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Ex-Treasury chief gets a costly lesson in battered home prices

Henry M. Paulson, President George W. Bush's top economic advisor, takes a $1-million loss on the sale of his home in a tony Washington neighborhood.

December 30, 2010|Reuters

Few know better than former Treasury Secretary Henry M. Paulson how the struggling U.S. economy has battered home prices.

As former President George W. Bush's top economic adviser, Paulson played a lead role battling the U.S. housing downturn and deep financial crisis it sparked.

But last week it got personal.

Paulson sold his three-bedroom home in a tony Washington neighborhood last week for close to a third less than his initial asking price and more than $1 million below what he paid for it more than four years ago.

The villa-style home near the official vice president's mansion and the National Cathedral sold for $3.25 million on Dec. 21. Paulson put it on the market for $4.6 million in April, later lowering the asking price to $4.15 million, according to real estate industry records. He paid $4.3 million in August 2006, according to government records.

"A jewel-like facade, reminiscent of a Provencal villa, gives way to a remarkable interior with living space on three levels and expansive common areas," the listing gushed.

Paulson clearly got caught in the wave of price declines that has bedeviled sellers across the nation. But real estate is location specific, and Paulson fared much worse than his neighbors.

The value of Paulson's house fell 24.4% during his ownership. Nationally, home prices are 29.3% lower over that period, according to real estate data firm CoreLogic.

But they're just 5.6% lower in his ZIP Code, according to the Santa Ana firm.

"It may just be that the treasury secretary paid too much for his house," said Richard DeKaser, an economist with the Parthenon Group. Until October, DeKaser was president of Woodley Park Research, an economic and housing consulting firm based less than half a mile from Paulson's former house.

The loss probably won't have much effect on Paulson's net worth, which was estimated to be as much as $700 million in 2008.

Paulson, who ran Goldman Sachs before coming to Washington in 2006, was not immediately available to comment.

Perhaps his house had a treasury chief curse. His successor at the Treasury Department, Timothy F. Geithner, was unable to sell his five-bedroom home in Larchmont, N.Y., for $1.6 million in 2009 and instead rented it out after taking up his post.

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