The Rockefellers, the Morgans and the Astors, the most powerful Gilded Age families, knew how to pick real estate. The worth of the properties they once owned on Mount Desert Island in Maine has soared during the national real estate bust.
Americans watched their home values tumble an average of 29 percent from the start of the real estate collapse in 2006, according to the Federal Reserve. Mount Desert estates owned by the descendants of oil and industrial barons gained by almost the same amount, according to local records.
While the recession erased more than 8 million jobs and brought the home-construction industry to a grinding halt, billionaire Mitchell Rales bought a $5.5 million estate and tore it down to build a $25 million mansion on Mount Desert in Maine, the U.S. state with the highest proportion of vacation homes, according to new figures from the 2010 U.S. census.
“The upper end has survived the crash better than most,” said Gary Fountain, a broker at Mount Desert Island Real Estate in Bar Harbor. “There are still plenty of Learjets parked at the Bar Harbor airport every weekend.”
The rest of Maine isn’t used to summer residents arriving on private planes. Packed minivans filled with families from nearby states is more the norm. As a whole, the value of Maine’s real estate has fallen 12 percent since 2006. There’s no separate gauge of the vacation-home market in the state. In the same period, New York’s home values dropped 15 percent.
The gain in the value of real estate in Mount Desert, a town with the same name as the island, outpaced even the 14 percent rise in Southampton, the priciest of the villages on the eastern tip of New York’s Long Island where Hollywood starlets and Wall Street bankers spend their summers. The roster of Hamptons summer residents includes Lloyd Blankfein, the chief executive officer of Goldman Sachs Group Inc., and Hollywood producer Steven Spielberg.
Purchases of luxury homes in both communities are often made with cash, according to brokers.
“Even if the very rich lose money in the stock market, they still have enough left over to buy a luxury vacation home and, really, do whatever else they want,” according to Jonathan Miller, the president of Miller Samuel Inc., a residential appraisal company based in Manhattan.
Most of the glitterati who flock to the Hamptons in the summer months are newly rich, said Miller. That includes Howard Stern, the radio talk-show host, and actor Jerry Seinfeld. Taking part in the annual summer exodus from Manhattan, either by roads jammed with other refugees or, for the wealthiest, via helicopter, is considered a status symbol by investment bankers and CEOs, he said.
In the town of Mount Desert, many summer residents earned their money the old-fashioned way -- they inherited it. The great-great-grandchildren of the Rockefeller dynasty tend to spend summer days sailing on the Gulf of Maine or hiking in nearby Acadia National Park, where John Rockefeller Jr., the son of the Standard Oil founder, built a network of carriage roads almost a century ago so he could ride his horse without being annoyed by newfangled automobiles.
In the Hamptons, planning and attending charity fundraisers is the main summer sport. One of the most exclusive tickets is the VIP tent for the final day of the Hampton Classic Horse Show on Labor Day weekend, where ladies wear elaborate hats and waiters dress in white coats.
Mount Desert summer residents reserve that weekend for the Labor Day Series, an annual sailboat race sponsored by the Northeast Harbor Fleet, the yacht club where the younger David Rockefeller Jr. and Armour Mellon, whose family founded Mellon Bank, keep their boats. At the awards ceremony, the dress code is fleece and boat shoes.
“You couldn’t get more different than the Hamptons and Bar Harbor, but what the two real estate markets have in common is that disconnect with other segments of the housing market,” Miller said.
The assets of Americans who own at least $1 million, in a tally that excludes real estate, grew 8.4 percent in 2010, according to the Merrill Lynch Global Wealth Management and Capgemini World Wealth Report in June. In the same period, U.S. personal per capita income rose just 2.8 percent to $39,901, according to the Census Bureau.
David Rockefeller Sr., 96, the only surviving grandchild of oil tycoon John D. Rockefeller, owns more than a dozen properties in Mount Desert with a combined value of more than $37 million, including most of Bartlett Island off Mount Desert’s west coast, according to assessment records. Sascha Rockefeller, the granddaughter of former U.S. Vice President Nelson Rockefeller, owns a $1.7 million home, and Abby Rockefeller, the great-granddaughter of the founder of Standard Oil, has a $1.1 million estate.
In all, there are more than a dozen Rockefellers with property along the southern coast of the island.
“Mount Desert is quiet money, discreet wealth,” said Brad Emerson, a historian and antique shop owner in nearby Blue Hill, Maine. “From the time the Rockefellers and the Vanderbilts and the Mellons and the Astors first started coming to the island, until today, it was considered bad taste to flaunt your money.”
Angering the Locals
Those days may be coming to an end. Rales, who bought the $5.5 million tear-down, used architects Gwathmey Siegel & Associates to design his new home in the futuristic style they used for houses in the Hamptons. Construction was finished in April, according to Kyle Avila, the Mount Desert assessor.
The destruction of the century-old Victorian mansion, and the style of the home that replaced it, raised the ire of many of the town’s residents, said Emerson, the historian.
“This isn’t like the Hamptons, with flashy new houses,” he said. “This is Rockefeller country.”