Million-dollar homes hard to move in down economy
By James Thorner, Times Staff Writer In Print: Sunday, June 21, 2009
A particularly stubborn segment of the real estate market is the super-premium home. Examples include the 25,000-square-foot mansion in Avila, built by corporate raider Paul Bilzerian. It includes a full basketball gym, a racquetball court, a fitness room, a music room and a home theater. It is not on the market now, and was last under contract for $15 million about two years ago. Matt Geiger’s 26,000-square-foot, six-bedroom mansion in East Lake, at left, has a stocked lake and sits on 40 acres next to Crescent Oaks Country Club. Geiger also owns 60 acres of adjacent land. The house is now listed at $12.5 million. It had been for sale for more than $20 million.
From a bunkhouse-turned-sales office on the shores of Lake Thonotosassa, Steve Powell manages home sales at the millionaire enclave of Stonelake Ranch.
It's 98 rural home sites set serenely in rolling horse country 30 minutes east of downtown Tampa. Despite the 13,000- and 20,000-square-foot mansions taking shape at Stonelake, real estate isn't exactly rocking on Lake Thonotosassa.
Developers have trimmed prices as much as 30 percent, and sales have crumbled by about two-thirds the past couple of years. Powell spots fewer Mercedes and Lexuses rolling up the wooded, winding lanes of Stonelake.
"The fact is you're dealing with a more discriminating buyer," Powell said. "Although they may have the money, a lot of them are holding back."
What happens when big spenders with disposable income neither spend nor dispose? The area's high-end real estate market is finding out.
Sales of million-dollar-plus homes in Hillsborough and Pinellas counties plunged 42 percent from 2006 to 2008, from 554 to 321. This year, million-dollar transactions are even harder to find.
As of early June, the two counties had recorded about 70 sales in the million-plus category, the slowest pace in more than a decade. Sometimes the homes have sold, but price chopping knocked them out of the million-dollar club.
North of Tampa in Avila, more than 30 resales clog the listings. Popular with professional athletes and other "new money," Avila is taking it hard. At the top of the sale listings is gold dealer Mark Yaffe's $25 million mansion.
The down market is weighing on prices for condominiums on the St. Petersburg and Clearwater waterfronts, as well. It didn't help when financially distressed Opus Development announced hurried plans to auction luxury units in its new condo tower at 400 Beach Drive.
Several condos have sold this year at Clearwater's ritzy Sandpearl Resort, but prices are hundreds of thousands of dollars less than they were even a year ago.
In classic neighborhoods like Snell Isle in St. Petersburg, buyers demand substantial cuts before they bite. A new house at 851 Brightwaters Blvd., for example, was listed for $4.5 million but sold in May after being discounted to $3.4 million.
Some luxury builders who specialize in the million-dollar-plus market report peak-to-valley sales declines of 80 percent. Upscale builder Mark Maconi declared bankruptcy, and some of its competitors are adjusting to leaner times.
"The meat of our market is in the million-dollar price range — or was," said Charley Hannah of Tampa's Hannah Bartoletta Homes.
To be sure, recession-proof professionals and wealthy retirees are still scarfing up luxury real estate.
In Avila, Mariano Rivera, the New York Yankees' veteran relief pitcher, spent $8.9 million this year for a 9,200-square-foot mansion with a theater, billiard room, guest house and gated motor court with five-car garage. Teammate Derek Jeter is building a 30,875-square-foot home on Davis Islands.
Harold "Hal" Steinbrenner, Yankees executive and son of George Steinbrenner, plunked down $2 million in March for a waterfront house near West Shore Boulevard.
Former University of Florida quarterback Rex Grossman, late of the Chicago Bears, paid $1.7 million in February for a country spread northwest of Tampa.
Pinellas' largest sale this year was a $5.2 million, St. Pete Beach home sold to David Coterel. He's the former Ohio autoworker who won $314 million in the Powerball lottery in 2007.
But million-dollar homes are hardly an easy sell. The buying pool is narrow. House hunters are demanding. Financing is tough.
A particularly stubborn segment are super premium Taj Mahal homes. Examples include the 25,000-square-foot mansion in Avila built by ex-corporate raider Paul Bilzerian and the $19 million bachelor pad near Tarpon Springs owned by former NBA basketball player Matt Geiger. Both have languished.
"Baseball player Derek Jeter paid $7 million for the lot alone. No one's ever going to buy that house," said Ed Gunning, a Realtor who sells luxury homes with Smith & Associates. "Why would you buy someone else's house for $25 million? You'd build your own house. Those are monuments to yourself."
Another problem is appraisals. With so few sales against which to compare prices, banks are going with the lowest, to the chagrin of sellers and Realtors. Even in a market heavy with all-cash deals, many buyers still like to finance part of the purchase price.
Hannah has weathered another phenomenon: wealthy buyers who want the shirt off his back, and maybe the skin underneath for good measure.
Hannah faced the wrath of disappointed buyers when he listed a former $2 million model home in MiraBay, a Key West-style saltwater community in Apollo Beach.
Hannah chopped the price to $1.2 million, but the house hunter offered $700,000. That didn't even cover Hannah's land and construction costs.
"I can appreciate them being savvy buyers, but at some point reasonable is reasonable," the builder said. "The anger has caught me off guard. They'll call you names and fault your morality. I've been called stupid and crazy for not taking the deal."
Bob Glaser, owner of Smith & Associates, expects such "price sensitivity" to last another two years. But one of his agents, Frank Malowany, spies hopeful signs.
Malowany was the agent for the $10 million sale of MarineMax owner Bill McGill's Belleair home last year. It broke a Pinellas County price record.
He said the high-end selection can be so slim that people entering the market these days often express interest in homes not for sale.
"As tough as times are," Malowany said, "the general response is, 'No, we're not interested in selling at any price.' "
