Category Archives: Luxury Homes

Why Manhattan’s Skyscrapers Are Empty

Approximately half of the luxury-condo units that have come onto the market in the past five years remain unsold.

In Manhattan, the homeless shelters are full, and the luxury skyscrapers are vacant.

Such is the tale of two cities within America’s largest metro. Even as 80,000 people sleep in New York City’s shelters or on its streets, Manhattan residents have watched skinny condominium skyscrapers rise across the island. These colossal stalagmites initially transformed not only the city’s skyline but also the real-estate market for new homes. From 2011 to 2019, the average price of a newly listed condo in New York soared from $1.15 million to $3.77 million.

But the bust is upon us. Today, nearly half of the Manhattan luxury-condo units that have come onto the market in the past five years are still unsold, according to The New York Times.

What happened? While real estate might seem like the world’s most local industry, these luxury condos weren’t exclusively built for locals. They were also made for foreigners with tens of millions of dollars to spare. Developers bet huge on foreign plutocrats—Russian oligarchs, Chinese moguls, Saudi royalty—looking to buy second (or seventh) homes.

But the Chinese economy slowed, while declining oil prices dampened the demand for pieds-à-terre among Russian and Middle Eastern zillionaires. It didn’t help that the Treasury Department cracked down on attempts to launder money through fancy real estate. Despite pressure from nervous lenders, developers have been reluctant to slash prices too suddenly or dramatically, lest the market suddenly clear and they leave millions on the table.

The confluence of cosmopolitan capital and terrible timing has done the impossible: It’s created a vacancy problem in a city where thousands of people are desperate to find places to live.

From any rational perspective, what New York needs isn’t glistening three-bedroom units, but more simple one- and two-bedroom apartments for New York’s many singlesroommates, and small families. Mayor Bill De Blasio made affordable housing a centerpiece of his administration. But progress here has been stalled by onerous zoning regulations, limited federal subsidies, construction delays, and blocked pro-tenant bills.

In the past decade, New York City real-estate prices have gone from merely obscene to downright macabre. From 2010 to 2019, the average sale price of homes doubled in many Brooklyn neighborhoods, including Prospect Heights and Williamsburg, according to the Times. Buyers there could consider themselves lucky: In Cobble Hill, the typical sales price tripled to $2.5 million in nine years.

This is not normal. And for middle-class families, particularly for the immigrants who give New York City so much of its dynamism, it has made living in Manhattan or gentrified Brooklyn practically impossible. No wonder, then, that the New York City area is losing about 300 residents every day. It adds up to what Michael Greenberg, writing for The New York Review of Books, called a new shameful form of housing discrimination—“bluelining.”

We speak nowadays with contrition of redlining, the mid-twentieth-century practice by banks of starving black neighborhoods of mortgages, home improvement loans, and investment of almost any sort. We may soon look with equal shame on what might come to be known as bluelining: the transfiguration of those same neighborhoods with a deluge of investment aimed at a wealthier class.

New York’s example is extreme—the squeezed middle class, shrink-wrapped into tiny bedrooms, beneath a canopy of empty sky palaces. But Manhattan reflects America’s national housing market, in at least three ways.

First, the typical new American single-family home has become surprisingly luxurious, if not quite so swank as Manhattan’s glassy spires. Newly built houses in the U.S. are among the largest in the world, and their size-per-resident has nearly doubled in the past 50 years. And the bathrooms have multiplied. In the early ’70s, 40 percent of new single-family houses had 1.5 bathrooms or fewer; today, just 4 percent do. The mansions of the ’70s would be the typical new homes of the 2020s.

Second, as the new houses have become more luxurious, homeownership itself has become a luxury. Young adults today are one-third less likely to own a home at this point in their lives than previous generations. Among young black Americans, homeownership has fallen to its lowest rate in more than 60 years.

Third, and most important, the most expensive housing markets, such as San Francisco and Los Angeles, haven’t built nearly enough homes for the middle class. As urban living has become too expensive for workers, many of them have either stayed away from the richest, densest cities or moved to the south and west, where land is cheaper. This is a huge loss, not only for individual workers, but also for these metros, because denser cities offer better matches between companies and workers, and thus are richer and more productive overall. Instead of growing as they grow richer, New York City, Los Angeles, and the Bay Area are all shrinking.

Across the country, the supply of housing hasn’t kept up with population growth. Single-family-home sales are stuck at 1996 levels, even though the United States has added 60 million people—or two Texases—since the mid-’90s. The undersupply of housing has become one of the most important stories in economics in the past decade. It explains why Americans are less likely to movewhy social mobility has declinedwhy regional inequality has increasedwhy entrepreneurship continues to fallwhy wealth inequality has skyrocketed, and why certain neighborhoods have higher poverty and worse health.

In 2010, one might have thought that the defining housing story of the century would be the real-estate bubble that plunged the U.S. economy into a recession. But the past decade has been defined by the juxtaposition of rampant luxury-home building with the cratering of middle-class-home construction. The future might restore a measure of sanity, both to New York’s housing crisis and America’s. But for now, the nation is bluelining itself to death.

Source: by Derek Thompson | The Atlantic

A Record Number of Homes Closed for $100 Million-Plus During 2019

Six deals topped $100 million in 2019, despite a general slowdown across the U.S. luxury real-estate market. Here is a look at the top-10 home sales

Cartwell sold for $150 million in December – Jim Bartsch

In 2019, a small group of enormous real estate deals, while bearing little relationship to the overall market, had an outsize impact on the national conversation about wealth inequality and the rapidly expanding billionaire class.

A boom in ultrahigh priced deals in Palm Beach this year, including the $111 million sale of an oceanfront estate, raised questions about the number of wealthy New Yorkers fleeing to Florida in response to a 2017 change in federal tax law. A string of $100 million-plus deals completed in Los Angeles put the spotlight on high-end real estate on the West Coast.

Hedge-fund manager Ken Griffin’s roughly $238 million purchase of a New York penthouse, which set a price record for the nation, bolstered the arguments of legislators who support additional property taxes for the super rich.

These megadeals don’t necessarily speak to a broad surge in real estate values. In general, the U.S. luxury real-estate market faced a slowdown in 2019, thanks to oversupply in certain markets, tax changes and a general decline in foreign purchasers.

Read on for a closer look at the top 10 deals of the year, a record six of which topped $100 million, according to research by The Wall Street Journal and appraiser Jonathan Miller. Mr. Miller said he believes the previous record was three $100 million-plus deals, achieved in both 2014 and 2016.

1. 220 Central Park South, New York

Price: Roughly $238 million

Early in 2019, hedge-fund executive Ken Griffin closed on a roughly $238 million apartment. Emily Assiran for The Wall Street Journal

Mr. Griffin’s purchase of the roughly 24,000-square-foot Billionaires’ Row apartment “came to personify the issue of income inequality for many people,” said luxury agent Jason Haber of Warburg Realty of the deal. “Ken Griffin closed right when the legislature began their session. It was like throwing meat to the wolves.”

Soon after, the New York legislature expanded the so-called “mansion tax,” designed to target buyers of properties priced at $2 million or more, and increased property transfer taxes. The deal also helped reignite discussions around a pied-à-terre tax, which would tax multimillion-dollar second homes as a funding source for the city’s beleaguered subway system.

“It served as Exhibit A for why we should look at the possibility,” said Sen. Brad Hoylman, who sponsored the pied-à-terre tax bill.

The purchase was one of a string of record-breaking acquisitions by the billionaire in recent years In 2017, the Citadel founder bought several floors of a Chicago condominium for a record $58.75 million. He also bought a London home for about $122 million, and a piece of land in Florida for $99.1 million (see below).

To some extent, Mr. Griffin’s spending spree has made him a central figure in the debate about wealth inequality in New York. “Anyone who can afford to pay for a $238 million apartment can afford to pay a little more off the top to make the city a better place for everyone,” Sen. Hoylman said. Mr. Griffin has rarely spoken publicly on the issue. At an event this year hosted by Bloomberg News, Mr. Griffin criticized presidential hopeful Sen. Elizabeth Warren, saying he wished she spent more energy on education, rather than attacking “those of us who have been successful.”

The recently completed tower has quickly become New York’s new “it” building. Other buyers include musician Sting and hedge-fund executive Dan Och (see below).

Buyer’s agents: Tal Alexander and Oren Alexander of Douglas Elliman

Seller’s agent: Deborah Kern of the Corcoran Group

A view of Chartwell, which was purchased by Lachlan Murdoch. Jim Bartsch

2. Chartwell, Los Angeles

Price: $150 Million

Lachlan Murdoch, co-chairman of News Corp., which owns Dow Jones & Co., publisher of The Wall Street Journal, paid about $150 million for this Bel-Air estate in December, setting a record for the Los Angeles area, according to people familiar with the deal. Observers said it was the second-priciest sale ever recorded in the country for a single-family home.

Lachlan Murdoch. David Paul Morris/Bloomberg

While the price-tag was huge, the property was the latest in a line of homes to sell for a major discount to their original asking prices, marking the culmination of years of aggressive or arguably aspirational pricing for luxury homes across the country. The roughly 25,000-square-foot mansion came on the market in 2017 for $350 million, making it the most expensive listing in the nation at the time.

Designed by Sumner Spaulding around 1930, the property was owned by onetime Univision Chairman A. Jerrold Perenchio. It came with a Wallace Neff-designed five-bedroom guesthouse, a 75-foot pool, a tennis court and a car showroom with space for 40 vehicles. Mr. Murdoch didn’t respond to requests for comment.

Seller’s agents: Drew Fenton, Jeff Hyland and Gary Gold of Hilton & Hyland; Joyce Rey, Jade Mills and Alexandra Allen of Coldwell Banker Global Luxury; and Drew Gitlin and Susan Gitlin of Berkshire Hathaway HomeServices California Properties.

Buyer’s agent: Drew Fenton of Hilton & Hyland.

Spelling Manor in Holmby Hills sold for nearly $120 million. Jim Bartsch

3. Spelling Manor, Los Angeles

Price: $119.75 million

British Formula One heiress Petra Ecclestone sold Spelling Manor, a sprawling estate built for the late television producer Aaron Spelling, this past summer for $119.75 million, records show. The buyer hailed from Saudi Arabia, according to people familiar with the deal.

Petra Ecclestone. Jeff Spicer/Getty Images

The Holmby Hills property, designed in the style of a French château, is about 56,000 square feet, making it one of the largest private homes in the country. After Ms. Ecclestone bought it from Mr. Spelling’s widow, Candy Spelling, in 2011, she brought in more than 500 workers to do a three-month, multimillion-dollar renovation. The property has a two-lane bowling alley, a wine cellar, a beauty salon, a gym, tanning rooms and a tennis court.

The property is one of several significant Los Angeles area homes to have traded to buyers from the Middle East this year. In May, a Saudi buyer snapped up two neighboring Bel-Air properties for $52 million, The Wall Street Journal reported.

Seller’s agents: Kurt Rappaport and Daniel Dill of Westside Estate Agency; Jade Mills of Coldwell Banker Global Luxury and David Parnes and James Harris of the Agency.

Buyer’s agents: Jeff Hyland and Rick Hilton of Hilton & Hyland.

Read about the next seven featured properties by clicking on the article credit below…

By Katherine Clarke | Mansion Global who republished it from The Wall Street Journal

Jeffrey Epstein’s $56 Million Mansion Could Become a Real-Estate Nightmare

(Jeanette Settembre) Jeffrey Epstein lived in what’s reportedly one of the largest private homes in Manhattan, where he allegedly sexually abused under aged girls, an allegation so horrific, real-estate experts say people will go out of their way to avoid walking down the block.

Epstein has pleaded not guilty to the charges.

Epstein’s seven-story, 21,000-square-foot Upper East Side home near Central Park is reportedly valued at $56 million, and if the home ever hits the market again, the stigma from the financier’s alleged sex-trafficking scandal will likely diminish its worth.

“After an event like this occurs, and the public becomes aware of it, all of a sudden the value drops significantly,” real-estate appraiser Orell Anderson, who valued the homes where Nicole Brown Simpson and JonBenet Ramsey were murdered, told MarketWatch.

“When tragedy or crime occurs at a home, it could take years before it ever sells, even if it’s a high profile residence”

One might find what’s inside the mansion disturbing even without knowing the harrowing acts that occurred inside.The home is reportedly adorned with unsettling decor choices, like a female doll hanging from the chandelier, and a self-portrait Epstein reportedly commissioned of himself portrayed in a prison scene behind barbed wire in the middle of a corrections officer and a guard station, according to The New York Times. All of those adornments, of course, would be removed in lieu of any sale.

When tragedy or crime occurs at a home, it could take years before it ever sells, even if it’s a high profile residence. And when it does, the buyer usually gets a discount on it, and the market value could take years to bounce back, if it ever does, Anderson says.

Homes where something as extreme as a murder occurs can often decrease a property’s value by 25% because of physical damages to the house like blood stains, or the lingering smell of dead bodies, Anderson explains. Then there’s the stigma of living in a house where someone was killed, or a tragedy happened.

After O.J. Simpson’s former wife Nicole Brown Simpson and her 26-year-old friend Ron Goldman were found dead outside of her Brentwood home in 1994, Brown Simpson’s family tried to sell it, but no one wanted to buy a home where a double homicide occurred.

The house was on the market for two years before it finally sold for a fraction of what Brown Simpson paid for it. She purchased the home for $625,000 and it sold for $525,000, according to realtor.com. And in 1974 when Ronald DeFeo murdered an entire family in the “Amityville Horror House,” it sold for a $250,000 loss in 2017.

“The property in the short-term would take a significant hit to what its potential would be.”

New York City-based real-estate appraiser Jonathan Miller says even cursed homes see resiliency.

“Whenever there is a tragedy, generally speaking, at least in New York, the property in the short-term would take a significant hit to what its potential would be,” Miller explained.

He said Epstein’s Upper East Side mansion is especially unique because there’s only a handful like them on the block near Central Park. “I find that within a few years that generally fades away and even accelerates when you have a unique property or housing shortage.”

How to salvage and attempt to sell a cursed property

Once the dust settles after a tragedy, there are physical changes that can be made to present the property in a new light.

“It’s best to make the house look different from the pictures of it in the media so that people don’t immediately recognize it.” Anderson says, of changing the facade. “Put in more lights or change the color of the walls so there’s a perception that things have changed.”

That could mean investing in landscapers to add more plants to the front entrance to make it look more inviting, or changing the color of the home to make it appear brand new so perspective buyers don’t associate the property with it’s dark history.

However, real-estate agents are typically obliged to reveal the history of a house, especially if there were serious crimes committed there such as a murder, to a prospective buyer.

To boost the value of Simpson Brown’s home, it underwent a massive renovation and an address change so prospective buyers wouldn’t associate the condo with its past. It took more than a decade to bounce back selling for $1.72 million in 2006, according to realtor.com.

In the DeFeo murder home, granite counter tops, a heated sun room, fireplace and home sprinkler system were added likely to help boost the value in 2016 before it sold a year later.

Homes where tragedies occur can be redeveloped, turned into memorials or destroyed

Anderson says another way to restore a property that’s been plagued by crime or violence is to demolish it and rebuild something completely new, like turning a single-family mansion into an apartment building or office space depending on what zoning and land laws permit.

“If you had the kind of money, you could tear down the home and make it into something different,” Anderson said. In other cases, like an act of terrorism or a mass shooting, sometimes homes or the place where a tragedy occurred are destroyed all together, Anderson noted.

Some buyers hire energy healers to chase away evil spirits and bad vibes

When the DeFeo murder home first sold in 1975 after he was convicted, the buyers reportedly moved out nearly a month after they moved in because they allegedly heard voices telling them to “get out.” It could be worth getting an energy healer or spiritual leader to come in and cleanse the house, Anderson says, to put potential home owners at ease.

“If your market demands it, you could get your local priest or energy healer to come exercise the bad spirits. It might sound ridiculous, but that seems to be calming for people who believe in ghosts, or have superstitions,” Anderson says.

Source: By Jeanette Settembre | Realtor.com

***

The Jeffrey Epstein Rabbit Hole Goes a Lot Deeper Than You’ve Been Told So Far

It seems like the whole Epstein thing was an elaborate professional blackmail operation intended to ensnare the rich and powerful. But who was really behind it, who was really bankrolling Epstein?

We really need to get to the bottom of this for all the right dominos fall.

Hunting For Ranches Like Penthouses Means Perks, Or Forget It

Source: T. Boone Pickens Family Office

(Bloomberg) — Buyers looking for the perfect luxury ranch, that billionaire’s take on American rural life, may have to hold out to get what they want.

Whether it’s sky-high in New York or in the Big Sky country of Montana, high-end properties seem to be hitting a soft patch: they’re harder to sell unless they come with an exclusivity where price matter less. But that means paying a premium for that perfect combination: from mountain views at sunset to proximity to well-stocked towns to wildlife or the cachet of neighbors.

While six of 38 ranches listed for sale at more than $10 million have been marked down in the past 90 days, there’s a limited supply of properties that cover the full range of features, according to Billings, Montana-based broker Hall and Hall.

“When you get all of those things working together, if you really want that, you have to pay up if it comes available,” said Hall and Hall managing director B Elfland, who goes by his first-name initial without a period.

That has some sellers betting that bigger is better. Morton Fleischer, chairman and co-founder of Store Capital Corp., is marketing his Arizona and Montana ranches together for $50 million. One selling point, he said by phone, is the millions poured into the area by GoDaddy Inc.’s billionaire founder Bob Parsons.

Private Jet, Horses

“If I was younger, I wouldn’t sell that ranch,” Fleischer, 82, said of his Scottsdale home. “It’s a good investment for someone.”

“I got out of the pressure cooker and could get on my horses,” he said. “Perhaps someone running a hedge fund who’s in their 40s and wants to live a lifestyle out west and has enough money to have a jet plane to get back and forth could do the same.’’

Nearly doubling the price to attract a buyer may seem counterintuitive. Take West Creek Ranch in Colorado, with no buyer since John Hendricks listed it for $149 million in 2017. Now the Discovery Channel founder is combining the offer with his guest resort and car museum down the road for $279 million, according to Sotheby’s International Realty.

Also on the market in Colorado for $46 million is Henry Kravis’s Westlands Ranch. Kravis has a net worth of $6.2 billion, according to the Bloomberg Billionaires index. Private-equity executive Charlie Gallagher is asking $36 million for his Elk Island Ranch.

Exclusive Market

That’s a far cry from what NFL and Premier League team owner Stan Kroenke paid in 2016 when he bought the W.T. Waggoner Estate Ranch in Texas listed for $725 million, which is bigger than New York city and Los Angeles combined. Kroenke has a net worth of $8 billion, according to the Bloomberg Billionaires index.

In Montana, “In each 2016 and 2017, there were only four sales $10 million and above,’’ said Hall and Hall broker David Johnson. “The next year, there were eight. It wasn’t a double in demand. It was a double in supply.”

Hall and Hall sold 16 ranches for more than $10 million in 2018, compared to six so far in 2019. While that may suggest a slowdown, ranch sales can’t be compared to the frenzy of big cities.

“Our market doesn’t have the dramatic swings that New York and California residential markets have,” said Elfland.

Owning a rural slice of heaven runs deep in the psyche of even the biggest victors of capitalism. Shining examples of the American Dream are the country’s biggest individual landowners, John Malone, who has a net worth of $8.6 billion, according to the Bloomberg Billionaires index, and Ted Turner, founder of CNN.

Life Timing

Buying a ranch can be a matter of timing, of having a job on autopilot and kids out of the house who want to visit.

“The clock is running, so if they’re going to enjoy it, it’s an incentive to pay a premium,” said Johnson.

When the kids stop visiting, it can be sad.

“We sold one last year that had been on the market for 10 years,’’ he said. “The price had come down by two thirds to where the buyer would pick it up.’’

Source: by Hailey Waller | Bloomberg News

Mansion Bust: Hamptons Estate Sells For 46% Discount

Arbor Realty Trust CEO and president Ivan Kaufman just bought a 58-acre estate in the Hamptons for $35 million — about HALF of its $75 million asking price from 2003 and about $14 million less than its most recent asking price, reported the New York Post.

https://www.zerohedge.com/s3/files/inline-images/Arbor-Realty-Trust%20three%20ponds%20home-.jpg?itok=FqP4bLNF

The estate in Bridgehampton, called Three Ponds Farm, features an 18-hole golf course, a large pool, several gardens, a tennis court, and ponds.

https://www.zerohedge.com/s3/files/inline-images/three%20pond%20front%20view.jpg?itok=YzkFqzXb

The estate was first listed in 2003 with an asking price of $75 million. Then in 2007, listed again for $68 million. It was relisted back in December 2018 for $49 million.

https://www.zerohedge.com/s3/files/inline-images/three%20pond%20inside.jpg?itok=aEXjv0Xe

Down the street, the 42-acre Jule Pond estate in Southampton was slashed by $30 million for an asking price around $145 million instead of $175 million.

The developments of the deteriorating Hamptons mansion market comes at a time when luxury real estate across the North East is under structural stress.

Several months ago, we reported about the housing crisis developing between Manhattan, Greenwich, and the Hamptons.

The median sale price of a Hamptons home has fallen to a seven-year low of $860,000, according to our report.

Some of the real estate slowdowns can be connected to President Trump’s federal tax reform, which makes it more expensive to own estates.

Across all price levels, sales in the Hamptons have declined five straight quarters. This has led to an overall decline in the median sale price of homes, down 5.5% in 1Q19 versus the same period a year ago. About 300 homes changed hands in last quarter, was the lowest sales transactions in many years.

The wealth of the Hamptons real-estate market is closely correlated with those of nearby Manhattan, another real estate market that is quickly cooling.

Source: ZeroHedge

Developers Are Pulling Out All The Stops Amid Los Angeles’ Mega-Mansion Glut

Builders and brokers are throwing blowout bashes and testing an array of marketing stunts amid the area’s spec home bubble

(WSJ) Heavy duty vehicles line both sides of many of the winding two-way streets in the Hollywood Hills, making them treacherous single-lane thoroughfares. Construction workers wave stop signs as trucks laden with glass and steel back slowly out of driveways. Empty parcels of land all over Los Angeles’s poshest neighborhoods are being transformed into lavish mansions with price tags in the tens, or even hundreds, of millions.

“Every time I drive up there for any reason, if I return without getting my car dinged I breathe a sigh of relief,” says Andy Butler, a real-estate marketing consultant.

Real-estate experts estimate that there are about 50 ultra high-end spec houses under construction in the area, from Beverly Hills to Bel-Air and Brentwood.

The unprecedented wave of development has its roots in the heady days of 2014 and 2015, when foreign buyers poured into Los Angeles and luxury markets across the country logged record sales. A couple of local megawatt deals—including the $70 million sale of a Beverly Hills compound to billionaire Minecraft creator Markus Persson in 2014—inspired the construction of bigger and pricier homes, most of which were built as contemporary cubes. Some were built by inexperienced developers; many had price tags north of $20 million.

Now, there are simply too many, and not enough buyers to go around. “It’s created its own monster,” says Stephen Shapiro of Westside Estate Agency. “We have an enormous oversupply of these white boxes. There’s years of inventory out there.”

This Bel-Air home shaped like an airplane propeller is asking $56 million. A rendering of the home. Matthew Momberger

A review of the Los Angeles multiple listings service shows close to 100 homes on the market asking over $20 million in Los Angeles County, at least 35 of which could be classified as spec homes, and more are under construction. And those are just the listed ones: Appraiser Jonathan Miller says more than a third of homes in that price category are never entered in the MLS. Some of the city’s most expensive are notably absent.

The surplus mirrors a similar situation in New York, where high-end developers rushed to build pricey condos amid a market upswing, and are now faced with enormous competition for buyers.

But unlike New York, smaller, private lenders and wealthy individuals have provided much of the financing for the Los Angeles spec homes.

https://si.wsj.net/public/resources/images/B3-EC948_spec05_M_20190529143005.jpg

Don Hankey, a California businessman known as the king of subprime car loans, says one of his companies has provided close to $300 million on high-end homes in the Los Angeles market, including on spec homes. Public records show Hankey Capital provided about $82.5 million in financing to “The One,” an almost-built megamansion by Los Angeles developer Nile Niami, who plans to list it for $500 million.

That asking price is more than twice the record paid for a home in the U.S., a record set earlier this year by hedge funder Ken Griffin’s purchase of a nearly $240 million penthouse in New York. The record price for a Los Angeles area home was set by the $110 million sale of a Malibu mansion in 2018.

“You have to be concerned,” Mr. Hankey says of the oversupply. “We’ve cut back. We’re not as aggressive in the financing.”

Other lenders on pricey spec homes include Axos Bank, formerly Bank of Internet, which financed a massive $180 million monolith built by plastic surgeon and newbie developer Raj Kanodia.

The debt load for developers can be substantial. “If I’m living in my house and I put it on the market for sale, I’m still living in my house,” Mr. Shapiro says. “These are empty houses, and the developer is spending a lot every month to keep them.”

https://si.wsj.net/public/resources/images/B3-ED146_0530sp_M_20190530103731.jpg

Andy Warhol’s 1974, two-toned, Rolls-Royce Shadow can be included in the deal for a new Trousdale spec home that’s branded around the artist. Photo: Darren Asay

In this environment, and amid signs that prices are falling, developers and their agents are going to extraordinary lengths to differentiate their listings from the pack. They are throwing themed bashes in lieu of traditional open houses, thinking up gimmicky new amenities and hiring marketing experts to reimagine homes as individual brands with their own names, logos and stories. Some developers are relisting plots of land, hoping to get their money out without sinking more money into construction.

“People come to us because they want to stand out,” says Alexander Ali, whose marketing and public relations firm the Society Group is finding a growing business in creating brands for megamansions. “There are so many new homes coming to the market every day.”

Mr. Ali’s latest exercise: Turning a roughly 7,600-square-foot contemporary home in Trousdale into “WARHOL 90210,” a property branded around artist Andy Warhol. Mr. Ali and the developer, Wystein Opportunity Fund, joined with a local gallery to display Warhol prints in the home. At a Warhol-themed disco to be held on site, a Warhol look-alike will be filmed striding through the party; the resulting video will be blasted out on social media. (The house has no connection to Mr. Warhol.)

Amid a surplus of luxury spec homes, developers and their agents are going to extraordinary lengths to differentiate their listings from the pack, like throwing themed bashes in lieu of traditional open houses. Photo: Joshua Bobrove

David Parnes, Mauricio Umansky and James Harris of The Agency, which threw the party. Photo: Joshua Bobrove

Mr. Ali convinced the agent that Mr. Warhol’s onetime car—a 1974, two-toned, Rolls-Royce Shadow—and the Warhol prints featured in the home should be included in the deal. “It defines the house as a collector’s dream,” Mr. Ali says. The whole package seeks $17.75 million. The house can be sold separately for $15.625 million.

In February, Mr. Niami threw an elaborate party inspired by Dutch artist Hieronymus Bosch’s painting “The Garden of Earthly Delights” in a home he is listing for $39.995 million. Its three levels were organized into heaven, earth and hell, and models in colorful tulle dresses swam in the property’s glass bottomed pool, said Mr. Ali, who organized the party.

There were actors posing as Adam and Eve while hosting a virtual reality game that allowed guests to enter a rendition of the Bosch painting. People drank whiskey infused with the body of a dead cobra, and dancing women dressed in leather, whips and chains. A camel stood at the entrance to greet guests.

Another performer floated on the surface of the pool in a transparent bubble. Photo: Joshua Bobrove

In Bel-Air, real-estate brokerage firm the Agency recently threw a “Great Gatsby” themed event to launch a $35.5 million spec house. A female performer in a bedazzled costume hung upside down from a trapeze to pour champagne for guests, while another floated on the pool in a transparent bubble.

Mr. Ali says developers will pay anywhere from $20,000 to hundreds of thousands to throw such events.

In addition to the parties, developers are always on the hunt for creative new amenities. “It’s about the wow factor,” says spec home developer Ramtin Ray Nosrati, whose under-construction mansion in Brentwood includes a secret room for growing and smoking marijuana.

The ventilated room, accessed by hitting a button hidden inside a living room bookcase, will have tinted windows that darken for privacy. The house, slated to ask between $30 million and $40 million, will also come with a budget for an employee to supervise growing and harvesting. Mr. Nosrati compared the amenity to “having your own vineyard.”

Despite all this, price cuts are the order of the day. Bruce Makowsky, a handbag designer-turned-developer who sold the Minecraft property, lowered the price of his latest project, a lavish Bel-Air house with a candy room and a helipad, to $150 million, down from its original $250 million asking price. Mr. Niami slashed the price of a sprawling 20,500-square-foot house known as Opus to $59.995 million, down from $100 million.

Developer Ario Fakheri has chopped the asking price for his Hollywood Hills home with a roughly 300-gallon indoor shark tank to $26.995 million from $35 million.

Sales are still happening: Approximately 11 deals have closed for more than $20 million in Los Angeles so far this year, and a Saudi buyer recently paid $45 million for a spec home built by diamond manufacturer Rafael Zakaria. But buyers know they have the upper hand. “People are making lowball offers,” says Mr. Shapiro of Westside Estate Agency. “They’re not being shy.”

Doug Barnes, the founder of Eyemart Express, sold a contemporary home in Beverly Hills for $34.65 million in April, or nearly 40% off its original $55 million asking price, records show. British restaurateur and Soho House co-owner Richard Caring is listing a home he bought in Beverly Hills for $29.995 million; he paid $33 million for it in 2016, records show.

As for “The One,” the $500 million property was originally slated to come on the market in 2017 but has yet to be listed. The developer blamed construction delays.

Corrections & Amplifications: Stephen Shapiro of Westside Estate Agency said buyers know they have the upper hand in negotiations to purchase high-end spec homes. An earlier version of this article incorrectly stated that sellers have the upper hand. (May 30, 2019)

Appeared in the May 31, 2019, print edition as ‘The Spec Home Bubble.’

Source: by Katherine Clarke | The Wall Street Journal via @kathieClarkeNYC

‘Too Big To Sell’ – Boomers Trapped In McMansions As Retirement Looms

More wealthy baby boomers are finding themselves trapped in homes that are too big to sell. They want to downsize but can’t get what they paid.

This was guaranteed to happen, and did. Baby boomers and retirees built large, elaborate dream homes only to find that few people want to buy them.

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Please consider a Growing Problem in Real Estate: Too Many Too Big Houses.

Large, high-end homes across the Sunbelt are sitting on the market, enduring deep price cuts to sell.

That is a far different picture than 15 years ago, when retirees were rushing to build elaborate, five or six-bedroom houses in warm climates, fueled in part by the easy credit of the real estate boom. Many baby boomers poured millions into these spacious homes, planning to live out their golden years in houses with all the bells and whistles.

Now, many boomers are discovering that these large, high-maintenance houses no longer fit their needs as they grow older, but younger people aren’t buying them.

Tastes—and access to credit—have shifted dramatically since the early 2000s. These days, buyers of all ages eschew the large, ornate houses built in those years in favor of smaller, more-modern looking alternatives, and prefer walkable areas to living miles from retail.

The problem is especially acute in areas with large clusters of retirees. In North Carolina’s Buncombe County, which draws retirees with its mild climate and Blue Ridge Mountain scenery, there are 34 homes priced over $2 million on the market, but only 16 sold in that price range in the past year, said Marilyn Wright, an agent at Premier Sotheby’s International Realty in Asheville.

The area around Scottsdale, Ariz., also popular with wealthy retirees, had 349 homes on the market at or above $3 million as of February 1—an all-time high, according to a Walt Danley Realty report. Homes built before 2012 are selling at steep discounts—sometimes almost 50%, and many owners end up selling for less than they paid to build their homes, said Walt Danley’s Dub Dellis.

Kiawah Island, a South Carolina beach community, currently has around 225 houses for sale, which amounts to a three- or four-year supply. Of those, the larger and more expensive homes are the hardest to sell, especially if they haven’t been renovated recently, according to local real-estate agent Pam Harrington.

The problem is expected to worsen in the 2020s, as more baby boomers across the country advance into their 70s and 80s, the age group where people typically exit homeownership due to poor health or death, said Dowell Myers, co-author of a 2018 Fannie Mae report, “The Coming Exodus of Older Homeowners.” Boomers currently own 32 million homes and account for two out of five homeowners in the country.

Not Just the South

It’s not just big houses across the Sunbelt. It’s big houses everywhere. If anything, I suspect it’s worse in the north. There is an exodus of people in high tax states like Illinois who want the hell out.

Already big homes were hard to sell. Now these progressive states are raising taxes.

Triple Whammy

  1. Millennials trapped in debt and cannot afford them
  2. Millennials wouldn’t buy them anyway because tastes have changed.
  3. Taxes are driving people away from states like Illinois

Good luck with that.

For the plight of Illinoisans, please consider Illinois’ Demographic Collapse: Get Out As Soon As You Can.

Authored by Mike Shedlock via MishTalk,
Source: ZeroHedge