Developers and real estate agents are struggling to sell mega-mansions in Los Angeles, according to a report.
There's an "oversupply" of at least 50 highly expensive spec houses currently being built in the Los Angeles area — with plenty more multimillion-dollar mansions already listed, The Wall Street Journal reported. Some of these ritzy homes with price tags in the $20 million range aren't even officially on the market yet, an appraiser told the news outlet.
While these mansions are stunning, there's a major problem: There aren't enough deep-pocket buyers.
The construction of these pricey Los Angeles homes, which has reportedly been financed by individuals or private lenders, was triggered by several high-end deals around 2014 and 2015 — when the real estate market was hot in the area, the outlet noted.
In order to woo potential clients, developers and real estate agents are now reportedly turning to unconventional methods including adding interesting amenities (such as a secret room for smoking and growing marijuana), giving homes their own brands or logos or hosting lavish events (like a "Great Gatsby" themed party).
Some desperate agents are cutting prices, according to the outlet. One mega-mansion in Bel Air that had been listed at $250 million had its price slashed to $150 million in January.
On the East Coast, another housing market is suffering from price cuts.
In the Hamptons, the chosen summer destination for the country’s elite, houses are being sold for lower prices and properties are staying on the market for months at a time, according to The New York Times.
Home prices were said to be down. The median price for a single-family home in the area has dipped 7.9 percent to $860,000, according to a report from Douglas Elliman Real Estate.
Jonathan J. Miller, the author of the Douglas Elliman report, said one of the reasons buyers were choosing not to buy in the Hamptons was due to the federal tax code Congress approved in 2017.
The state and local tax deductions (SALT) allow taxpayers to deduct the property and income taxes they pay from their federal returns. President Trump’s tax law put a lid on SALT deductions. The cap allows homeowners to deduct only up to $10,000 from state individual income or sales taxes and property taxes from their federal income taxes. The new tax code, passed by Congress in 2017, made it “more expensive for homeowners to own luxury property,” the Times noted.
Fox Business’ Kathleen Joyce contributed to this report.