The very top of the housing market is still swelling. Nationwide, nearly 200 dwellings are listed for sale for more than $20 million, experts estimate, and brokers say that the pace of these homes selling has remained relatively brisk. Donald Trump is asking $125 million for his oceanfront compound in Palm Beach. At the moment, that's believed to be the most expensive listing in America. The run-up in mortgage rates has little effect on mansion buyers, partly because many pay cash.
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Monday, July 10, 2006
By ROBIN GOLDWYN BLUMENTHAL
IT MAY BE OF LITTLE CONSOLATION to Joe Home Owner, but at least one segment of the housing market is holding up just fine: the realm of the über mansion. These sprawling estates, many costing $20 million and up, are finding plenty of buyers among the swelling ranks of the superrich.
"So far, the very top of the housing market is defying the housing trend," says William Zeckendorf, a developer and co-chairman of the New York real-estate brokerage Brown Harris Stevens. In fact, he and others say, the market for these modern-day castles is, in some locations, actually stronger than last year.
Make no mistake, these aren't $2 million McMansions or even $10 million trophy homes. In those price ranges, realty brokers report, some clear signs of softness have been turning up. And in the overall residential market, price increases have slowed dramatically.
America's truly grand mansions, from Greenwich, Conn., to Bel-Air, Calif., are in a market of their own, subject to their own forces of supply and demand. Right now the demand side could scarcely be healthier: The number of super-wealthy individuals, or those with financial assets of more than $30 million, last year increased by more than 10% worldwide, to 85,400, according to a survey by Merrill Lynch and consulting firm Capgemini.
And there's no shortage of spectacular homes to choose from. Nationwide, nearly 200 dwellings are listed for sale for more than $20 million, experts estimate. While not all will be snapped up right away, brokers describe the current sales pace as generally brisk.
In fact, the market is so strong that some have come to view it as a good place to park money amid the uncertainties of the global economy. How else to explain why one person with 10 homes decided to buy a $42 million apartment in New York? "He's hoping to spend three weeks out of the year there," says Dolly Lenz, vice chairman of Prudential Douglas Elliman in New York, who recently sold the apartment, located in the Time Warner Center. "That's the goal."
This 26,000-square-foot home is being marketed as a piece of Tuscany in Greenwich, Conn. It comes with 30 acres of land, "walk-in" fireplaces and a hand-crafted elevator in the atrium. The asking price: $31 million.
This 26,000-square-foot home is being marketed as a piece of Tuscany in Greenwich, Conn. It comes with 30 acres of land, "walk-in" fireplaces and a hand-crafted elevator in the atrium. The asking price: $31 million.
In Manhattan, that kind of money buys 360-degree views of the city and basement storage bins worth $100,000. Just outside the city, in Greenwich -- the land of hedge funds -- $31 million would be enough for a "European compound" now on the market. With its winding drive and vast lawns, the nearly 30-acre property is meant to put one in mind of Tuscany.
The delicious fragrance of wide-pine antique floors pervades the 26,000-square-foot home, which has everything from a 3,500-bottle wine cellar and "walk-in fireplaces" to a lower-level powder-room shower with Dutch-style doors for easy bathing of the hounds. In the kitchen, there's a pizza oven, a fireplace and a butcher's meat locker. Then there's the atrium, with 60-foot ceilings made of antique beams and an elevator made of hand-forged wrought iron.
For all it's old-world touches, the current owners started building it only three years ago and haven't quite finished it (the 12-seat entertainment room, for instance, isn't quite ready). So why would they want to sell?
"I think it overwhelmed them," says Julianne C. Ward, of Prudential Connecticut Realty, the listing agent for the property. And by the time the house was finally built, the couple's three children had grown up, leaving a monstrous empty nest and annual taxes north of $80,000.
In Beverly Hills, the $20-billion-plus market continues to gather steam, says Jeff Hyland, president of Hilton & Hyland Christie's Great Estates, a top broker in Los Angeles. "Trying to find something for $10 million has become extremely difficult, but it's easier to do than $20 million," he says.
This summer retreat on Boston's North Shore, in Manchester by the Sea, has 10-plus bedrooms, rare Russian walnut paneling -- and a $19.8 million price tag. So far this year, the Beverly Hills area has seen six sales of $20 million and above, compared to only two in all of last year.
THE BUYERS AND SELLERS of such properties, not surprisingly, often have boldface names. On the island of Palm Beach, Fla., financier Henry Kravis recently bought a $50 million property on the Intercoastal Waterway, and Bruce Toll of Toll Brothers paid just shy of $27 million for a lakefront house, according to Ava Van de Water, a broker at the Brown Harris Stevens office there. Ron Perelman recently sold a property for $22 million, and Donald Trump is asking $125 million for his oceanfront compound in Palm Beach. At the moment, that's believed to be the most expensive listing in America.
"We have people bidding $90 million, but I don't think he'll take anything less than $110 million," says Lenz of Prudential Douglas Elliman, the listing agent.
Though sellers of mainstream homes are seeing buyers pull back because of rising mortgage interest rates, that's not something Trump has to worry about in attracting takers.
"People who have money have money," avers Hall Wilkie, president of Brown Harris Stevens' residential sales. The ultra-high end is "a market that interest rates don't affect that much," he says, not least because many purchases are in cash. "It's a market that nothing affects as much."
Adds Patricia Lou Martin, co-owner of Kramer & Martin, a realty broker in Rancho Santa Fe, Calif.: "The big buyers of $10, $20 and $30 million dollar properties are not counting their pennies."
I'll Take Manhattan: Exclusive apartments are selling briskly in New York, providing a good clue about the strength of the market nationwide.
None of which is to say the luxury housing market doesn't have its stress points. Some brokers are reporting early signs of softness -- but that is mostly in lower price tiers, such as $5 million homes. In Manhattan, the middle-tier luxury market -- between $5 million and $15 million -- is slightly off, some say.
But at the nosebleed level, Manhattan and most other major markets look strong. In the first quarter, a total of 20 apartments ranging in price from $20 million to $32 million were sold in Manhattan, according to Prudential Douglas Elliman. Maintenance and taxes on the $32 million property, a 15-room place on the 79th floor of the Time Warner Center, come to $80,000 a month. There were 11 active listings of single-family homes, as of the end of March.
In the Hamptons, there are now a whopping 30-35 listings in the $20 million-plus range, along with eight to 10 other listings elsewhere on Long Island. And numbers like that don't even count the many so-called pocket listings -- private sales that never make it on to the multiple-listing service.
While homes of this ilk can easily take a year or longer to sell, that isn't always the case these days. "We recently listed a $25 million house that sold in the first week like it was a million-dollar house," says Gary Gold of Hilton & Hyland. He reckons there are now 21 homes with asking prices above $20 million in the "Platinum Triangle" of Bel-Air, Beverly Hills and Holmby Hills.
He attributes some of the strength in the market to "real-estate addicts," people who just can't stop buying or selling, remodeling or redecorating. There are many such people in show biz, he adds.
The Bottom Line
The run-up in mortgage rates has little effect on mansion buyers, partly because many pay cash. With demand booming, some sprawling estates are sold in just a week.
Cher, he notes, has had "at least a dozen homes around town," and Sylvestor Stallone and Eddie Murphy are also what Gold calls serious real-estate people. "The same houses keep coming on the market again and again," says Gold, who has sold some homes several times in a year.
GOLD SEES PEOPLE going to greater and greater lengths to assemble the perfect mansion. He tells of one client who built his house of Venetian plaster, complete with roof tiles imported from an 1850 villa in Tuscany and European tiles that are probably a couple of hundred years old. "He didn't want anything fake," says Gold. "Most people have a stockbroker. This guy had a beam broker."
The beams, incidentally, were from Canada and hewn before there was electricity.
There's probably a potential buyer for every type of mansion imaginable. "Our client base will tend to be quite opportunistic about real estate," says Anton Pil, head of fixed income at JP Morgan Private Bank. The ultra-high market "looks OK," he adds, because the consumer base is less sensitive to economic cycles, and "oftentimes, when you pay that kind of money for a home, there's something unique about it that tends to add value."
He says that more foreigners, whose currencies have appreciated against the dollar, are buying in the U.S. But it is also going the opposite way, with some American buyers heading overseas. These days, there's no telling where you might find the fortress of your dreams.
