There's been a lot of denial among luxury homeowners. In 2006, it was thought that the luxury market wouldn't suffer the same fate as the broader market. A year later, high-end home buyers were thought to have endless, deep pockets, further insulating the top-tier from the cratering economy. As the nation's markets in 2008 went from bad to worse, some in the industry claimed that the dearth of trophy properties outstripped supply.
This year, reality set in. No one is buying $100 million homes. Few are buying $30 million homes. Properties in that range are either being reduced by amounts similar to the national debts of small countries--Dunellen Hall, reduced by $50 million from $125 million to $75 million, and BootJack Ranch to $68 million, a reduction of $20 million from last year's asking--or are being pulled from the market entirely.
It's been a bad year for America's Most Expensive Homes, our annual list of the nation's priciest oceanfront mansions, urban townhouses, monumental ski lodges and country estates. Mainstays like the $125 million Fleur de Lys in Beverly Hills, a 45,000-square-foot re-creation of Louis XIV's palace at Versailles, and the $100 million Tranquility, a Lake Tahoe 20,000-square-foot mountain home on 210 acres, are still at the top of our list, two and three years after they came on the market, respectively.
In 2008, it took a $75 million price tag to make our list. Now there are four homes priced below that: the $68 million BootJack Ranch in Pagosa Springs, Colo., with its 77,000 square feet of cabin space, including a 13,800-square- foot main house, a $65 million Brentwood, Calif., ranch designed by Robert Byrd, a $60 million Beverly Hills mansion built in 1919 by silent-film stars Douglas Fairbanks and Mary Pickford and a $60 million Upper East Side apartment with a mind-boggling 10,000-square-feet of space.
To compile our list, we spoke with brokers and consulted listing agents and real estate appraisers and scoured real estate listings. We didn't include private listings, also called pocket listings, because they're quietly shopped around among elite buyers, nor did we measure land sales. The so-called Spelling Mansion, a 123-room Holmby Hills spread, which has reportedly been on and off the market at $150 million is currently not publicly listed and therefore was not included. The penthouse of the Pierre Hotel in Manhattan is also officially off the market.
When did the high end of the market truly fall apart? When the financial crisis set in, particularly after Lehman Brothers failed Sept. 15 and Freddie Mac and Fannie Mae went into government conservatorship on Sept. 7. In New York, and the Hamptons, that completely shut off the sales spigot. "There are only two closed sales above $30 million that I know of," says Jonathan Miller, principal of Miller Samuel, a Manhattan-based appraisal firm. "There were a few additional sales that closed in September, but they went to contract before the party ended. "It's the same story on the West Coast, almost 3,000 miles from Wall Street.
"I'm calling peak June, July of 2008, that was the end of it," says Mauricio Umansky, a broker with Hilton and Hyland in Beverly Hills, who despite the downturn has sold two $30 million homes since the financial crisis set in. "When September 15 hit, that was the boom lowering."
Of course, if it takes a couple more years to sell the $125 million Fleur de Lys or the $100 million Tranquility, their sellers are most likely willing to wait. After all, these homes been sitting on the market for years, and the amount a broker can make in commission off that kind of sale is enough to retire on.
Perhaps that's the fifth factor in the high-end market: It only takes one offer.