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Are Baby Boomers Pricing Their Ultra Luxury Homes Too High?

The gap between asking and sales prices for the most expensive houses is widening, says report

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At $200 million, the sprawling Playboy Mansion in Los Angeles is currently the fifth most expensive house for sale in the world.

Christie's International Real Estate
At $200 million, the sprawling Playboy Mansion in Los Angeles is currently the fifth most expensive house for sale in the world.
Christie's International Real Estate

Ultra luxury home sellers are not getting all they wish for, as the gap between asking and sales prices of high-end homes is widening. In 2015, realtors surveyed by Christie’s International Real Estate said the highest-priced homes in their markets sold on average for 19% less than their original asking prices, compared with 14% less in 2014, according to the recently released Luxury Defined report. In fact, the more expensive the property, the more it was discounted, says the report. For homes between $1 million and $3 million, the average discount was 6%; for houses priced at $10 million to $20 million, the discount was 11%. The cut reached 15% for properties in the $20 million to $30 million range.

MORE:Penthouse in One of the World’s Tallest Buildings Sets Price Record for 2016 In explaining the trend, the report says that wealthy buyers are becoming more focused on value. And that’s because of a shift in the demographics of luxury homebuyers. “This cycle has been characterized… by the almost complete retreat of older baby boomers as buyers,” Ruth Kennedy Sudduth, executive vice president and managing director of the residential brokerage division at LandVest in Boston, said in the report. “Gen X is a tough-minded, value-oriented bunch, and there aren’t as many of them who are buyers as there are baby boomers who are sellers.”

MORE:The World’s Hottest Luxury Housing Market is Auckland The growing disparity between seller and buyer expectations, however, is not discouraging some ultra wealthy homeowners from aiming even higher this year. For example, a $500 million spec home in Los Angeles by developer Nile Niami is the world’s highest priced property for sale. Obtaining what they look for might be challenging for sellers. Christie’s notes in its report that the pool of cash-rich ultra-affluent buyers worldwide shrunk to 1,810 at the end of last year, the first drop in this population since 2009.

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