High-end homes are slow to sell
Economy Crowded market makes it tough on builders selling very expensive houses

BY MARY ELLEN PODMOLIK Comments 0
Published: October 31, 2009

CHICAGO — If a man’s home is his castle, what happens to the new castle still looking for its man?

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In the current economy, it sits and waits.

In Oak Brook, Ill., it’s a $5.75-million stone castle. In nearby Burr Ridge, it’s a Middle Eastern-influenced home named Villa Taj, once priced at $25 million and headed for the auction block.

In Chicago, it’s an unfinished, four-story, bank-owned home with an elevator. And in Lake Forest, Ill., it’s an elegant country home with its already trimmed price just slashed by another $1 million.

All are newly constructed, ultrahigh-end homes, reminders of the housing market’s headier, healthier days. And all are additions to a market that is bursting with multimillion-dollar homes waiting for that very discriminating buyer with very deep pockets.

"It used to be when we showed a $3 million house, we’d show three or five,” said Jaime Adams, a real estate agent with Adams & Myers Realtors, Hinsdale, Ill. "Now, you’re maybe showing (homes) between $2.8 million to $3.6 million or $3.7 million, because you don’t know if someone is going to wheel and deal. ...”

In Lake Forest, for example, more than 50 homes are listed for sale for at least $3 million, not counting homes that are being privately marketed. In the past 12 months, 11 residences in that price range sold, and it took, even with significant discounts, an average of almost 500 days to sell.

Move up to homes listed for at least $5 million and there are more than 20 Lake Forest properties for sale. In the past 12 months, one home in that price range sold, which means if the supply and market held steady at their current level, it would take 20 years to whittle that inventory.

The same scenario, high inventory and reduced pricing, has been unfolding throughout other tony communities, which might lead one to wonder why a builder would deliver another house to an already crowded, depressed marketplace.

The answer is they have little choice. Many builders started ultrachic homes 12 to 18 months before the housing bubble totally burst.

Builders are trying their best to market them, using Web sites, neighborhood cocktail parties, open houses and price cuts. They also are working with lenders to help facilitate super-jumbo mortgages, but that isn’t always a problem. There are far fewer buyers in this rarefied air, but they are part of a well-heeled group that frequently pays with cash.