Southern California felt the downturn as well.
Dana Treister, a real estate attorney with Greenberg Traurig in Los Angeles, says the problems with properties there were a function both of timing and location. For instance, after the Staples Center opened in downtown L.A., a slew of high-end luxury condominium developments followed in the early- to mid-2000s and there just wasn't the kind of demand that had been anticipated.
"Downtown Los Angeles just built up too fast, and it was largely urban professionals moving in who couldn't afford the prices," Treister says.
On the other hand, areas like the Pacific Palisades, Beverly Hills, Pasadena and West Hollywood saw much smaller drops in value-about 10%. Any reductions are now at least back to 2007 levels.
What happened to ultra-high-end properties in Southern California, which typically sell to people in the entertainment industry, tends to be true for high-priced homes wherever they are: They continued to fare relatively well throughout the recession because there are not as many properties in this class and because the buyers can afford to not worry about the economic ills that concern everyone else.
"When you can afford to buy a home for $10 million, you're not as sensitive to the changes in the economy, so those kind of properties are still holding up-though there aren't as many of those homes," Treister says.
That's what happened in New York City, where within the last six months several sales records were broken, and then broken again.
"New York responded very differently than the rest of the country" to the economic crisis, says Hall Willkie, president of Brown Harris Stevens in Manhattan. "It is unique. It's a world capital. There is a great deal of demand and never a lot of supply."
Brown Harris Stevens represented both buyer and seller in the first record-breaking sale: A Russian billionaire bought a 6,700-square-foot penthouse on Central Park West last February for $88 million, shattering the prior record of $53 million, set in 2006. While the penthouse at One57 sold three months later for $2 million more, or $90 million total, the Central Park West apartment formerly owned by Sanford Weill, founder of Citigroup, still cost more per square foot-$13,000.
"Very unique properties, trophy properties, have done extremely well," Willkie says.
Manhattan never had the kind of overbuilding that other areas did, according to real estate experts. In fact, many say there remains a dearth of true status properties in the city, as over the last several years it was virtually impossible to get financing to put new buildings up.