Expensive tastes linger after market feast ends

Luxuries: Big spenders seem to barely flinch at economic downturn.

Downturn barely dents demand

April 09, 2001|By Laura Vozzella | Laura Vozzella,SUN STAFF

The rich are drowning their stock market sorrows with fine California cabernets.

Although the Nasdaq is in bear territory and the Dow nearly there, Vintage Cellars can't keep $47.99-a-bottle Keenan cabernet in stock. The wine shop in southwest Howard County received 120 bottles a month ago. Now it's almost out.

Dom Perignon is selling well, too - by the $1,595.83 case. A woman bought two $85 bottles of bubbly at the store Thursday in anticipation of "winning" a $2.58 million house in an auction that night.

"If there's a recession, it's not out here," said Rich Cantore, the store's general manager.

The yearlong stock market slide has cost investors more than $5.3 trillion, despite Thursday's rally. Thousands of workers are being laid off across the country, not just from upstart dot-coms, but from corporate giants such as Motorola, Lucent Technologies, Intel and Cisco Systems.

And looming over Baltimore is a glowing, grape-colored symbol of the Internet boom gone bust - the name of a struggling company splashed in neon across the city's football stadium. Virginia-based PSINet announced last week that it will probably be forced to file for bankruptcy.

Although wealthy investors - the ones with the most to lose in the market - are grumbling about their portfolios, they haven't let those losses cramp their style.

Sixty-five big spenders are on a waiting list to buy the new $62,000 Lexus convertible at an Owings Mills dealer. A Mount Washington decorator is ordering a $10,000 carpet for her client's new billiard room. A $100,000 swimming pool is going into a Potomac back yard. A Columbia family just booked a one-week, $12,000 Caribbean vacation that includes a beachfront hotel suite and a private concierge.

"The people that have money are not slowing down," said Don Wresche, a Laurel contractor recently hired to do three kitchen makeovers for an average of $69,000.

Wresche knows a thing or two about the market plunge. During the past three years, he's sunk $7,224 into Intel stock, hoping the investment would pay for his daughter's wedding. In September, the stock was worth $15,000. Now, as the June wedding draws near, it's valued at about $6,000.

Luckily for Wresche and his daughter, the demand for dream kitchens hasn't taken a similar dive.

A Silver Spring couple just hired him to do a $92,000 renovation - the most expensive job he's ever signed. Plans call for a $6,000 stainless steel refrigerator, granite countertops, $900 commercial-grade faucets, custom maple cabinets and an $1,800 built-in wok.

"I can't keep up with it, it's so busy," he said.

Nationally, car sales are on track this year to be the third best in history, said Bob Schnorbus, director of economic analysis for J. D. Power and Associates in Michigan. Luxury vehicles are gaining market share.

"We just had a record month," said Paul Darby, a sales manager at Russell BMW in Catonsville. "It seems the worse the market gets, the more cars we sell. I don't know if they figure it's a better investment to buy a BMW than to put their money in the stock market."

Despite the stock market gyrations and recent layoffs, consumer confidence rose last month - the first increase in six months, according to the Conference Board. Some economists say free-spending ways make sense because unemployment rates remain low and workers generally feel secure in their jobs.

That may be particularly true in Maryland, which has an abundance of federal government jobs and less reliance on manufacturing and dot-com sectors, economists say. Statewide, unemployment rose slightly to 4.1 percent in February, state officials announced Friday. Nationally, the rate is 4.3 percent.

"If you were talking about a sudden, huge rise in unemployment, then you might expect a sudden change in consumption spending," said Christopher Carroll, associate professor of economics at the Johns Hopkins University.

Interest rates are low, too, driving one of the hottest real estate markets in memory in metropolitan Baltimore.

Luxury homes are taking a little longer to sell lately, but they're still selling, several real estate agents in metro Baltimore say. A 20,000-square-foot home in the Preserve, one of Howard County's most exclusive neighborhoods, went for $2.9 million about a week ago, after five months on the market.

The lower rates are also prompting many homeowners to refinance, which can make them feel richer even if their stock portfolios say otherwise.

"The 401(k) is about sometime in the future," Carroll said. "The mortgage refinancing is about right now."

Some signs of softening sales are cropping up here and there. Just look in the shadow of PSINet Stadium, a facility named in high-flying days - not quite 2 1/2 years ago - when the Internet company had $105.5 million to spend on a sponsorship deal that included naming rights.

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