Sales of homes valued at $100 million are expected to double this 12 months as booming financial markets and hopes for rate of interest cuts fuel a recovery in the luxurious real estate market, in accordance with latest reports.
As of July 15, six homes within the U.S. have sold for greater than $100 million, in accordance with data from Miller Samuel and Douglas Elliman. If the pace of sales continues, it might greater than double last 12 months's total and sure surpass the record of nine homes sold for over $100 million in 2021.
Granted, the nine-figure club is a tiny group. But sales of homes valued at $50 million, $20 million and even $10 million all point to a powerful rebound in the luxurious real estate market after its decline in 2023. The comeback stands in stark contrast to the national housing market, which remains to be affected by the pressure of high mortgage rates and an absence of supply.
“This is a significant increase in sales, something we are not seeing at all in the broader real estate market,” said Jonathan Miller, CEO of valuation and research firm Miller Samuel.
Manhattan saw two blockbuster deals last month. A penthouse in Central Park Tower – the world's tallest residential constructing – sold for $115 million to an unknown buyer. And the penthouse at Aman New York reportedly sold for $135 million to Russian-born billionaire Vladislav Doronin, who founded the event company that built the constructing – effectively buying it from his own company.
Palm Beach, Florida's only private island, Tarpon Island, sold for $150 million in May and Oakley founder James Jannard just sold his Malibu mansion for $210 million, making it the most costly home ever sold in California.
Even San Francisco is embracing the luxurious real estate boom. Laurene Powell Jobs, the billionaire widow of Steve Jobs, just bought the most costly home ever sold in San Francisco. She paid $70 million for a 16,000-square-foot property in Pacific Heights, sandwiched between her neighbor Larry Ellison on one side and Apple design guru Jony Ive on the opposite.
Signs of strengthening are also evident further down the luxurious scale. According to Redfin, over 4,000 homes valued at $5 million or more were sold through June, up 13 percent from the identical period last 12 months.
“It's been a much stronger and more robust start to the year than anyone expected,” said Mike Golden, co-founder of Chicago-based @properties and Christie's International Real Estate.
Luxury markets across the country are seeing strong demand, in accordance with Christie's 2024 Mid-Year Luxury Outlook. In Naples, Florida, home sales over $10 million rose 14% in the primary quarter, in accordance with the report. In Montana, sales over $4 million rose 50% through early May, in accordance with PureWest Christie's International Real Estate.
The boom in artificial intelligence has led to a renewed increase in sales within the San Francisco Bay Area.
“My biggest surprise so far in 2024 has been how many qualified buyers have the ability and willingness to pay premium prices for ultra-elite properties, which speaks to the tremendous liquidity in the upper segments of the market,” said Nathalie de Saint Andrieu, a Bay Area broker.
The diverging trajectories of ultra-luxury and the broader real estate market underscore the very different forces driving the economy of the luxurious segment from the remaining of the country. The national real estate market ebbs and flows with mortgage rates, affordability is at historic lows, and lots of Americans are tied to their homes with low-interest mortgages. The super-rich pays for his or her homes with money, especially when rates of interest are high. In Manhattan, two-thirds of deals this spring were paid for with money, and in the luxurious segment the share is even higher, in accordance with Miller Samuel.
What's more, the boldness (and money) of rich homebuyers largely is determined by the stock market, which continues to interrupt records this summer. With trillions of dollars being created through stocks, the super-rich at the moment are on the lookout for properties to purchase.
“The ultra-luxury real estate segment is almost completely disconnected from the regular real estate market,” Miller said. “It's more of a global market than a local one. And it's more of a barometer of the health of the global financial markets.”
The rise in inheritances from the $80 trillion Great Wealth Transfer can also be boosting sales. Daniel de la Vega, president of One Sotheby's International Realty, said he's seeing a pointy increase in South Florida within the variety of millennials and Generation Z purchasing condos with family trusts.
“They want new construction, and some of them buy the houses without having seen them first,” he said. “They especially like branded properties.”
De la Vega said one other trend driving up luxury home sales is demand for ever-larger homes. Post-Covid, he said, wealthy buyers want all of the amenities of their lifestyle of their homes — from gyms and spas to offices, entertainment spaces and display pieces for his or her art and automobile collections.
The price per square foot for luxury condos in South Florida has increased 33% this 12 months to $3,451. The price per square foot for single-family homes has increased 11% to $2,485.
“In the past, the price per square meter decreased the larger the property became,” said de la Vega. “Today it is the opposite. We have never seen figures like this before. These are astronomical numbers.”
The luxury real estate market typically takes a break before a presidential election as buyers wait for more certainty. So far, strong financial markets have outweighed any election concerns. But within the second half of the 12 months, that is way from a done deal.
“At least judging by the events we're seeing this year, the election doesn't seem to be having a major impact on the luxury goods landscape,” Miller said.
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