WHATEVER THE CURRENT state of the economy, the world's rich are getting richer and are spending more and more on lavish estates.
And 2007 could be a banner year for sales of luxury homes, regardless of how the rest of the housing market fares. Sales of homes priced above $5 million surged 18 percent in 2006 from 2005, and were up 31 percent in the first quarter of 2007 from 2006 levels, according to John Karevoll, chief analyst with San Diego–based DataQuick Information Systems.
The record for the most expensive home sale in U.S. history fell in May when financier Ron Baron bought a 40-acre oceanfront property in East Hampton, N.Y., for $103 million from Adelaide de Menil, heiress of the Schlumberger oil fortune. Baron did not even want the existing homes on the site—he donated them to the town of East Hampton to make room for his planned estate.
The previous U.S. record for home sale price was set in 2004 by the $70 million sale of financier Ron Perelman's estate in Palm Beach, Fla.
With at least five U.S. homes currently on the market for $100 million or more, Baron's record buy could fall at any time. Among the for-sale properties are Donald Trump's $125-million Palm Beach oceanfront mansion; a Saudi prince's $135-million Aspen, Colo., retreat; and a $155-million 55,000-square-foot spec home being built at the members-only Yellowstone Club in Montana by developer Tim Blixseth, according to the Dallas–based Institute for Luxury Home Marketing.
The current international sales price record is $128 million, set by steel magnate Lakshmi Mittal's 1997 purchase of an estate in London, England.
Leading the charge in the purchase of ultra-luxury homes are wealthy individuals working in the financial services industry, says Mark Zandi, chief economist at Moody's Economy.com.
“Their wealth has gone skyward; everything's been going right for them in recent years,” Zandi says.
Learn more about markets featured in this article: San Diego, CA.