Housing crunch, 90210: Places like Beverly Hills, Calif. and Greenwich, Conn. have been hit by steep price declines, and a jump in foreclosures.
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NEW YORK (CNNMoney.com) -- Across the country, real estate agents and home sellers in wealthy neighborhoods who grew accustomed to seven-figure bidding wars during the boom are feeling the sting of the housing
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NEW YORK (CNNMoney.com) -- Across the country, real estate agents and home sellers in wealthy neighborhoods who grew accustomed to seven-figure bidding wars during the boom are feeling the sting of the housing crunch.
Ed McMahon can vouch for that. The former Johnny Carson sidekick and TV pitchman recently saw his $5 million Beverly Hills home go into foreclosure.
In fact, McMahon is a celebrity face to a broader trend.
Prices down, foreclosures up
In Palm Beach, Fla. (zip code 33480), median home prices fell 38% during that period, according to the real estate Web site Trulia. Prices in Greenwich, Conn. (06831), dropped 15%, while homes in Wayzata, Minn. (55391), are selling for 28% less.
"What I'm finding is that million dollar plus homes declined 4% or so [over the past 12 months]," said Don Kelly, a spokesman for Zaio, which is building a national data base of home value appraisals.
And foreclosure data tracks the pricing information. In Beverly Hills, filings nearly doubled to 41 in the first four months of this year, up from 22 in the same period last year, according to RealtyTrac, which compiles foreclosure stats. In Palm Beach, there were 34 foreclosure filings, up from 9 in the period a year ago. Greenwich had 23, up from 10, while Wayzata had 18, compared with 14 a year ago. Kenilworth, Gladwyne and Medina had just one each, while Lincoln had none.
Of course, the high-priced areas have generally held up better than overall home prices, which plunged a record-setting 14.1% in the 12 months ending March 31, according to the S&P Case/Shiller Home Price Index. And a handful of posh outposts are still posting gains. Prices rose 18% in the swanky Chicago suburb of Kenilworth, Ill. (60043), 9% in Medina, Wash., which is home to Bill Gates just outside Seattle, and 5% in Silicon Valley's Atherton, Calif. (94027).
But many ritzy areas are finding they are not immune to the housing slowdown.
Drew Peterson, an agent with Weichert Realtors in Greenwich, says sales volume has slowed as buyers have become more cautious.
"There are motivated sellers, and opportunities for buyers to capitalize on sellers downsizing," he said. Some of the owners of large estates are moving out and resettling in Greenwich's more urban downtown area.
In the Philadelphia suburb of Gladwyne, the wealthiest town in Pennsylvania which lies along the fabled "Main Line," the market has also slowed, according to Judy Getson, the sales manager for Prudential Fox & Roach in Haverford.
According to Trulia, just six homes sold in Gladwyne during the three months ending April 30, down from 14 sold in the same three months during 2003, a boom year. There are now 42 homes in town on the market for a million dollars or more, according to Realtor.com, ranging from $1.195 million to $17 million.
Getson is seeing a downsizing phenomenon similar to Greenwich in the Philadelphia area, although not in Gladwyne proper. "A lot of people are moving from mansions and buying condos in the city," she said.
Perhaps the hardest hit of the 10 wealthy zips in our sample is Palm Beach, Fla. Corcoran Group agent Paulette Koch says inventory is building up in the "low end" of the local market there - the $2 million to $6 million range.
"The volume of sales has declined," she said, "and the selling season this year started very late and slowly."
The ultra-high-end has, however, been very good. "There have been records set all over the place," she said.
Sales are also moving much more slowly in the Minneapolis suburb of Wayzata, according to Linda Blyth, director of previews for Coldwell Banker Burnet.
"One of our own agents had his own $4.2 million house on Lake Minnetonka as part of the waterfront tour we do every Fall. It sold in April, at full price, to someone who was on that tour," she said. "People are taking longer to make a decision."
Even in stronger markets, like Medina, Wash., sales volume is down.
The market slowdown has unleashed a "fair amount of inventory," said Larry Williams, a real estate agent for John L. Scott Real Estate. And homes are often overpriced. "Many sellers haven't figured out that it's not a seller's market anymore," he said.
Still, Williams sold a $2.2 million house recently in less than a day, with multiple offers. And he had a waterfront lot for $4.4 million that went in nine hours.
"The stuff that is selling is going in 30 days or less, and the average sale is more than 100% of the asking price," said Williams. But to sell, it has to be high quality and the marketing - photos, advertising, pricing and staging - all have to be top-drawer as well.
Of course, most of the homeowners in the country's wealthiest zip codes - hedge fund chiefs, industrial moguls and dot-com billionaires - will probably have the means to wait out a slump. It's doubtful that these areas will see the flood of distressed sales that sent so many other areas into a downward spiral.
And that alone can be enough to give places like Beverly Hills a boost.