The 50-foot indoor lap pool at the Cheslock estate. Source: Higgins Group Real Estate via Bloomberg

The house was custom built by Stanley Cheslock in 2003. Source: Higgins Group Real Estate via Bloomberg

The house features a 3,700-bottle wine cellar. Source: Higgins Group Real Estate via Bloomberg

A dining room in Stanley Cheslock’s 26,000-square-foot Greenwich home. Source: Higgins Group Real Estate via Bloomberg

It’s been more than 500 days since
Stanley Cheslock put his 26,000-square-foot Greenwich,
Connecticut, “dream home” on the market for $17.95 million.

The house and its surrounding estate — custom built by
Cheslock in 2003, with a movie theater and 3,700-bottle wine
cellar — is waiting for a buyer who sees the current asking
price, $15.95 million, as a bargain.

“It’s a steal,” said Cheslock, a co-founder of an
investment firm, who has knocked almost 50 percent off the price
he was asking when he first tried to sell the property five
years ago. “It’s way underpriced.”

Homes priced at $10 million and above are accumulating on
the market in Greenwich, a town about 30 miles (48 kilometers)
north of Manhattan that’s known as the U.S. hedge fund capital.
They’re moving so slowly that it would take more than four years
to sell them all, the biggest backlog since at least 2004,
according to Mark Pruner, an agent with Prudential Connecticut
Realty. Wall Street’s greater emphasis on deferred compensation,
in which a portion of an annual bonus will be paid in the
future, has stifled demand, he said.

“Our market moves very closely with the financial
markets,” Pruner, based in Greenwich, said in an interview.
“Deferred compensation has totally hammered the over-$10
million market because people just aren’t getting large amounts
of cash, and that market has traditionally been a cash market.”

Fifty-two houses in that price range were listed for sale
as of May 19, according to Pruner. Four have sold this year and
two are in contract. At that pace, it would take 52 months to
sell the inventory, he said. If that backlog remains through the
end of the year, it would be the biggest in his data going back
to 2004.

Financial-Industry Buyers

“Previously, if you got a $10 million bonus, buying a $5
million house wasn’t that big a deal” said Pruner, who
estimates that about half of all homebuyers in Greenwich work in
the financial industry.

“If you get $20 million — $3 million in cash and 17 in
deferred compensation — are you going to borrow another $2
million in cash to buy a house? I don’t think so,” he said.

Cash bonuses on Wall Street declined 8 percent last year as
financial firms raised base salaries and deferred some earnings,
New York State Comptroller Thomas DiNapoli said on Feb. 23.
Companies disbursed $20.8 billion in 2010, down from $22.5
billion a year earlier.

The average Wall Street employee took home a cash bonus of
$128,530 in 2010, a drop of 9 percent that was greater than the
total decline because the pool was shared among more workers,
DiNapoli’s office calculated in a report based on personal
income-tax collections.

Less Liquidity

The smaller payouts reflect changes adopted by the industry
after the credit crisis, in response to criticism that soaring
incentives pushed traders to disregard risk. About 56 percent of
financial firms incorporated risk management into performance
measures for top executives by the end of 2010, and 37 percent
have also done so for lower-level staff, according to a February
study by Deloitte Touche Tohmatsu Ltd.

“Pay for performance and incorporating risk measures is
making its way through more and more of the ranks of Wall
Street, and that is going to have an impact because people have
less liquidity at bonus time than they used to,” said Constance Melrose, managing director of eFinancialCareers North America, a
network of websites for finance industry professionals.

A smaller cash component of bonuses may translate to fewer
high-dollar property sales in Greenwich, where the median
household income was about $122,000 in 2009, more than twice the
national average, according to the U.S. Census Bureau. The town
is home to about 90 hedge funds, data compiled by Bloomberg
show.

‘More Caution’

“People just aren’t stepping up as quickly as they did in
the older days,” said Robin Kencel, a broker at Greenwich Fine
Properties, whose listings include a 19-room “English manor
estate.” The 11,800-square foot (1,100-square-meter) Tudor-
style home, known as Nor Tor, originally listed for $15.75
million and was reduced three weeks ago to $14.75 million.

“There’s just a little bit more caution and buyers seem to
be taking a bit more time in committing to a purchase,” Kencel
said.

Homes listed for sale above $10 million have spent a median
of 204 days on the market, according to Pruner. Of the homes in
that category, 29 percent have languished for more than a year.
Properties in the $2 million to $3 million range, by comparison,
were on the market for a median of 72 days and 12 percent have
gone a year or more without a buyer.

$1 Million-Plus

Nationwide, the supply of luxury homes is shrinking,
according to the National Association of Realtors. The inventory
of unsold houses priced at $1 million or more — the highest
category the group tracks — declined to 17.8 months in April
from 22.9 months a year earlier, said Walter Molony, a spokesman
for the Realtors. For all single-family, previously owned homes,
the supply was 8.5 months. Properties that sold for at least $1
million made up 1.8 percent of existing-home transactions in
April, when the median sales price was $163,700.

In Greenwich, there were 158 total home sales in the four
months ended April 30, up 7 percent from the same time a year
earlier, according to data compiled by John Cooke of Prudential
Connecticut Realty. The median price of the properties that
changed hands in that period increased 39 percent to $1.95
million. Sales of houses valued at $2 million to $3 million
jumped 50 percent to 30 transactions.

‘Move Up’ Market

Thirty more deals in the $2 million to $3 million range
were pending at end of April, Pruner’s data show, pushing
inventory of those homes down to 9.4 months of supply. Home
sales in that category, considered Greenwich’s “move up”
market, fell the most in almost three decades in 2009, according
to Shore Country Properties in Riverside, Connecticut.

Buyers who shopped for homes above $5 million two years ago
have shifted their search to lower price points, said Julianne
Ward, a broker with Prudential Connecticut Realty. “Everyone’s
toned down their price range by at least a couple of million,”
she said.

Owners of the most-expensive homes have the financial
wherewithal to stick to their asking price, according to Ward,
though she said they’re taking a risk.

“Buyers won’t look at houses that are overpriced,” Ward
said. “They have too much to choose from. The houses on the
high end, they’re down 30 to 40 percent. Some of them have more
to go.”

630 Days

A 10,000-square-foot gated home on the Long Island Sound
waterfront sold in February for $25 million, a discount of
almost 30 percent, after 630 days on the market. The Field Point
Circle property, with five bedrooms, seven fireplaces and a
“walled water garden” with walkways made of “hand-cut
bluestone slabs,” was originally priced at $35 million,
according to the Greenwich Multiple Listing Service.

Still for sale is a 16,900-square-foot colonial with six
bedrooms and eight full bathrooms, listed at $12.95 million. The
property has been on the market about 100 days.

“The only thing that’s keeping any of these houses not
sold is price,” said Joseph Barbieri, a broker with Sotheby’s
International Realty in Greenwich, whose listings include four
homes priced at $10 million or more.

Barbieri estimates that as many as 10 more properties in
that range may come to market by year’s end. He said he’ll list
two new ones in the next month.

Stanley Cheslock says he hopes this is the year his 21-acre
(8.5-hectare) Hillcrest Estate, with its 50-foot indoor lap pool
and “Siberian spruce sauna,” will find a buyer. He first put
the property up for sale in 2006, asking $31 million.

‘Huge Estate’

“The kids were all moved out and the house was larger than
we needed,” said Cheslock, 65, founding partner of Cheslock
Bakker Associates, an investment firm in Greenwich. “Right
now we’re taking care of this big, huge estate, and while it’s
fun, I’d like to do other things.”

Cheslock and his wife spent about $19 million to acquire
the land and build the house, plus “a couple million” more for
renovations over time.

In 2008, the couple hired an auction company to handle the
sale, ahead of what Cheslock viewed was a softening real estate
market. Bids starting at $19 million were solicited over five
weeks. None of the would-be buyers sealed the deal with a check
or agreed to the sale terms, according to Cheslock and Ward of
Prudential, who represented him in the auction.

Cheslock returned to the market in October 2009, separately
listing the home along with the 21 acres, and an adjacent 8-acre
parcel with a cottage.

The parcel and cottage sold last June for $4.5 million, and
the remaining estate, priced at $15.95 million, is still
available for a “unique buyer” who craves the privacy of a
gated compound at a discount.

“Somebody’s going to get the deal of a lifetime,” said
Jason Kinard, managing partner of the Higgins Group of
Greenwich, the broker that most recently listed Cheslock’s home.
“In anywhere from five to seven years they’re going to be very
happy with what the house will be worth and what it can fetch on
the open market.”

To contact the reporter on this story:
Oshrat Carmiel in New York at
ocarmiel1@bloomberg.net

To contact the editor responsible for this story:
Kara Wetzel at
kwetzel@bloomberg.net