- Los Angeles has too many megamansions and not enough buyers, reported Katherine Clarke for The Wall Street Journal.
- Real-estate agents and developers are turning to themed parties, gimmicky amenities, and $US100 million price cuts to get the megamansions off the market.
- From LA to NYC, gimmicks and price cuts are being used in big cities nationwide, signalling a slow luxury real estate market.
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Los Angeles has no shortage of multimillion-dollar mansions, but its growing inventory is becoming a headache for developers and real-estate agents.
The surplus of LA mansions sitting on the market, reported Katherine Clarke for The Wall Street Journal, began with “a couple of local megawatt deals” to foreign buyers in 2014 and 2015, which prompted the development of larger, more expensive homes exceeding $US20 million.
And there’s more to come – 50 ultra high-end spec houses are currently being developed in the city, Clarke reported. These megamansions, not all of which are completed, can be expected to cost anywhere from $US35.5 million to $US500 million.
Private lenders and wealthy individuals have financed much of the spec homes, and real-estate agents and developers are employing extreme measures to get them off the market. Think themed parties instead of open houses or gimmicky amenities such as a secret room for growing and smoking weed and a candy room, according to Clarke.
They’re also relisting plots of land and “hiring marketing experts to reimagine homes as individual brands with their own names, logos, and stories,” wrote Clarke. That’s not to mention employing steep price cuts by as much as $US100 million: Just consider the Los Angeles megamansion listed at $US250 million that recently received a price cut of $US100 million because nobody wanted to buy it.
From LA to NYC, gimmicks and price cuts signal a slow luxury market
Gimmicky tactics and slashed prices aren’t unique to LA – they’re indicative of a lingering luxury real-estate market in big cities nationwide. New York City, where “nothing’s selling,” according to Cary Tamarkin, New York City developer and architect of Tamarkin Co., in a Mansion Global interview, has its own luxury surplus problems.
Many of the city’s penthouses have been sitting on the market for months, even years, and some eventually receive a drastic price cut or are carved into two smaller apartments, Business Insider’s Katie Warren previously reported.
More than half of luxury homes in Manhattan – priced at $US4 million or above – were sold at discounted prices in the first five months of 2018, Warren wrote, citing Mansion Global. And at 432 Park Avenue, New York City’s tallest residential building, a 95th-floor penthouse listed for $US82 million was split into two apartments, 95A and 95B, for $US41.25 million and $US40.75 million, respectively, after being on the market for two-plus years, Curbed reported.
In New York, an $US85 million Hell’s Kitchen condo comes with tickets to outer space and a couple of Rolls-Royces. In Miami, one luxury building provided its residents with Tesla-driving chauffeurs. And in Baltimore, 414 Light Street is also loaded with amenities, including an al fresco dining space, a yoga and meditation room, and a business lounge.
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