Is the luxury spec-home market rebounding? Recently, Harrison Ford and Calista Flockhart quietly closed on one of Los Angeles’ biggest spec-home sales of the year: a Brentwood estate for $12.65 million. It comes on the heels of homebuilder Mohamed Hadid’s $50 million June sale of the opulent Bel-Air manse Le Belvedere, believed to be the biggest residential sale in the U.S. this year. But the sale prices don’t tell the whole story.
Ford and Flockhart’s house in Mandeville Canyon proved tough to sell — it was listed in the spring for $15.9 million. This high-end niche has clearly shrunk since the recession. During the boom, about 30 spec projects at more than $5 million were listed each year; about 10 have hit the market this year. “A lot of the spec builders got hurt pretty badly over the last couple of years,” says agent Hugh Evans of Partners Trust, who repped Chris Liebes, the seller-developer of the couple’s new residence.
Speculative building at this level is especially risky because such projects require huge outlays of capital before a buyer is found. Although he declined to discuss the identity of the buyers, Evans, himself a developer of spec houses, admits that there was “no money made on this house. However, there are a couple of builders out there still making money.”
Indeed, the market has shown resilience: Agent Drew Fenton of Hilton & Hyland has sold two spec homes this year, one on Lawlen Way in Beverly Hills and the other on Tanager Way in the Hollywood Hills. Both traded for more than $8 million.
Fenton said it’s a narrow market, but when developers deliver the right product, it’s possible to make a quick and profitable sale.
“At the highest level of the pyramid, the expectations grow. Whatever people are seeing at resorts and around the world, they expect to experience in their houses,” says Fenton, who adds that trends include security stations, spas and salons. “When you’ve got a niche buyer, you really have to hit the nail on the head.”
Publicists for the couple had no comment.