The rarefied U.S. market for homes priced at $50 million or more is having a banner year, with sales and listings already on pace to outnumber 2020 and the years preceding it.
The surge at that very top end is being propelled largely by increased wealth, a renewed focus on and appreciation of what home is and a lack of other spending options over the past year, according to experts.
In the four months to the end of April, the $50 million-plus market was well ahead of previous years. Sellers across the country had already listed 30 ultra high-end homes at that price level and seriously deep-pocketed buyers had purchased eight, according to data compiled by online property portal Redfin for Mansion Global.
Throughout the entirety of 2020, those totals stood at 60 and 16, respectively; in 2019, they clocked in at 56 and 14, according to the data.
Particular hotspots have been Los Angeles and South Florida.
Last year’s super-prime market may have been strong, said Redfin chief economist Daryl Fairweather. “But it wasn’t as strong as it is now.”
“Although we’ve been in a recession and a pandemic,” Ms. Fairweather added, “it hasn’t really impacted the really wealthy.”
If anything, after the recent rip-roaring success of the stock market, the most affluent Americans have become wealthier, resulting in extra capital and limited options for spending it during the pandemic and the restrictions that have accompanied it.
“If you’re a really wealthy person you can’t spend your money on what you would usually,” whether that be vacations, high-end dining or anything in between, Ms. Fairweather said. “The wealthy have lots of money, but not a lot of options for spending.”
The real estate market—despite assorted limitations imposed on the industry nationwide following the onset of the pandemic last spring—has remained open for business, however, and property portfolio shuffling has become a top priority.
Something that’s particularly true at the super high end, according to Ms. Fairweather.
“If you love playing tennis but you can’t go to the club,” you’re going to be in the market for a home with a tennis court, she said. “All of these ultra-luxury features are even more desirable during the pandemic.”
The additional wealth, the desire for amenities and the eased uncertainty around the pandemic, have all helped to drive demand to higher levels than usual this year, Ms. Fairweather said. “Usually you don’t see a lot of competition at the top end. This year there’s been more and more.”
In Los Angeles, the amount of $50 million-plus properties available on and off the market is substantial, according to Tomer Fridman of The Fridman Group at Compass.
“This is one of the busiest years in L.A. history in terms of transactions and the price value for property here has increased compared to years before,” he said.
There are currently 20 properties listed publicly for sale priced at or in excess of $50 million in and around the city, 16 of them having been listed to date this year, making it the national hotspot for uber-high-end listings, according to records.
For comparison, there are 15 such properties listed publicly—only five of which have hit the market this year—in New York City, a bastion of wealth in the U.S. that had seen its high-end market grapple with the effects of pandemic, though the tide is now turning. Those figures in New York are likely an undercount given the number of uber-luxury new developments, like Central Park Tower and others, quietly marketing penthouses offline.
“The past year has shown that not only is L.A. a stable investment for a home—and we learned how important the home is—but the market has proven to withstand any shutters in consumer confidence and offer buyers both a major global city and large acreage to create security and privacy in the estates,” Mr. Fridman said.
Mr. Fridman’s most recent deal in the $50 million range came just before Christmas, he said, with the sale of the city’s famed Owlwood Estate that sold for $88 million.
“Perhaps Covid causing a lack of travel, concerts, filming and athletics allowed for certain buyers in this price point to have more time to look at purchasing and touring homes.” But even without the pandemic, “this trajectory and massive cash in capitals of the tech [and] start up industry likely would have unveiled with or without Covid,” he said.
From a sellers perspective, “with validation for buyers circulating the city at this price point, the incentive is there to include their home in the inventory while this level of the market is so active.”
In South Florida, where there are currently five single-family homes and one private island compound listed publicly for $50 million or more, with three of those having hit the market so far in 2021, another driver of activity at the very top-end of the market is migration, according to Jill Hertzberg of The Jills Zeder Group at Coldwell Banker Realty.
“We always had people from the Northeast corridor, but we never had West Coast,” Ms. Hertzberg told Mansion Global. “They’re all coming here and loving it.”
The appeal of the Sunshine State is down to a combination of the Covid-affect pushing individuals away from denser areas and allowing for more remote work, and the lower tax environment, which on a $50 million asset “is humongous,” Ms. Hertzberg said.
The two factors have provided the perfect mixture for acceleration in activity across the prime market.
“It’s just been enormous,” Ms. Hertzberg said. “From personal experience, it’s definitely increased notably.”
The most recent sale Ms. Hertzberg handled within that $50 million-plus price range was an 8.31-acre waterfront-estate on Jupiter Island that changed hands on April 7 for a hair over $55 million, listing records show.
Ms. Hertzberg represented the buyer and the seller of the property, which hit the market at the end of January and was pending sale just two weeks later.
Pre-pandemic, people didn’t spend too much attention on their single residences, perhaps having multiple homes to choose from and typically spending summers elsewhere.
But now, “everyone’s in their homes,” Ms. Hertzberg said. “Covid brought to everyone’s attention that old adage ‘there’s no place like home.’”