12 October 2012

Art, Architecture or $?

If you haven't been shopping for modern waterfront homes in Miami in the last month or so, you're excused. But for everyone else, including this lowly real estate broker and modern architecture fanboy, some price developments are flat out ridiculous. Even considering current market-trends.

Franz Marc: House with Trees, 1914
I'm at a loss to explain to clients why a house for $3,300 per square foot is ten times nicer than one for a realistic $330 a square foot. Or why this location is ten times nicer than that one.

My suspicions of occasional random price determination were confirmed by a recently closed sale in Miami that topped the charts at $47,000,000. That house has been on the market for five years (!), starting at $60m. Based on the size of the house and a lot price of $10m, I figured that $60m was a number picked by other reasons than a normal mark-up. And true, the builders admitted that they just wanted to have the most expensive property on the market. Hats off to my colleagues who still sold it.

But when pricing is getting out of hands at times, sellers and their estate agents have to come with up with very flaky explanations, including my favourite one: "It's not real estate, it's art. Dummy". (They don't say dummy, but you somehow feel it).

My beloved NYT recently printed a good piece about it – nice to know that even some heavy hitters in The City don't buy into the art-logic, and understandably so.

Can you follow the "it's so expensive, it's art" argument? Because I sure don't.

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