Matt Woolsey, 05.19.08, 4:00 PM ET
A little over two years ago, when Donald Trump listed Maison de L’Amitié in Palm Beach, Fla., for $125 million, it was a sign of the times. Real estate prices were on the rise, and even though it was $50 million more than the next-highest listing, there was a sense that Trump would get his price. After all, everyone else in America was getting his.
Once again, Maison de L’Amitié points to the state of the housing market. In March, Trump knocked $25 million off the price, the biggest discount ever for a single residence not related to bankruptcy proceedings.
But that hasn’t pulled other sellers off the $100 million-plus ledge. At the top of our list this year is a $165 million Beverly Hills, Calif., mansion once owned by William Randolph Hearst; a Jacobean manor on 40 acres in Greenwich, Conn., and a Los Angeles château, commended by former French President Jacques Chirac for its architecture, both priced at $125 million; and perhaps the finest property in Nevada’s Lake Tahoe on 210 acres of land with its own private cove. Price tag: $100 million.
The ultramodern Portobello estate in Corona del Mar, Calif., which has a listing price of $75 million and was, in 2006, the second-most expensive home in the country, rounds out the list. Even though it has eight bedrooms and 30,000 square feet of interior space, not to mention its own private beach, it barely made this year’s elite group.
To compile our list, we spoke with brokers and consulted listing agents and real estate appraisers and scoured real estate listings. Most of the homes on this year’s list are newcomers that have entered the market with high eight-figure or $100 million-plus prices. Estates like Three Ponds in Bridgehampton, N.Y., the Pierre Penthouse in Manhattan and the Portobello–which in previous years seemed excessive at $70 million to $75 million–are now second tier when it comes to price.
Our list did not include land properties. The $115 million Bell Ranch in San Miguel County, N.M., boasts an impressive 10,832-square-foot, eight-bedroom main house, and its own airstrip. But at 250,000 acres, it offers buyers mostly land. That, and 3,200 Red Bell cows and a horse herd.
We also didn’t include private listings, also called pocket listings, because they’re quietly shopped around among elite buyers. One rumored example: Prince Bandar bin Sultan of Saudi Arabia’s $135 million Hala Ranch in Aspen, Colo. It had been on the market for two years but is no longer publicly listed.
Measuring the Market
"Inventory is relatively tight for trophy-type properties," says Jonathan Miller, president of Miller Samuel, a Manhattan real estate appraisal firm. "It’s a contrarian element to some of the slip-off in sales, because the bulk of the market is down largely due to a weaker economy."
A recent survey of wealthy Americans, or those with more than $1.35 million a year in discretionary income, done by American Express Publishing and Harrison Group, found that high-end home buyers feel this year is a great one to buy property.
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One reason has to do with financial market conditions. The Dow Jones industrial average is down 5% this year, and the Standard & Poor’s 500 has dropped 10%. Real estate in prime locations allows buyers to hedge against the risks of a sagging market and a sinking dollar by putting their money into a less volatile asset, similar to the reasons that people invest in gold. The highest end of the luxury market, above $20 million, has not softened like the general market.
"Over the long haul, quality real estate has never been a loser," says Jim Taylor, vice chairman of the Harrison Group, a marketing and strategic research firm in Waterbury, Conn. "If you’ve paid in cash, you’re balancing your portfolio against market risk. They’re not printing any more land, even if they are printing more money."
Miller says that the upper end of the Manhattan market, or homes $8 million and up, has seen its inventory contract by 35% over the last year. "If we were having this conversation six to nine months ago, we’d say it was Wall Street bonuses," he says, "but the weak dollar has certainly played a role."
In addition, sellers like Trump, with his $25 million price reduction, are increasingly flexible.
"The resistance has lessened,” says Nelson Gonzalez, a broker at Esslinger-Wooten-Maxwell in Miami Beach. “Smarter sellers are dropping their prices, and buyers are coming up a little bit more to make deals."
He says in an elite enclave of the Venetian Islands, in Miami Beach, where one will often find sales of $20 million and up, there have been more sales in the first quarter this year than all of last year combined. In 2007, there were 13 total waterfront sales. Through the first quarter this year, 12 waterfront properties have closed or are in contract.
Whether that pickup in high-end activity means this will be the year of the $100 million sale is anyone’s guess. We’ve been waiting two and a half years.