Category Archives: Luxury Housing

Home Builder Toll Brothers Shocks With 13% Plunge In Orders As California Falls A Staggering 39%

Toll Brothers announced its fourth quarter results on Tuesday, unleashing a fresh flood of concerns about the state of the housing market after it disclosed its first drop in orders since 2014. Orders were down 13% from the year prior, missing the analyst estimate of a 5% increase in dramatic fashion.

The company focuses much of its business on the California high-end home segment, which – as a result of the housing bubble in most west coast cities and rising rates, is facing an “affordability crisis” coupled with a sharp drop in overseas demand. According to the company, orders for the state were down an astounding 39%.

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The company blamed rising rates for the drop off in buyer demand, as well as sinking stock prices. What is odd is that stock prices haven’t really “sunk” – unless the company was referring to its own stock…

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... with the CEO blaming “the effect on buyer sentiment of well-publicized reports of a housing slowdown” for the plunge in orders. You see, it’s not the housing market that is slowing: it is perceptions about the market slowing, that is hitting the company.

That said, “perceptions” are correct: as we noted last week, new home sales crashed in October, suffering the biggest plunge since 2011.

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Even so, the atrocious quarter didn’t deter all analysts, who promptly defended the stock. Drew Reading, Bloomberg Intelligence analyst stated that “there are many positive factors underpinning the economy that we believe are supportive of the housing sector longer-term, and our affluent markets particularly.”

Tolls dismal results follows signs that we have been discussing for much of the past year, which have confirmed that the luxury housing market is cooling off across the country.

Recently, we profiled a mansion in Chicago that was taken off the market after being listed for $50 million and only being assessed for $19.4 million. United Automobile Insurance Chairman and CEO Richard Parrillo constructed the 25,000 sq ft Lincoln Park mansion a decade ago, after buying the property in 2005 for $12.5 million from the Infant Welfare Society.

After two years on the market, Parrillo and his wife held firm at $50 million, a record for the region, their original listing agent told the Chicago Tribune. The agent said the couple plowed more than $65 million into the estate, including land cost.

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$50 million Lincoln Park mansion — Chicagoland’s priciest listing — taken off the market

Cook County Assessor’s Office reports shows the mansion’s $50 million asking price was hugely overinflated versus its most recent estimated market value, which stood some 60% lower, at $19.4 million. The report notes the 2018 property value is significantly higher from the assessor’s $14 million estimated market value for the mansion in 2017, due to a quick burst in high-end home sales in the last several years that had since cooled.

Source: ZeroHedge

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Luxury Home Prices In Singapore Soar 13% As Vancouver Prices Crash 11%

Singapore has now overtaken Hong Kong as the top city for luxury home price gains in Q3.

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Luxury home prices in Singapore were up 13% in the third quarter from the year prior, according to Knight Frank LLP’s Prime Global Cities Index. The rising prices were partly the result of limited supply of higher end properties.

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Hong Kong instead fell to 14th place, with just a 5.5% year-over-year gain during the third quarter.

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And the rise in Singapore does little to offer a picture of what the luxury property market looks like globally. Worldwide, luxury properties rose by just 2.7% on average across the 43 cities that make up the index – this is the weakest performance in annual terms in almost 6 years.

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Cities like Edinburgh and Madrid found themselves in the top five, while London wound up moving into negative territory, watching prices fall 2.9% as a result of the continuing uncertainty around Brexit. Cities like Paris and Berlin posted steady gains of 5.6% and 5.4%, respectively.

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Also among the decliners was Dubai, where prices fell 3.8% resulting in the middle eastern city being the fifth worst on the list. Stockholm, Istanbul and Taipei all registered 6.3% year-over-year declines, tying them all for second worst place.

Finally, pulling up the rear is Vancouver, where we have spent time documenting a collapsing real estate bubble over the last couple of months. Vancouver saw its luxury home prices down 11% as more affluent pockets of the city, like West Vancouver, saw a pronounced slowdown in sales.

At the beginning of October, we asked readers what happens when prices rise so high that a chasm forms between bids and asks in Vancouver? The market grinds to a halt.

That’s what happened in September, when according to the Real Estate Board of Vancouver (REBGV), residential property sales tumbled by 17.3% from August 2018, and a whopping 43.5% from one year ago. In fact, a total of only 1,595 transactions took place as both buyers and sellers continue to sit on their hands amid confusion whether the recent torrid price gains will continue or whether the housing bubble has burst.

Sales of detached properties in July was just 508, a decrease of 40.4% from the 852 recorded in September 2017, and the 812 apartments sold was a 44% drop compared to the 1,451 sales in September 2017.

And no, it’s not seasonal: last month’s sales were a whopping 36.1% below the 10-year September sales average.

Source: ZeroHedge

US Treasury Secretary Mnuchin Lists Park Ave. Apartment For $33 Million, Three Times What He Paid For It

No sooner did we report that the housing “recovery” over the last 10 years has skipped many “underwater” communities in the United States, than we found confirmation of the opposite: Treasury Secretary Steve Mnuchin is selling his Park Avenue apartment in Manhattan for three times the price that his aunt paid for it 18 years ago. He has listed the apartment for $32.5 million. His Aunt is listed as the broker on the sale.

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The sale is happening at the same time that residents of numerous commuter towns across the United States have seen the values of their houses collapse to less than half of what they were in 2006, prior to the housing crisis.

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Mnuchin recently listed the 6500 square-foot, 12 room apartment that he bought from his aunt in 2000. It was purchased then for just $10.5 million. It had been in his family since the 1960s and, when he turns around to list the property this time, he stands to net $22 million more than what he paid for it, if his asking price is met.

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The apartment is being listed by Warburg Realty and is located inside of 740 Park Ave., inside the historic Rosario Candela building. Other famous former tenants of this building include the Rockefellers and the Kochs. Currently, Stephen Schwarzman, the CEO of Blackstone Group, lives there. The building was developed by Jacqueline Kennedy Onassis’ grandfather.

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Other than that, it’s just your average ordinary run of the mill apartment on Park Avenue: five bedrooms, a wall wood paneled library, a wet bar, a formal dining room, a private elevator, 11 foot ceilings, marble floors and a sweeping spiraling staircase that still has its original banister.

The first floor of the apartment has six bathrooms and an 800 square-foot living room.

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Upstairs, the apartment has a master suite, walk-in cupboards, study, two more bathrooms and three extra bedrooms. The apartment spans two levels in the building on both the eighth and the ninth floor and it also has a large kitchen with a “breakfast nook”.

While that all seems extremely glamorous, Mnuchin hasn’t even used this apartment as his main residence, reportedly. Mnuchin was living in California before his appointment to the Trump administration, but has since bought a $12.6 million apartment in Washington DC.

We’re glad to hear that Mnuchin was able to ride out the housing crisis successfully. We were worried about him for a moment.

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Source: ZeroHedge

$1Billion Price Cut: Luxury real estate gets slashed

  • The high-end real-estate market has seen steep price cuts in recent months as foreign buyers dry up andnew tax laws kick in.
  • The Ziff family estate in Manalapan Florida cut its price in May by $27 million, from $165 million to $138 million.
  • Even the Oracle of Omaha, Warren Buffett, has had to lower his asking price on his beach home in Laguna Beach.

The most expensive real-estate in America just became a little less expensive — with $1 billion in price cuts among America’s top listings over the past few months, according to a CNBC analysis.

The high-end real-estate market has seen steep price cuts in recent months as foreign buyers dry up, new tax laws bite the wealthiest states and sellers realize the market peak of 2014-2015 isn’t coming back anytime soon, luxury brokers say.

According to RedFin, the real-estate brokerage and research firm, fully 12 percent of homes listed for $10 million or more saw a price drop in 2018 — double the levels of 2016 and 2015. Just over 500 listings in the U.S. had a combined price cut of $1 billion in the second quarter, according to RedFin.

“Prices were growing too fast for what buyers were willing to pay,” said Taylor Marr, a senior economist at RedFin.

Some of the price cuts have reached tens of millions of dollars, according to the listing. The Ziff family estate in Manalapan Florida cut its price in May by $27 million, from $165 million to $138 million. That follows a previous price cut, from $195 million last year — so it’s price has dropped by $57 million over the past year.

A 10-bedroom mansion on Miami Beach’s posh Star Island cut its price by $17 million in May, from $65 million to $48 million. A giant apartment at New York’s Sherry Netherland had its price cut by $18 million, falling from $86 million to $68 million.

The cuts follow a spate of even bigger cuts earlier this year. The $250 million mansion in Bel Air California known as “The Billionaire” became America’s most expensive listing when it came onto the market for $250 million in 2017. In April, the price was cut by a massive $62 million, to $188 million.

Brokers representing the house said that unique homes like “The Billionaire” – which comes with a $30 million car collection, a giant outdoor TV that retracts from behind the pool, and elevators lined with crocodile skin – said the home is just finding its true market price.

“There is no comp for a house like this,” said Shawn Elliott, one of the brokers for “The Billionaire.” So the new price reflects the price offered by a recent potential buyer.

A spec home in Beverly Hills, called Opus, was listed in August of 2017 for $100 million, but the price was cut to $85 million a month later. Now the home, which once had a gold theme, has been re-styled in black in hopes of finding a buyer.

The late Johnny Carson’s estate in Malibu, Ca. saw its price drop by $16 million, to $65 million from $81 million. The house is being sold by fashion magnate and film producer Sidney Kimmel.

Even homes that see big price cuts are selling for less than their discounted prices. A 20,000 square-foot mansion in the Hamptons, once owned by fashion mogul Vince Camuto, was first listed in 2008 for $100 million. Its price got chopped to $72 million, and it sold this spring for around $50 million – half of its original listing price.

Even the Oracle of Omaha, Warren Buffett, has had to lower his asking price on his beach home in Laguna Beach. The home was listed in 2017 for $11 million, but he has slashed the price to $7.9 million. He’s still likely to make a big profit – he bought the home in the early 1970s for $150,000.

The reasons for the price drops are many. In some cases, the prices for the homes were fantasies. Sellers had irrational expectations or they were using the sky-high prices to attract attention to their properties. The luxury real-estate market has fallen since its peak in 2014 and 2015, and many sellers are finally adjusting to a different market.

Supply of homes at the high end is also high, especially for newer condos and spec homes in New York, Los Angeles and major metro areas.

“There could be an over-supply of these high-end homes,” Marr said.

The new federal tax law, which limits deductions of state and local taxes, is also putting pressure on real-estate in high-tax states. And foreign buyers, who were driving some of the highest-priced sales in 2014 and 2015, have pulled back. A stronger dollar has also made U.S. real-estate more expensive.

It’s unclear whether the price cuts signal an upcoming crash in the luxury market. Prices could simply adjust without a severe correction. But the size of the cuts suggest that many luxury listings have yet to find their sale prices.

“Price cuts can be a great leading indicator and give a forward-looking view,” Marr said. “But it’s too early to tell where it’s headed.”

Source: by Robert Frank | CNBC

Father of Paris Hilton to Sell Historic 16th Century Roman Mansion for Bitcoin

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Rick Hilton, who is the father of Paris Hilton and chairman of Hilton & Hyland, is all set to sell a 16th-century Roman mansion for cryptocurrencies. The auction for the property will be held on June 28, and it will make history as the first ever property to be auctioned on blockchain.

The 11-bedroom house is, reportedly, worth upwards of $35 million. The sale will go online on Propy.com, which is a global property store with decentralized title registry.

Realtors Love Cryptocurrencies and Blockchains

In 2017, at least 20 homes were sold for cryptocurrencies globally. This year, the bar could be set much higher.

Hilton said: “The auction shows real estate’s growing trust in blockchain and provides crypto investors an opportunity to diversify and solidify their portfolio with a trophy asset.”

The priciest home ever sold using cryptocurrencies was a seven-bedroom Miami estate. It was sold for 455 Bitcoins or approximately $6 million. The Roman mansion could easily break this record and set a record high.

A Listing Beyond Compare

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The Palazzetto, which is a grand mansion designed and built by Michelangelo’s collaborator Giacomo Della Porta, is an Italian landmark. Della Porta was also involved in the building of St. Peter’s Dome, which is another famous landmark in Rome, Italy.

The mansion is composed of two independent but connected luxury units. The property boasts of multiple entrances, an in-house theater, a secret garden, a wellness spa, and a gym.

The rooftop offers 360-degree views of the city and bird’s eye view of the neighborhood along with the Altar of the Fatherland. It has 11 bedrooms, 15 and a half bathrooms, three kitchens and multiple living and dining rooms, complete with four parking spots.

Source: by Viraj shah | Blokt

Manhattan Home Sales Tumble Most Since 2009 as Buyers Walk

Home sales in Manhattan plunged by the most since the recession as buyers at all price levels drove hard bargains and were in no rush to close deals.

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  • Haggling gets more aggressive for listings at all price points
  • ‘People are very anxious about overpaying,’ brokerage CEO says

Sales of all condos and co-ops fell 25 percent in the first quarter from a year earlier to 2,180, according to a report Tuesday by appraiser Miller Samuel Inc. and brokerage Douglas Elliman Real Estate. It was the biggest annual decline since the second quarter of 2009, when Manhattan’s property market froze in the wake of Lehman Brothers Holdings Inc.’s bankruptcy filing and the global financial crisis that followed.

The drop in sales spanned from the highest reaches of the luxury market to workaday studios and one-bedrooms. Buyers, who have noticed that home prices are no longer climbing as sharply as they have been, are realizing they can afford to be picky. Rising borrowing costs and new federal limits on tax deductions for mortgage interest and state and local levies also are making homeownership more expensive, giving shoppers even more reasons to push back on a listing’s price — or walk away.

While just a few years ago, bidding wars were the norm, “there’s nothing out there today that points to prices going up, and in many buyers’ minds, they point to being flat,” said Pamela Liebman, chief executive officer of brokerage Corcoran Group. “They’re now aggressive in the opposite way: putting in very low offers and seeing what concessions they can get from the sellers.”

Corcoran Group released its own Manhattan market report Tuesday, showing an 11 percent decrease in completed purchases and a 10 percent drop in sales that are pending.

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For sellers, to reach a deal in the first quarter was to accept a lower offer. Fifty-two percent of all sales that closed in the period were for less than the last asking price, according to Miller Samuel and Douglas Elliman. Buyers agreed to pay the asking price in 38 percent of deals, but often that figure had already been reduced. Combined, the share of deals without a premium was the biggest since the end of 2012.

“Even with New York real estate prices, you do hit a point in which resistance sets in,” said Frederick Peters, CEO of brokerage Warburg Realty. “People are very anxious about overpaying.”

Peters said that these days, he gets dozens of emails a day announcing price reductions for listings. And buyers are haggling over all deals, no matter how small. In a recent sale of a two-bedroom home handled by his firm, a buyer who agreed to pay $1.5 million — after the seller cut the asking price — suddenly demanded an extra $100,000 discount before signing the contract. They agreed to meet halfway, Peters said.

Buyers also are finding value in co-ops, which in Manhattan tend to be priced lower than condos. Resale co-ops were the only category to have an increase in sales in the quarter, rising 2 percent to 1,486 deals, according to Corcoran Group. Sales of previously owned condos, on the other hand, fell 12 percent as their owners clung to prices near their record highs, the brokerage said.

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The median price of all sales that closed in the quarter was $1.095 million, down 5.2 percent from a year earlier, brokerage Town Residential said in its own report. Three-bedroom apartments saw the biggest drop, with a decline of 7 percent to a median of $3.82 million, the firm said.

Prices fell the most in the lower Manhattan neighborhoods of Battery Park City and the Financial District, where the median slid 15 percent from a year earlier to $1.21 million, according to Corcoran Group. On the Upper West Side, the median dropped 8 percent to $1.1 million.

Neither new developments nor resales were spared from buyer apathy. Purchases of newly constructed condos, which continue to proliferate on the market, plummeted 54 percent in the quarter to 259, Miller Samuel and Douglas Elliman said. Sales of previously owned apartments dropped 18 percent to 1,921.

The plunge in transactions is actually a good thing, in that it may serve as a wake-up call for more sellers to scale back their price expectations, said Steven James, Douglas Elliman’s CEO for the New York City region.

“It sends the sellers a signal that you have to get more reasonable if you want my buy,” James said. “It’s like buyers said, ‘I’ve told you all along, but you wouldn’t listen! Now I have your attention, so let’s talk.”

Video Link

Source: By Oshrat Carmiel | Bloomberg

 

 

 

Most Expensive Condo In The (leaning, sinking) Millennium Tower Just Sold For $4.66 Million

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The most expensive condo in the leaning, sinking Millennium Tower has just closed escrow at a selling price that is $1 million less than what it had been asking.

Originally priced at $5.99 million when it hit the market in March 2017, Unit 401 was then re-priced, then taken off the market, only to be re-listed at $4.99 million and finally sold for $4.66 million, SocketSite reports.

Two adjacent units on the fourth floor of the eleven-story mid-rise component of San Francisco’s leaning Millennium Tower development (a.k.a. the City Residences) were legally merged back in 2013 to create a single four-bedroom unit #401 which measures 3,814 square feet and sold for $5.3 million in May of 2014 … Keep in mind that the seller was offering financing “for qualified applicants” and Sterling Bank was offering loans with at least 50 percent down, according to the listing.

The Millennium Tower was a massive real estate success when it finally closed its new sales in 2013, raking in $750 million in revenue from properties. A penthouse initially sold for as much at $9.8 million and the average price tag was $1.8 million.

But the building was discovered to be both leaning and sinking two years ago. It has sunk 17 inches and leaned 14 inches to the northwest, sparking a rash of lawsuits and a flight of residents who claim they’ve sold their investments at a loss.

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The unit isn’t the first in the troubled tower to see a major dip in value during resale — in mid-December, the two-bedroom, three-bathroom unit #48B sold for a 30 percent loss, bringing in $2.99 million. It had previously sold for $4.25 million in November 2013.

“The seller took about a 30 percent loss over a period where the market appreciated rapidly,” Patrick Carlisle, chief market analyst at brokerage Paragon, who wasn’t involved in the deal, told the Business Times at the time. “That’s got to be pretty painful.”

By Riley McDermid | San Francisco Times