Hedge fund haven bit by recession
TEXT OF STORY
Kai Ryssdal: Greenwich, Conn. is about an hour train ride from Manhattan. It’s more than just another suburb, though. It’s one of the richest towns in the country, in no small part because it’s also hedge fund central. Wall Street bankers by the dozen have settled there to run the funds. Until not too long ago times were flush. But with the billions in hedge fund losses the past couple of years, and job cuts on Wall Street, the recession’s really starting to be felt. Marketplace’s Amy Scott took a trip to check it out.
AMY SCOTT: It’s one of those sparkling winter afternoons. I’m walking up a snowy driveway to a massive Colonial-style house.
GARY SILBERBERG:: Welcome to my home.
Gary Silberberg is a realtor in Greenwich. He also owns this place. It’s got five bedrooms, each with its own bath.
SILBERBERG: Basement stairs.
And down in the basement there’s plenty of room for amenities.
SILBERBERG: This is where you’d probably want your home theater with tiered seating. It’s set up in such a way that you can probably get 10-12 seats in here, theater style seating.
Silberberg doesn’t live here. This is what’s known as a spec home.
SILBERBERG: I built it on speculation that I would sell it.
SCOTT: And how’s that working out so far?
SILBERBERG: So far it’s not quite the way I had planned it. It hasn’t sold as fast as I would have liked.
In fact, it’s been on the market for two years. Silberberg has knocked a million dollars off the price to try to move it. Now he’s asking just under $5 million. At that price he’s competing with dozens of homes sitting on the market around Greenwich. A few years ago they might have sold in a matter of days or weeks. Evan Goldenberg designs high-end wine cellars for homes like these. Business has slowed down so much he’s had to let two people go.
EVAN GOLDENBERG: You know I felt bad having to lay off employees, but unfortunately there wasn’t enough work coming in to the office to maintain the salaries. Most of my best clients have been, I guess, the bonus babies of times past. They’re lucky enough to have a job to go to every day at this point.
They’re not shopping much these days, by the look of the town’s main retail strip, Greenwich Avenue. Several stores have closed in the last few months. Even people who still have money are either afraid or embarrassed to spend it. Jim Mendelsohn is finance manager at one of Greenwich’s many luxury car dealerships.
JIM MENDELSOHN: There was a customer who traded in a top of the line Rolls Royce for a considerably less expensive car. It just wasn’t appropriate for this time and age.
As bankers and hedge fund managers curb their lavish lifestyles, the town is cutting back too. Revenue from real estate taxes and building permits has fallen.
PETER TESEI: Overall we’re down anywhere from $8-10 million in the current year.
Peter Tesei is First Selectman of Greenwich. It’s a bit like the mayor.
TESEI: We’re going to have to take what I consider pretty drastic steps and reduce headcount.
That means laying off as many as 60 town workers. Projects like a new community pool and a school auditorium are on hold. There’s less money for nonprofits, too — from the art museum to the local United Way. Fundraising there is off about seven percent, just as more people need its services. For all the wealth here, plenty of “regular folks” live in Greenwich. It’s home to a few subsidized housing projects. And for some, the downturn hasn’t been all bad.
JENNIFER and BRODY TICE: Chips! You’re gonna eat chips at church.
In the modest Chickahominy section of town, Brody and Jennifer Tice get their children ready for choir practice. They’re raising five kids on Jennifer’s salary as a doctor’s office manager, with a little help from Brody’s student loans. He started law school last fall. He says the boom times passed his family by.
BRODY TICE: For us, the past 8-10 years have been a hardship. Every time we’ve done a little better, prices just went up, and it was this constant sense of playing catchup that we were never going to quite pull off.
That’s partly why he quit his job as a carpenter to become a lawyer. The Tice family rents a small house in a neighborhood where even homes that look out on the local dump sell for a million dollars. Jennifer says it’s been hard raising kids in a place where their wealthier friends travel by private jet or take class trips to places like the Galapagos Islands.
JENNIFER TICE: The children are so exposed to this constant barrage of, “Where did you go on vacation? Oh, you know we went skiing, we went here, we went there.” And it’s a little bit tough at times to explain that there are a lot of kids, even down street, that are also not going.
In some ways, the recession has made things easier for the Tice family. They no longer have to explain when they can’t afford something.
TICE: If anything, now that folks aren’t spending quite so freely, some of the prices have dropped. We actually found a rental that we’ll be moving into next month, and it’s so much more than we could have afforded during the boom years.
Tice says someday they would like to buy a home and set down some roots. But unless prices fall a lot further, it probably won’t be in Greenwich.
I’m Amy Scott for Marketplace.
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