Is it time to buy a mansion?

And how long will these prices last? [View in browser]( [Bloomberg]( Hi, I’m [James Tarmy](, Pursuits arts columnist and our chronicler of luxury real estate. Jumping between the two categories is easier than you’d think: rich peoples’ money moves around the world like a vast weather system; art and real estate are two places where it touches down to earth. Also, I am human, and therefore enjoy looking at pretty pictures of houses I can’t afford. And boy are they unaffordable! In three months ending in April 30, the median sale price of US luxury homes rose 19.8% from a year earlier, [according to a recent report](, even as the number of sales began to fall dramatically. (The report defines luxury as the top 5% of a housing market.) People aren’t buying mansions like they used to, in other words, but prices aren’t budging. A house in the Hampton’s Sagaponack is on sale for a mere $12 million. Source: Douglas Elliman Real Estate As more than a few people [have pointed out](, if you own a fancy house and don’t need to sell, it’s a state of affairs that will suit you just fine. Your house is still worth a crazy amount of money! But if you’re a prospective buyer hoping for prices to subside, the situation is probably discouraging. And the bad news is similar for the rest of us. The rich might be different from you and me, but when it comes to rising home prices, we’re all in the same boat: if you’re already a homeowner you’re in great shape, if you’re not, [the barrier to entry can seem impossibly high](. The major question facing anyone reporting on home prices—luxury or otherwise—is if prices will finally go down soon, and if so, by how much. There are [literally trillions of dollars]( riding on the answer, but no one has a very compelling one, at least not yet. Would you spend $34 million on this house in downtown Aspen? Source: Haldeman Banner Team, Christie’s International Real Estate Glass half full speculation: When it comes to luxury home prices, most rich people are still rich, even if their portfolios are down 20%, and that means that markets in places rich people love (the Hamptons, Aspen, etc.) are still doing fine in terms of home prices, even as transaction volume slows down. But the glass half empty argument is pretty compelling: there are signs that, like the rest of the [slowing US home market](, luxury sales are beginning to take a serious hit. No one likes to spend money while they’re losing it, and, with recession fears threatening to become a reality, there’s an understandable reluctance to buy a home at a price that could plausibly represent the peak of an overheated market. The one sure thing is that gradually, more fancy houses are coming onto the market (“listing inventory is rising,” in real estate parlance) even if prices remain stubbornly out of reach. A three-bedroom home overlooking the bay in Fire Island Pines was listed for $2.65 million. Source: Vinnie Petrarca Fire Island Real Estate Recent Luxury Market Analysis [Aspen’s Mansion Market Is Cooling Right as the Buying Season Starts]( But don’t expect a bargain. [The Hamptons Covid-Era Buying Frenzy Is Officially Over]( At least until August. [Demand for $10 Million-Plus Homes Slows in New York, Hamptons]( For the first time in a decade, a “balanced market” is on the table. [The Last 12 Houses on Florida’s Fisher Island Are Up for Sale]( They’re priced in the range of $33 million, which is expensive even for America’s fifth-richest zip code. [Fire Island Pines Is the Most Expensive It’s Ever Been]( Happy Pride month. Other Real Estate Coverage Worth Reading The funny thing about the real estate beat is that it’s pretty niche (famous New York real estate developers like Gary Barnett and Stephen Ross are … not actually famous), but on another level, it’s something that millions of people care about. And that breeds some really excellent reporting and analysis. I strongly recommend you read: - [The Real Deal](’s “Daily Dirt” newsletter, sent out to paying subscribers and worth every penny; it has news, numbers, recaps, and records, all written in a chatty, informal style. - Curbed’s [real estate]( section, which is admittedly better for trends pieces than breaking news, but the trends pieces are always entertaining. - Broker Donna Olshan’s weekly [Luxury Market Report]( newsletter, which we at Bloomberg will occasionally report on, and which provides an accurate real-time insight into the state of market. - Appraiser (and regular Bloomberg commentator) Jonathan Miller’s weekly [Housing Notes]( newsletter, which combines news and his own good-humored analysis. Also worth every penny. (It’s free.) As Promised, Pretty Pictures of Expensive Houses … Most of which are for sale! And all of which cost, at minimum, several hundred times the median US household income. [Historic Hudson Valley Estate Hits Market for $25 Million]( [Rare, $11.5 Million Modernist Marvel Hits Market in East Hampton]( [The Rocky Mountains Are the Next Hotbed for Contemporary Architecture]( [Billionaire Robert Toll’s NYC Penthouse Hits Market for $22 Million]( [This $49.5 Million Bel Air Compound Is Hidden in Plain Sight]( My Favorite Architecture Books Because I’m nominally in charge of Bloomberg’s book coverage, and because I am also nominally involved in Bloomberg’s real estate coverage, gorgeous architecture books make their way across my desk on a regular basis. Nearly all of them are fun to look at, but the following are good enough to actually read. - [Santa Fe Modern: Contemporary Design in the High Desert]( by Helen Thompson - [Vaux-le-Vicomte: A Private Invitation]( by Guillaume Picon - [Villas and Gardens of the Renaissance]( by Lucia Impelluso - [Atlas of Brutalist Architecture]( by Phaidon editors - [CCCP: Cosmic Communist Constructions Photographed]( by Frédéric Chaubin You Had Some Questions So here’s some answers! Keep them coming for next week via our [Bloomberg Pursuits Instagram]( and [e-mail](mailto:daydreams@bloomberg.net?I%20have%20a%20question). Is there such thing as a sustainable mansion? In my dreams. I occasionally see new-construction mansions that are touted as “carbon neutral” or “net-zero” but then they will also have, say, raw concrete walls or floor-to-ceiling glass windows, both of which are not great for the environment. (Concrete uses a ton of fresh water and also its production [pollutes a lot](; floor-to-ceiling glass windows [tend to be very energy inefficient](.) More to the point, we continue to see Americans flocking to areas they should be running from, namely, [the entirety of Florida]( and [most of California](. The so-called l’Orangerie in a nearly $50 million LA mansion. Photographer: Jim bartsch Long ago, in the halcyon days of youth [2014], [I wrote an article]( with the headline “As Climate Changes, 'Underwater Mortgage' May Take on New Meaning,” where I called up the then-deputy director of the Climate Change Science Institute at the [Oak Ridge National Laboratory](, and asked him where he’d buy in the US if he was looking at 50 year timeline. He wasn’t really concerned by sea level rise; instead he was way, way more worried about available fresh water and punishing heat and wildfires. Anyway, his qualified answer was: buy in the Great Lakes area all the way across to New England. So, if you want to buy a truly a sustainable mansion, i.e. a house that can be sustained in the face of forthcoming natural disasters, maybe consider the Rust Belt. Or Maine. I’m a first-time homebuyer. How do I time it right? A question for the ages and one only you can answer. Really, it boils down to some combination of your personal financial well-being, the carrying cost of whatever home you choose, and of course, the availability of what’s actually on the market. Here’s what I can say, though: if there’s one takeaway from the current housing market, it’s that home buying should be approached conservatively. Billionaire homebuilder Robert Toll listed his New York penthouse for $22 million earlier this year. Courtesy of SERHANT. / by Krisztina Crane of Evan Joseph Studios. Take [the Hamptons](. (Please, [take the Hamptons](.) I’ve heard more than a few stories about people who bought last year—which, with the benefit of hindsight, seems to have been the very peak of the market—using the calculation that they could cover their sky-high mortgages by renting the house out for the summer at (wait for it) sky-high prices. And then…everyone who’d been renting for the last two years decided to go to Europe this summer instead and [rental demand fell to earth](. Now there are “for rent” signs wherever you go out East, and I can only speculate that the people who thought they’d be covered by families spending $100,000 a month for a weekend getaway are beginning to sweat. An architecturally significant house in East Hampton could be yours for $11.5 million. Photographer: Allan Pollok-Morris Which is to say! I can’t tell you when to buy, but I can tell you that you shouldn’t buy if the purchase involves a lot of best-case-scenarios to pull off successfully. Should I be focusing on buying my home or vacation property in order to Airbnb it? This is sort of the same question, and the answer is similarly impossible for me to get right. The variables are too … various, but let’s just start by stating the obvious: if your vacation home is in Newark, NJ, the Airbnb market is probably not as strong as in the scenic Hudson Valley, and if you are buying a house in order to rent it out you need to first consider what the costs are to own the home (maintenance, mortgage, utilities, taxes) and compare them to what you could reasonably expect to make in income. And now, for something novel: A house in Jackson Hole, Wyo. that isn’t (presently) for sale, although it was [just featured]( in Bloomberg. Photographer: David Agnello At the end of the day, you might discover the numbers don’t really add up. But if they do, there are certainly worse ideas than building equity by covering your mortgage with short-term rental income. Debt can be a tool! But it can also, you know, bankrupt you. Follow Us Like getting this newsletter? [Subscribe to Bloomberg.com]( for unlimited access to trusted, data-driven journalism and subscriber-only insights. You received this message because you are subscribed to Bloomberg's Pursuits newsletter. If a friend forwarded you this message, [sign up here]( to get it in your inbox. [Unsubscribe]( [Bloomberg.com]( [Contact Us]( Bloomberg L.P. 731 Lexington Avenue, New York, NY 10022 [Ads Powered By Liveintent]( [Ad Choices](