP code in the country, prices increased 6.2 percent to $3.25 million (quite a hefty mortgage) while days on the market fell to 82 from 104.

“Silicon Valley is the reason the market is stable,” Harrison said. “The software businesses are hiring a lot of people still these days.”

Prices declined by 18.2 percent in Los Altos Hills, where homes spent a month longer on the sale block, and by 11 percent in Woodside, where homes spent two more months on the market than they did a year ago.

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