With eyes fixed firmly on Wall Street and the proposed $700 billion bail-out, most of us are probably wishing we had gone to merchant banker school instead of whatever vocation we chose. I know I am - I can only imagine just how much of this money will end up being paid out as “consultancy fees,” to unemployed bankers with Manhattan mortgages to pay. In fact I think I will drop whomever ends up with the blank check book a line and see if they need a luxury real estate consultant. I promise to overvalue everything by at least 50%, suggest a 250% mortgage - 3% interest for 5 years and guarantee it will be worth that much by the time the interest rate goes up to 18%. And if that doesn’t work, we can just ask the fed for another handout.

Whichever way it falls, a look further westward gives an indication of the effects that are now starting to be felt in the luxury property markets. Tough times call for tough marketing, and Scott Franklund, President of Legendary Properties Sotheby’s International Realty, is hosting the Sotheby’s Fall 2008 Luxury Real Estate Sealed Bid Auction in Boulder, Colorado.

According to their press release, this luxury property auction will present over $16,000,000 in inventory, with, as far as I can tell, realistic opening bid requirements. These are not the type of properties one usually sees with a mortgage attached, and Mr. Franklund was eager to point out that this is by no means a foreclosure situation.

We feel that an event like this will help stimulate the luxury property sales in our area. We are spending upwards of $100,000 in marketing this event which will bring in buyers from all over the nation and possibly the world. This is not a foreclosure auction. The sellers are luxury property owners who are looking for a shorter sales cycle. Most homes will be available for viewing on dedicated Sundays throughout September and October. Scott Franklund.

One of the properties, Somerset Manor in Niwot, Colorado was previously listed at $7,395,000 - minimum bid is now $5,395,000.

Somerset Manor

Even some one with my rudimentary mathematical skills is able to work that out as a two million dollar reduction. In my opinion, much of the recent drops in sales volumes in the luxury market has been, at least in part, due to sellers holding out for unrealistic prices. It would seem Mr. Franklund has been able to dissuade at least some owners from that course. A far more realistic way of starting the ball rolling again than huge federal bailouts. The auction is by sealed bids only and the deadline is October 15, 2008 at 5pm. For more information on the properties offered, visit this site.

As usual, the news regarding the condition of the luxury real estate market appears at odds with many statements coming from the real estate agencies.

At a recent luxury real estate auction in Fort Lauderdale, Florida, properties were quickly taken off the block after receiving no bids. One penthouse condominium in Williams Island for example, was previously listed for $5.6 million, went on the block for $5million, was dropped to $2.5 million and immediately withdrawn.

Those properties that did sell, invariably sold for much less than previously offered. Two bay-front properties on Venetian Islands sold for $500,000 and $1 million – the last time they changed hands, back in 2005, the same properties sold for $2 million and $2.75 million respectively.

Yet at the same time, The Star quotes SKY Sotheby’s president Chad Roffers as saying: “The high end is resilient. Certainly the market has corrected since the peak of 2005. What we are seeing is that quality waterfront inventory is holding value." Which rather contradicts the prices achieved.

Unsurprisingly, many of the sales went to foreign buyers.

In London, much the same story unfolds. Prices realized and analysts opinion are in sharp contrast to the real estate agents opinions.

Savills are predicting that the amount of money available to invest in high-end properties will fall by as much as 65% this year. This thanks to smaller bonuses in the city as the banks start to feel the effects of mortgage write-downs in the USA sub prime market. Traditionally, London’s luxury property market has relied heavily on bonus laden financial brokers propping prices up.

Having said that, Knight Frank claims to have sold 40 of the 80 available apartments in the One Hyde Park development. Once again, the bulk of the sales were to foreign buyers – of the 40 sold so far, 13 were to Russian buyers, 10 to Middle eastern and just 8 to British buyers. One would have expected them all to have sold by now in a strong market, but the average sale price is around £20 million.

Donald Trump hit the news recently also. A recent press release from "Ultimate Homes," said:  Donald Trump’s  much-publicized Palm Beach mansion has a new price: $100 million. Along with the $25 million price reduction, Trump also turned the listing over to Lawrence Moens, a Palm Beach broker who has a reputation as a low-key but highly effective dealmaker.

When it debuted on the market in 2006, the estate’s $125 million price tag made it the most expensive property for sale in America and generated a great deal of attention. It took the No. 1 spot in that year’s edition of Ultimate Homes, and, most importantly, it was one of the first, if not the first, to break the $100 million price point.

While the media always has focused on price, what makes this estate so important, according to Moens, are the 6.75 acres and almost 500 feet of unobstructed oceanfront. Also significant is the location itself, which he describes as “prime, one of the most desirable places on the Eastern seaboard.”

Another change, according to Moens, is the potential that the property could be sold as two separate parcels or a single compound.

The price change means Trump’s estate is no longer one of the five most expensive residential listings in the country, although it is still in the top 10. Unique Homes is currently compiling its annual list of the 1,000 most expensive properties on the market in the country. This list is published in a magazine called Ultimate Homes, which also will include the 10 priciest listings in each state. Ultimate Homes is a new magazine, launched this May.

It was the best of times, it was the worst of times, it was the age of wisdom, it was the age of foolishness, it was the epoch of belief, it was the epoch of incredulity, it was the season of Light, it was the season of Darkness, it was the spring of hope, it was the winter of despair, we had everything before us, we had nothing before us, we were all going direct to heaven, we were all going direct the other way - in short, the period was so far like the present period, that some of its noisiest authorities insisted on its being received, for good or for evil, in the superlative degree of comparison only.

Charles Dickens (1812-1870) A Tale of Two Cities

When Mr. Dickens wrote this, I very much doubt he was thinking 150 years in the future – or indeed about the property market in Florida, but if I was a believer in that sort of thing, I could have called his words prophetic.

2007 saw record prices in some segments of the market. This waterfront teardown in the Harbor Beach neighborhood in Fort Lauderdale, for instance, sold for a record breaking $8,500,000 back in April. The property sits on a 33,000 sqft, point lot facing the Intracoastal and includes 400ft of fully equipped dock space, and is beside one of the deepest canals, allowing access by all but the largest megayachts. Interestingly though, it doesn’t appear to have been torn down yet.

But Florida also saw one of the highest foreclosure rates in the country, along with knock down prices on all but the highest level real estate, with as much as 50% being wiped off the value of some condominium developments.

Many of the most recent sales have been through auction houses and it is fair to say this has been mostly mid-priced ($150,000 - $400,000 range).

Now the acid test for luxury real estate in Florida. Thanks to slow sales and a glut of property, both the auction house Sotheby’s and Coldwell banker are taking the unusual step of arranging a luxury property auction.

More than $200 million worth of property will hit the auction block in Florida on March 28th and we will see just how robust the luxury property market is in Florida.

Some of the properties have been previously listed for as much as $23 million.

Although the price for this property, 1 Isla Bahia – Harbor Beach is actually listed as previously $22,999,999, which I seem unable to not find funny. I don’t think that ploy works quite the same as it does when you are attempting to keep the price under five bucks at $4.99

Now Only $22,999,999 Save $1 !!!!!!!!!!!!

The auctioneers website is here, and they have 4 pages of listings, with luxury properties from Miami, Ft Lauderdale, Palm Beach county, and other areas.

Along with the rest of the luxury real estate world, we wil be extremely interested to see the prices realized.