The Biggest Real Estate Deals of 2007

That kind of wealth is heavily concentrated on Wall Street. Even though it's been a rough year for the banks, and write-downs related to mortgage-backed securities have wrought havoc on balance sheets, the big money spigot is still flowing to top executives.

"The five largest firms are going to pay more in bonuses than they did last year, and even if bonuses go down by 15% in total, as some people have suggested, they'd still be the second highest on record," says Heym.

Economists often debate how much bonus money makes it into the real estate market, but Heym says the money on hand right now is more than sufficient to fuel higher prices in the upper luxury sector. "Buyers can put the money down and pay in cash, or they might want to finance part of the sale to do other things with the money," says Heym. "For most of the people, it's not their first bonus."

Astronomical Assets

Prices in the top sector are not affected by general market trends because, quite simply, they exist outside the general market.

"In the high-end market, it's all about wealth and a lack of property," says Mauricio Umansky, a broker with Hilton & Hyland in Southern California. "A lot of people want to be in Los Angeles, people want to be Malibu, Aspen and New York ... there are trophy properties out there and enough billionaires out there that want to buy a trophy property."

Because all the buyers have multiple homes and often use trophy properties infrequently, it probably makes more sense to think of these properties in the same way experts speak of valuations in the high-end art market. Unique properties--like irreplaceable paintings--trade rarely. Valuing the penthouse at the Plaza can be as difficult as appraising a Picasso.

"If it's an outlier, the valuation, and getting your arms around the value is difficult because there aren't any true comparables," says Jonathan Miller, director of research at Radar Logic, a New York real estate analytics firm. "We're still looking at the fundamentals and property characteristics, and understanding how a property fits within a market. Chances are you may have had other properties further back in time and you can extrapolate."

Like the luxury real estate market, it was a banner year for the art market. David Geffen, for example, sold a Jackson Pollack for $143.5 million and a Jasper Johns for $80 million; Christie's moved $395 million and Sotheby's sold $270 million of art in November shows. While the hedge-fund millionaire's cash fuels both luxury markets, how much longer it can last is a question that haunts the Street.

Still, when it comes to America's most expensive properties, the slumping dollar should buoy sales for the foreseeable future.

"The one benefit to the credit crisis and a slowing economy is that the dollar isn't going to get stronger against these other currencies," says Heym. "Foreign buyers are essentially getting huge discounts."

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