WSJ: The New Price of Luxury: $40 Million
Jeff Keil paid $2.3 million in 1991 for his townhouse on the Brooklyn Heights Promenade in New York. When he put the roughly 17,500-square-foot house on the market a few months ago, he listed it for $40 million.
“It sounds unbelievable,” he said on a recent afternoon, while taking in breezes and views of Manhattan from the porch. He added: “I wish everything I did brought that return.”
Up until a few years ago, homes priced at $40 million or more were almost nonexistent. Not anymore—with the country’s most expensive homes priced well above $100 million, listings and sales at the $40 million mark have popped up across the country. “We’ve had this creation of a new market category unlike anything that’s ever been seen before,” saidJonathan Miller of Manhattan-based Miller Samuel Real Estate Appraisers. “Five or 10 years ago, a $40 million sale or listing was an outlier. And today it’s almost commonplace.”
Over the past year, there were more than 300 homes for sale across the country priced from $35 million to $49 million—an increase of 24% from the prior year, according to data from real-estate website Trulia.
And these prices aren’t just wishful thinking. In the past five quarters, Mr. Miller said at least 37 homes have sold between $30 million and $49.9 million in New York, Miami and Los Angeles. That is up from 14 that sold in those markets during the corresponding period in the boom years of 2007 and 2008.
These super-luxury home sales are being fueled by a number of factors, Mr. Miller said, including the creation of global wealth since the economic downturn, demand from overseas and domestic buyers looking to park their money in hard assets and the high price of land in prime locations, which forces builders to price their properties higher. It is also common for big-ticket listings and sales to generate a copycat effect, prompting other sellers to put their homes on the market for similarly ambitious prices, he said.
A few weeks ago, Beverly Hills real-estate agent Branden Williams relisted a five-bedroom house in the Hollywood Hills. The house, which had been on the market with another agent for about a year, was asking $35 million. Mr. Williams raised its price to $38 million. “All the prices around us have gone up so much in the last year,” reasoned Mr. Williams, of Hilton & Hyland, who is co-listing the property with his wife, Rayni, also of Hilton & Hyland, and Ben Bacal, of Rodeo Realty Fine Estates.
The house measures about 13,000 square feet. Owner Sean Sassounian, founder of SAS Textiles, bought the site about six years ago for about $4.5 million. He said he started building the house about four years ago with plans to live in it, but when he and his wife ended up having three children in rapid succession, they decided to move instead to the flats of Beverly Hills to be closer to their schools. The newly completed house has three full kitchens, a gym, a theater, an elevator, an infinity-edge pool with city views, a massage room and a subterranean garage that fits about eight cars.
Despite the bevy of new decamillion-dollar listings and the headlines that accompany them, it can still take months or years to sell a home at this price.
“The vast majority of homes over $5 million don’t fly off the shelves the way people want you to believe they do,” said real-estate agent Leonard Steinberg of Compass, who is co-listing a Tribeca townhouse. Originally listed in October for $48 million, it is now priced at $46 million.
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