Tuesday, January 27, 2009

Rich and Famous = Poor and Homeless

By David Norton

The financial news over the past year or so has been daunting to say the least. Day after day we turn on CNBC (or whatever news source) and see red across the board, almost unanimously throughout the worlds markets. In addition, unemployment is at 7.2%, our financial system is painfully crumbling in front of our eyes, and those hundred year old American conglomerates are begging for handouts. But even through all of this, some still say things aren't that bad.

Being a finance major looking for a job, I see the difficult times as a setback. However, I'm in no position to complain as I'm not the unemployed banker with kids and a mortgage. Even Ivy league MBA graduates are getting laid off in this environment as we see those qualified and once wealthy individuals being forced to tighten their belts. It seems as though no one is "recession safe" with the uncertainty of today's markets.

Usually economic downturns do not affect the upper echelon of American society, but in this economic state, their fall is quite evident.

New York City's high society playground, the Hamptons, has seen a downturn with staggering numbers. Just last year, average home prices fell from $800,000 to $690,000 or a 14% loss in value. Sales of homes dropped 41% and existing inventory rose 19%. Apparently those recession proof individuals with high net worth are fallible after all.

As real estate sales struggle throughout the country, the Hamptons proves to be no exception. For investors looking to turn a profit, this could be a time to buy says some experts. Unfortunately, no one has the available capital, or the nerve to take a chance in this high end market.




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