Billionaire Sells His Home For A 65% Discount. Is The Ultra Luxury Real Estate Market In Trouble?

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Not every dream house has a dream outcome. Billionaire Sun Microsystems co-founder Scott McNealy has sold his Silicon Valley home at a deep discount to its original asking price. The San Francisco Standard reported that the five-bedroom mansion in Palo Alto, CA was sold for $35 million, nearly 65% below what he asked in 2018.

McNealy reportedly purchased the 13-acre lot in the 1980s but he and his wife Susan didn’t start building the home until 2008. McNealy founded Sun Microsystems in the 1980s which was later sold to Oracle for $7.4 billion. Over eight years, they spent nearly $11 million creating a highly customized stone and adobe structure. The house has over 21,000 square feet with every amenity a billionaire could desire, including an indoor ice rink, a gym with a climbing wall, a home theater, and a dance floor. Outside is a pool, spa, and large pavilion with views over the surrounding hillside.

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The home first hit the market for $96.8 million in 2018. It was relisted for $53.9 million in January 2020 and removed from the market in 2022. The sale was handled off-market. Realtor Deepee Chattha, who had the listing in 2020, told the San Francisco Standard, “Whoever bought this property got a steal, even in the current economy.”

Real estate in Palo Alto, one of the most expensive cities in Silicon Valley, has continued to escalate in price. According to a June Redfin report, prices were up 15.6% year-over-year with a median price of $3.6 million. While sales were down 22%, homes did sell after just 14 days on the market. The area is still highly desirable and homes like the McNealy mansion are outliers because of their size and scale.

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Positive And Negative Signs For High-End Homes

Homes at the ultrahigh end of the market usually take much longer to sell because the pool of buyers is much smaller and the homes are often highly customized to the owner. Kanye West recently found a buyer for his Malibu, CA beachside home after taking $14 million off the price tag. Realtor.com recently rounded up some high-profile homes in California that have seen major list price reductions. Casino mogul Steve Wynn has knocked $60 million off the price of his Beverly Hills home and still hasn’t found a buyer. Rick and Kathy Hilton had to cut $30 million off the price of their Bel-Air mansion before it sold.

Not all of the data is negative and plenty of active, wealthy buyers remain. A recent report from Savills revealed that U.S. buyers are snapping up luxury real estate in Southern Europe. Real estate appraiser Miller Samuel and brokerage Douglas Elliman predict that 2024 will be a record breaker for extremely expensive homes. The U.S. has already had six home sales for $100 million or more this year including a New York City penthouse that sold for $115 million. A mansion in Palm Beach, FL sold for $152 million. “It’s a substantial uptick in the pace of sales, something we’re not seeing at all in the broader housing market,” said Jonathan Miller, CEO of Miller Samuel.

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