NO BILLIONAIRE BUYERS FOR JACKSON’S RANCH
Out-of-the-way property could take years to sell
Almost a year ago, in May 2015, Michael Jackson’s former Neverland Ranch hit the market. The 12,598square-foot French Normandystyle home sits on 2,698 acres in the Santa Ynez Valley, northeast of Los Angeles. It has six bedrooms, a four-acre lake with its own waterfall, an outdoor barbecue, a pool house, three guest houses, a tennis court, and a 5,500-square-foot movie theatre and stage.
Asking price back then was US$100 million.
Asking price 10 months later? Still US$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 does have a fairy tale feel. Homes in the highest echelon of the real estate market — everywhere — aren’t selling fast. The key to unloading a US$100-million property these days? Be patient.
“The uber-luxury high-end market isn’t anywhere near where it was three, four, five years ago,” says Brendon DeSimone, a real estate expert with the listings site Zillow.com. “That market has 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 of them, but not all of them are looking for a ranch.)
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 US$23.5-million note from Thomas Barrack Jr.’s Colony Capi- tal LLC — is in Los Olivos, a town of 1,100, about 200 kilometres 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 US$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 US$4 million each year.
And there’s almost nothing to compare Neverland with. 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.”
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 highend homes to stay on the market for much longer than that.
(A source called rumours that China’s version of eBay unsuccessfully tried to auction it off 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 US$125-million, 12bed, 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. There hasn’t been a price cut.
On Zillow, there were only four other properties asking US$100 million or more this year. One of those was the Playboy Mansion, which was hoping for a cool US$200 million earlier this year, but is now listed as “off market.”
The others include a US$135million, 8,000-square-foot Beverly Hills estate ( yes, in the 90210 zip) with seven beds and 10 baths; it’s been on Zillow for about 150 days.
On the East Coast, there’s a 13bed, 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 US$100 million. It was delisted, then came back a couple of weeks ago asking US$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 US$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 US$19.9 million.
That doesn’t mean there’s truly a limited supply. It’s likely many high-end properties aren’t public listings.
While many of the country’s most expensive homes are in highend 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.