The Disappearing Market For $100 Million Homes

It was confirmed recently that Scott Bommer, the hedge fund tycoon, has flipped his Hampton spread for $110 million, which is the second priciest sale on record in the history of New York State. Bommer appears to have been fortunate to manage this flip at a time of low sales for properties in this price range, despite the numerous $100 million-plus residential listings over the past few years.

According to Forbes, of about twenty four mega-mansions, luxury penthouses, and speculative residences which were priced to sell at $100 million and above during the recovery only a few were sold. The remainder were price chopped, taken from the investment deal, or left with unprecedentedly ambitious “price tags” in place. Investors are being very choosy!

Most brokers believe that there is no $100 million-plus housing market, as can be confirmed in the gradual disappearance of many of these mega-priced listings from the market. They referred to the $100 million-plus trades in 2013 and 2014 as a series of closely spaced anomalies. Jonathan Miller (Miller Samuel) said all such transactions were really out of place and “one-offs”, adding that the market has not physically changed, but there is more visibility.

Foreign nationals have in recent years invested their cash in real estate in Manhattan, Miami, and to a lesser extent, Los Angeles, as a result of rising global wealth and unstable markets. Many of the deals were hidden under limited liability companies. This made it hard to know who was buying a lot of the high-priced listings, or how deep the ultra-luxury market ran. In a bid to make more profit, New York developers created posh penthouses as Los Angeles speculators built modern mansions.

As it is, there are indications that the luxury market is gradually going down the drain. Manhattan, which is known for many luxury towers, with a total number of 190 apartments at the rate of $10 million or more in 2015, has been tracked/reported to have experienced a new downward trend. Contracts signed at $10 million and above dropped by 16% in the year 2015. Additionally, it took two months longer to sell a luxury property in 2015 compared to 2014.

Our count of the priciest home sales in the US includes only residential estates. It excludes the $129.6 million purchase made in Palm Beach by billionaire Ken Griffin in 2013 for three homes and four lots. It also excludes billionaire Ron Baron’s purchase of 40 acres of undeveloped East Hampton land in 2007 which is worth $103 million. Ron Kroenke’s recent acquisition of Texas’ Waggoner Ranch, which was listed for $725 million was not included; and neither was the sale of Los Angeles’ 50,000-square-foot Fleur de Lys, which went for $88.3 million; a reported $102 million price likely also included furniture.

Please visit us at www.RubenPerezNYC.com