- Even celebrities and ultrawealthy homeowners can face challenges selling their homes.
- Take the socialite Sonja Morgan — the starting bid for her NYC home is a fraction of its purchase price.
The world of luxury real estate may seem like a place where deals are plentiful, transactions are swift, and satisfaction is guaranteed.
But that isn't always true, especially in New York City, where a slowdown in demand has made selling multimillion-dollar condos and townhouses more challenging, as Kenny Lee, a senior economist at StreetEasy, told Business Insider.
In many of NYC's upscale neighborhoods, homes are lingering on the market longer and sales are falling, signaling that when it comes to a slump in the real-estate market — not even the nation's wealthiest Americans can walk away unscathed.
Consider the case of Sonja Morgan, the ex-wife of John Adams Morgan, a great-grandson of the founder of J.P. Morgan & Co. Despite Morgan's socialite status and her home's location on the posh Upper East Side, she's struggled to sell the five-story, six-bathroom brownstone.
Morgan, a star of Bravo's "Real Housewives of New York," has owned the home at 162 E. 63rd St. for 27 years, living there on and off. Since around 2008, she has made numerous attempts to sell it but has failed to attract any serious buyers.
Curbed's Bridget Read wrote that now, after years of listing and delisting the property, Morgan had opted to auction it with a starting bid of $1.75 million, far below its reported purchase price of $9.1 million in 1997.
"I want to be free to garden and travel and not have to worry about the house — but I'm not taking nothing," Morgan told Curbed.
Bidding opened with Concierge Auctions on May 16 and is set to remain open until May 29. As of May 24, the highest bid was $4.25 million.
Even the ultrawealthy lose in the game of real estate
Luxury-real-estate shows, such as "Million Dollar Listing" and "Buying Beverly Hills," often portray the selling of high-end homes as effortless. But even with an elite ZIP code and the pedigree of a famous or rich seller, sealing the deal can still prove difficult. Michael Jordan, for example, has been unable to sell his mansion outside Chicago for more than 11 years.
There's also the 105,000-square-foot mega-mansion in Los Angeles developed by the former film producer Nile Niami. Following 10 years of construction, the home languished on the market without attracting a buyer. It was later placed into court-ordered receivership and subsequently entered bankruptcy proceedings. Finally, it was auctioned off for $126 million to the billionaire CEO of Fashion Nova, Richard Saghian, in 2022.
The crux of the issue is that the more expensive a home is, the fewer potential buyers it has — it's a troublesome scenario amid slowing buyer demand and growing economic uncertainty. The lack of demand from traditional buyers has led to an increasing number of ultrawealthy homeowners, including the entrepreneur Rob DeSantis, renting out their homes or auctioning them off rather than waiting around for buyers.
"A lot of luxury buyers may already have a primary home, so maybe they're looking for a new investment," StreetEasy's Lee said. "For that reason, even though they are generally less affected by high mortgage rates, they are heavily influenced by the general economic outlook."
He said that was partly why more luxury buyers were increasingly considering renting out their homes rather than selling them.
Custom features added by sellers and maintenance costs can also put off buyers
One person's dream renovation could be the next person's nightmare.
Lee pointed out another obstacle for luxury homeowners: their inclination to elaborately customize their homes with features that may or may not be appealing to the average buyer.
"A lot of houses and apartments in New York City were built before the war," Lee said. "It's also for that reason, it's common for a lot of owners to go through renovations, to make it more livable and more to their own taste."
In addition to a koi pond in the garden, the Morgans also installed a large nautical star in the entryway on the ground floor during a $3 million renovation, Curbed reported.
Lee said another factor contributing to the difficulty of selling luxury properties was the high costs associated with their maintenance and upkeep.
Morgan's townhouse carries estimated monthly property taxes of $6,003, according to the StreetEasy listing. This figure doesn't include additional expenses that come with owning a townhouse such as insurance, repairs, upgrades, landscaping, and more.
Morgan told Curbed she was ready to be rid of it all.
"I don't want anyone to think, 'New York is done, and that's why she's leaving,'" Morgan said. "I'll always be a New Yorker. I just don't need all this."
Correction: May 28, 2024 — Because of an editing error, an earlier version of this story misidentified the entrepreneur Rob DeSantis as Gov. Ron DeSantis of Florida. Also because of an editing error, a photo caption in the story misstated the starting bid of Sonja Morgan's home. It was $1.75 million, not $1.75.