In South Florida, a seller would do well to tout the cellar. Palm Beach, Boca Raton and Delray Beach are the best places in the U.S. to list a luxury home with a basement, boosting the listing price by 10.07% per square foot, according to real-estate site Trulia. But that’s the ceiling for basements. Nationally, the mention of a basement in a luxury-home listing actually correlates with a lower home price, the Trulia analysis found. On average, luxury homes with basements listed for 2.17% less per square foot than similar homes without one, said Trulia housing economist Ralph McLaughlin. In Bakersfield, Calif., the descent was especially steep: luxury homes with basements listed for 7.8% less per square foot than those without. “We’re not saying basements don’t matter. But when you control for all other amenities, it’s not as important,” said Mr. McLaughlin. “It could also detract from the value because, for the most part, basements require maintenance,” he added. To determine the effect of a basement on pricing, Spread Sheet asked Trulia to analyze the top 10% of the priciest listings with basements in the country’s largest 100 markets. The model controlled for variables such as square footage, ZIP code, the year built, number of bedrooms, and other factors that affect home values. The model did not distinguish between different kinds of basements, such as walk-out or subterranean spaces. The research covered a year of listings through the end of October. In the overall market, including all price points, basements had a slightly positive impact on listing price, with an average boost of 1.5% per square foot. One possible reason, Mr. McLaughlin says, is that the average homebuyer puts a higher premium on storage space, especially when buying a larger lot is cost-prohibitive. As to why some luxury markets benefit from basements while others don’t, Mr. McLaughlin says rarity can play a role. In Palm Beach, where basements caused the most sizable price bump, it’s unusual to find a luxury home with a basement because of the high water table.
GOING DOWN
Comparative price per square foot of a luxury home with a basement, vs. one without.
• HIGHEST
West Palm Beach, Fla.: 10.07% Ventura County, Calif.: 7.04% Dallas, Texas: 5.76% Wilmington, Del.: 2.49%
• LOWEST
Bakersfield, Calif.: -7.80% Syracuse, N.Y.: -4.69% Salt Lake City: -4.65% New Haven, Conn.: -4.53%
• U.S. AVERAGE: -2.17% Source: Trulia
Jim Harpel, 78, who works in private equity, is selling his 1935 Georgian-colonial mansion on 1.4 acres on Palm Beach for $28.9 million. Included in the 17,300-square-foot mansion is a fully finished basement with a wine cellar, tasting room and a vault for valuables. Wally Turner, the listing agent with Sotheby’s International Realty, said it’s very difficult to find luxury homes with basements in the area, because of stricter zoning rules for new construction. Taste can also play into a basement’s value. “The more customized it is, the smaller the group you appeal to,” said Scott Hobbs, president of luxury builder Hobbs Inc., in New Canaan, Conn. Mr. Hobbs said the basement is where homeowners let their creativity run wild, because only close friends and family get to see it. He has built several unusual subterranean projects, including a Turkish bath, a laboratory for a robot builder, and a squash court. “Call it the lower level,” he said. “Just to call it a basement is unfair.” Write to Stefanos Chen at stefanos.chen@wsj.com This article originally appeared in The Wall Street Journal.