Sales of ultra-luxury homes priced at $100 million or more are set to double this year, signaling a strong recovery in the high-end real estate market. According to data from Miller Samuel and Douglas Elliman, six homes in the US have already sold for over $100 million as of July 15. This pace of sales is expected to surpass last year’s total and potentially break the record of nine homes sold for over $100 million in 2021.
While the nine-figure club remains exclusive, the rebound in the ultra-luxury market is also evident in the sales of homes priced at $50 million, $20 million, and even $10 million. This resurgence stands in stark contrast to the broader housing market, which is still grappling with high mortgage rates and a lack of supply. Jonathan Miller, CEO of Miller Samuel, describes the increase in sales as a substantial uptick, noting that it is not mirrored in the general housing market.
Notable transactions in the ultra-luxury segment include two blockbuster deals in Manhattan: the $115 million sale of a penthouse at Central Park Tower, the tallest residential building in the world, and the reported $135 million sale of the Aman New York penthouse to Russian-born billionaire Vladislav Doronin. Other significant sales include the $150 million sale of Tarpon Island, Florida’s only private island, and the $210 million sale of Oakley founder James Jannard’s Malibu mansion, which set a record as the most expensive home ever sold in California.
Even San Francisco is experiencing a surge in ultra-luxury sales. Laurene Powell Jobs, the billionaire widow of Steve Jobs, recently purchased the most expensive home ever sold in the city for $70 million. Signs of strength can also be seen in the luxury market below the $100 million threshold. Redfin reports that sales of homes priced at $5 million or more have increased by 13% compared to the same period last year.
According to experts, the strength of the ultra-luxury market can be attributed to several factors. The booming stock market, which continues to reach new highs, is a key driver of confidence and cash among wealthy homebuyers. Unlike the general housing market, the ultra-wealthy can afford to purchase properties with cash, especially when interest rates are high. In fact, two-thirds of Manhattan deals this spring were cash transactions, with an even higher rate in the luxury segment.
The surge in sales can also be attributed to the ongoing Great Wealth Transfer, which is passing on billions of dollars to the next generation. Millennials and Gen Z buyers, armed with family trusts, are increasingly purchasing ultra-luxury properties, particularly in South Florida. These buyers are seeking new development and are willing to buy sight unseen, often favoring branded residences.
Another trend driving the sales of ultra-luxury homes is the demand for larger properties that accommodate all aspects of a luxurious lifestyle. After the pandemic, wealthy buyers are seeking homes with amenities such as gyms, spas, offices, entertainment spaces, and displays for their art and car collections. The price per square foot for luxury condos in South Florida has increased by 33% this year, while per-square-foot prices for single-family homes are up by 11%.
While the ultra-luxury market typically experiences a pause before presidential elections, the current strong financial markets seem to be outweighing any election concerns. However, the second half of the year remains uncertain. As the ultra-luxury market continues to thrive, it serves as a barometer for the health of global financial markets, showcasing the disconnect between this segment and the broader housing market.
In conclusion, the surge in sales of ultra-luxury homes priced at $100 million or more indicates a robust recovery in the high-end real estate market. Factors such as a booming stock market, the Great Wealth Transfer, and the demand for larger properties with luxurious amenities are driving this rebound. While the broader housing market faces challenges, the ultra-luxury segment remains resilient, attracting cash buyers and setting records with multimillion-dollar transactions. The second half of the year will reveal whether this trend continues amid ongoing economic and political uncertainties.
