US estate agents are living in fantasy island

Even the upmarket folk of Greenwich, Connecticut, can't escape the credit crunch

"We're in a season of white elephants, of projects commenced in good times now languishing in bad," writes Nick Paumgarten in the New Yorker. He has in mind one particular white elephant the Lake Carrington estate in Greenwich, Connecticut.

Just up the coast from New York, Greenwich is not the sort of place you'd associate with the subprime mortgage fiasco. As Paumgarten says, it is more "prime than sub". But like almost everywhere these days, it's feeling the pinch.

Luckily the town has a law that forbids the erection of For Sale signs in front of houses otherwise its residents would be embarrassed both by the sheer quantity of properties on the market and by how unrealistic the price tags for most of them are proving to be. Generally, says Paumgarten, "people are almost as protective of their property values as they are of their children".

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The Lake Carrington house is situated in what is quaintly known as "backcountry Greenwich". On the edge of a man-made lake, it was constructed by a local real estate developer, Antares Investment Partners. The style is described as "stockbroker Georgian". There are 35,000 sq feet of floor space if you include the basement an underground complex, according to Paumgarten, which houses a basketball court, a movie theatre, an indoor swimming pool, a gym, a spa, a wine cellar and a wine-tasting room.

The Lake Carrington house went on the market in April 2007 with a price tag of $28m. It wasn't even finished: basically it was (still is) a Potemkin-style husk. There are no bathroom or kitchen fixtures, the floors are plywood. To move in, a buyer would need to put in an extra $5m-$15m worth of work. The developers describe their house as "couture-ready", the wheeze being that the buyers, whoever they are, can "customise the guts" but not the shell to their taste. I suppose, as Paumgarten suggests, this gigantic folly is like many others embarked on in recent years, and not just in Greenwich. It is part of a rash of "insta-mini-giganto luxury houses" whose "banal extravagance both mitigates and exacerbates what people either too rich or too poor to live in such houses would consider their tackiness".

Before Lake Carrington went on the market, Joseph Beninati, one of the founders of Antares, told the New York Sun: "There's always a market for van Goghs, and there's always a market for backcountry mansions in Greenwich. Markets are pretty much irrelevant here. It just depends which group of guys in the world are on top. So it might be the Russian oil barons, the hedge-fund guys, or the private-equity guys today... It is just a rotation of who has the millions and millions".

In this case, no potential buyer had quite as many millions as Beninati hoped. A deal has apparently been struck. But the price agreed is $13.75m just under half the original asking price.