Mega Mansions Are Selling Like Hotcakes! 

A five-bedroom house built in 1955 in East Hampton is up for sale. The price tag: $72 million.

Nirav Tolia, the co-founder Nextdoor, is selling his San Francisco home in the Pacific Heights for $25 million.

Entertainment mogul Jeffrey Katzenberg just sold his Beverly Hills home, privately, for $125 million.

And a mountain home in Vail was recently purchased by a biotech entrepreneur for $57 million, a record sales price for this ultra-affluent Colorado town.

These are just four of dozens of houses sold for mega-millions since March, when the Corona Crisis shutdown began. A glance at sales data from these super-exclusive real estate markets presents a clear conclusion: They have not suffered. Quite the contrary, demand and prices are at all-time highs.

In my June 29 blog, where I talked about the immediate economic consequences of the coronavirus crisis, I said that I would not want to be investing in multi-million-dollar houses right now.

So, what’s going on?

I did a bit of research. There’s not enough data to support any reasonable conclusions… but we can make some guesses.

Why the selling? 

The super-rich are generally better informed about economics and market trends than the average Joe. That means they are aware of and concerned about the runaway federal spending that has accelerated in the past several months. It’s possible that some of them have decided that inflation is inevitable in the long run and a market crash is possible in the short-term, and so they’ve decided that it’s a good time to transfer some of their stock market wealth into real estate, whose prices traditionally rise and fall in line with inflation. If you have half a billion in stocks right now, converting 10% of it to buy a $50 million mansion might be a smart, anti-inflationary move.

Why the buying? 

Many of these super-exclusive neighborhoods are protected enclaves – far from the city centers that are being burned and pillaged by BLM and Antifa revolutionaries and local, fun-loving looters. But some of them – like Beverly Hills in LA and Pacific Heights in San Francisco – are close enough to the action to be vulnerable to the sort of spread of chaos to suburbia that Donald Trump has been criticized for talking about. I have more than one friend in New York, LA, and other city centers that are considering moving away. If you had a mega mansion near one of the high-tax, high-unemployment, hyper-revolutionary hotspots and you could make a few million by relocating to a safter, quieter, tax-friendlier location, wouldn’t you be tempted to move?

That said… I’m still not buying.