Are Buyers Slowly Coming Back for Luxury Homes?by
In the market for a house with a bowling alley, a private beach, and a marble swimming pool? How about a full acre of living space? You have more options than you think.
About 320 properties selling for more than $20 million are on the market across the U.S., according to a recent survey by Ultimate Homes. But in the year since the economic crisis began, sales of these ultra-pricey homes have all but stalled even as the bottom of the housing market is showing some life.
Billionaires Regain ConfidenceOf course, only a handful of $50 million-plus homes sell even in the best of times. The last major trophy home to sell was Donald Trump's 60,000-square-foot Palm Beach mansion, which sold to Russian tycoon Dmitry Rybolovlev last summer for $95 million, one of the highest prices ever paid for a U.S. residential property.
"When Lehman Brothers disappeared and the whole economy fell apart in the fall, that put the breaks on luxury," said Rick Goodwin, publisher of Unique Homes and Ultimate Homes magazines. "The downturn is so severe that it's even making the well-to-do cautious. People worth $6 billion are suddenly worth $3 billion. It's a significant jolt, losing half your net worth."
Luxury realtors are hoping the dry spell is coming to an end. Last month, a 2006 Aspen mansion, including 10 bedrooms spread across 21,400 square feet, sold for $43 million. Earlier this year, pop star Madonna paid $32.5 million for a Georgian-style townhouse on the Upper East Side of Manhattan.
"I don't want to say everything went dark, but they [the buyers] went quiet" last fall, said Joshua Saslove, the listing broker for the Aspen property. "Now, they've reappeared on the horizon."
Not only are the number of trophy listings growing, but they're still reaching extraordinary heights.
Topping Unique Homes' ranking of the most expensive listings last month was the $150 million, 56,500-square-foot estate owned by television producer Aaron Spelling's widow. In 2005, the top property on the list was $75 million, a price that would have placed it at the bottom of this year's top 10, Goodwin said.
Best Beaches Fetch Top DollarMany of America's priciest homes happen to be located in beautiful beach locations, in Long Island's Hamptons or along the coasts of Maine, New Hampshire, Massachusetts, California, Florida, and Hawaii. BusinessWeek.com came up with a list of some of the most expensive beach homes on the market. Topping the list is Sandcastle, a $59.5 million estate in Bridgehampton completed this spring by builder Joseph Farrell, who lives in the house. Farrell is now renting out the 31,000-square-foot beach estate while he vacations with his family in Hawaii. An unnamed tenant, who is paying $425,000 to rent the house for two weeks, will have access to gorgeous ocean views, a two-lane bowling alley, a racket ball court, and an outdoor heated pool with an underwater stereo.
Farrell says he expects his home to sell for a good price, but acknowledged that the pool of luxury buyers has shrunk.
"I don't think it's ever going to be same; it's a new world we live in," Farrell said. "But if you have the best location and the best product, you can always find a buyer."
Jonathan Miller, chief executive of real estate appraisal firm Miller Samuel, said sales in the Hamptons were down 43% in the second quarter compared with a year earlier, and the median price was off nearly 17% during the same period.
Vanity Pricing?Sellers in this price range often have trophy properties that they've built for themselves or customized to their own tastes. They can afford to wait until the right buyer comes along, Goodwin said. The price tags might not be realistic, but can serve to attract press coverage and create a starting point for negotiations, he said.
Miller said some of the most expensive listings across the country simply aren't in line with the slumping market. "A larger question to answer is how many of those properties are priced correctly and are not just vanity prices," Miller said.
Click here to see the most expensive beach houses in the U.S.