Only a matter of time before a home crosses $1B threshold

In the past 18 months there have been 30 U.S. homes sold at or above the $50 million mark.
JUN 08, 2015
By  Bloomberg
When a Los Angeles hilltop home that's under construction was recently priced at a record half-billion dollars, it looked like a one-off in excess. The same thought occurred to me late last year when real estate investor Jeff Greene, who won big betting against the housing market before the financial crisis, priced his renovated Beverly Hills, Calif., home at $195 million. When I dug a little deeper, though, I found that the nine-figure home is becoming almost, well, commonplace: There are no less than three homes with asking prices of more than $300 million — on the French Riviera, in London and in Monaco. Those prices tower over anything a high-roller hangout like the Hamptons has to offer; the most expensive sale there was an East Hampton estate that last year fetched $147 million, less than a third of the asking price for the L.A. house — but still the highest price ever for a U.S. home. The National Association of Realtors reports that the average U.S. existing home goes for $264,500. Should anyone thinking of buying that half-billion L.A. palazzo consider other uses for that money, it could buy roughly 1,890 average homes, or the equivalent of a small town. There is no precedent for these kinds of prices. And yet there may be other homes available in this price range or higher, but hidden from public view as so-called pocket listings — homes not officially on the market but whose owners have indicated their willingness to consider offers. Are these homes worth the money or are their owners simply emboldened by recent gilded-age real estate trends? Just for some context, in the past 18 months there have been 30 U.S. homes sold at or above the $50 million mark. In the U.S., the $100 million listing price threshold was reached a few years ago for a Manhattan condo on top of a Midtown tower built 30 years ago. This condo sat on the market for several years and never sold. But the Manhattan market is catching up and now there are several penthouse condos that will be offered for as much as $175 million. These residences are far removed from what the average person, or even the average rich person, considers a home. Although these properties are technically considered single-family residences, many will never be permanently occupied and their owners may never have to bother with the fuss of making a mortgage payment. In some case, their owners may never even spend a night in them. They are homes in name only. About the only question left is: When will a home go on the market with an asking price of $1 billion? Jonathan Miller writes about the housing economy and other aspects of real estate for Bloomberg News.

Latest News

JPMorgan tells fintech firms to start paying for customer data
JPMorgan tells fintech firms to start paying for customer data

The move to charge data aggregators fees totaling hundreds of millions of dollars threatens to upend business models across the industry.

FINRA snapshot shows concentration in largest firms, coastal states
FINRA snapshot shows concentration in largest firms, coastal states

The latest snapshot report reveals large firms overwhelmingly account for branches and registrants as trend of net exits from FINRA continues.

Why advisors to divorcing couples shouldn't bet on who'll stay
Why advisors to divorcing couples shouldn't bet on who'll stay

Siding with the primary contact in a marriage might make sense at first, but having both parties' interests at heart could open a better way forward.

SEC spanks closed Osaic RIA for conflicts, over-charging clients on alternatives
SEC spanks closed Osaic RIA for conflicts, over-charging clients on alternatives

With more than $13 billion in assets, American Portfolios Advisors closed last October.

William Blair taps former Raymond James executive to lead investment management business
William Blair taps former Raymond James executive to lead investment management business

Robert D. Kendall brings decades of experience, including roles at DWS Americas and a former investment unit within Morgan Stanley, as he steps into a global leadership position.

SPONSORED How advisors can build for high-net-worth complexity

Orion's Tom Wilson on delivering coordinated, high-touch service in a world where returns alone no longer set you apart.

SPONSORED RILAs bring stability, growth during volatile markets

Barely a decade old, registered index-linked annuities have quickly surged in popularity, thanks to their unique blend of protection and growth potential—an appealing option for investors looking to chart a steadier course through today's choppy market waters, says Myles Lambert, Brighthouse Financial.