Billionaires buy luxury homes despite climate risks and high mortgage rates

At a time when high asking prices and mortgage rates have made homebuying more challenging than ever, one distinct market sector is still selling robustly: megamansions that only the ultrawealthy can afford.

One recent sale of note: In June, billionaire James Jannard, the founder of Oakley sunglasses and apparel, sold his massive estate in Malibu for $210 million, setting a California record. While the buyer’s identity remains undisclosed to the public, this mystery owner now boasts the most expensive property in the state, surpassing JAY Z and Beyoncé, who paid $190 million for a Malibu property last year.

In another noteworthy sale this June, Laurene Powell Jobs paid $94 million for a 9,810-square-foot oceanfront Malibu property with a five-bedroom, three-bath home built in 1956. She already owned two adjacent properties in the Paradise Cove area; a Google Earth photo shows it under construction.

While Malibu remains popular among wealthy homebuyers, other sought-after locations include San Francisco, Aspen, New York City, Miami, and Palm Beach. Each place has recorded sales among the year’s highest-priced transactions, all over $50 million.

Despite climate disasters and economic challenges affecting most of the U.S. housing market, America’s ultraluxury market continues to thrive. Wealthy buyers operate under different circumstances that insulate them from issues deterring average homebuyers.

“Homes in coastal areas such as Palm Beach are at risk of property damage due to climate-related events,” says Realtor.com senior economist Hannah Jones. “However, ultraluxury home shoppers continue to flock to these areas.”

Margit Brandt from Premier Estate Properties in Palm Beach notes that new FEMA regulations and insurance provider requirements have led developers to meet higher standards for wind and flood protection. Wealthy homeowners can afford these advanced building codes.

Timing also plays a role; many affluent individuals avoid hurricane season by relocating temporarily. “Most Palm Beach residents skip hurricane season [then fly down] after Thanksgiving,” Brandt explains.

Beach erosion is another concern for coastal buyers. “Homes with newer concrete foundation systems command a premium,” says Sandro Dazzan from The Agency Malibu. For fire-prone areas like Malibu, buyers seek homes with fire suppression systems and will hire teams for brush clearance and planting fire-resistant vegetation around their estates.

“Ultrawealthy buyers are flocking to Malibu because of our beautiful rural environment and the incredible Santa Monica Mountain range,” Dazzan adds.

Wealthy buyers prefer properties that require no immediate renovation or improvements. “The most important factors we see Palm Beach buyers looking for are instant gratification or turnkey products,” shares Brandt.

New York City’s Central Park Tower exemplifies this demand; one unit priced at $150 million has attracted interest from wealthy buyers worldwide but has yet to sell.

Affluent buyers often circumvent high mortgage rates by leveraging their sizable equity portfolios within banks or paying cash outright. "Many feel times of turmoil give them a better opportunity to use their cash to negotiate a better deal," says John Antretter from The Agency in NYC.