Luxury Home Super States

(page 2 of 2)

Florida has 234 of the country's most expensive homes, which range in price from $10 million to $155 million, and California has 205.

"If you were to take all the luxury properties in San Francisco and L.A., it wouldn't match up with Manhattan," says Nick Antonicello, Unique Homes' director of sales. "Peter Minuet [the Dutchman who is said to have bought Manhattan from Native Americans for $24] still made the best real estate deal of all time."

Mountain Peak Homes

Interestingly, the two most expensive homes for sale in the U.S. are not in New York, California, or Florida, but in Montana—a $155 million spec home called the "Pinnacle"—and Aspen, Colo.—a Saudi prince's $135 million ranch. Is this a sign that other states are catching up with traditional luxury-home hot spots?

"The affluent market is growing, and not everyone wants to live in a condo or pay premium prices," says Armstrong. "Instead, many have turned to 'spillover' markets that were more inland and offer unique lifestyle choices."

This trend will continue, Armstrong predicts, but he says it is not likely that states like Colorado, Montana, and Arizona will see anything close to the number of luxury properties in New York, California, or Florida anytime soon. The competition for space has also produced a trend to build up, and condo hotels have an increasingly popular, low-maintenance choice among the affluent (see BusinessWeek.com, 12/4/06, "Checking Into Condo-Hotels").

How Now, Dow Jones?

Can anything topple the luxury-home super states? More than anything else, high-end home markets are linked inexorably with the stock market's performance, especially in New York and in Florida, which absorbs much of the Northeast's wealth in the form of second homes.

Lately, investors have been nervous that still-sluggish home values will further weaken the troubled subprime mortgage market, and vice versa. If the pressure on stocks is severe enough, Moody's Economy.com housing economist Celia Chen believes luxury home sales may not be a strong as many are predicting. "But I don't think it's going to change that much," she says.

Other than the stock market, little seems to affect luxury home buyers, especially at the very high end. "These markets are by category and geography a world by themselves, they dance to their own tune," says DataQuick's Karevoll.

So when you don't have to worry about swings in the economy, the slowdown in the housing market, or qualifying for a mortgage under tighter lending standards, what do you worry about? For ultra-wealthy home shoppers, today's most pressing dilemma may be: California, New York—or both?

Click here to see the biggest luxury real estate markets in the U.S.

Correction: This story originally misidentified the buyer of the most expensive home sold in 2006.

Roney is Real Estate writer for BusinessWeek.com.