In an era where rising home prices and soaring mortgage rates have made purchasing property increasingly difficult for the average buyer, one segment of the market remains robust: the ultraluxury real estate market, where megamansions are still being snapped up by the ultra-wealthy.

Billionaire Real Estate Moves in Malibu

In June, billionaire James Jannard, the founder of Oakley sunglasses and apparel, made headlines when he sold his expansive Malibu estate for a staggering $210 million, setting a new record for the most expensive home sale in California. While the buyer’s identity remains confidential, this individual now owns the priciest property in the state, surpassing even the $190 million that JAY Z and Beyoncé paid for their Malibu home last year.

Another notable transaction in Malibu this June involved Laurene Powell Jobs, who paid $94 million for a 9,810-square-foot oceanfront property featuring a five-bedroom, three-bath home built in 1956. This purchase adds to her existing portfolio of properties in the Paradise Cove area, which is currently under construction, according to satellite imagery.

The Persistent Appeal of America’s Most Exclusive Real Estate Markets

A view from above of Laurene Powell Jobs’ latest Malibu, CA, land grab (Google Satellite)

Malibu remains a favorite destination for affluent homebuyers, alongside other high-profile locations such as San Francisco, Aspen, New York City, Miami, and Palm Beach, FL. Each of these locations has seen property sales this year exceeding $50 million, underscoring their ongoing appeal to the wealthy.

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Why the Billionaires Are Unfazed by Climate Change

While concerns about climate change, including floods, wildfires, and storms, might deter the average homebuyer, these issues seem to have little impact on the purchasing decisions of the ultra-wealthy.

“Coastal areas like Palm Beach are vulnerable to climate-related events, which might dissuade some buyers,” says Hannah Jones, a senior economist at Realtor.com. “However, ultraluxury home shoppers continue to flock to these areas despite the risks.”

This resilience among wealthy buyers can be attributed to their financial capacity to afford properties built to withstand extreme weather. Margit Brandt, a real estate agent with Premier Estate Properties, Inc. in Palm Beach, notes that new building codes and FEMA regulations have mandated that developers construct homes with enhanced wind and flood protections. Consequently, homes in these areas are increasingly being designed with the latest storm-resistant features, which is a luxury that many regular homeowners cannot afford.

Additionally, timing plays a crucial role in mitigating risk for these buyers. Palm Beach, for instance, experiences its hottest and most humid weather—and the height of hurricane season—from June through November. During this period, many wealthy residents retreat to their northern estates, returning only after Thanksgiving, as Brandt points out. For those who need to evacuate during a storm, private jets are always an option.

In coastal areas, another significant concern is beach erosion. According to Sandro Dazzan, managing partner of The Agency Malibu, the structural integrity of a property’s foundation is critical in these regions. Homes with newer concrete foundations, which offer more stability than the older wooden piles used in the past, command higher prices. High-end buyers tend to favor newly built homes with modern sea walls and advanced foundation systems.

Fire is another natural hazard that the wealthy can mitigate with money. Dazzan notes that his clients often seek properties equipped with advanced fire suppression systems and fire-resistant construction materials. They also hire specialized teams to clear brush and plant fire-resistant vegetation around their estates. In some cases, homeowners can even contract private companies to monitor their properties and respond in the event of a wildfire, providing an extra layer of protection.

Despite the environmental risks, the natural beauty and exclusivity of these locations remain powerful draws for the ultra-wealthy. “Ultrawealthy buyers are drawn to Malibu because of our stunning rural environment and the breathtaking Santa Monica Mountain range that spans the entire city,” says Dazzan. One of the most significant sales of 2024—a newly built, 10,527-square-foot mansion with direct access to the Pacific Ocean—was completed here for $61 million.

Why Billionaires Favor ‘Triple-Mint’ Turnkey Properties

Unlike average homebuyers who might consider a fixer-upper to save money, billionaires typically prefer properties that are move-in ready and require no additional work.

“In Palm Beach, buyers are looking for two main things: instant gratification or turnkey products, and value,” Brandt explains. “They want to enjoy their purchase as soon as possible.”

Brandt was the agent for the buyer of a $150 million property in Palm Beach, one of the top residential sales of 2024. Known as Tarpon Isle, this 21,406-square-foot mansion was developed on a 2.27-acre manmade island and boasts 11 bedrooms and 22 bathrooms. The property exemplifies the trend of wealthy buyers seeking new, pristine homes that require no additional renovations.

In New York City, the concept of “triple-mint” condition—where a property is in perfect, move-in-ready shape—has become the standard in luxury real estate. John Antretter, a licensed associate real estate broker with The Agency, emphasizes the importance of this quality in today’s market. “Triple-mint condition sells a luxury property today,” he says. “Buyers don’t want to have to gut renovate an apartment; they want it to be perfect from the start.”

One such triple-mint property is located in Central Park Tower, the tallest residential building in the world. A trophy unit here is currently on the market for $150 million. Although it hasn’t sold yet, it has attracted significant interest from billionaires around the globe.

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Why Wealthy Buyers Are Unconcerned by High Mortgage Rates

The high mortgage rates that have burdened many American homebuyers are of little concern to the ultra-wealthy, who often have access to financial options that are out of reach for most people.

“Instead of using standard mortgages, many Palm Beach buyers opt for loans secured by their equity portfolios within their banks,” Brandt explains. “These loans often have very competitive interest rates since they are backed by substantial equity in relatively liquid assets.”

Additionally, many affluent buyers choose to pay cash for their properties, rendering mortgage rates irrelevant. This approach allows them to negotiate better deals, especially in times of economic uncertainty. As Antretter notes, “Many feel that times of turmoil give them a better opportunity to use their cash to negotiate a better deal.”

In conclusion, while the majority of the U.S. housing market may be struggling, the ultraluxury segment remains resilient. The ultra-wealthy continue to invest in prime real estate, drawn by the unparalleled beauty, exclusivity, and turnkey perfection of the properties available in some of the most desirable locations in the country. Their ability to mitigate climate risks, secure favorable financing, and pay cash for high-end homes ensures that this market remains as hot as ever.

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