A few years ago it was big news when a home went on the market for a hundred million, and if it managed to sell for that high a price it would dominate the real estate chatter for weeks. Yet we have just closed out 2019 with six homes selling for at least $100 million—the highest number of sales at that price in U.S. history for any given year—and there are about twice that many properties on the market with equally high asking prices (a number that doesn’t include the properties with thousands of acres of private land included in the sale). This week another one joined the ranks when Metro Networks founder David Saperstein listed his Malibu house for $115 million, making it one of seven houses in the L.A. area asking nine figures. If it sells for that price it would be the fourth most expensive sale for California, coming in behind the $150 million sale of The Chartwell Estate, the $119.5 million sale of The Manor, and a $117.5 million dollar sale in the Silicon Valley haven of Woodside. The first two properties on the list sold last year.
All of a sudden $100 million has stopped being just a vanity price tag. It has become the established threshold for what it means to enter into the upper stratosphere. As appraiser Jonathan Miller comments, “Nine-digit asking prices started as a phenomenon in 2014 in the early days of the post-financial crisis luxury real estate boom. Out of nowhere, listings began to appear around the country north of the $100 million threshold, spurring other sellers to try their luck too. While value is perception, this herd mentality provided confirmation bias on steroids, with nearby homeowners trying their luck as well.”
Miller continues: “The frenzy grew to the point where even though the vast majority of these homes weren’t worth anywhere near those numbers, those big asks became commonplace. While the vast majority of these listings never sold, some did, with 2014 U.S. sales at or above the $50 million threshold surged to 23 in 2014 from less than a handful in a typical year. And despite softness in high-end housing markets across the U.S., this record was tied in 2019, and there were more sales at or above $100,000,000 in U.S. housing history. There is safety in numbers, especially the large numbers.”
Even if the push toward $100 million is coming from the other equally high-priced listings out there on the market, there still has to be a justification for such a high price tag that goes beyond just the usual laundry list of luxury features. If you compare all the $100 million dollar listings around the country it appears at least one trend is letting the local market—the very hyperlocal market—be what defines a property as worthy of surpassing nine figures. The Malibu home listed by Saperstein, for example, has a small private beach even though it is within an oceanfront community. It takes the two local criteria for luxury—privacy and water frontage—to the greatest possible extreme for what the lot can contain.
Or, in Beverly Hills, where having a pool and a gym is pretty standard for the luxury market there is a $110 million listing for a contemporary that not only claims to have the largest zero edge infinity pool in Beverly Hills but also a workout area described as more of a sports complex (it even has a chandelier). Compare that to the L.A. neighborhood of Holmby Hills, famous for housing many of Hollywood’s early big stars, you have a $115 million listing called Owlwood Estates. The house dates to the 1930s, around the time the neighborhood was just beginning to be developed, and was once the home of singers Sonny and Cher. It still has many of its ornate decorative touches and sits on a sprawling ten acres—a lot size that is hard to find in Los Angeles. Not too far away is the very exclusive enclave of Beverly Park, a neighborhood where homes are required to be a minimum of 5,000 square feet, and the $165 million dollar listing is an impressive 20,000 square foot main house with two additional two-story structures for guests.
These three homes could hardly be considered similar to each other, but they can make a case for their asking prices because they reach the pinnacle of what the local streets are known for, whether it is staying in shape, Los Angeles history or palatial proportions. Thus, to stake a claim over the hundred million mark, it isn’t about what the house has. It’s about what the neighbors have too.