by Matt Woolsey

 little over two years ago, when Donald Trump listed Maison de L’Amitié in Palm Beach, Fla., for $125 million, it was a sign of the times.

Real estate prices were on the rise, and even though it was $50 million more than the next-highest listing, there was a sense that Trump would get his price. After all, everyone else in America was getting his.

 little over two years ago, when Donald Trump listed Maison de L’Amitié in Palm Beach, Fla., for $125 million, it was a sign of the times.

Real estate prices were on the rise, and even though it was $50 million more than the next-highest listing, there was a sense that Trump would get his price. After all, everyone else in America was getting his.

Once again, Maison de L’Amitié points to the state of the housing market. In March, Trump knocked $25 million off the price, the biggest discount ever for a single residence not related to bankruptcy proceedings.

But that hasn’t pulled other sellers off the $100 million-plus ledge. At the top of our list this year is a $165 million Beverly Hills, Calif., mansion once owned by William Randolph Hearst; a Jacobean manor on 40 acres in Greenwich, Conn., and a Los Angeles château, commended by former French President Jacques Chirac for its architecture, both priced at $125 million; and perhaps the finest property in Nevada’s Lake Tahoe on 210 acres of land with its own private cove. Price tag: $100 million.

The ultramodern Portobello estate in Corona del Mar, Calif., which has a listing price of $75 million and was, in 2006, the second-most expensive home in the country, rounds out the list. Even though it has eight bedrooms and 30,000 square feet of interior space, not to mention its own private beach, it barely made this year’s elite group. his price.

To compile our list, we spoke with brokers and consulted listing agents and real estate appraisers and scoured real estate listings. Most of the homes on this year’s list are newcomers that have entered the market with high eight-figure or $100 million-plus prices. Estates like Three Ponds in Bridgehampton, N.Y., the Pierre Penthouse in Manhattan and the Portobello–which in previous years seemed excessive at $70 million to $75 million–are now second tier when it comes to price.

Our list did not include land properties. The $115 million Bell Ranch in San Miguel County, N.M., boasts an impressive 10,832-square-foot, eight-bedroom main house, and its own airstrip. But at 250,000 acres, it offers buyers mostly land. That, and 3,200 Red Bell cows and a horse herd.

We also didn’t include private listings, also called pocket listings, because they’re quietly shopped around among elite buyers. One rumored example: Prince Bandar bin Sultan of Saudi Arabia’s $135 million Hala Ranch in Aspen, Colo. It had been on the market for two years but is no longer publicly listed.

Measuring the Market

While sellers nationwide are suffering, the highest segment of the luxury market, in trophy property corners like Palm Beach, Fla., Beverly Hills, Calif., or the east end of New York’s Long Island, has performed well. Setting the tone for this year: a $60 Southampton, N.Y., buy to an unknown buyer. And there’s John Thornton, a former Goldman Sachs partner and chairman of the Brookings Institution, who last month bought a $81.5 million Palm Beach spread.

“Inventory is relatively tight for trophy-type properties,” says Jonathan Miller, president of Miller Samuel, a Manhattan real estate appraisal firm. “It’s a contrarian element to some of the slip-off in sales, because the bulk of the market is down largely due to a weaker economy.”

Tranquility $100 million Lake Tahoe, Nev. Owned by Joel Horowitz, co-founder of Tommy Hilfiger

A recent survey of wealthy Americans, or those with more than $1.35 million a year in discretionary income, done by American Express Publishing and Harrison Group, found that high-end home buyers feel this year is a great one to buy property.

One reason has to do with financial market conditions. The Dow Jones industrial average is down 5% this year, and the Standard & Poor’s 500 has dropped 10%. Real estate in prime locations allows buyers to hedge against the risks of a sagging market and a sinking dollar by putting their money into a less volatile asset, similar to the reasons that people invest in gold. The highest end of the luxury market, above $20 million, has not softened like the general market.

“Over the long haul, quality real estate has never been a loser,” says Jim Taylor, vice chairman of the Harrison Group, a marketing and strategic research firm in Waterbury, Conn. “If you’ve paid in cash, you’re balancing your portfolio against market risk. They’re not printing any more land, even if they are printing more money.”

Miller says that the upper end of the Manhattan market, or homes $8 million and up, has seen its inventory contract by 35% over the last year. “If we were having this conversation six to nine months ago, we’d say it was Wall Street bonuses,” he says, “but the weak dollar has certainly played a role.”

In addition, sellers like Trump, with his $25 million price reduction, are increasingly flexible.

The Portabello Estate $75 million Corona del Mar, Calif. The unique design on this Southern California waterfront mansion resembles a nautilus shell

“The resistance has lessened,” says Nelson Gonzalez, a broker at Esslinger-Wooten-Maxwell in Miami Beach. “Smarter sellers are dropping their prices, and buyers are coming up a little bit more to make deals.”

He says in an elite enclave of the Venetian Islands, in Miami Beach, where one will often find sales of $20 million and up, there have been more sales in the first quarter this year than all of last year combined. In 2007, there were 13 total waterfront sales. Through the first quarter this year, 12 waterfront properties have closed or are in contract.

Whether that pickup in high-end activity means this will be the year of the $100 million sale is anyone’s guess. We’ve been waiting two and a half years.

By Les Christie, CNNMoney.com By Les Christie, CNNMoney.com

NEW YORK (CNNMoney.com) — With prices crashing around the nation, home price affordability has improved dramatically in many U.S. cities.

As a result, 53.8% of all new and existing homes sold nationwide during the first three months of 2008 were affordable to families earning the median household income of $61,500, according to the latest Housing Opportunity Index released Tuesday by Wells Fargo and the National Association of Home Builders (NAHB).

That’s up from 44% during the first three months of 2007 with home prices the most affordable they’ve been since the three month period that ended June 30, 2004.

“Three factors combined to substantially increase housing affordability,” said NAHB president, Sandy Dunn, in a press release accompanying the report. “Mortgage rates returning to near the record low levels of a few years ago, a $2,500 rise in family income nationwide (from 2007 to 2008) and lower house prices.”

Real Estate Survival Guide

Home prices dropped about 8% compared with a year ago, according to NAHB, but that doesn’t mean that buyers are flocking back to the market.

“This measure can only take you so far in implications for the market,” said Dave Seiders, NAHB’s chief economist. “There’re several factors that the index does not capture.”

These include buyer expectations. Many are reluctant to act in falling markets. That sentiment can contribute to market overshoot, according to Seiders, in which prices fall lower than would be their logical bottom.

Richard DeKaser, who, as chief economist for national City Corp., runs his own affordability studies, pointed out that three main factors influence housing market trends: demographics, like more families moving into an area attracted by jobs; sentiment, the perception that the housing market is a good investment at any point in time; and affordability.

“While affordability is an important factor that will contribute to recovery of housing markets eventually,” he said, “improved affordability is unlikely to lift markets out on its own.”

Mortgage lenders playing hard to get

The index also fails to capture the tightening of lending standards, which has been quite dramatic during the past 12 months. The index presupposes constant lending standards.

But today, lenders are requiring much higher down payments, better financial documentation and higher credit scores than they did during the boom, cutting back on the number of potential buyers.

California has been particularly hard hit by a liquidity squeeze in jumbo loan markets. These mortgages of greater than the $417,000 cap limit that Freddie Mac and Fannie Mae imposed (now temporarily raised to $729,250) are especially important to high-priced markets.

“Jumbo markets had essentially shut down, ” said Seiders, “and many California markets depend on jumbo loans.” These are getting a little easier to find but they still cost a full 1 to 1.5 percentage points higher than other loans.

That has helped make Los Angeles, the least affordable metro area in the United States, more affordable than last year. But still, despite much lower home prices, to a median $412,000 from $525,000, only a little more than 10% of homes sold during the first quarter of 2008 were priced low enough so that households earning the median income of $59,800 in the area could buy.

That, however, is a change from a year ago when only 3% of Los Angeles area homes sold were affordable to the average Joe.

The affordability improvement was even greater for Santa Ana in Orange County, Calif. Helped by a median price drop to $470,000 from $610,000 a year ago there, 17.4% of homes sold were affordable, up from 4.4% during the first three months of 2007.

In San Diego, home affordability rose to 25.2% from 9.4% as prices dropped to $368,000 from $460,000; in Riverside, Calif. affordability went to 26.9% from 9.7% as prices fell to $288,000 from $380,000; and in Stockton, Calif., it soared to 35.5% from 9.7% as prices cratered to $262,000 from 390,000.

Outside the Golden State

The least affordable big city outside California was the New York metro area. There, nearly flat prices - $490,000 this year compared with $500,000 last, led to an increase in affordability to 12.5% this year. Still, that’s better than a year ago, when only 6% of homes sold were affordable. New York is the second least affordable area according to this survey.

As has held true for several years, most of the affordable big cities were in the Midwest with Indianapolis leading the way. Homes sold there during the first three months cost about $106,000, down from $116,000 last year and 90.1% of all households living there earned enough to buy a median priced home, up from 89% last year.

Other affordable big cities include Youngstown, Ohio, where a median home price of $75,000 (down from $78,000) makes 89.5% of homes sold affordable; Grand Rapids, Mich,. where 88.7% of homes sold were affordable (up from 84.5%) and Detroit, where 86.9% of homes were affordable, a statistic that actually fell from a year ago when 87.4% of homes sold were affordable.

Although home affordability improved to its best level since mid-2004, Seiders is not predicting a market turnaround anytime soon.

According to him, with job growth slowing, negative consumer sentiment and tight mortgage lending standards, it could be a while before real estate markets start climbing again.

He’s predicting that housing starts won’t turn upward until early 2009, that home sales will be flat through mid-2009 and that home prices will fall another 10% or so beginning to recover in late ‘09.

by AnnaMaria AndriotisWith home values continuing to plummet across the country, it’s become clear that the real estate meltdown is far from over.

Values for single-family homes in 14 major U.S. cities posted double-digit declines from their respective peaks, according to the Standard & Poor’s/Case-Shiller Home Price Indices, which tracks prices of single-family homes. On a national level, home values are down 12% since December 2006. And according to Beth Ann Bovino, a senior economist at Standard & Poor’s, they could drop another 10% by the end of the year.

“Things are accelerating downwards [and] in most cases the fall gets steeper and steeper every month,” says David Blitzer, chairman of the index committee at Standard & Poor’s.

The biggest culprit for this downturn: rampant speculation on property values during the past several years. “The areas that have seen a huge amount of speculation…are the ones that got nailed,” says Blitzer. “The farther up prices went the farther down they’ve come.” This was especially true in the Sun Belt region. Cities like Las Vegas, Miami and Phoenix, which are popular for either their beaches or deserts, lured investors looking for rental properties that would appreciate in value so they could later sell them to baby boomer retirees for a sizable profit, explains Danielle Babb, a real estate analyst and professor of economics and statistics Northcentral University in Arizona.

Foreclosures have also contributed to the decline in home values. During the first quarter, foreclosures were up 112% from the same period in 2007, according to RealtyTrac, which lists foreclosed properties. As a result, there’s now a glut of homes for sale on the market and a lot of very nervous mortgage lenders reluctant to give out loans.

Here are the five cities that have taken the hardest hit in home values.

Las Vegas

Everyone in Vegas knows that it pays to have Lady Luck on your side. Unfortunately for home buyers, Lady Luck has come and gone. Single-family-home values in Sin City rose a jaw-dropping 135% between January 2000 and September 2006. But then the winning streak ended. Home values have fallen 24.5% from their peak, the largest decline in the nation, says Blitzer.

Of course, the tables could always turn. “It’s still one of the fastest growing cities…and one of the strongest economies in the nation,” says Kendra Todd, real estate broker and host of HGTV’s “My House is Worth What?”

Miami

Miami may be best known for its beaches, nightlife and art scene, but it has recently gained another, albeit dubious, distinction: It’s believed to have the highest number of vacant condos in the country, according to the National Association of Realtors.

It wasn’t just Miami’s condo market that experienced a boom and bust; single-family homes also took a dramatic hit. Speculators who couldn’t afford to invest in Miami’s pricey luxury condos bought up the more affordable single-family homes in the city, only to abandon them when things got rough, says Standard & Poor’s chief economist, David Wyss. That’s helped push values of single-family homes 22% lower. “[Miami] doesn’t have quite the biggest decline, but it’s dropped very far very fast,” says Blitzer.

Phoenix

Tumbleweeds aren’t exactly taking over the streets of Phoenix, but the city has seen quite an exodus from a couple of years ago when speculators and real estate developers descended on it en masse. More than 67,100 single-family homes were built in Phoenix between 2000 and 2006, according to the Census Bureau, with home values rising by 127%.

Once home values started to unravel, however, speculators started abandoning their rental and investment properties. “People will go to much longer lengths to avoid defaulting on a primary residence than on a secondary home,” says Wyss. Now, home values are down 24% from their peak.

Los Angeles

Not only has suburban sprawl added to L.A’s traffic problems, but it’s also a big reason home prices here have fallen by 22% since their October 2006 peak.

Homes that were located as far away as a one- or two-hour drive from the city’s center were being pitched to buyers as properties whose values would appreciate as fast as those in the city, says Babb. However, that never happened, she says.

San Diego

Strong job growth, great weather and a smattering of palm trees: Who wouldn’t want to live in San Diego? But what makes a place desirable also tends to make it more expensive. Home values here rose by 150% between January 2000 and December 2005. At its peak, this city had the highest ratio (14 to 1) of median home prices vs. median incomes in the country. Homes here were worth about 14 times the amount of money owners made each year, says Wyss. The national average was 3.4 to 1 — even at the peak of the boom in 2006, he says.

“The expectations for this city — that it was employing rapidly and that everyone wants to move here — got way too high,” says Wyss. Home values are now 24% below the peak.

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