Vanity Pricing Consolation Prize for Luxury Real Estate

by Tom Johansmeyer (RSS feed)
Aug 6th 2009 at 6:02PM

You have 320 choices if you're looking for a home that costs more than $20 million – though if you're smart, you shouldn't have to pay nearly that much. Why? As you'd expect, real estate agents are having trouble moving these houses, so they are staying on the market for a while, and age doesn't do much for a property's value.

The top listing right now belongs to Aaron Spelling's widow – at least until she can sell it. This is a difficult proposition, however, with a price tag of $150 million. Four years ago, the highest price on the market was half what Spelling is asking. This year, $75 million isn't good enough to make the top 10.

Since the number of listings is up, you'd expect sales to be down ... and that's how it's working out. In the Hamptons, year-over-year sales were off 43 percent in the second quarter, with the median price down 17 percent. Homeowners who can't sell are trying to rent instead, with mixed results. Joseph Farrell, who has a home in Bridgehampton, would like to sell it for $59.5 million. Until that happens, he has to be content to rent it, which he's doing now at $425,000 for two weeks.

So, if homes aren't moving, why continue to price them above $20 million? The answer is as old as consciousness: vanity. An absurd price is guaranteed to get some attention (as I've just demonstrated).

Tags: aaron spelling, AaronSpelling, beachfront, bridgehampton, estate, estates, hamptons, housing, housing bubble, housing market, housing sector, HousingBubble, HousingMarket, HousingSector, real estate, RealEstate, villa