A view of the Central Park Tower at 217 West 57th St. in New York City.
Source: Cody Boone, SERHANT Studios
A version of this article first appeared in CNBC's Inside Wealth newsletter with Robert Frank, a weekly guide for high-net-worth investors and consumers. Sign up to receive future editions delivered directly to your inbox.
Sales of homes valued at $100 million are expected to double this year as booming financial markets and hopes for interest rate cuts fuel a recovery in the luxury real estate market, according to new reports.
As of July 15, six homes in the U.S. have sold for more than $100 million, according to data from Miller Samuel and Douglas Elliman. If the sales pace continues, it would more than double last year's total and likely surpass the record of nine homes sold for over $100 million in 2021.
Granted, the nine-figure club is a tiny group. But sales of homes valued at $50 million, $20 million and even $10 million all point to a strong rebound in the luxury real estate market after its decline in 2023. The comeback stands in stark contrast to the national housing market, which is still suffering from the pressure of high mortgage rates and a lack of supply.
“This is a significant increase in sales, something we are not seeing at all in the broader real estate market,” said Jonathan Miller, CEO of valuation and research firm Miller Samuel.
Manhattan saw two blockbuster deals last month. A penthouse in Central Park Tower – the world's tallest residential building – sold for $115 million to an unknown buyer. And the penthouse at Aman New York reportedly sold for $135 million to Russian-born billionaire Vladislav Doronin, who founded the development company that built the building – effectively buying it from his own company.
Palm Beach, Florida's only private island, Tarpon Island, sold for $150 million in May and Oakley founder James Jannard just sold his Malibu mansion for $210 million, making it the most expensive home ever sold in California.
Tarpon Isle, a private island in Palm Beach, Florida, is for sale for $218 million.
CNBC
Even San Francisco is embracing the luxury real estate boom. Laurene Powell Jobs, the billionaire widow of Steve Jobs, just bought the most expensive home ever sold in San Francisco. She paid $70 million for a 16,000-square-foot property in Pacific Heights, sandwiched between her neighbor Larry Ellison on one side and Apple design guru Jony Ive on the other.
Signs of strengthening are also evident further down the luxury scale. According to Redfin, over 4,000 homes valued at $5 million or more were sold through June, up 13 percent from the same period last year.
“It's been a much stronger and more robust start to the year than anyone expected,” said Mike Golden, co-founder of Chicago-based @properties and Christie's International Real Estate.
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Luxury markets across the country are seeing strong demand, according to Christie's 2024 Mid-Year Luxury Outlook. In Naples, Florida, home sales over $10 million rose 14% in the first quarter, according to the report. In Montana, sales over $4 million rose 50% through early May, according to PureWest Christie's International Real Estate.
The boom in artificial intelligence has led to a renewed increase in sales in the San Francisco Bay Area.
“My biggest surprise so far in 2024 has been how many qualified buyers have the ability and willingness to pay premium prices for ultra-elite properties, which speaks to the tremendous liquidity in the upper segments of the market,” said Nathalie de Saint Andrieu, a Bay Area broker.
The diverging trajectories of the luxury goods market and the broader housing market underscore the very different forces driving the economy of the luxury segment from the rest of the country. The national housing market ebbs and flows with mortgage rates, affordability is at historic lows, and many Americans are tied to their homes with low-interest mortgages. The super-rich can pay for their homes with cash, especially when interest rates are high. In Manhattan, two-thirds of transactions this spring were paid for with cash, and in the luxury segment, the share is even higher, according to Miller Samuel.
What's more, the confidence (and money) of wealthy homebuyers largely depends on the stock market, which continues to break records this summer. With trillions of dollars being created through stocks, the super-rich are now looking for properties to buy.
“The ultra-luxury real estate segment is almost completely disconnected from the regular real estate market,” Miller said. “It's more of a global market than a local one. And it's more of a barometer of the health of the global financial markets.”
The rise in inheritances from the $80 trillion Great Wealth Transfer is also boosting sales. Daniel de la Vega, president of One Sotheby's International Realty, said he's seeing a sharp increase in South Florida in the number of millennials and Generation Z purchasing condos with family trusts.
“They want new construction, and some of them buy the houses without having seen them first,” he said. “They especially like branded properties.”
De la Vega said another trend driving up luxury home sales is demand for ever-larger homes. Post-Covid, he said, wealthy buyers want all the amenities of their lifestyle in their homes — from gyms and spas to offices, entertainment spaces and display pieces for their art and car collections.
The price per square foot for luxury condos in South Florida has increased 33% this year to $3,451. The price per square foot for single-family homes has increased 11% to $2,485.
“In the past, the price per square meter decreased the larger the property became,” said de la Vega. “Today it is the opposite. We have never seen figures like this before. These are astronomical numbers.”
The luxury real estate market typically takes a break before a presidential election as buyers wait for more certainty. So far, strong financial markets have outweighed any election concerns. But in the second half of the year, that is far from a done deal.
“At least judging by the events we're seeing this year, the election doesn't seem to be having a major impact on the luxury goods landscape,” Miller said.
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