Millionaires wave goodbye to the mansion as the luxury market booms in Philly
David and Diane Charlton own the kind of home others fantasize about: a European-influenced country estate set back from major roads. A sprawling 34 acres surrounded by protected Chester County land. Six bedrooms. A pool. A horse farm, stables, and a wine cellar.
Yet there's a reason that fantasy isn't reality. Despite the amenities, the land, and a strong school district, the house can't seem to sell.
For the last year and a half, the 10,000-square-foot house outside Pottstown has sat on the market. Interested parties have come and gone. And though the price has been slashed by nearly $500,000, the estate, now priced at less than $3 million, has yet to see a buyer bite.
Even as some industry observers caution that a recent slowdown in the luxury market is far from over, David Charlton says he's optimistic. And maybe with good cause: In 2016, sales of suburban homes listed at $1 million or more ticked up 4.6 percent, according to an Inquirer analysis of Trend Multiple Listing Service and city data provided by Kevin Gillen, senior research fellow at Drexel University's Lindy Institute for Urban Innovation.
At the same time, the median sale price of luxury homes in eight suburban counties in the Philadelphia region — Bucks, Chester, Delaware, and Montgomery in Pennsylvania and Burlington, Camden, Gloucester, and Mercer in New Jersey — jumped 2 percent to $1.27 million. (Median is the middle; half of the homes sold for more, half for less.)
Modest gains in the suburbs were upstaged, however, by sales in Philadelphia itself, the analysis showed. In 2016, the number of sales of $1 million-plus homes surged nearly 34 percent over 2015 levels, even when condominium units are excluded. The median sale price of high-end Philadelphia single-family homes dropped 7.4 percent to $1.33 million in 2016, but it was a year that also saw several condo sales above $10 million.
"The types of luxury homes that are selling are slightly different than what you have seen in the past," said Dan Fulton, senior vice president of John Burns Real Estate Consulting, a national research firm. "The farther-out suburban premium luxury homes that may have been in demand in the past are not as in demand today."
"People are still spending the money," Fulton said. "They're just paying more for a [city] lifestyle."
That shift in preference among million-dollar buyers underscores what observers say is a demographic transformation across the country. For years, cities have increasingly been viewed as a magnet for millennials seeking to rent apartments and buy starter homes, as well as for baby boomers looking to downsize. Now, though, cities are becoming equally as attractive for millionaires and billionaires, too.
The trend has been especially pronounced in Philadelphia, a place that just two decades ago rarely saw high-end home sales. Although cities such as New York and San Francisco have hardly ever struggled to sell million-dollar listings, here the trend is new.
"Prior to 2000, Philadelphia was lucky to have two or three sales of million-dollar homes per year," Gillen said. Last year, with the sale of 111 homes (not condos), Philadelphia "reached an all-time historic record."
In many ways, this is an indicator of just how much more the city has to grow, Gillen said. Sluggish growth in the suburbs is an equally strong barometer, too.
"Luxury homes tend to be leading indicators," he said. "The people purchasing these homes are successful, sophisticated individuals who know how to read and time the market."
For the suburbs, the slower luxury market could indicate that million-dollar buyers are starting to pull their money out, Gillen said. And often, these sellers are not downsizing — they're moving into luxury city listings.
That marks a deviation from a decade ago, when both nationally and in this region sales of million-dollar homes in the suburbs boomed. Even after the housing bubble popped, sales remained strong, as buyers snatched up high-end properties for lower prices.
But eventually, strong activity led to increased new construction in that price tier. A glut of new multimillion-dollar listings came online. And as the city increased in attractiveness, too much inventory caused a suburban slowdown, with the number of million-dollar sales dropping to 440 in 2009.
Headline-making high-end condo sales have proliferated as Philadelphia has experienced a multifamily-housing boom. In December, Comcast CEO Brian Roberts purchased the 45th floor of his company's new tower at 1800 Arch St. for $14.3 million. Around the same time, the 7,000-square-foot penthouse at Two Liberty Place sold to an undisclosed buyer for nearly $11 million.
And last year, the penthouse at 500 Walnut was sold for more than $17 million, the most expensive residential sale ever in Philadelphia.
"I'm seeing that it's easier to sell a luxury home in Philadelphia than it is in the suburbs," said Patricia Royston, an agent with Kurfiss Sotheby's International Realty, who listed the 13-bedroom former estate of the Pew family in Gladwyne for under $5 million. "People do not necessarily want the lifestyle of owning an estate. They want something that's easier to care for."
In no way have sales of luxury suburban listings collapsed. In 2016, 744 homes originally listed at $1 million or more sold in the eight-county suburban region around Philadelphia — nearly as many as the 758 sold in 2006, when the housing boom was peaking locally.
Yet the total number of higher-priced listings has declined. In 2006, the data show, 21 homes in the suburban region sold for $3 million or more. In 2016, that number declined by more than 50 percent, with just 10 selling.
"Not as many people want to mow lawns or take care of a 10- to 15-acre property," said Linda Krick Danese, a Kurfiss Sotheby's agent.
The slowdown has spelled trouble for iconic, sprawling estates. In Gladwyne, the famed Linden Hill, once owned by the Campbell Soup Co.'s Dorrance family, has been on the market since 2013. Set on 50 acres, the secluded Norman-style manor house features eight bedrooms, two pools, a guest house, gardens, and more. But it was listed at $24.5 million four years ago. And on the market it has sat. Over time, the price has been slashed by nearly $8 million.
"Linden Hill is an absolute treasure," said Lisa Yakulis, the Kurfiss Sotheby's agent for the property. "It's just harder to find that buyer."
David Charlton said he knows it can be difficult with properties as distinctive as his horse farm.
"It's a larger property, you have to find a horse person," said Charlton, 51, a insurance executive. "It's going to have to be somebody that's more attracted to it."
"We went in with the expectation that it would take some time," he said. "We still love living here."