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Greenwich Boom & Bust

The New Yorker has an article about how Greenwich, Connecticut is not immune to the real estate crash. The article has some great quotes and sections about real estate in general, but it's more about how the rich got greedy and were hurt by the real estate crash.

If money buys anything, it’s impatience.

Old money and new, doesn't matter, in a time when real estate foreclosures abound, money has no owner, it's just in your pocket or someone else's for a short period of time. But this piece had a wonderful paragraph (listed below) on the fascination with real estate: who owns what, who lives in that amazing house over there, who lived in that house before - the history.

There’s a story behind every home, and there’s a mystery behind mansions of extravagance that are up for sale and also those deserted single family homes on the verge of foreclosure. Both intrigue us, but we’re perhaps more concerned by the sign in front of the mansion since so much was lost. The owners have dropped from up so high. We wonder how they could fall so far. What happened?

People like to drive around and look at nice houses. They want to know who lives in them, what the owners did to afford them, as well as who used to live in them, and why they no longer do. Houses are projections of taste and means, or the lack of them, and signify fortunes made and lost—the ebb and flow of capital from generation to generation, place to place, line to line. Each cycle of ownership is a cautionary tale—dinner table mythology.

The story talks about how at one time you weren’t allowed to put a for sale sign out in front of a home in Greenwich, Connecticut. It’s the opulent playground of the hedge fund barons with loads of new money and the historic pride of those from old money. The Bush family even having roots in the area before they moved to Texas. Those for sale signs were a blot on their gated communities. But today, with the crash of the real estate market, all are affected, from the mansion owners in Greenwich to the first time homebuyers or greedy investors in California and Florida. There are even foreclosure auctions in Greenwich.

In real estate, the only thing more important than location is optimism. Rosy projections create a kind of fog that can make it all but impossible to measure the prospects of the project a project.

The article talks about how even the richest of the rich got greedy and built not just McMansions but huge castles. Going to the extreme of tearing down the previous mansion to build a spec castle/mansion. They seemed to think that they could turn around and sell the palatial grounds for an even heftier price - they didn't think the credit crunch and real estate bubble would touch Greenwich.

But as we know, the real estate crash – the real estate bubble, hit everyone. Greed is common from the small time poker player to the big time real state investor.

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