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While the turmoil in the mortgage industry has led to a housing slump, sales of homes of $1 million or more have risen.

Amid housing slump, high-end boom

Homes for $1m and up selling briskly in state

While most of the Massachusetts housing market is slumping, one sliver is booming: million-dollar properties.

Sales of single-family homes priced at $1 million and above have surged 9.6 percent so far this year, compared with a 5 percent decline in sales of homes under $1 million, according to Warren Group, a Boston publisher of real estate data and news.

"People worth $5 million or $10 million are buying houses," said Dan Kaplan, editor of New England Home magazine, which will highlight the luxury-home trend in an article planned for the November issue.

"They are not letting little market blips bother them," he said.

Once such buyer was Trudy Sullivan, the new chief executive of Talbots Inc., whose house hunting this summer came down to location, not price. Relocating from Manhattan, where she was president of Liz Claiborne Inc., she and her husband, Michael Sullivan, a private art dealer, wrestled with whether to buy in Hingham, near Talbot's offices, or in Boston. Life in the city won. The Sullivans purchased a $5 million townhouse on Beacon Hill that had originally listed for a little under $5.475 million.

The Hingham house was larger and "Boston's not an inexpensive city," she said. But the couple chose Boston in part, she said, because "my husband's lifelong ambition was to own a townhouse on Beacon Hill."

Real estate analysts said one explanation for the strong sales in this upper end of the market is that wealthy homebuyers are less affected by economic cycles that influence what other shoppers can afford, and those with less money may wait out a downturn to see how low prices go.

Wealthy buyers, by comparison, often enter the market for "lifestyle" reasons -downsizing, retirement - or for career advancements that include a bigger paycheck.

During the housing recession in the early 1990s, prices for expensive houses fell more rapidly than the rest of the market, then hit bottom and recovered first, said Wellesley College economics professor Karl Case.

But Patrick Newport, US economist for Global Insight, a Waltham research firm, said it is unclear if that is occurring today. Sales of luxury homes in the current market may be rebounding because wealthier buyers are insulated from problems affecting the mortgage industry that have further depressed the broader market, he said.

About one in three people who buy a house for more than $1 million pay cash, Kaplan said. Many of these buyers are executives in the state's still-strong economic sectors, particularly biotechnology, high-tech, and finance, where stock options awards and bonuses are common.

The boom is not confined to downtown Boston's posh addresses or the otherworldly Nantucket market. Brookline was the location for 2007's marquee transaction: Los Angeles Dodgers owner Frank McCourt Jr. finally sold his home for $16 million, after three years on the market, to John W. Henry, principal owner of the Boston Red Sox.

Westwood had the fourth-highest sale price this year, at $6.5 million, followed by Weston, at $6.2 million.

"There's still plenty of money out there," said agent Miceal Chamberlain of Historic Homes Inc. in Newton, where 121 homes priced at more than $1.5 million have sold so far this year - 21 more than in all of 2006.

And at the same time that overall house prices across the state have fallen - 4.7 percent - the median sales price in the $1 million-plus category has risen 3.7 percent, Warren Group said. This marks a turnaround in the luxury home category from 2006, when sales fell 10 percent and the median price slipped 1.8 percent. And the soft market, even at the high end, in 2006 may have helped make luxury homes more attractive this year, agents said.

High-priced homes do take longer to sell because there is a smaller pool of buyers. The average house under $1 million currently on the market has been listed for 100 days, compared with 139 days for $1 million and up, according to MLS Property Information Network.

The high-end boom is not confined to Massachusetts. California, one of the nation's largest housing markets, is laboring through a downturn: Sales plunged more than 20 percent during the second quarter, and the median price for homes under $500,000 dropped 2.6 percent; yet home prices above $500,000 gained 3.7 percent, according to the California Association of Realtors.

"I don't think it tells you much about what's going to happen," Newport said. "It's just a different market," he said.

Warren Farrell, 72, and wife Lois, 68, recently moved into a $1.3 million condominium in The Woodlands at Belmont Hill, on grounds formerly owned by McLean Hospital. They spend summers at their Lake Winnipesaukee home and wanted a primary home that required less maintenance than the Belmont house where they raised three sons. But Warren Farrell, a former Smith Barney executive, said the couple was not looking to downsize: Their 3,400-square-foot unit is roughly the same size as their old house.

Lois Farrell said the advantage of moving was, "I don't have to do the gardening, don't have to pull the weeds, and we can just pull right into the garage and go right into the house."

Cohasset, just nine square miles on Boston's South Shore, is packed with luxury homes - and $1 million doesn't buy much there anymore.

Driving along Atlantic Avenue and Jerusalem Road, with its broad ocean views, one day last week, broker David Drinkwater, pointed to one recent $1 million-plus sale after another. The homes were a combination of "do-overs" - expansions by the new owners that preserved remnants of the original houses - and "tear-downs" by buyers who razed the existing structures to build historically accurate homes.

On Jerusalem Road, he pulled up to a tiny, one-story house with views of picturesque Little Harbor. The house drew a bidding war this year, won by a buyer who saw it as a long-term investment, said Drinkwater, the sellers' agent.

The price: $1.135 million, he said, for "a very small, rustic cottage."

Kimberly Blanton can be reached at

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