On a recent afternoon, the Beverly Hills paparazzi took to the skies.
Held at bay from their target by a long, gated driveway, they had to resort to helicopter fly-overs to nail their shot. In this case, however, the elusive celebrity wasn’t a person — it was a house.
Not just any house, but rather the top dog of the realty moment. Its entry into the for-sale market July 9 merited a media stir because its $165 million asking price makes it the most expensive property in America.
At least, for now. It’s a perverse reality that, while most of the American housing market is practically slumbering, the competition to be the uber house — the top of the real estate heap — is thriving.
“The very top of the market is hotter than ever,” said Laurie Moore-Moore, a Dallas consultant who trains real estate agents who want to work the luxury market. “For the flamboyantly wealthy, yes, there is a competition, to some extent, for the ultimate trophy house.”
In other words, she says, when you’re courting billionaires, it could pay to raise the price, not lower it.
So there are at least half a dozen homes in America for sale at $100 million and up, and the pricing one-upmanship seen in the last year has turned into a “how high can they go?” news event.
The front-runner, at $165 million, is Beverly House, the 6.5-acre former home of publishing legend William Randolph Hearst that has been owned for the last 30 years by attorney-investor Leonard M. Ross.
Beverly House’s price bested a Bozeman, Mont., ski aerie that had held the No. 1 spot for some months at $155 million, though construction on the spec home has barely begun.
The list goes on to include the Aspen, Colo., “ranch” of a Saudi prince ($135 million); Donald Trump’s remodeled oceanfront manse in Palm Beach, Fla. ($125 million); a residence modeled after Versailles in the Holmby Hills neighborhood of Los Angeles (also $125 million); and a 210-acre Lake Tahoe, Nev., estate ($100 million).
After that, there’s a gap, with a cluster of homes at a measly $75 million.
Real estate experts who regularly trek in this rarefied air say that generally, such homes may take a couple of years to sell. But they’re confident that the extraordinarily wealthy — unfettered by such mundane concerns as down payments and mortgage-interest rates — are shopping. The number of potential purchasers with such wealth isn’t big, they say, but it’s big enough.
“The list would be the size of a small-town phone book,” said Moore-Moore.
Forbes magazine’s annual tally of billionaires this year found a record 946 of the species around the globe, and 178 of them crossed into billion-dollar territory in just the last year. They’re getting richer, the magazine said — their combined net worth climbed by $900 billion, to $3.5 trillion, which works out to $3.6 billion apiece.
A separate study released in June by Merrill Lynch and Capgemini estimated the number of “ultrahigh net worth individuals” worldwide with net assets of at least $30 million — excluding their primary residences and consumable possessions — grew last year by 11.3 percent, to 94,970.
“The rich are growing in numbers globally, and their wealth continues to grow, as well,” said Moore-Moore, who heads the Institute for Luxury Home Marketing. “And they’re putting more of their investment portfolios into second, third and fourth homes.
“Plus, the wealthy are increasingly becoming citizens of the world,” she said. “If you look at the very wealthy in the Middle East, 80 percent own homes somewhere outside their country of residence.
“Among Europeans, 40 percent own homes outside their native county.”
But if these top-tier homes aren’t going to be primary residences, it’s a given that the buyers will shop around a while, the agents say.
“[Palm Beach] is like a second, third or fourth home for people, so it takes longer to sell,” said Cristina Condon, who has been marketing the Trump estate for about a year. “Because nobody has to be here, it’s a matter of if they want to be here.”
Shari Chase, the listing agent for Tranquility, the Lake Tahoe property offered at $100 million, agrees.
“There’s only a certain, thin layer of people in that stratosphere, but we are in an area that attracts many of the billionaires,” she said. “Once you reach a certain price range, you can expect properties of this stature to be on the market for two years or more.
“We sold [what was then] the highest-priced residence in 1998, and that was offered at $50 million,” Chase said. “It took two and a half years to [get a contract], and then it took us two years to close it. They are lengthy transactions.”
Whether the mega-mansion market can sustain ever-rising pricing remains to be seen, said Paul Boomsma, who heads the Chicago-based Luxury Portfolio program for Leading Real Estate Companies of the World, a network of independent brokerages.
“It’s unprecedented,” he said. “We haven’t had any history [of pricing at that level], and all these properties are relatively new to the marketplace. It’s going to be interesting to see what happens.”
But Chase and others say that interest in the top tier of houses is gaining momentum.
The record paid for an American property was set this spring when Ron Baron, founder of the Baron Funds investment firm, paid $103 million just for land where he plans to build a home in East Hampton, N.Y.; the sellers of the 40 acres agreed to move four buildings from the site to get the deal through.
Still, Moore-Moore said the U.S. is playing catch-up: The world record also was set recently, when Sheikh Hamad of Qatar paid the equivalent of $200 million for a penthouse apartment in a to-be-built high-rise overlooking Hyde Park in London.
“We’re looking at breaking new ground throughout the [U.S.],” Chase said. “In 1998, there weren’t the number of zeros at the end of those prices that now are popping up all over.”
Real estate agent Stephen Shapiro, who has the Beverly House listing, said he won’t be surprised when it is pushed out of the top spot.
“In certain, select areas, the prices will continue to go up, as the wealth of individuals has gone up dramatically,” he said.
But just who are these people – the ones who buy homes with such features as a staircase modeled after one on the Titanic or a private ski gondola?
For one thing, they’re not likely to be “old money” from fortunes made many decades ago, Moore-Moore said.
“There isn’t a lot of old money out there. That tends to get spent by second and third generations,” she said. “There’s a lot more new money than old money.”
These most affluent home buyers are likely to have made their wealth through business. “They’re CEOs and folks from Wall Street whose cash flow is tremendous, or wealthy entrepreneurs. They want to make a statement about their success.”
Like tycoons of bygone eras, they like to make that statement through opulence — a home with 40 bathrooms or a helicopter pad or its own carwash, she said.
“These are people who are saying, ‘I have made my mark in the world,'” she said. “They’re saying, ‘this is my opportunity to enjoy my success.'”
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mumberger@tribune.com
