When it comes to listing luxury real estate, agents prefer to tell a story—if there is one— through the marketing materials. Depending on the property, they’ll either focus on its historical significance or highlight famous former residents—from past presidents to Hollywood icons—to generate interest. Most of the time this works, and they get some press for their efforts and bring more people in the door.
But does having a property with some serious history translate to a higher sales price? That’s something else entirely, and in most cases, the answer is no, experts say.
"I’d like to say absolutely, people go nuts for historic or famous homes," said Rick Pretsfelder, a partner at Manhattan-based real estate firm Leslie J. Garfield & Co. "But unfortunately, that’s not the case."
And sometimes, historical significance—specifically when it comes with landmark status—can even hurt the sale, experts say.
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Of course, every property is different, and in some cases, history truly is an asset. But that’s only the case if it’s a one-of-a-kind home that’s totally functional despite its age and built in an unbelievable location on a great piece of land.
In Sydney, the Boomerang house is a prime example of a one-of-a-kind property with real historical appeal. It was the first Spanish mission style home built in the area when it was constructed for A£60,000 in 1926, when a harbor front mansion typically sold for A£3,000, said Ken Jacobs of Christie’s International Real Estate.
Many years later, in 1978, this was the first home in Sydney to sell for more than A$1 million, and was later the first to sell for over A$20 million in 2002, Mr. Jacobs said. "It’s got an illustrious history, not because of any famous ownership or being featured in a movie, but more for the caliber of the property," he said. "Having said that, it was featured in ‘Mission Impossible 2,’ but it was already an icon before that happened."
In the United States, the Playboy Mansion, located in Los Angeles’s Holmby Hills, is also of that one-of-a-kind ilk. "The Playboy Mansion is the ultimate property," said Gary Gold, the executive vice president of Hilton & Hyland, who sold it last summer for $100 million. "It’s arguably the most famous private residence in the world on one of the best estate sites in the country. It’s epic."
A step below this one-of-a-kind property is one that is famous, not for its historical credentials, but because of the pedigree of someone who’s lived there.
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In Manhattan, Donna Olshan, the president of Olshan Realty, said that when a big-name celebrity or sports star lists a property, their fame often brings more people in the door. In turn, this added exposure may drive up the price a bit if it happens to be a great house. But more often, name recognition alone has little effect.
Mr. Pretsfelder agreed. "In most cases, I think that the people who buy these houses will talk about its pedigree at a cocktail party," he said, "but it doesn’t seem like a house being associated with a famous person—at least in New York City—translates to a higher price."
For example, Mr. Pretsfelder said he sold Dustin Hoffman’s Upper West Side apartment about four years ago, but despite the press, "it had absolutely no bearing on the purchaser’s decision," he said.
When a historic name is attached to a property, like Katharine Hepburn, Greta Garbo or Jackie Onassis, they’re likely to elicit about as much excitement as an "Oh, cool" from the buyer, Ms. Olshan said, if not less enthusiasm. When she sold the Central Park West apartment of Harold Arlen, the composer of "Somewhere Over the Rainbow," many years ago, "it had no meaning to the people that bought it," Ms. Olshan said. "They didn’t even know who he was."
Craig Knizek, the co-managing partner of the Sherman Oaks and Calabasas offices for Los Angeles real estate firm The Agency, said he’s recently made a name for himself selling historic homes. Last year, for instance, he sold a house built in 1889 that was moved from Koreatown to a big plot of land in Encino in the 1920s, and later inhabited by Smokey Robinson, for $3.2 million.
Since then, the owners have undertaken a thorough and thoughtful restoration and addition effort, he said, which has included the adding on of a new guest house, plus 1,500 square feet of interior space. The plan is to list it again this summer for somewhere in the $8 million range, Mr. Knizek said, noting that he’s hoping modern updates like a new master suite and kitchen, combined with historic features, like the grand living room and dining room, Southern Colonial exterior with a covered porch and front yard fountain, and massive old Oak trees, make it a sure thing.
"There’s a certain type of buyer that doesn’t want that new, soulless construction," Mr. Knizek said. "This home delivers by evoking the feel of a bygone era."
More:One of Sydney’s Crown Jewels Hits the Market, Expecting to Set a Local Price Record
In cases where there’s a historic landmark designation, it can make it even more difficult to sell a property, depending on where it’s located and what building and renovation restrictions are in place.
In Australia, Mr. Jacobs said that there are three types of historic landmark designations, which come from the National Trust, Heritage Council or a local government. "In many cases, a landmark designation actually devalues the property," he said, because it leaves a would-be buyer no options to modernize or make significant changes, even when they’re needed.
Even when the National Trust will work with homeowners as they make thoughtful renovations to make things more functionally, it generally means a longer, more expensive and more involved process, which may turn buyers off.
In Los Angeles, there’s a similar problem when a third party comes in and designates a home historic when it really needs updates to be functional in the modern day.
For instance, if a landmark designated home has 68-inch door frames, which were standard in homes built as late as the 1970s (today, 8-foot doorways is the minimum), that means someone who’s 6-foot-3 or 6-foot-4 has to duck when they enter or exit any room. Stairways and railings that hit way too low can also present a problem.
More:Buyer Eyes Former Home of Hollywood’s ‘Princess’
"These aren’t museums, they’re houses—somewhere to live," Mr. Gold said. "When a third party imposes this label, it can be the kiss of death, and have a serious negative impact on the value of your home."
When someone chooses to have their home designated a historic landmark—as Taylor Swift just did in her Beverly Hills mansion— it’s a bit different because it’s about getting that tax benefit, not about a third party telling you what you can and cannot update. She’s opting in to accepting future restrictions on renovations and updates for a serious tax break, experts say.
There is one more time when a property’s history can drive down prices: when it’s negative.
Mr. Gold said that he remembers when the house where the Manson murders took place in sold about 20 years ago, and that notoriety only caused problems in the sales process. The eventual buyer tore it down before reselling, which is also what happened to O.J. Simpson’s house in Brentwood.
"The owners thought that by getting rid of the house they’d get rid of the stigma," Mr. Gold said. "And they were right."
Here is a look at other news from around the world compiled by Mansion Global:
Hong Kong Adds New Tax For First-Time Buyers
As part of ongoing measures to cool a housing market that’s seen a 364% increase in prices since 2003, Hong Kong’s government has introduced a new 15% stamp duty that applies to first-time homebuyers purchasing more than one property at once. The measures are aimed at buyers who have avoided the stamp duty on second home purchases by buying multiple properties in one fell swoop, and on the same legal document. While experts don’t expect the new rules to have much impact on developers or the market as a whole, they do predict it will create more opportunities for would-be first-time buyers currently edged out of the market by investors. (Reuters)
Beijing Orders Real Estate Sites To Stop Using Misleading And Hyperbolic Language
Beijing has ordered 15 of the city’s major online real estate portals to remove certain language and misleading information, including promises of "limitless potential for price gains," advice on feng shui and obtaining residence permits or school enrollment, and other language promising high returns in Beijing’s overheated market. The move comes right on the heels of the March announcement that Beijing authorities would raise the minimum down payment on second homes from 50% to 60%, and ban the purchase of third properties. The new restrictions target popular sites including Lianjia and I Love My Home, and are intended to prevent incendiary listing language from further fueling the market. (Business Times)
"Odd" Census Numbers Show Young Australians Have Paid Off High-Priced Mortgages
In numbers that will come as a surprise to anyone who’s been watching Sydney’s exploding real estate market, new census data from New South Wales—the southeastern Australian state that counts Sydney as its capital—indicates that the typical resident owns their home outright, and is not paying off a mortgage. This was also true in lower-priced areas like Tasmania and the Australian Capital Territory, but in Western Australia, South Australia, and Victoria, the majority of census respondents indicated that they were paying off a mortgage. The numbers run counter to other data indicating a property bubble in Sydney, and also mark a departure from numbers collected as recently as 2011, when the number of respondents who owned their homes outright dropped down to 33.2%... (news.com.au)
Canadian Homeowners Eager To Sell, But Spooked By High Cost Of Re-Investing
With home prices in cities like Toronto continuing their steep climb, a new poll indicates that 41% of would-be Canadian sellers are considering putting their homes on the market primarily in hopes of cashing in on the boom and turning a profit. However, the flip side of newly high prices is that 62% of respondents said that the cost of potentially buying a new property is so prohibitive that they’re "reluctant to sell" and move out. The data comes from a March survey by the Canadian Imperial Bank of Commerce, which also found that 67% of baby boomers planned to sell, but were nervous about entering the volatile market. However, with more politicians pushing measures to temper the market, 48% of homeowners planning to sell also expressed concerns that new taxes and other policy changes could potentially lower housing prices. (Vancouver Sun)
After Last Building Boom, Calgary Has A Glut Of Vacant Homes And Condos
A dramatic recent boom and bust cycle has left Calgary, Canada, with over 2,000 unoccupied new housing units in March, the largest inventory on record, according to the Canada Mortgage and Housing Corp. Since March 2014 (before a slip in oil prices triggered a local recession), the surplus of empty housing stock has nearly quadrupled, and while the excess is largely comprised of new condo apartments, there are also 465 unsold single-family homes in Calgary, as well as 360 unsold semi-detached rowhouses. Housing starts are still brisk in the area (though lower than peak levels), and with the local economy starting to show signs of improvement, ATB Financial chief economist Todd Hirsch said: "We’re not quite out of the woods [...] Things are moving in the right direction. That’s not to say all of the unoccupied inventory gets absorbed right away; it could still take a year." (Calgary Herald)
Faltering Dubai Rents Expected To Rise By The End Of 2017
Though Dubai rent prices were stagnant in the first quarter of the year, JLL, a real estate investment and advisory firm, predicted an uptick by the end of the year. After consistent declines in 2016, the first quarter of 2017 saw prices merely stay put, which JLL interprets as meaning that the market has neared the bottom of its cycle, and is on the way back up, though not by dramatic leaps and bounds. "Given the continued slowdown in the Dubai economy, and its dependence on the global economy where growth remains uncertain, any recovery in residential prices in Dubai is unlikely before late 2017 at the earliest," said JLL researcher Craig Plumb. (Khaleej Times)
U.S. Vacation Home Sales Took A Steep Drop In 2016
Even amid high existing home sales last year, the second-home survey from the National Association of Realtors indicates that rising prices led to a significant drop in purchases of vacation homes, with more second-home buyers taking out mortgages for their purchases, and looking to use their new properties as investments via short-term rentals. The survey found a 21.6% year-over-year drop in vacation home purchases, a 36% decline from their peak in 2014. "In several markets in the South and West—the two most popular destinations for vacation buyers—home prices soared in recent years because substantial buyer demand from strong job growth continues to outstrip the supply of homes for sale," said NAR chief economist Lawrence Yun. "With fewer bargain-priced properties to choose from and a growing number of traditional buyers, finding a home for vacation purposes became more difficult and less affordable last year." Median vacation home prices were at their highest levels since 2006, while investment home prices were at their highest levels since 2005, leading to an increase in financing among second-home buyers. (World Property Journal)