Interesting article from Forbes Magazine about home prices in Belvedere. A definite read for all Marin County residences.
By: Erin Carlyle
Home prices are rising across the nation. According to the latest data available from S&P/Case-Shiller, April sales prices across 20 major metros were up 10.8% year-over-year. But on prestigious Belvedere Island north of San Francisco, the most expensive home officially listed on the market is being offered at a deep, 31.6% price cut.
Initially listed at $27.5 million in May 2010, the 9,415-square-foot, six-bedroom home has been price-slashed twice. In February 2013, the price dropped to $21.95 million. Then in March, it dipped even further, to $18.8 million. Given the fact that the property has been on the market for four years now, a buyer might snag it for even less.
Despite a string of record-breaking $100-million-plus home sales this year, price tag reductions in theluxury market aren’t all that unusual. ”The upper end is going to look at their property a one-of-a-kind piece of artwork,” explains Ken DeLeon, a luxury broker in Palo Alto, Calif. “You’re more inclined to see people try a bold number, a big number, to start. And when that fails, you have to kind of get more realistic …It’s no longer a Rembrandt, it’s just a home.”
With the help of Realtor.com, which collects more than 98% of the listings on the nation’s Multiple Listings Services, Forbes compiled a list of 10 homes with majorly reduced prices. More than half of these properties have seen price reductions of greater than 20%; two have been reduced by more than 30%. The home closest to its original list price is still being offered at a 12% discount.
Sellers and brokers who find they need to reduce prices may have been overly optimistic. to start out, says Dolly Lenz, an ultra-luxury broker in New York City. ”Perhaps [they] see a trophy sale reported (by you) and think that can happen for them as well,”
In many cases, the discounts are bucking against the local trends. In the greater San Francisco area, the median price for the top one-third of the residential market rose 34.1% from November 2011 (when the national housing market hit bottom) through March 2014, according to Zillow Z -3.37%. In other words, as luxury home prices in San Francisco were rising by about more than 30%, the nearby Belvedere Island estate dropped its price at about the same rate.
A similar situation holds true for “Fidelio,” a 12,000-square-foot home plus 5,000-square foot office on 61 acres in rural The Plains, Virginia,. Listed for $21 million in April 2013, the estate has since dropped to $15 million, a 28.57% cut. Meanwhile, about an hour East in Washington, D.C., prices have moved in the opposite direction: the median price for top-tier homes rose 11.5% from the November 2011 national bottom through March 2014. Thirty-five miles southwest, in Culpeper, Va., the median price for the top one-third of the residential market is up 15.3% in the same period.
The situation is replicated a third time in Post Falls, Idaho, where a 28,469-square-foot waterfront estate with 13 bedrooms and a 10-car garage was initially listed for $15.995 million in September 2011, then dropped by 25% to $11.995 million in July. In Spokane, Wash., 25 miles across the Idaho-Washington state border, the median price for a top tier home is up a modest 4.5% since the national market bottomed out, according to Zillow. A luxury property in the prestigious Old Preston Hollow neighborhood of Dallas, Tex., is being offered at $14.99 million, a 23% price cut. Meanwhile, the median price for the top one-third of the Dallas-Fort Worth residential market has gone up 12.6%.
Given that these luxury homes are moving in a downward direction, the cuts likely indicate a case of the “Rembrandt” pricing that DeLeon referenced.
“The luxury market has always seen list prices that were set higher above actual market levels,” says Jonathan Miller, president of real estate appraisal and consulting firm Miller Samuel Inc. “The housing stock tends to be less homogeneous so it is higher to price and [has] longer marketing times. It also sees more price creep than most sectors–i.e. ‘The house down the street got $5 million, so my house that is half the size must be worth at least $4 million.’”
Of course, some markets aren’t seeing price reductions in the luxury market at all. “I certainly don’t see it in Beverly Hills because the inventory is so minimal,” says Jeff Hyland, president of Los Angeles firm Hilton & Hyland, who says that sellers there wait out the market rather than cut prices. “We’ve seen a 20% increase in property prices, so I don’t see price reductions unless someone has bought another property, or there’s a divorce, or a death.” (And indeed, no property on our list is located in Los Angeles.)
Check out our full list of Luxury Homes With Slashed Prices.
(Note: Our tally of the most expensive homes on the market in Belvedere Island excludes Locksley Hall, which in 2005 was listed at $65 million, before dropping to $48 million. That home now features a price available “upon request” and is not officially on the market, according to agent Oliva Hsu Decker.)