Bernanke feels impact of US housing slump

The US housing recession has arrived literally on the doorstep of Federal Reserve Chairman Ben Bernanke.

Bernanke lives in Washington's Capitol Hill area in a four-bedroom, 2,600-square-foot house he bought new in May 2004 for $839,000. Almost four years later, it may not be worth any more, according to real estate records and local agents.

Bernanke's timing wasn't the best - values in the area peaked a year later - and he is hardly alone among Americans living in an investment that's turned cold. His situation shows that the slump that began with distress in the subprime market is now engulfing wealthier neighborhoods, including some in the nation's capital.

"Even though he's the Fed chairman, he's going to get hit - but I think lot of people will in Washington," said William Wheaton, an economist at the Massachusetts Institute of Technology. The value of Bernanke's home "probably went up to $1.1 million and it's probably back down to $840,000", because prices in Washington just a couple years ago "got out of control", Wheaton said.

Bernanke, 54, started working in Washington in 2002, when he joined the Fed's board of governors under then-Chairman Alan Greenspan. His home purchase two years later may have occurred just before prices peaked on the Hill.

In an area of mostly brick row houses, some dating from the 19th century, Bernanke bought a new townhouse within Capitol Hill's historic district.

As Bernanke surveys the breadth of the housing slump, he won't have to venture far from home.

Real estate records show Bernanke's next-door neighbor's house sold in July 2007 for $880,000, 4.9 percent more than Bernanke's purchase three years earlier. A home four doors down and comparable in size and condition to Bernanke's has been on the market for five weeks at $899,000, after a failed attempt to sell for $988,000 in 2006.

That still leaves the homes of Bernanke and his neighbors worth about four times more than the median home price in the District of Columbia, as measured by S&P/Case-Shiller.

Agencies

(China Daily 03/21/2008 page17)