Real Estate: The $100 Million House Is Here

$100 Million Real EstateHomes selling for $100 million or more hardly seem real. Isn’t $100 million the type of number usually associated with a missile defense program or the national debt of a small UN member?

And yet they’re here. According to the latest luxury homes report from Christie’s International Real Estate, “more properties than ever were both sold and listed for sale at $100 million or higher in 2014. ‘Trophy’ is the new buzzword in luxury real estate.”

To put this in terms we can all understand, if you buy a modest $100 million property with 20 percent down you need $20 million up front plus an $80 million mortgage. At 3.75 percent your payments for principal and interest total $370,492.47 — per month. Of course, taxes and insurance are extra, as are butlers, maids, valets, chauffeurs, chefs, and other assorted staff.

In fairness, it should be said that the $100 million is not the norm. Christie’s explains that the definition of luxury depends on location. For instance, you can be in the upper brackets with a $2 million home in most places around the globe, but expect to pay $8 million in Beverly Hills if you want to party with the rich and famous.

For a meager $5 million you might be able to get a modest pad with 1,319 sq. ft. in London while the same money can buy 6,000 sq. ft. in the Hamptons, 13,777 sq. ft. in Lisbon and 17,222 in Monterrey Nuevo Leon, Mexico.

As important as size, for your money you’ll get a top location and a home with every possible amenity.

For instance, Vivian Marino, writing in The New York Times, notes that a mid-town Manhattan condo has just sold for $30,683,372.50. This palace in the sky on West 57th Street is on the 53rd floor of a new building and includes five bedrooms, five and a half baths and — more importantly — a location which is within easy walking distance to the Carnegie Deli.

Gimme Shelter

What’s interesting about this property is not that its price is so large but rather that the sale value is so precise: $30,683,372.50. You have to wonder how many hours of negotiation were required to assure that the price included the final 50 cents. In the context of a $30.7 million home sale such exactitude seems hugely unnecessary.

It’s hard to imagine that the super rich — and who else but millionaires and billionaires have $30 million or $100 million lying around — really want such expansive quarters. In visits to an assortment of estates and grandiose apartments much of the property appears little used if used at all. Instead, people seem to congregate in the kitchen or some room with a TV and books while the rest of the home gathers a lot of dust.

Dust is a real problem, not because it can’t be removed but because finding good help — an old and stereo-typical complaint — is really tough. Who today wants to be a maid or a butler when there are better jobs available? Places such as the palace of Versailles were only possible because armies of bucket-wielding toadies were on hand to clean every nook, cranny and royal.

While massive egos explain some of the larger homes to be seen, in markets such as Manhattan the real reason for ludicrously high-end prices is often that anonymous buyers from distant places want to shelter their fortunes. If something goes wrong in the old country — say revolution, mortar attacks or a few beheadings — the purchasers have a huge asset in America that can be re-sold with some rapidity to raise cash and start all over.

In such cases it’s not really real estate that’s being bought, it’s shelter from a different kind of storm.

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