Ultra-Luxury Market Grapples With $1B in Price Reductions
A sprawling family estate in Manalapan, Fla., has seen a price reduction of $57 million in the last year and is now listed for $138 million. And a home originally listed for a whopping $250 million in Bel Air, Calif.—the nation’s most expensive property at the time—was marked down $62 million in April and is now listed for $188 million.
These are two examples pointing to a larger trend of mega price reductions in the ultraluxury real estate sector, which saw more than $1 billion in collective price cuts during the second quarter of this year, according to a new Redfin analysis. In all of 2018 so far, about 12 percent of homes listed for $10 million or more have posted price drops—double the percentages from 2016 and 2015, according to Redfin.
CNBC reports that homes with major price cuts are also selling for even less than their discounted prices. For example, a mansion in the Hamptons, a tony vacation destination for New York’s wealthy, was first listed in 2008 for $100 million. The owners reduced the price to $72 million, but it sold this spring for about $50 million. “There could be an oversupply of these high-end homes,” which could explain the price reductions, says Redfin Senior Economist Taylor Marr.
But there could be more factors at play. “The high-end real estate market has seen steep price cuts in recent months as foreign buyers dry up, new tax laws bite the wealthiest states, and sellers realize the market peak of 2014 to 2015 isn’t coming back anytime soon,” CNBC reports. The federal tax law, too, limits deductions of state and local taxes, which is putting pressure on real estate in high-tax states, brokers say.