Modern Mansions Hit the Market With Eye-Popping Prices

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By MIRI MARSHALL

Oct. 25, 2006 -- They're fit for a king and cost a royal penny too -- and they offer a peek into the spending whims of today's business and celebrity royalty. No, they're not castles. They're the multi-million-dollar mansions that are flooding the market these days.
"In the past year, we've had three properties come on the market for $100 million-plus in the United States," says

By MIRI MARSHALL


Oct. 25, 2006 -- They're fit for a king and cost a royal penny too -- and they offer a peek into the spending whims of today's business and celebrity royalty. No, they're not castles. They're the multi-million-dollar mansions that are flooding the market these days.

"In the past year, we've had three properties come on the market for $100 million-plus in the United States," says Forbes.com editor Sara Clemence.

The list of sellers reads like a who's who of corporate and Hollywood high rollers, and at least one real-live prince:

Real estate mogul Donald Trump is selling his Palm Beach, Fla., mansion for a whopping $125 million. Trump paid about $41 million for the 80,000-square-foot home in 2004.

Tommy Hilfiger co-founder Joel Horowitz is selling his Lake Tahoe, Nev., fortress for $100 million. He built the five bedroom, 20,000-square-foot home in 2000.

It was also rumored that the Los Angeles mansion of the late TV legend Aaron Spelling secretly went on the market for up to $150 million. The monster, 123-room home reportedly cost Spelling $46 million.

But the priciest of them all is tucked away in Aspen, Colo. Saudi Prince Bandar bin Sultan's mansion is listed at $135 million.

And the mind-blowing price tags aren't limited to residential properties. Tishman Speyer and BlackRock Realty recently snagged a big commercial property when they purchased New York's historic Stuyvesant Town and Peter Cooper Village complexes. The deed was done for a tidy $5.4 billion and includes 110 buildings and 11,000 apartments.

Housing Prices Cool, but High End Stays Hot

While analysts say the real estate market has approached a cooling point, those with deep pockets have proved that the high-end market is still hot.

"It doesn't seem to be slowing. In fact, it seems to be gathering speed," says Clemence.

Forbes magazine reports that the average asking price of the 10 most expensive homes rose by 23 percent in the past year. In 2005, the 10 most expensive homes went on the market for an average price of $51 million. This year the average is $71.5 million.

But are these pricey properties are worth it? While he has made renovations, Donald Trump's mansion is going for more than double what he paid for it.

And recently, actor Nicolas Cage's Bel Air home was on the market for $35 million after he paid $7 million for it just eight years ago.

"Is that really so different than the flipping that's been going on throughout the real estate market for the past four or five years?" asks Clemence.

Maybe, but most people don't flip their homes for a 500 percent profit in less than a decade.

When it comes to these high-end deals, the principle is worth more than the price. For the highest-end buyers, the cachet of living in a contemporary castle is often valued more than walk-in closets or his-and-hers vanities.

"With this whole crowd of buyers, their home is an extension of their ego and absolute proof of their popularity and success," explains ABC News real estate consultant Barbara Corcoran. "It's the grown-up version of the red, hot convertible."

"Somebody who has the financial means to buy a $35 million property is probably more concerned with getting what they want than whether it's quote 'worth it,'" says Clemence.

Bargain Basement Depreciation … Not Gonna Happen

For those thinking about getting a slice of the upper crust, experts say waiting is probably not worth the effort.

"It never pays to wait to buy cheaper tomorrow because these super-duper homes are the last to come down in price and the first to recover," says Corcoran.

For the small but powerful group of buyers, they have time to wait for the asking price.

"An ordinary homeowner isn't willing to wait five years to sell a home," says Clemence. "If you own one of these mega properties, you're probably not desperate for the cash."

The Celebrity Factor

While amenities and other characteristics come into play, some agents say the celebrity factor contributes to the high-end home sales.

"The celebrity factor adds 20 to 30 percent to the purchase price," Corcoran says.

But others say the celebrity connection may not be a big deal after all.

"Anybody who's going to be able to afford that home is probably as prominent, as high profile, as wealthy as the seller," says Clemence.

Richard Monson of a California homeowners group says a star's home may add value to a neighborhood, but the shine may not last forever.

"It's not like that value is going to be sustained simply because Clint Eastwood built the house," Monson says. "Five years from now after he moves out, the house may or may not retain that value."

So what do all these big real estate deals say about the economy and the housing industry?

"The rich get richer and the poor get poorer," says Corcoran. "New money is easy to spend and to flaunt."

For the regular folk, expecting to flip your home for a big profit has not been easy in recent days. That National Association of Realtors reported Wednesday that the national median price of a single-family home fell to $219,800 last month, a drop of 2.5 percent from the price in September 2005. That was the biggest year-over-year price decline in records going back nearly four decades.

But that's unlikely to affect the headline-worthy asking prices for the most expensive homes. For the country's richest, perhaps the old real estate credo remains true: A home is worth whatever a buyer will pay for it.

Copyright © 2006 ABC News Internet Ventures

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