Almost a year ago, in May 2015, Michael Jackson’s former Neverland Ranch hit the market. The 12,598-square-foot French Normandy-style home sits on 2,698 acres in the Santa Ynez Valley, northeast of Los Angeles. It has six-bedrooms, a four-acre lake with waterfall, an outdoor barbecue, a pool house, three guest houses, a tennis court, and a 5,500-square-foot movie theater and stage. Asking price back then? $100 million.
Asking price 10 months later? $100 million.
The reason for the lack of movement on the price tag isn’t a stubborn seller or the lack of draw. (It really has a fairytale feel.) Homes in the highest echelon of the real estate market—everywhere—simply aren’t selling fast. The key to unloading a $100 million dollar property these days? Patience.
“The uber-luxury high-end market is not anywhere near where it was three, four, five years ago,” said Brendon DeSimone, real estate expert with listings site Zillow.com.
“That market has just really slowed down, and there are only so many billionaires who can afford to buy these homes.” (Bloomberg, by the way, counts at least 200 global billionaires, but not all of them are looking for a far-flung ranch.)
Luxury Slowdown
Dropping oil prices, fluctuating stock markets, and weak currencies have led to slowdowns in the world’s priciest markets. International buyers are still a force in the American real estate market, in part because high net worth individuals are looking for safer places than the stock market to park their cash. But it’s a little more risky to invest in a property that’s off the beaten luxury path, no matter how storied its pedigree. Sycamore Valley Ranch, as Neverland is now called, has three major hurdles to overcome: location, location, location.
The property—purchased from a financially ailing Jackson in 2008 with a $23.5 million note from Thomas Barrack Jr.’s Colony Capital LLC—is located in Los Olivos, a town of around 1,100, about 130 miles northeast of Los Angeles. That’s pretty far from the proliferation of the highest-end homes. “Most of the homes in these price ranges are waterfront, or with ocean views, or they’re in the cities,” says DeSimone. “They’re concentrated in L.A., New York, San Francisco and Miami.”
According to Zillow, Neverland is asking nearly 200 times the median home value in Santa Barbara County, which is $548,500. Wayne S. Natale, real estate broker for nearby Village Properties and a 30-year veteran of real estate in the Santa Ynez Valley says there are few truly high-end properties in his domain. (He doesn’t rep Neverland but he’s toured the property many times.) They only sell a couple of homes above $4 million each year. And there’s almost nothing to compare Neverland to, no comps to settle the stomachs of nervous buyers. The singer himself was inimitable, and thus so is his property.
“There’s never been a $100 million sale in the Santa Ynez Valley,” Natale says. “If it was in Aspen it would be a $100 million property, or maybe if it was in upstate New York or the Hamptons, but here that asking price has a lot of blue sky in it.”
List and Wait
To be clear, he’s not saying the property won’t fetch that price, just that it might take a long time. While for-sale homes in Santa Barbara County stayed on the market for an average of just 75 days in 2015, according to Zillow, it’s perfectly normal for unique and high-end homes to stay on the market for much longer than that. (And no, despite rumors last year that China's version of eBay unsuccessfully tried to auction it off, Neverland's sellers aren't resorting to wild techniques; a source close to the property called it a hoax.)
“Any property in the valley that’s even $3 million and up, it’s typically on the market for two to three years,” says Natale.
Take this $125 million, 12-bed, 13-bath home, an hour from Neverland right in Montecito, with those ocean views and almost 30,000 square feet. It’s been on the market since 2014, repped by the same folks taking on Neverland. There hasn’t been a price cut.
On Zillow, there were only four other properties asking $100 million or more this year. One of those was the Playboy Mansion, which was hoping for a cool $200 million earlier this year, but is now listed as “off market” (sorry, Bunny lovers).
The $100 Million Club
The others include a $135 million, 8,000-square-foot Beverly Hills estate (yes, in the 90210 zip) with seven beds and 10 baths; it has been on Zillow for about 150 days. On the East Coast (there’s no public listing between the coasts in this price range), there’s a 13-bed, 35-bath(!) home on the Long Island Sound, asking the same price as Neverland; it’s been on Zillow for almost 200 days.
Some sellers do consider price chops. Take Elk Mountain Lodge in Aspen. Owned by Bill Koch, the 27-bed, 32-bath mansion hit the market last year for $100 million. It was delisted, then came back a couple of weeks ago asking $80 million.
The truth is, not much is selling for those prices, anywhere, or at least not publicly. The most expensive home sold on Zillow in 2015 was $46.3 million. That was Kenny Rogers’ old place, 23,988 square feet in Bel Air. The last property on their list of the 10 most expensive homes sold last year is in Great Neck, N.Y., sold for a wee $19.9 million.
That doesn’t mean there’s truly a limited supply. Likely many high-end properties aren’t public listings.
“When you start getting north of $10 million, it’s a lot of that stuff never goes to market, a lot of pocket listings or quiet listings,” says DeSimone. “They’re only sold through brokers you know.”
The Simple Life
While many of the country’s most expensive homes are in high-end hot spots, Los Olivos is not an obvious place to invest in luxury real estate. It’s not that the town is just sleepy—it’s totally zonked. In a good way. For those who like that sort of thing.
“People who come here are looking for a place in a rural community where they can have peace and quiet and relax,” says Natale. “They’re not into the cocktail parties every Friday night.” He calls it a Levis and t-shirts kind of place, for people who love horses or vineyards, but not the limelight.
“When Michael Jackson was up here, he didn’t go around the community much,” says Natale. “He had his own environment, his own kingdom out there.”
Even if he wasn’t a presence in the town, MJ’s legacy could still help the property fetch a premium price. “If somebody wants to buy it and thinks that because Michael Jackson owned it that has monetary value, it’ll sell for $50 million or above,” says Natale. “It’s going to take somebody that falls in love with it, and then the $100 million doesn’t make any difference to them.”
