What real estate slump?

The Bay Area’s rich are still snapping up high-end properties for record sums. On Friday, a mystery shopper agreed to buy the unfinished penthouse at the Millennium Tower for $11 million. That’s $2,288.81 for each of the San Francisco property’s 4,800 square feet, a range rarely exceeded even when the space is built out - that is to say, when it actually includes walls and finishes.

The buyer, who wasn’t identified per the building owner’s policy, put down $1 million to begin the escrow process.

The deal is further evidence that people are willing to pay ever higher prices for luxury Bay Area real estate, particularly downtown San Francisco condominiums, even as thousands of average homeowners are wrestling with plummeting prices and fighting off the specter of foreclosure. High-end homes operate in their own universe because the availability is limited and the very wealthy are largely immune to the main factors dragging down the broader market.

“On the upper end, it has definitely gone up,” said Alan Mark of the Mark Co., a marketing and research firm for the condominium industry. “There’s a deep market for large, high-end condominium residences that have great views.”

New York-based Millennium Partners is developing the $500 million, 60-story glass structure at 301 Mission St., which is scheduled to open in spring 2009. Sales began in November and despite an average price tag of $2.5 million, the company is well ahead of its goals, said Richard Baumert, managing director with Millennium.

“The momentum has been pretty strong since the day we opened,” he said.

And not just at the Millennium.

During the fourth quarter of last year, 40 condos and single-family homes traded hands in San Francisco for more than $3 million - adding up to a total of $213.8 million in real estate sales, according to Pacific Union GMAC Real Estate. That’s up from 22 sales for $119.4 million a year earlier.

The trend has continued into the new year:

– A six-bedroom, five-bath home listed for $6.45 million in Ross went into escrow in January.

– A three-bedroom, two-bath property on 113 acres in Calistoga sold for $6 million on Feb. 7.

– An eight-bedroom, 9 1/2-bath house in Hillsborough traded hands for $11 million. It went on the market Jan. 28, sold on Jan. 29 and closed on Feb. 5.

– Units that sold at the St. Regis Hotel and Residences in San Francisco two years ago are trading for 50 percent more today.

These deals are occurring even as the broader market tumbles, with resale homes in the nine-county Bay Area falling 43.7 percent in January and median prices dropping nearly 9 percent from a year earlier, according to DataQuick Information Systems.

The high-end market is experiencing the opposite trend primarily because things like tight credit, prices that outpace incomes and subprime mortgages aren’t of particular concern to the wealthy, who can often pay all cash, said Avram Goldman, chief executive officer of Pacific Union.

And while there is a glut of inventory in markets hammered by foreclosures, the supply of very high-end homes is extremely tight across the region. A five-year wait for a premium property in a tony San Francisco neighborhood is not uncommon, said Malin Giddings, who specializes in upscale San Francisco real estate for TRI Coldwell Banker.

“We have so many more buyers who have money than we have inventory,” she said. “I don’t care how much money you have, I cannot make people move.”

On top of that, more people are becoming wealthy, as the rich are getting richer - creating additional demand that pushes prices higher.

The top 1 percent of California’s taxpayers saw their income jump 107.7 percent from 1995 to 2005, after adjusting for inflation, according to a California Budget Project report last year. Similarly, Forbes reported late last year that the collective net worth of the individuals on its 400 richest list grew $290 billion from the prior year to $1.54 trillion.

“The affluence in the U.S. is the greatest it has ever been,” said Richard Welty, president of Welty Capital Management in Lafayette. “They’re taking (money) out of investments and buying that dream house.” 

Source: San Francisco Chronicle