The ultra-wealthy cut back on home buying
NEW YORK – Feb. 24, 2016 – The market for $100 million homes is vanishing. During the housing recovery, about two-dozen mega-mansions offered at $100 million or more were listed. However, only four homes actually sold for a number higher than $100 million, and the others have had their price reduced or were taken off the market.
"The quiet disappearance of many of these mega-priced listings from the market underscores what most brokers have known all along: There is no $100 million housing market," Forbes reports. "Instead, what felt like a steady beat of $100-million-plus trades … were in fact a series of closely spaced anomalies."
These anomalies included a home in Woodside, Calif., that sold in 2013 for $117.5 million, a $120 million sale in Greenwich, Conn., a $147 million home sale in East Hampton, N.Y., and a $100.5 million Manhattan apartment.
"All those transactions were one-offs," appraiser Jonathan Miller of Miller Samuel told Forbes.com. "It's not that the market has physically changed, it's that there's more visibility. The word is out."
The high real estate price tags mainly drew in foreign buyers. Many deals were also secret, with transactions hidden under the shield of limited liability companies. But that is now changing.
Besides the mega deals, could the overall luxury market be cooling too? Some say signs are pointing to "yes." In Manhattan, for example, the inventory is swelling for luxury listings. A total of 190 apartments priced at $10 million or higher sold in 2015, down from 214 in 2014, according to CityRealty data.
In Miami, the absorption rate rose to 18.3 months compared to 11.3 months a year ago, according to a report from Douglas Elliman.
However, in Los Angeles, the luxury market posted its best year ever last year – having 482 closed sales over $5 million in 2015 on the west side of Los Angeles compared to 442 in 2014. What's more, 37 of those transactions were for properties $20 million or more – double the number in 2014.
"We had a wonderful year last year," says Steve Frankel, an L.A.-based luxury broker with Coldwell Banker Previews International. "We're not completely dependent on China taking a downturn. There's plenty of high-end money in Los Angeles and also from people moving from New York."
Los Angeles also seems to be one of the few places still introducing residences at $100 million or above.
Source: "The Vanishing Market for $100 Million Homes," Forbes (Feb. 19, 2016)
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