• Homeownership rates in the US continue to fall below potential. 
• But rising rates aren't weighing on demand for homes — even for millennials.
• It is possible millennials are not rejecting homeownership, but rather delaying it.

As we reflect on our country’s recent Independence Day commemoration, we find that the desire to achieve the American dream of homeownership still exists. Because, while the U.S. homeownership rate remains close to half-century lows, demand is strong, especially among millennials. In fact, results of our Real Estate Sentiment Index survey of title agents and real estate professionals conducted in the second quarter of 2018 showed nearly 87 percent of first-time home buyers were in the prime home-buying age of 26 to 35, which corresponds with the ages of millennials.

When considering homeownership rates, it’s important to note that traditional measures do not account for shifts in underlying demographic or economic factors. Instead, they report only the share of households that are homeowners. Analysis based on these traditionally calculated homeownership rates has resulted in mistaken conclusions that are often propagated as conventional wisdom. We developed our annual Homeownership Progress Index (HPRI) to provide a more in-depth look into the changes in homeownership rates over time by accounting for the impact of critical lifestyle, societal and economic trends that influence the likelihood of renting or owning a home. Understanding these homeownership characteristics and tracking how they change over time allows us to measure potential homeownership demand.

Homeownership Rate Continues to Underperform Potential

The figure below shows the actual homeownership rate versus potential homeownership demand represented by the HPRI. In years past, potential homeownership demand was greater than the actual homeownership rate. This was largely due to baby boomers making the lifestyle and economic decisions that drive homeownership demand, notably settling down to form households of their own. From 1984 to 1986 and again in 1992, the actual homeownership rate was at or above the potential demand. This was most likely a result of innovations in mortgage finance, and the economic boom of the 1990s. In the late 1990s to the early 2000s, the potential demand again peaked above the actual homeownership rate. Achieving the dream of homeownership may have been restricted then by access to credit or the down payment necessary to purchase a first home.

The housing crisis brought an interesting change, as the homeownership rate exceeded the potential demand from 2008 to 2012. Speculation, easy access to credit and exuberance during the housing boom of 2004-2007 spurred the homeownership rate to record highs. As the housing market turned in 2008 and economic fundamentals supporting potential homeownership demand decreased in subsequent years, the homeownership rate exceeded potential homeownership demand, with the gap reaching almost 9 percent at its peak in 2010.

This contrasts sharply with the dynamic observed in 2017, the most recent year of available data to estimate the HPRI. In 2017, potential homeownership demand grew by one percent over the prior year, while the actual homeownership rate underperformed potential demand by almost 9 percent. So, what could be the cause of this?

Millennial Demand Yet to Peak

One likely answer rests with the largest generational cohort – millennials. Millennials are often referred to as a “renter generation,” because they have prioritized furthering their education and thus delayed getting married and having children, which are critical lifestyle triggers to buying a first home. However, the dream of homeownership is far from dead for this age group. Nearly 80 percent of millennials who responded to a recent study by Harvard University’s Joint Center for Housing Studies agreed that homeownership was part of achieving the American Dream. Is it possible that they are not rejecting homeownership, but rather, simply delaying it?

SEE ALSO: We're about to find out if Australia's crackdown on mortgage lending will get even tougher

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NOW WATCH: What happens when you hold in your pee for too long

• Manhattan office property sales fell by more than a quarter this spring.
• This is partly due to a lack of mega-deals from big companies and Chinese conglomerates.
• Meanwhile, plenty of new supply is coming on the market.

In the second quarter, sales of large office properties in Manhattan fell 26% from the same period a year ago. It was the worst Q2 dollar volume in years:

Last year’s Q2 sales – as weak as they’d been – were propped up by the last-hurrah-deal undertaken by a Chinese conglomerate. The $2.2-billion sale of 245 Park Avenue to HNA Group was the sixth largest transaction in Manhattan ever. HNA paid $1,282 per square foot for the tower, which was called “among the highest price-per-pound for this type of asset.” It was the last big Chinese property purchase in Manhattan.

This year, Q1 was propped up by the $2.4-billion sale of Chelsea Market to Google. The deal accounted for over half the total transaction volume in the quarter. The price was a blistering $2,181 per square foot.

“What brought the sales volume down in Q2 was the absence of the high-profile, billion-dollar office deals we’ve become accustomed to in this thriving market,” CommercialCafé, a division of Yardi, said in its report. All Q2 had to show for as its largest office deal was the sale of 5 Bryant Park for $640 million.

With 10 small-ish office deals, no mega-deals from Google and Chinese conglomerates, the quarter was a “disappointment,” according to CommercialCafé:

The price Google had forked over for its trophy building in Q1 ($2,181 per square foot) pushed the average price to a record $1,266 per square foot. But in Q2, the average price fell 16% from a year ago to $867 per square foot, near the lower portion of the range of the past few years:

So volume has collapsed. But prices aren’t exactly crashing. There are no forced sales. Everything is slow and orderly. Hope prevails. And the rationalizing has begun.

“Over the past two years, office sales activity in Manhattan has slowed to a more sustainable level, finally coming down from the highs of 2014 and 2015,” CommercialCafé said.

Meanwhile, everyone is patiently waiting for the next Google to come along, now that the Chinese conglomerates with their murky structure and unlimited funds and their thirst for overpriced trophy projects have been sidelined by unfortunate events – including China’s crackdown on capital flight, a state take-over of some of the conglomerates including long prison sentences for some of the executives, and a blanket prohibition last summer on squandering capital on acquiring commercial real estate, such as office buildings and hotels, in foreign countries.

CommercialCafé used Yardi Matrix data to analyze all Manhattan office transactions recorded through July 2, 2018, of $5 million or more, and larger than 50,000 square feet. In the case of mixed-use properties, only those with over 50% office space were taken into account.

The largest deal in Q2 was the sale of 5 Bryant Park to Savanna for $640 million, by Blackstone and Brookfield Properties, which had acquired the 34-story tower in 2006 as part of a larger deal involving numerous properties across the US.

There was a foreign buyer – but not the kind Manhattan’s office sector has been praying for. It involved the fourth largest deal in Q2. Germany’s second largest bank, Commerzbank, in which the German government still holds a 15% stake as a result of its bailout, paid $333 million for the 400,000-square-foot tower at 222 E. 41st St. The building is leased entirely to NYU Langone Medical Center. The seller was Columbia Property Trust.

And plenty of new supply is coming on the market. In Q1, three properties totaling 1 million square feet were delivered. In Q2, 3 World Trade Center, an 80-story tower with 2.8 million square feet was delivered. While some high-profile companies have leased some space, including McKinsey Group, according to Yardi Matrix data, 1.5 million square feet of office space remain available.

For the remainder of the year, 4.7 million square feet of office space are scheduled to be delivered, including 55 Hudson Yards, a 1.4 million-square-foot 51-story tower.

Now if we could just get our Chinese conglomerates back! They were so much fun!

SEE ALSO: An unauthorized copy of an investing bible that Wall Streeters pay thousands of dollars for was up for grabs on Kindle for $9.99

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• Million-dollar listings have become commonplace in the US real estate market.
• But when you compare the cost-per-square-foot for million-dollar listings across the country, you'll find very different results.
• In Tampa, Florida, $1 million will fetch more than 5,000 square feet, while the same priced home in New York City buys less than 900 square feet.

Million-dollar listings once heralded true luxury for Americans who could afford it, but now more than 4% of all homes across the 100 largest US metros are worth at least $1 million.

Still, how much space seven figures will buy in different parts of the country ranges drastically. A million dollars could fetch buyers as little as 846 square feet in New York City and as much as 5,392 in Tampa, Florida. 

That's according to our friends at Trulia, who rounded listings in the $1 million range for the 25 largest metros in the US by population to find out how home sizes compare. 

Below, check out what a million-dollar listing looks like around the US, ordered from lowest to highest cost per square foot.

SEE ALSO: What a $500,000 home looks like in 25 major cities across America

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Tampa, Florida

Listing price: $999,000

Square feet: 5,392

Price per square foot: $185

Newark, New Jersey

Listing price: $979,000

Square feet: 4,885

Price per square foot: $200

Baltimore, Maryland

Listing price: $989,900

Square feet: 4,570

Price per square foot: $217

• Million-dollar homes are most likely to be found on the East or West coasts of America.
• LendingTree collected real estate data from more than 155 million properties across the United States to calculate which cities have the highest concentration of homes worth $1 million and up.
• Four cities in California have more than 10% of homes valued over $1 million.

America's coasts are bursting with million-dollar homes.

To pinpoint exactly where million-dollar homes are located — and how close they are to each other — LendingTree collected real estate data for more than 155 million properties in the United States. The home values are based on public taxes, deeds, mortgages, foreclosure data, and proprietary local data.

The data shows that expensive properties are more likely to be on the coasts than inland America with the exception of Denver, Colorado. California is home to the top three spots with the most million-dollar homes, thanks in part to the high concentration of startups and tech giants in the area. Four cities in California have more than 10% of homes valued over $1 million, and San Jose is the only place where the median home value (among all homes) is above $1 million.

Below, check out which US cities have the highest share of million-dollar homes in America.

SEE ALSO: What a $1 million home looks like in 25 major American cities

SEE ALSO: Millennials aren't buying starter homes — they're splurging on million-dollar places instead

22. Charlotte, North Carolina

Percent of million-dollar homes: 1.02%

Median value of homes: $187,000

Median value of million-dollar homes: $1,295,000

21. Baltimore, Maryland

Percent of million-dollar homes: 1.07%

Median value of homes: $270,000

Median value of million-dollar homes: $1,214,000

20. Riverside, California

Percent of million-dollar homes: 1.12%

Median value of homes: $332,000

Median value of million-dollar homes: $1,339,000

• The easy environment financial and housing markets have had for nearly a decade are ending.
• Prices will waiver as investors remain in denial and refuse to sell at lower prices.
• But soon that denial will turn to panic, and prices will plummet.

Our good friend John Rubino over at DollarCollapse.com just released an analysis titled US Housing Bubble Enters Stage Two: Suddenly Motivated Sellers.

He reminds us that housing bubbles follow a predictable progression:

• Stage One: Mania -- Prices rise at an accelerating rate as factors like excess central bank liquidity/loose credit/hot foreign money drive a virtuous bidding cycle well above sustainably afforable levels.
• Stage Two: Peak -- Increasingly jittery owners attempt to sell out before the party ends. Supply jumps as prices stagnate.
• Stage Three: Bust -- As inventory builds, sellers start having to lower prices. This begins a vicious cycle: buyers go on strike not wanting to catch a falling knife, causing sellers to drop prices further.

Rubino cites recent statistics that may indicate the US national housing market is finally entering Stage Two after a rip-roaring decade of recovery since the bursting of the 2007 housing bubble:

• the supply of homes for sale during the "all important" spring market rose at 3x last year's rate
• 30 of America's 100 largest cities now have more inventory than they did a year ago, and
• mortage applications for new homes dropped 9% YoY

Taken together, these suggest that residential housing supply is increasing as sales slow, exactly what you'd expect to see in the transition from Stage One to Stage Two.

If that's indeed what's happening, Rubino warns the following comes next:

Rubino's article is timely, as we've lately been seeing a proliferation of signs that the global boom in housing is suddenly cooling. I've also recently encountered similar evidence that the housing market in my own pocket of northern California is weakening, and I'm curious to learn if other PeakProsperity.com are seeing the same in their hometowns.

The Global Housing Bubble

Housing, as they accurately say, is local. Conditions differ from region to region, making generalizations of the overall market difficult.

That said, the tsunami of $trillions printed by the world's central banking cartel since 2008 clearly found its way into the housing market.

The world real estate market is HUGE, over $200 trillion. That dwarfs the global debt and equity markets. So it's no surprise the central authorities did all they could to reverse the losses the GFC created for property owners.

As a result, many of the most popular locations to live are now clearly in bubble territory when it comes to home prices:

The chart above displays the most bubblicious major cities around the world in red. But it's important to note that the merely 'overvalued' markets denoted in yellow, and even some of the green 'fair-valued' ones, are still wildly-unaffordable for the average resident.

For example, in "yellow" San Francisco, where the median home now costs $1.6 million, prices are well-above the excesses seen during the previous housing bubble:

And in 'fair-valued' New York City, the median household must spend 65% of its annual income on housing alone.

Is it any wonder that 70% of millennials who don't yet own a home fear they'll never be able to afford one?

Signs Galore Of Topping Markets

At the end of a speculative bubble, it's the assets that are most overvalued that correct first and correct hardest.

So we would expect that as the highest-priced real estate markets fare from here, the general real estate market will follow.

When we take a closer look at what's currently going on with the red-hot real estate markets noted in the chart above, we indeed see evidence supportive of Rubino's claim that the decade-long Stage One mania may now be ending.

Here's a spate of recent headlines about these cities:

• Toronto: Prices clearly peaked in early 2017. Prices are now down 3% vs last year.
• Syndey: Compared to last year, prices are now down 5% and supply has ballooned 22%.
• Stockholm & Vancouver: Over a recent 6-month period, prices in the luxury property market fell 9% and 7.6%, respectively.
• New York City: In Q1 2018, prices were down 8% YoY and sales were down 25%. NYC's luxury properties fared even worse.
• San Francisco: After hitting a record price high in January, the city has seen a rare spring decline in prices, while rents across the SF Bay Area are starting to "cool off"

Sure looks like Rubino's predicted Stage Two symptoms of rising supply and stagnating prices.

Local Signs, Too

As mentioned, I live in northern California, quite close to Santa Rosa. 

Things here aren't as nuts as they are in San Franscico; but it's still a moderately-affluent region with lots of second homes. It's one of the semi-frothy areas I'd expect to see cooling off in first should there be a downwards turn in macroeconomic conditions.

Located less than an hour north of San Francisco, residential housing prices here have roughly increased 2x over the past six years as the Bay Area has boomed. Supply has been in chronic shortage, exacerbated by the loss of thousands of structures burned during last October's destructive Tubbs fire.

But recently, for the first time in many years, realtors here are beginning to talk of a softening they're seeing in the local housing market.

Median sale prices dropped from May to June, which is counter to previous years. And several towns are seeing year-over-year declines in median price -- something unheard of over the past 7 years.

Meanwhile, the days-on-market ratio for properties is beginning to creep up.

Of the greatest concern to the realtors in my area: bidding wars are no longer happening. Houses are selling either at or below asking prices now. That's a *big* development in a market where houses have routinely sold for $50-100K+ above the listing price.

In a similar vein, I'm hearing evidence of the softening rents down in San Franscico and the East Bay (Oakland/Berkeley). Wolf Richter has done a good job chronicalling the substantial volume of newly-constructed units that have recently hit the market threatening to depress rents, and I've heard from a multi-family unit owner down there how landlords in the area are now finding their rents ~$500 too high for the market to bear.

This is all early and anecdotal data. It's too little at this point to claim definitively that my local housing market has entered Stage Two.

But I'm curious to hear from other PeakProsperity.com readers. What are you observing in your local markets? Are you seeing similar signs of concern?

Please share any insights you have in the Comments section below. Collectively, we may be able to add clarity, in one direction or another, to Rubino's hypothesis.

Prepping For Stage Two

Whatever the timing, Stage Two is an inevitability for today's ridiculously-overpriced real estate markets. It's not a matter of if it (as well as Stage Three) arrives, but when.

Given the data above, I think Rubino is correct in his assessment. Or at least, correct enough that prudent action is warranted today.

This makes even greater sense when considered along with the current trends of rising interest rates and quantitative tightening. Remember, home prices and interest rates have a mathematically inverse relationship: as rates go up, home prices must go down (all else being equal). And as central banks start withdrawing in earnest the excess liquidity that inflated property values to their current nose-bleed heights, expect further downward pressure on prices.

To drive the urgeny home even harder, we haven't even yet talked about the damage an economic recession and/or a painful correction in the financial markets would wreak on the real estate market. With the current expansion cycle the second-longest on record and our all-time-high markets looking increasingly vulnerable, it seems very unlikely we'll avoid at least one of those crises in the near to mid-future.

Here are worthwhile steps we recommend at this point:

• Consider selling: If you're a homeowner and are not committed to remaining in your property for the next decade+, do some scenario planning. If prices fell 20%, how much of a financial and emotional impact would that have on you? If you have substantial equity gains in your home, Stage Two is the time to protect them. If you have little equity right now, make sure you're fully aware of the repercussions you'll face should you find yourself underwater on your properity. What will your options be should you lose your job in the next recession? Whether to hold, or sell now and rent, is a weighty decision; and the rationale differs for each household -- so we strongly recommend making it with the guidance of your professional financial advisor.
• Raise cash: The vicious cycle that begins as Stage Two transitions into Stage Three is deflationary. Lower prices beget lower prices. During this period, cash is king. By sitting on it, your purchasing power increases the farther home prices drop. And when the dust settles, you'll be positioned to take advantage of the resulting values in the real estate market. We've written at length about the wisdom of this strategy given current market conditions, as well as how, while waiting for lower prices, you can get 30x the return on your cash savings than your bank is willing to pay you, with lower risk. Our recent report on the topic is a must-read.
• Educate yourself: Yes, real estate is overpriced in a number of markets. But it has been and will remain one of the best ways available to the non-elites to amass income and tangible wealth. And as mentioned, when the next Stage 3 brings prices down, there will be value to be had -- potentially extreme value. If you aren't already an experienced real estate investor, now is the time to educate yourself; so that you'll be positioned to take informed action when the time to buy arises. Our recent podcast interview on Real Estate Investing 101 is a good place to start.

In Part 2: The Case For Starting To Build A (Small) Short Position, we conduct a similar analysis into the overvaluation and growing vulnerability of the financial markets (which are highly likely to correct much faster, sooner and more violently than the housing market), including the details on a recent short position we've started building.

The tranquil "free ride" the financial and housing markets have had for nearly a decade are ending. The string of easy gains with little effort are over now that the central bank money spigots are turning off at the same time the "greater fools" pocketbooks are tapping out.

For a brief time, prices will waiver, as investors remain in denial and refuse to sell at lower prices. But soon that denial will turn to panic, and prices will plummet.

Make sure you're positioned prudently before then.

SEE ALSO: Fed Chairman Jerome Powell discounts the risks of a trade war, says economy remains strong

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• San Francisco's housing market is now commonly referred to as being in a "crisis."
• More than 60% of renters are in rent-controlled units, and even those have become less affordable.
• The San Francisco Planning Commission examines the situation in a new 88-page report.

It’s called “Housing Crisis” for a reason.

When we discuss the insane San Francisco housing market, it’s usually in terms of median asking rents ($4,680 a month for a 2-bedroom), the median single-family house price ($1.7 million), the median condo price ($1.2 million), or the Case-Shiller Home Price Index’s 11% year-over-year surge. As different as the data may be, all of the data agrees: San Francisco is a horrendously expensive place to live. But beneath the summary data hides the complexity of a housing market that is now commonly called the “San Francisco Housing Crisis.”

So for the first time, and to get a better grip on the issues, the SF Planning Commission has prepared a “Housing Needs and Trends Report,” or HNTR (12-page executive summary; 88-page full report). The report “represents more than a year’s worth of effort by both Planning staff and consultants to gather and analyze data,” it says. So here are some Key findings:

San Francisco is a city of renters:

65% of the homes are renter occupied; only 35% of the homes are owner occupied.

Over 60% of all rental units are in “rent controlled” buildings. In SF, rent control only applies to older multi-family buildings. It does not apply to buildings completed after June 13, 1979, and it does not apply to condos and single-family homes that are rented out. In other words, none of the newer housing stock is rent-controlled. Rent control in SF means that when the unit comes on the market, it is rented out at market rent, but annual rent increases from that point on are limited based on a measure of inflation.

Even rent-controlled units are becoming less affordable: of the 160,000 rent-controlled units in 2015, about 100,000 units were rented at rates that would be affordable to households earning less than 80% of the Area Median Income (AMI), down from 140,000 in 1990.

A household of two that earns less than 80% of AMI, according to the Mayor’s Office of Housing and Community Development, currently makes $75,750 or less a year.

The Planning Commission’s report pointed out:

Units rented in the previous 2 years, show the erosion of affordability of the city’s rent-controlled stock. Whereas in 1990 a substantial majority of all recently rented rent-controlled units were rented at rates affordable to lower income households, by 2015, only 10,000 such available units were affordable to those households.

9% of households live in about 33,000 affordable housing units, where rents and sale prices are set so that they’re deemed to be affordable at low and moderate-income levels by SF standards.

San Francisco’s growing density:

• Buildings with more than 5 units account for 52% of the city’s housing units but occupy only 19% of its land area.
• Single-family homes account for 27% of the housing units but occupy 62% of its land area.

And home price increases have far outrun inflation (CPI):

Not lack of supply, but lack of affordable supply:

In 2017, thanks to the construction boom, new construction created about 4,500 new housing units; in 2016, new construction created over 5,000 new housing units; this is way more than double the historical average since 1990 of 1,900 units per year. Practically of them were multi-family buildings.

But of those units built since 1990, 28% are deemed to have been “affordable to low and moderate-income households.”

Cost has an impact on who lives in San Francisco

High costs attract high-income households; lower-income households are leaving:

The number of households earning more than 120% of AMI (for a household of 2 = $113,650) tripled since 1990. And of them, 82% are now high-income households earning 200% or more of AMI (for a household of 2 = $189,400).

The number of “low and moderate-income” households earning less than 120% of AMI (for household of 2 = less than $113,650) dropped more in San Francisco than in the region. “This change may be due to households increasing their earnings or it may be because more of these households have left the city, or a combination of both.”

The number of workers who work and live in SF has reached an all-time high of nearly 500,000.

The majority of the increase in workers in SF has been driven by workers earning more than $100,000 per year – individual workers, not households. “However, workers” – not households – “earning less than $75,000 continue to be the majority of workers in San Francisco.”

But with two of those $75,000-a-year earners into one households, the household makes $150,000.

The number of high-income workers earning 200% or more of AMI has surged by 240% since 1990 with over half of that increase coming since 2000. At the same time, workers earning less than 120% of AMI – an individual worker making less than $99,500 – are leaving. In the chart below, note the increase of workers making 30% of AMI ($24,850). Would that be students? (Click to enlarge).

The report finds that “housing cost burden has increased for renters and owners of all income groups, but very low-income households [less than 50% of AMI, or less than $47,350 for a household of 2] experienced large increases in severe cost burden since 1990. Above-moderate income households now face rent burden, which they did not in 1990.”

Households earning less than 50% of AMI ($47,350 for a household of 2) face a situation where housing costs consume 50% or more of income.

The way people make do in SF is by living together:

“San Francisco exceeded the region in the rate of growth for couple households (without children or other family members) and roommate households,” the report said. “These households are also more likely to be higher income as they are able to combine incomes from multiple working household members.”

This is why San Francisco is a place where people with relatively high incomes can feel squeezed. Earning less than 120% of AMI for an individual worker, thus earning less than $91,200 a year.

SEE ALSO: We're nearly at zero: The US just passed another flashing-red indicator on the way to recession

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• Housing prices are on the climb, and with them, the chance of getting less space for your money.
• With the help of Trulia, we found how much home $250,000 will buy in the biggest city in every state.
• In Wichita, Kansas, $250,000 can buy 3,504 square-foot house, while in New York City it can buy a 900 square-foot co-op apartment.

It's no secret that housing prices in the US are on the climb.

It's getting even harder to afford a $500,000 home, let alone a $1 million home. 

We teamed up with Trulia to see just how far $250,000 — about the cost of an entry-level home when you consider the United States' median listing and sale prices— will get you in the biggest city in every state.

Turns out, home purchasing power can vary drastically depending on where you live. In Wichita, Kansas, $250,000 can buy you a five-bedroom house that's more than 3,500 square feet. For just a little more money, you can purchase a 420 square-foot studio apartment in Washington, DC.

From Denver to New York City, see how big of a home $250,000 will get you in the biggest city in every state, ranked by price per square foot.

SEE ALSO: How much it costs to live in the most expensive zip code in every state

DON'T MISS: 10 hard truths no one tells you about buying a house

Bridgeport, Connecticut

Listing price: $255,000

Square feet: 4,791

Price per square foot: $53

Kansas City, Missouri

Listing price: $250,000

Square feet: 3,560

Price per square foot: $70

Wichita, Kansas

Listing price: $250,000

Square feet: 3,504

Price per square foot: $71

A hunter's paradise is having a hard time finding a buyer.

It's called the Granot Loma, and according to the listing, it may be the largest log-cabin lodge in America.

With a private marina and 5,000 acres of surrounding woodlands, the 26,000-square-foot house was listed for a staggering $40 million in 2015 making it the most expensive house in Michigan.

Bob Sullivan of Northern Michigan Land Brokers formerly had the listing. It is now for sale by its owner for $20 million — a discount of more about 50%.

Keep scrolling for a tour of its taxidermy-filled interiors.

SEE ALSO: Nobody wants to buy this $12.5 million Brooklyn mansion with connections to mobsters and Russian heiresses

Called Granot Loma, this gigantic log cabin sits on the shores of Lake Superior, north of Marquette, Michigan.

It was built and named in 1923 by its original owner, financier Louis G. Kaufman.

Kaufman played a pivotal role in the founding of General Motors, where he was on the board for 20 years.

• Ryan Serhant is the star of Bravo's "Million Dollar Listing" and the head of one of the top real-estate teams in America.
• He moved to New York City in 2006 as a struggling actor and applied skills useful in show business to real estate.
• Good salesmanship isn't about forcing people to buy things they don't want, but guiding them to a choice they're genuinely happy with, he said.
• He explained how he's learned to better balance his priorities in the past year to make himself a stronger leader. 

"Million Dollar Listing" star Ryan Serhant told us how he defines success: "It's not about money. It's not about lifestyle. It's not about building a bigger team or anything. It's that I set goals for myself, and I write them down every year, and if I hit those goals I have been successful that year."

In an episode of Business Insider's podcast "This Is Success," Serhant told us about his unlikely rise from a struggling actor — he even had a hand-modeling gig — to the top of the New York City real-estate world in just about a decade.

The Serhant Team, part of Nest Seekers International, is the top real-estate team by sales volume in New York and No. 2 in the country, according to Real Trends' rankings for 2017. The team closed deals worth $838,237,545 in 2017. Serhant also recently got his own show, "Sell It Like Serhant," and a vlog where he shares the best lessons he's learned.

In September, he'll also be a published author. I had a chance to read a copy of his upcoming book, "Sell It Like Serhant," and it's full of sales tactics anyone can use in their career. We started our conversation with what he considers the fundamental rule of selling.

Listen to the full episode here: 

Subscribe to "This Is Success" on Apple Podcasts, Google Play, or your favorite podcast app. Check out previous episodes with:

• Business coach Marie Forleo
• Skinnygirl CEO Bethenny Frankel
• GOAT CEO Eddy Lu
• Girl Scouts CEO Sylvia Acevedo

Transcript edited for clarity.

Ryan Serhant: People don't want to be sold, but they love shopping with friends. If you can remember that, it'll change the way you go into any sales pitch for the rest of your life. And you won't put on your salesperson's hat. You won't walk up to someone and say, "Can I help you with something?" You'll start every conversation the way you did the first time you met your best friend, right? And every friend we have, at one point in time, started as a stranger, but then we met them, and we became friends with them. And people like shopping with their friends, and they will spend money. So if you just remember that people hate being sold but they love shopping with friends, you will change your sales game.

An unlikely path to real estate

Richard Feloni: What do you think it is about your personality that drove you into sales?

Serhant: Oh man. I mean, I was not born a salesperson whatsoever. I think a lot of people watch "Million Dollar Listing" or watch "Sell It Like Serhant"— I think what people's mindset was of me was based on what they see on Bravo, which is young, successful, money money money money. But that's what people like to see on the show.

But I was the shyest, weirdest, most awkward kid ever growing up, and it was the last thing in the world I thought I would ever do. Like, if you had told 10-year-old me I would grow up to be a real-estate broker in New York City, I probably would have thought that you were on crack or something. Like, it made no sense. But I moved to New York City to be an actor, which didn't work out, and then I hand-modeled, which worked out, but I didn't want to be a professional hand model the rest of my life.

Feloni: How did you find those gigs?

Serhant: Hand modeling happened because someone saw a headshot of mine where I had, like, my hand up on my chin, and an agent called me and was like, "Hey, AT&T wants to see you." I was like, "Oh, wow, awesome. Like, a modeling gig, that would be great." They're like, "Well, sort of. It's for your hands." I was like, "For my hands? What are you talking about?" I was like, "Like George Costanza? Or like David Duchovny from 'Zoolander,' something like that?" And they're like, "Yeah, yeah, yeah, but it's a big business."

And so I went into this casting call for AT&T when they were doing this ad campaign where they were painting people's hands to look like different countries and then holding BlackBerrys in the middle of them. Long story short, they really liked my hands, and that paid my rent for a long time.

But yeah, so I was very, very socially awkward and very, very weird, but I was forced because my back was up against a wall. I was forced to develop a thicker skin and to come out of my shell and really try to create a personality that was OK with talking to strangers, which totally freaked me out when I first moved to New York. And I think that that kind of ability of mine to just go up to anybody on the street and ask them their name and how they're doing, without feeling any shame whatsoever, has really helped me in my sales business.

Feloni: Well how did you start that in the first place?

Serhant: I was broke. It's very important for all people who are commission-based, who are incentive-based that way to really figure out what their wall is, right? I call it the four W's: your work, your win, your why, and your wall. And that wall is really important.

So for me, I was trying to act in a city. I was doing a lot of free theater. I was playing a clock. I was playing random stuff on, like, the west side—

Feloni: What do you mean playing a clock?

Serhant: I was in a free play that was like off-off-off-off-off-Broadway in a basement in Union Square where literally I played a clock in, like, this rendition of Edgar Allan Poe stories. And so I stood there for like half an hour with my hands going tick-tock, tick-tock, tick-tock. It was, like, the worst.

Feloni: Oh, wow.

Serhant: It was so hard.

Feloni: That's not a good role.

Serhant: No, it is not a good role. But it was New York City. The word "Broadway" was in there somewhere. And I just ran out of money. I ran out of money.

I didn't want to get a quote-unquote survival job, meaning that I didn't want to wait tables or bartend, because then I'd be stuck doing that. I knew a lot of actors in the city who were 50 years old and still on their survival job, right, which then isn't a survival job — I mean, that's now your job job, and now you're trying to act as a hobby, because you get used to paying your bills. And I didn't want to do that, so I literally pushed myself to the point where I just ran out of money and had my debit card declined at Food Emporium on 59th Street trying to buy a pack of tofu, and then cried on the subway. And that was my wall, right? That was, like, that moment for the rest of my life that I wanted to run away from as hard as possible, and I had to be shameless about it.

So I got my real-estate license because a friend told me to, and my first day in the business was September 15, 2008. So that was the day Lehman Brothers filed for bankruptcy.

Feloni: That doesn't sound like a good time to get into real estate.

Serhant: In hindsight, it was the best time. At the time, it was probably the worst time ever. I say in hindsight because a lot of people got out of the business because they had a lifestyle to uphold, right? They knew business when it was good, and then all of a sudden you stop doing deals and stop making money. How are you going to pay your mortgage? How are you going to make your car payments? How are you going to put your kids through that private school?

Feloni: You had nothing to lose.

Serhant: I had no money.

Feloni: Yeah.

Serhant: So all these brokers were getting out of the business, and I was, like, by myself. And I had nothing to lose, so I went into the Starbucks on 49th and Madison and talked to people. I would go up to pregnant women and I would ask them if they needed more space. Like, I would go up to people coming out of Saks Fifth Avenue, because our office was right there, and if they had more than two shopping bags I'd go up to them and ask them if they wanted to invest in real estate, just because I had nothing to lose. And if I completely failed in New York City, it meant I had to move home to Colorado and paint fences for the rest of my life, and that was hell to me.

Feloni: I mean, if you're being motivated by fear, does that ever become — did it ever feel toxic in a way?

Serhant: Sure. It's a mixture, right? You kind of ride, and I think everyone rides this seesaw every day of fear on one side and confidence on the other. And you can't sit and just hold the seesaw down on one end. Because if you're just afraid all the time, you're never going to do anything. And the flip side, if you're just totally confident all the time, you're going to be an a--hole, and no one's going to ever want to work with you.

So you have to find that balance of where the fear in you to succeed pushes you enough to find a confidence to do what you need to do every single day — to, over time, become successful. And the definition of success then changes, because it becomes relative. Like, success to me when I first got into the business was paying my rent on time, and it was like $1,100 a month, every month. If I could do that and maybe, like, save a month's worth of rent, I was a freaking success.

Now things have changed. And so I use that fear of not having money and needing to make money, but I balanced it out with this kind of confidence of building my personality and coming out of my shell, and kind of treating it like an acting job, like an improv class. Everyone I met I was going to adapt to the way they wanted to see me, and I was going to sell them real estate, even though I had no idea what I was doing.

Feloni: Can you tell me about this phone call that you had with your brother that you had talked about before?

Serhant: You did read the book.

Feloni: Yeah.

Serhant: So that was kind of an aha moment for me, because the first couple of years in the real-estate business in New York City are terrible — like, you make no money. And there was this one guy in the office who was crushing it, like, every day, and he was about my age, right, and he just did so well, and I had no idea how he did it, because we were basically like the same person. And I thought: Well, I went to a better school. I did this. I did that. Why is this guy so much better, and why do I suck?

And I stepped out onto the fire escape and I called my older brother one day — I think this was in like 2009 — and I was like, "You know what, this sucks. I want to quit. I shouldn't be a real-estate broker. I'm not from New York." I just gave him every single excuse possible, and what I really remember from that phone call was him saying to me, "Stop being such a little b----. If he can do it, you can do it. Stop wasting my time. Go out and work harder." And I was like, "Wait, what? Can you make me feel better for, like, one second here? That's why I called you." And he did not make me feel better whatsoever.

But I have that kind of thing that he said to me ringing in my ears all the time, which is — and I know it's a little profane — but him saying to me "stop being such a little b----" reminded me that I was crying and giving excuses for something that I could just take care of on my own. And that really woke me up to figuring out kind of how to build a career instead of just having a job where I was showing apartments.

Learning how to be a salesman — and a TV star

Feloni: So you kind of approached from going from a shy kid, as you were explaining, to just — I mean, if anyone sees you on TV even, you just exude confidence. So, like, from A to B. At that point, did it start just because you almost took it like an acting role, like of yourself?

Serhant: Yes. Because I had to figure out something that I could control, right? When you first get into the sales business — or any business really — you're nervous. Like, you're freaked out. "I'm not going to do well.""My boss is going to fire me.""Everyone else is better than me." And I had all of those feelings. I had no confidence in what I was doing, because I had never done it before. I'd never rented someone an apartment and taken their financial information. I had never sold an apartment before. I was dealing with money that made no sense to me, because I had never had it before.

So it was important for me to try to figure out what I could control at that stage in my life, and what I could control is what I knew. And so I would go on these broker tours, and I would watch other real-estate brokers give tours. And because they had been in the business for 10, 20 years, they didn't really know everything about the building or the block or the neighborhood, but they really rested on their confidence, because they had done a lot of deals. Like, that's what they knew. So I didn't have that. But what I had was the ability to memorize information, because I had spent my whole life trying to be an actor, so I could memorize information really, really well. So what I told myself was: Listen, I'm going to rely on what I know, and no one is going to say, "Wow, you're too new to this business," or "You're too young," because I'm going to know more than anybody else.

And so I would memorize as much as I possibly could about the building I was going to show, the block that I was going to be on. I'd do my research on that entire neighborhood so that no one would ever look at me like a young kid doing business. Like, I could tell you that on the corner of 12th Street downtown and Fifth Avenue, that building on the corner has 142 units in it, and it was built in 1911, right, and the super's name is Tony. That was good information for me to have, that all I had to do was figure it out and memorize it, and that was then my confidence. So that's what helped me balance out that seesaw.

Feloni: At what point did you realize that, hey, this might actually be something more than just a side gig?

Serhant: Yesterday. I mean, I could tell you about every deal I've ever done, but it took years of doing them over and over before I really figure out, you know what, maybe this thing is going to work. Like, even after "Million Dollar Listing" started. Like, I got cast on "Million Dollar Listing" in 2010. We filmed the whole first season in 2011. I almost died because I was so stressed out the whole time. And then it came out in 2012. And even then the market was so terrible. It was so hard. I still didn't know, like, was I going to do this the rest of my life? Was this really going to be my thing?

Feloni: Even when you were on TV doing it?

Serhant: Yeah, because the show hadn't come out yet, and I was still trying to figure out what I wanted to do. Maybe I went back and got my master's, I don't know. I came to New York to do theater, and I hand-modeled a little bit — now all of a sudden I'm selling real estate on TV. Like, this was not the plan.

But it kind of was the plan in a weird, backwards way. Like, there is no path, right? That's why I try to say yes to as much as possible, and you figure out the path along the way. When people ask me, like, what kind of mindset I had going into this business, I really think back to when I was a little kid, and I made the decision when I was a little kid to be successful, and hopefully it would be through acting because I think I could be the next Brad Pitt. Clearly didn't work out. And it ended up being as a real-estate agent, and a real-estate agent who's on reality TV.

But I chose success first and let the career come second. A lot of people have problems, and they get depressed, and they move out of a city, or they call their parents every day crying because they chose a career first and success second. And when that one career doesn't happen or doesn't happen the way you think it is, then it's not a speed bump — people treat it like a brick wall. But speed bumps are there for a reason. And maybe you go down a different road. Maybe you figure something else out. And everyone can be a great salesperson if they really think back to, like, everything they learned when they were in fourth grade.

Feloni: How do you mean?

Serhant: Meaning that, like, in fourth grade, third grade, fifth grade, you learn to share. You learn to talk to the person next to you. You learn to talk to the girl for the first time or the boy for the first time. You learn deadlines for homework. You learn everything that is intrinsic in being a good businessperson when you're 8, 9, 10, 11 years old. And holding on to those attributes, as well as kind of pushing out your personality as much as you can, makes you a good salesperson.

Feloni: You're talking about "Million Dollar Listing." How did you end up on that show in the first place?

Serhant: How did I end up on "Million Dollar Listing"? I went to an open casting call in March of 2010 with 3,000 real-estate agents at the Hudson Hotel, and they picked three.

Feloni: At that point, were you even, like — did you feel qualified to be on the show as, like, a—

Serhant: No.

Feloni: Yeah.

Serhant: No. But, like, I went into the audition on that fear side of the seesaw really hard — like, scared sh--less that, like, what am I doing, how am I going to do this — until I saw all these people. And then I said: You know what, I've been in front of cameras before. I've done some TV before. I was Dr. Evan Walsh IV on "As The World Turns." I can do reality TV. I might not be the best real-estate agent. I might not have the résumé that all these other people do. But I'm going to flip that seesaw over, and I'm going to ride the confidence side for a heartbeat here.

And that's exactly, I think, what they wanted to see, was someone who was steadfast in their beliefs. So I just went in there and sold myself hard, and then they bought it, and here I am.

Feloni: So you played the role of being one of the best agents in the city.

Serhant: Yeah.

Feloni: And then just kind of led to it.

Serhant: Yeah. I mean, I think they asked me, like, "Who's the best real-estate agent?" And I think my answer literally was, "You're looking at him." Not necessarily true, but also not untrue. Like, I can believe that I'm the best, and no one — who's going to tell me something else? It's really going to come down to kind of the way I portray myself, right? It's like that classic PR story that advertising is now dead and PR rules the world of promotion. And so if I scream my own success from a mountaintop, people will hear it, and that's how you'll build your persona, your personality, your career that way.

Feloni: In growing into this role, even now being on TV, is there ever a chance that you would lose yourself in a role where it lacks some authenticity?

Serhant: As a salesperson?

Feloni: Yeah.

Serhant: No, I don't think so. I think I use the skills that I learned in improv and acting school and in college to build my personality. And when I say build my personality, I don't want people to think I created, like, a fake persona to go out and sell. What I mean is that I was shy and overweight, and I really liked watching movies in my apartment by myself, and I didn't want to go out and talk to people, because people made me nervous. But because I had to, because my back was up against a wall, and I needed to make money, and real estate was now the thing that I was going to do because a friend told me to do it, I had to improvise. I had to be OK with going outside and talking to people on the street and in Starbucks and meeting strangers and showing them apartments I had never seen before. And I had to figure it out, and you do that by saying yes. You do that by kind of putting on a protective shield a little bit and not going out there as the Ryan who just wanted to Netflix and chill, but the Ryan who is going to be an awesome salesperson today, who can Netflix and chill a little bit later.

Feloni: I think a lot of people, when they think of salespeople, they think of the used-car salesman, or they think of the monorail guy from "The Simpsons."

Serhant: Yes.

Feloni: Kind of, like, just selling you something you don't want. By the end you feel tricked, and it's all about just flattery and fakery.

Serhant: I think every business has some stereotype. Whether you're an attorney or a banker or a doctor, there's some negative stereotype that goes with it. So a lot of salespeople are like that. They put on their salesperson's hat and they just sell, sell, sell, sell, sell, which can work here and there, but it's not going to work in the long term, because you'll build bad relationships.

Sales isn't about pushing. It's not about convincing somebody, right, which is what the used-car salesman and the "Simpsons" character kind of make you think. What a good salesperson is able to do is to assure someone of a choice that they were going to make anyway, or of a choice they should make because it's better for them than an alternative choice.

Even if it's selling shoes — like, you went in there to buy a $100 pair of shoes, and you want to start running on the West Side Highway because that's what your friends do. The salesperson could just sell them to you. He could take you to the $200 pair of shoes and sell you those because those are more expensive. Or he could say, "Have you run before?" And you might say no. "OK, well, the $100 pair of shoes here are for more advanced runners; they don't have much of a sole. There's a $125 pair and a $150 pair that have a more cushion to them, and this is what more first-time runners wear, but it's up to you." Now you all of a sudden feel assured in your decision to spend a little bit more money, so the salesperson did their job as a salesperson, but you're also making a purchase that's probably better for your knees, better for your ankles, better for your Achilles tendon, because the salesperson assured you of a choice that you were going to make anyway, but a better one, right?

That's what a good salesperson should do. And on my other show on Bravo, "Sell Like Serhant," that was so hard to teach people, because they would come into the store every day with their salesperson hat on and they just wanted to sell, sell, sell, sell, sell, when it's really not about that.

Building and managing a team

Feloni: How did you learn to be a leader?

Serhant: Through failure. Through, like, terrible, terrible management skills.

Feloni: Because at this point, hadn't you only just started to figure yourself out?

Serhant: Yeah. I think I saw that, as a manager and as a leader, people, what they really want, is two things.

They want business. Everyone wants to succeed. So I needed to help my team get business and succeed, the same way a football team can't exist if the quarterback doesn't throw the ball somewhere, right?

And I needed to be a nice person. I saw teams that failed and companies that failed because they were run by people who were just dicks, and they just were mean. And I kind of took — what do you call it? What's that saying? Like, "Do unto others as you wish they would do unto you," what is that?

Feloni: Yeah, the golden rule.

Serhant: Yeah, the golden rule. Right.

Feloni: Yeah.

Serhant: Like, that's the best leadership advice I could give to anybody. Otherwise, people don't want to work for you, and there's so many places people could go to work. Like, they don't need to work for you. There's a lot of places to go. And so as long as I was putting business out there, working harder than everyone who works for me so that I could lead by example and practice the golden rule, my team just slowly, naturally started to build.

Feloni: And then having a TV presence, I would imagine that that can be seen as kind of, like, a running ad for your business and for your team's business. But on the other hand, I would imagine that at some points it could work against you if someone would be like, "Oh, this is just the guy from TV."

Serhant: Yeah. I mean, I have to pitch against that attitude every single day. I mean, "Million Dollar Listing" helped me open doors, but it didn't open any doors. It wasn't like the show came out and then all of New York City called me to list or help them buy an apartment. I mean, when was the last time you picked up the phone and called the Kardashians? Like, you don't do that, right, because they're on TV.

And so that's what I thought was going to happen. Did not happen whatsoever, but it helped me open doors by being able to say, "Listen, I'm a real-estate agent, and I think I'm pretty good at what I do. Also, I'm on a television show that airs to 25 million people around the world. I would love to meet you to talk about selling your home." And some people — not all, but some people — would then add me into the mix. And I still had to do my thing when I was in the room; I still had to pitch really hard.

And the show is a great kind of advertisement for me, but by the time it comes out, everything that we've put on there has either sold or not sold, so it's not like "Million Dollar Listing" helps me sell individual properties. It helps me build my business so that I can better sell the properties that I have today.

Feloni: Why do you think that your team has become so successful in this market?

Serhant: We are very disciplined, honestly. We're probably the most disciplined team out there. I think I can be very, very tough, but I trust everyone to do their job, or they can't work for me. Everyone who's on my team is relentless and incredibly aggressive and also very empathetic, and they're all great people.

And so we work incredibly hard, but we have very, very strong discipline. We're not just real-estate agents who list a property, hope to sell it, maybe get another one, hope to sell it. There is almost kind of like a military aspect to it, right, which works for us.

Feloni: Yeah. I saw that last year the magazine The Real Deal, it was saying that, after a few employees left your team, they were trying to connect it to rumors that maybe your TV career was getting in the way with your team. How do you respond to that?

Serhant: My TV career did get in the way a little bit, because, I mean, in 2017 I filmed one season of "Million Dollar Listing," I filmed an entire season of "Sell Like Serhant," which took a lot of time, and I wrote a book all at the same time. It was tough on certain members of the team who are used to me being around a lot more. And so those people who wanted me to be there every single day decided to go and do their own thing, which is fine.

But it was just I think The Real Deal caught on to, like, a couple of them left at the same exact time, which for me, like, just opens up desks, to be honest, and it opened up finding greater new talent. And now, like, I can't imagine my team without those new people that I now have who have helped me grow my business exponentially.

And I still sold more than anybody else last year, so that's kind of that discipline that I've built into the team, that it's not surviving or succeeding based on any one person; it's everyone working together to sell as much as possible.

Feloni: Have you found a way to balance doing — as you say, it's kind of like juggling, like, having so many things at once?

Serhant: Yeah, it's the power of leverage. It's the power of leverage and trusting people to do what they're supposed to do. I remember, well, I don't know, five years ago, six years ago, something like that, as my business was really starting to take off I was super stressed out. I was busy, busy, busy, busy, busy, and I think I was complaining to my wife, Amelia, who was my girlfriend at the time, and just saying, like, "I can't just do this right now. I'm so busy, busy, busy, busy, busy." And she was like, "You know what, you say that all the time. You know who's busy? Obama. You're a real-estate agent. You're not that busy."

And when people say they're busy, it just means that they're really bad at time management. I know people say that all the time, but it really is true. And they try to do too much by themselves, which is what I was trying to do, because I thought that that's what I was supposed to do.

And so I brought in more admin staff. So my team alone has six admin staff members who just help my team. No other real-estate team has that. And I really, really leveraged myself onto my team members, and really pushed them to be better than I am, and really brought in team members who were honestly better than me so that they were able to do the things that I could do — just happen to be better — so that way I could do the TV shows and spend the time to write a book without business failing.

Feloni: So that's almost like the other side of your lesson of "always say yes."

Serhant: Yeah. Well, it's "say yes to help," right? Say yes to help. A lot of people in my situation — and you see it too with the other guys on the show — they do a lot by themselves, and then they're busy all the time. And then when they decide to go on vacation, all business stops. Like, that's not what I want. When I'm away, I want more things to sell, right? That's like what a good boss creates within any kind of company.

And so I really kind of said yes to leveraging myself, said yes to letting go, said yes to bringing on more business and figuring out how to do it later. Like, that's really been a key to my success over the last 10 years, saying yes to business that I didn't know how I was going to handle and figuring it out.

Defining success

Feloni: We talked about, like, at that point how you defined success when you were desperate — at this point, when you're at the peak of your success, how do you define it now?

Serhant: Now I define success by hitting goals that I set for myself. And it's not about money. It's not about lifestyle. It's not about building a bigger team or anything. It's that I set goals for myself, and I write them down every year, and if I hit those goals I have been successful that year. If I don't hit those goals, then I have failed that year.

That way, success isn't this big lofty thing that's up there in the clouds, and it's not just like, "I want to be a billionaire." Like, that's stupid, right? There's no plan of action that's set there. There's nothing that drives me crazier than someone who comes to me, says, "Yo, I'm an entrepreneur. This is what I do. This is what I sell. I sell this. I do this. I'm building this company." I'm like, "OK, what did you do last week?" They're like, "Well, I was in the Hamptons last week, played golf on Sunday, but, like, Monday through Friday." No, no, no. Like, if you want to build your own business, you do it seven days a week. I did not take a single day off for three years. And it's easy for me to say now: It's really, really hard to do, and it's really hard for a lot of people to do as well. So you have to figure out what you really, really want and stick to it.

The other thing I would say is: You don't have to do it by yourself when you start. That's probably a mistake that I made. I think I would've grown faster, but I started by myself because I didn't have that intuitiveness to real estate. I didn't really know that that's what I wanted to do. It was kind of weird. I didn't see myself as being a real-estate broker. I didn't even like real-estate brokers. And so I was doing other things at the same time. If I had maybe worked on someone else's team, if I had maybe worked for another company, if I had maybe learned by watching successful people do what they do instead of just trying by myself to do it, it would've been better.

Feloni: Well, thank you so much, Ryan. I really appreciate it.

Serhant: Thank you for having me.

SEE ALSO: Business coach Marie Forleo explains how she created her dream job and got hundreds of thousands of fans

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NOW WATCH: 'MILLION DOLLAR LISTING’ STAR: I understand why people hate dealing with NYC real estate brokers

• Atlantic City, New Jersey suffered dire financial troubles after a wave of casino closures in 2014. 
• The city avoided bankruptcy after the state intervened, which primed the city for a comeback.
• Two new casinos opened in June, which is expected to add about 3,500 rooms to the supply pool, as well as about 6,500 jobs.
• Local developers are launching hip food destinations, and the $220 million Stockton Gateway Project is further developing the beachfront college.
• Sports betting was recently legalized, which is also likely to help the casino-driven economy.

Atlantic City seems to be getting back in the game.

The recent legalization of sports betting can only help the casino-driven local economy, experts say. But developers are also looking beyond gambling to attract a broader mix of travelers and diversify the city's revenue stream.

"New business is on a parallel track with gaming," said James Wood, president and CEO of Meet AC, a marketing bureau launched in 2014 to position the casino town as a convention destination. "We want to maintain a vibrant economy, just as Las Vegas has a strong non-gaming component."

On the gaming side, the Hard Rock Hotel & Casino, formerly the Trump Taj Mahal, opened in June. In addition to drawing guests who want to gamble, the venue hopes to appeal to music lovers with its focus on entertainment, including at least 50 acts a week and a theater that can seat 7,000, according to a spokesperson.

The Ocean Resort Casino, formerly the Revel, also opened last month. The two launches mark a reversal of the 2014 wave of casino closures. The result of that spate of closings was financial trouble so dire that in 2016, state officials took over fiscal control of the city. With the state's help, the city reached an $80 million tax settlement — related to tax appeals — with casinos; the move helped Atlantic City avoid bankruptcy and positioned it for a rebirth.

Room for more?

In 2016, revenue per available room (RevPAR) grew 19 percent and occupancy grew 45.7 percent year-over-year as the casino closures resulted in a drop in supply. In 2017, occupancy and revenue per room was nearly equivalent to 2016; the number of rooms grew by 324 in the same period. The increased inventory led to a 9 percent dip in Atlantic City's revenue per available room, down to $51.96, in the first five months of 2018 versus the year-ago period, according to STR, a data and analytics specialist.

Industry insiders see the push to diversify attractions in the city as the key to fueling more demand for the added room supply. Sports betting is a significant part of that diversity, said Dan Hanrahan, a director with CBRE Hotels Advisory, Capital Markets."It may well attract a patron or visitor that might not have come to Atlantic City."

But even stronger help could come from beyond the casinos, he said, such as conventions or the nascent corporate presence: "You need non-high-season business."

The opening of the Hard Rock and the revamped 6.4 million-square-foot Ocean Resort Casino — which developer AC Ocean Walk acquired in January 2018 for $200 million — will add about 3,500 rooms to the supply pool, as well as about 6,500 jobs, according to Mayor Frank Gilliam.

The Tropicana Casino and Resort recently changed hands as well. In April, Carl Icahn announced a $1.85 billion deal to sell Tropicana's real estate to Gaming and Leisure Properties, Inc., and to combine its gaming and hotel entities into Eldorado Resorts, the casino entertainment company.

And Showboat owner Bart Blatstein said recently that after reopening the 852-room property as a hotel only — without the original casino — the full capacity of 1,300 rooms will be available this summer.

City officials are looking to fill some of those rooms with convention-goers. The Atlantic City Convention Center has 486,600 contiguous square feet of exhibition space, with 45 meetings rooms and five exhibition halls ranging in size from 29,400 to 199,500 square feet.

All those exhibitors and guests need places to sleep, and the hotel market appears to have seen gains through the marketing of the convention center. In 2016, the number of rooms booked increased 22 percent year-over-year, to 213,189, coinciding with wider marketing of the center and new amenities. In 2017, the total number of rooms booked due to conventions or shows rose to 219,839, an additional 3 percent increase over the prior year, according to data provided by Meet AC.

In addition to trade shows and new casinos, events involving multiplayer video games and other e-sports are an area for growth, according to Meet AC's Wood. He also said that large amateur competitions that bring in beach volleyball and basketball teams are spurring demand. Then there are emerging sports such as beach pole vaulting or long-drive contests, an offshoot of golf in which participants try to hit the longest drive. Last month, the World Long Drive Association convened in Atlantic City.

Getting to betting

As for the potential impact of tourism driven by sports wagering, one variable for hotels will be the length of stays generated by the bettors, Hanrahan said.

Day trips by bus to Atlantic City are easy to book from all over the East Coast, so the question is, will sports bettors go that route, or will they arrange for overnight stays to coincide with sports events? Keeping sports bettors overnight may be as simple as providing in-play betting, which allows for wagers throughout the games in real time. It's a factor that brings a new activity to hotels, said Hanrahan, and more activity adds more demand. But it's too early speculate on numbers.

Although the growth of online sports wagering could keep bettors at home, experts see online activity as supporting in-casino activity.

"Early fears that Internet gaming would cannibalize land-based casino revenues have largely been dismissed," according to Rummy Pandit, executive director of the Lloyd D. Levenson Institute of Gaming Hospitality & Tourism. Pandit's 2017 report on the issue cited gains in land-based gaming in 2015 and 2016.

As the market matures, the real competitor may not be online sports betting, said Hanrahan, but sports books in other states. "As more states come online, [Atlantic City's draw] may become diluted," he said.

Away from casinos

Visitors to Atlantic City may be surprised at the new string of hip food destinations on South Tennessee Avenue.

Local developer Mark Callazzo, CEO of Alpha Funding Solutions, is opening the Tennessee Avenue Beer Hall this summer. That debut follows the Hayday coffee shop and the just-opened Made Atlantic City Chocolate, a bean-to-bar chocolate shop where desserts and cocktails are served. The impetus for it all, he said, came from a conversation with a group of millennial employees who said they choose not to live in Atlantic City because it lacks walkability.

"There is no main street. If you walked between the bars, it would be like seven miles," Callazzo said.

Joining him in raising the hip quotient is Asbury Park developer Patrick Fasano, who is working to bring new restaurant options nearby. Fasano's arrival is an important vote of confidence, according to Callazzo. "Here's an out-of-area guy believing in Atlantic City," he said.

Another major part of diversifying the town's economic base is the $220 million Stockton Gateway Project, which contains a six-acre campus for Stockton University, and the new, 72,000-square-foot headquarters of South Jersey Gas. New industry could also bring overnight guests to the area. 

Stockton's beachfront campus, which will support 1,000 students and provide apartments for more than 500, is scheduled to open in the fall of 2018. Stockton's neighbor, South Jersey Gas, will work out of a new six-story office tower with about 200 employees. It is scheduled for completion in late 2018.

The developments all add up to evidence that revitalization is coming, block by block, said Mayor Gilliam. "We are going to continue to tackle the blight."

SEE ALSO: How Atlantic City went from a bustling tourist hub to a ghost town

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• Smart homeowners should take out an affordable mortgage on an undervalued home, according to economists at SmartAsset.
• SmartAsset recently found the most undervalued cities to buy a home in the US, based on value per square foot.
• It looks like the eastern side of the US is the most undervalued area to buy a home — more than half of the top 10 cities are located there.

Becoming a homeowner is often more complicated than one expects. It's also more expensive — millennials buying their first home today will pay 39% more than baby boomers who bought their first home in the 1980s.

In today's homebuying climate, it's important to take out an affordable mortgage— and even better to do so on an undervalued home. That's according to SmartAsset, which recently released a report on the most underrated cities in the US to live in based on current vs. potential housing values.

SmartAsset created a statistical model for 200 cities investigating how housing values, represented by price per square foot, were affected by eight quality of life metrics: unemployment rates, high school graduation rates, percent of residents with a college degree, crime rate, entertainment establishment density, average days of rain, average days of bad weather, and walk score.

The model (formally, a linear regression model) shows the positive or negative impact each of those eight measures had on housing prices. To determine how overvalued or undervalued a particular city was, SmartAsset compared the model's prediction for housing prices in that city based on how the city fared on the eight quality of life measures to the actual price per square foot in the city. SmartAsset ranked undervalued cities based on how much lower their actual housing prices were than the prices projected by the model.

For example, the average home in Los Angeles, California, is worth nearly $425 per square foot, according to Zillow. But according to SmartAsset's model, it should be worth nearly $525 per square foot — so residents are saving almost $100.

More than half of top 10 undervalued cities are located on the eastern side of the US.

Below, see the best places to buy a home where the average property is worth at least $80 less than what it should to worth. 

SEE ALSO: The salary you need to afford rent in every state, ranked

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31. Columbia, Missouri

Projected value per square foot: $178.08

Actual value per square foot: $98

Savings: $80.08

30. Santa Ana, California

Projected value per square foot: $447.13

Actual value per square foot: $366.75

Savings: $80.38

29. Omaha, Nebraska

Projected value per square foot: $196.89

Actual value per square foot: $115.17

Savings: $81.72

• Housing completions in the US increased more than 2% over the last year.
• The housing market is now almost at a 3-year low in the gap between housing supply and demand.
• While the increase in completions is a welcome sign, two measures of future housing supply declined.
  

Yesterday’s Census Bureau report on housing construction bodes well for home buyers, as the pace of housing completions increased 2.2 percent over last year. The continued year-over-year growth in completions means more homes on the market in the short-term, offering some immediate relief in alleviating housing supply shortages.

“The growth in the pace of housing completions, now at a 1.26 million seasonally adjusted annualized rate, means we’re almost at a 3-year low in the gap between housing supply and demand.”  

The growth in the pace of housing completions, now at a 1.26 million seasonally adjusted annualized rate (SAAR), means we’re almost at a 3-year low in the gap between housing supply and demand. As builders start work on additional housing, we will inch closer to balancing inventory with demand. But, with millennials entering household formation age and baby boomers living longer and more independently than previous generations, builders will remain under pressure to keep up with the growing demand.

While the increase in completions is a welcome sign, two measures of future housing supply declined. Building permits decreased 3.0 percent since this time last year, while housing starts fell 4.2 percent, indicating a slight decrease in the longer-term production pipeline of new housing supply.

However, another important metric indicates we may see further increases in housing construction soon. Construction labor, which saw an increase of nearly 4,000 residential construction jobs between May 2018 and June 2018, supports further improvement in the pace of home-building and signals that housing construction is likely going to increase in the months ahead.

June 2018 Housing Starts

For the month of June 2018, the new residential construction report shows that:

• The number of building permits issued, a leading indicator of housing starts, decreased by 3.0 percent year over year.
• Housing starts decreased by 4.2 percent, compared with a year ago.
• The stock of housing units authorized to be built increased by 10.3 percent, and the number of housing units under construction increased by 4.9 percent on an annual basis.
• The number of completed homes, which is additional new net supply added to the housing stock, increased by 2.2 percent compared with a year ago. 

Chief Economist Analysis Highlights

• The annual increase in completions signals modest immediate relief from the housing shortage and sends an optimistic message about the housing market.
• In June, the overall pace of housing starts, at 1.17 million units, is a 12.2 percent decrease from the previous month. Based on the less volatile three-month moving average, the volume of total residential (single- and multi-family) housing starts is 54,000 less than May 2018, but 99,000 units higher than a year ago.
• Housing starts are an important indicator of future supply as the housing market continues to face a supply constraint challenge.
• An estimated seasonally adjusted annualized rate of 1.26 million housing units were completed in June, representing a 2.2 percent increase from the June 2017 figure of 1.25 million – a modest, yet important, step toward producing enough housing to meet market demand.                

What Insight Does Monthly Housing Start Data Provide?

Housing starts data reports the number of housing units on which construction has been started in the month reported, providing a gauge of future real estate supply levels. The source of monthly housing starts data is the “New Residential Construction Report” issued by the U.S. Census Bureau jointly with the U.S. Department of Housing and Urban Development (HUD). The data is derived from surveys of homebuilders nationwide, and three metrics are provided: building permits, housing starts and housing completions. Building permits are a leading indicator of housing starts and completions, providing insight into the housing market and overall economic activity in upcoming months. Housing starts reflect the commitment of home builders to new construction, as home builders usually don't start building a house unless they are confident it will sell upon completion. Changes in the pace of housing starts tells us a lot about the future supply of homes available in the housing market. In addition, increase in housing starts can lead to increases in construction employment, which benefits the overall economy. Once the home is completed and sold, it generates revenue for the home builder and other related industries, and is added to the housing stock.

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• Adam Neumann stepped down as WeWork's CEO on Tuesday, citing public scrutiny after The We Company filed for an initial public offering.
• But despite Neumann's antics as CEO and decision to step down, WeWork still has some serious problems with its business.
• WeWork's rapid expansion and business issues mean the company now presents a serious danger to the New York and London real-estate markets.
• Dan Alpert is an adjunct professor at Cornell Law School and founding managing partner of the New York investment bank Westwood Capital LLC.
• Visit Business Insider's homepage for more stories.

Tequila-fueled staff meetings and investor pitches, pot smoking on board Gulfstream jets, and wild-eyed declarations of the ability to change the world (and to live forever) may have found ready media outlets seeking to present salacious tidbits regarding the behavior of Adam Neumann, the cofounder, chairman, and now former CEO of sometime-before-yesterday's momentum darling, The We Company, and its better-known subsidiary, WeWork.

Putting aside that such antics would be better suited to the chief of something called The Me Company than to its communitarian alter ego, they are a distraction in comparison with the prank that is WeWork itself.

So let's skip past the beer and kombucha taps in the common area and discover why this confusing company has turned from foamy-headed to flat in the span of a few months after announcing its intentions to go public.

2 reasons WeWork's business model doesn't work

The first reason for WeWork's fall from grace is that the business model on which WeWork relies amounts to attempting to globalize a chain of sidewalk lemonade stands by signing a full-faith-and-credit forward contract for $34 billion of Crystal Light with Kraft Foods. And then counting on the world being both infinitely thirsty and that its purchasing power will never be dented by recession.

For what WeWork has undertaken, as disclosed in the prospectus for its erstwhile IPO, is in fact $34 billion (yes, that's billions) of rent obligations to landlords around the world over the next 15 years, highly concentrated in centers of commerce such as New York and London.

It had to shell out $1.2 billion in 2018 alone, when it was still in wildly rapid growth — and in the first six months of 2019, on an annualized basis, was paying rent of $2.5 billion per annum, and still rising.

It has also taken on $1.4 billion of corporate indebtedness (a daunting sum for a startup to be sure, but a drop in the bucket compared to its lease liabilities). This for a company that grossed less than $2.6 billion in sales for the 12 months through June, and in that period had only $232 million — after other cash operating expenses — before paying its rent bills of $2.1 billion.

The second bit of nonsense emanates from the business in which WeWork is engaged in the first place — leasing other people's real estate to tenant "members" with essentially no credit capacity and in a business with minimal barriers to entry, other than a willingness to pay rent.

Essentially, to revert to the lemonade-stand analogy, WeWork is trading from the curb — albeit with a very expensive permit. The problem is, everyone in commercial office real estate has a curb of its own. The very landlords who actually own the space from which WeWork is plying its wares can set up, and are setting up, their own "lemonade stands" in the form of short-term, flexible occupancy coworking space with copious support services and tie-ins.

WeWork is, to its customers, the Uber of commercial real estate (it has tried residential too, which has proved disappointing), the Johnny-on-the-spot solution that avoids one having to work out of their home or neighborhood Starbucks, or setting up costly support services.

The problem is that this form of "Uber" is one that has guaranteed all its drivers' pay and leased multiple fleets of cars for the next decade and a half, and then some. Long-term liabilities against short-term income streams would make no more sense to the ride-hail industry than they do to commercial real estate, even less so for the latter as real estate is far more expensive and rigid a commodity than cars and, yes, people. Landlords can provide a small fraction of their inventory for coworking, short occupancy without burying their business model in risk.

For WeWork, apparently, undertaking risk IS the business model.

WeWork poses risks for the real-estate industry

So far I have expressed my dismay in terms of relevant to existing and potential shareholders of, and lenders to, WeWork. But there is more at stake here.

WeWork has become a dominant player in the office market in many major cities. In New York and London, WeWork is the largest private sector office tenant, something they actually crow about. In Manhattan, the company has over 5.3 million square feet of office space, more than the entire enclosed space of the Mall of America, the largest mall in the US.

Now this is, to be fair, only about 1% of the total market. But that is not the relevant metric where WeWork is concerned.

By my calculations, two years ago, in mid-2017, WeWork had about 2.4 million of space in Manhattan (2.8 million in all of New York City), and therefore added nearly 3 million square feet in Manhattan over the past 24 months.

Total leasing volume in Manhattan during that period was about 55 million square feet, the vast majority of which were lease rollovers or tenants moving from one space to another, as opposed to net new absorption (the difference between space coming to market and newly leased space). Even so, WeWork was itself 5.5% of gross leasing volume, an enormous amount for a single tenant.

But, in terms of net absorption, according to data from industry sources and my calculations, if WeWork were removed from the equation, the Manhattan market would have experienced negative absorption of roughly -700,000 square feet of leased space, as opposed to the just over 2.3 million square feet of net absorption that it experienced over the 24 months ended June. This, folks, means that at the margin WeWork is moving markets — bigly.

Therefore, the precarious nature of the firm's business model not only endangers the landlords that are directly exposed to the company, but the market at large.

Were the demand represented by WeWork to disappear (either in a recession, a collapse of "tech bubble 2.0," and/or because other landlords move in to service such coworking demand as remains after others return to their homes or Starbucks), rents across the commercial office market would be negatively impacted, to the detriment of all participants therein (except, of course, tenants).

So, yes, Adam Neumann showed incredible chutzpah with his clowning about and his self-dealing (buying and leasing space to the company, concentration of voting rights, even claiming personal trademark rights to the word "WE"). But don't let all that be a distraction from what is really going on behind the curtain (wall). The business model itself defies both common sense and market realities.

Dan Alpert is an adjunct professor at Cornell Law School, a senior fellow in macroeconomics and finance at the school's Jack C. Clarke Business Law Institute, and founding managing partner of the New York investment bank Westwood Capital LLC. He has been active in commercial real-estate banking and finance since 1982.

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• An analysis by Redfin found the 10 housing markets that are at the greatest risk of a downturn in the next recession.
• The study measured each metro area on seven variables.
• The four main, highest-weighted variables include: the ratio of median home sale prices to median household income, the ratio of the average home loan to the average home value, year-to-year home price volatility, and the number of flipped homes that have been sold twice within 12 months.
• Visit Business Insider's homepage for more stories.

In the midst of the United States' ongoing trade war with China, talks of a looming recession have been floating around the media. 

When it comes to real estate, there are several key factors that help forecast which housing markets will be the most vulnerable when the next recession hits — whether it happens now or ten years from now.

A recent analysis by Redfin looked at major metro areas across the US and found the 10 that are most likely to be at risk of a housing downturn in the next recession.

"Recessions don't always necessarily lead to big swings in home prices, but they do in certain areas. That's why it's important to look at how much the housing market is at risk opposed to the overall economy," Redfin's chief economist Daryl Fairweather explained to Business Insider. 

Read more: The 25 best places to live in America

The study measured each metro area on four main variables: the ratio of median home sale prices to the median household income, the ratio of the average home loan to the average home value, year-to-year home price volatility, and the number of flipped homes (homes that have been sold twice at different prices within 12 months). These four variables each held the same weight and were the most weighted factors in the study. 

"The reason why those [four] are the most important [variables] is because they are the ones that impact housing the most," Fairweather told Business Insider.

There were three other, less weighted, variables measured in the study: the diversity of local employment, the share of the local economy that is dependent on exports, and the share of local households headed by someone 65 or older. The weight of each variable remained consistent throughout the study. You can read more on the methodology and the weight of each variable here. 

Keep reading to see the 10 metro areas that are most at risk, ranked in order of increasing vulnerability to a real estate dip.

SEE ALSO: The most expensive suburb in every US state

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10. Orlando, Florida

Median home-sale-price-to-household-income ratio: 4.8

Average home-loan-to-home-value ratio: 61.2%

Year-to-year home price volatility: 16%

Share of home sales that are flips: 6.3%

9. San Antonio, Texas

Median home-sale-price-to-household-income ratio: 4.1

Average home-loan-to-home-value ratio: not available

Year-to-year home price volatility: 15.7%

Share of home sales that are flips: 5.8%

8. Los Angeles, California

Median home-sale-price-to-household-income ratio: 10.9

Average home-loan-to-home-value ratio: 62.6%

Year-to-year home price volatility: 15.7%

Share of home sales that are flips: 7.7%

7. Las Vegas, Nevada

Median home-sale-price-to-household-income ratio: 5.1

Average home-loan-to-home-value ratio: 61%

Year-to-year home price volatility: 16.7%

Share of home sales that are flips: 8.3%

6. Tampa, Florida

Median home-sale-price-to-household-income ratio: 4.5

Average home-loan-to-home-value ratio: 59.2%

Year-to-year home price volatility: 17.1%

Share of home sales that are flips: 7.5%

5. Providence, Rhode Island

Median home-sale-price-to-household-income ratio: 4.5

Average home-loan-to-home-value ratio: 70.6%

Year-to-year home price volatility: 16.8%

Share of home sales that are flips: 4.4%

4. San Diego, California

Median home-sale-price-to-household-income ratio: 8.1

Average home-loan-to-home-value ratio: 65.6%

Year-to-year home price volatility: 16.9%

Share of home sales that are flips: 5.9%

3. Miami, Florida

Median home-sale-price-to-household-income ratio: 5.9

Average home-loan-to-home-value ratio: 50.4%

Year-to-year home price volatility: 15.2%

Share of home sales that are flips: 7.5%

2. Phoenix, Arizona

Median home-sale-price-to-household-income ratio: 4.7

Average home-loan-to-home-value ratio: 64.8%

Year-to-year home price volatility: 17.7%

Share of home sales that are flips: 8.1%

1. Riverside, California

Median home-sale-price-to-household-income ratio: 6.3

Average home-loan-to-home-value ratio: 65.3%

Year-to-year home price volatility: 17.9%

Share of home sales that are flips: 6.3%

• A townhouse on New York City's Upper East Side is on the market for $88 million.
• The 20,000-square-foot mansion includes a panic room, a saltwater pool, and a Versailles-inspired dining room.
• The opulent home has been on and off the market since 2013, when it was initially listed for $114 million.
• Visit Business Insider's homepage for more stories.

An opulent mansion in New York City with a panic room and a Versailles-inspired dining room has been on and off the market for nearly six years. Originally asking $114 million, the townhouse at 12 E. 69th St. is now for sale for $88 million.

The listing agent, Paula DelNunzio of Brown Harris Stevens, said the mansion is the only 40-foot-wide house with a 20,000-square-foot interior that has been on the market in a totally renovated condition. Other similarly wide houses for sale in Manhattan have needed extensive renovations, she said.

"The scale of the interior rooms is beyond belief and without compare, as there are four of the most remarkable rooms ever seen in a New York mansion," DelNunzio told Business Insider.

The dining room was inspired by Versailles, according to Curbed.

It's been on and off the market since December 2013, when it was originally listed for $114 million. The next year, it was discounted to $98 million.

In 2017, a buyer was in contract to buy the home for $80 million, The Real Deal reported. But the deal fell through, so the house went up for rent for $175,000 a month before being relisted for $88 million.

Here's what the $88 million house looks like inside.

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A townhouse on New York City's Upper East Side is for sale for $88 million.

The six-bedroom townhouse is 40 feet wide and "totally renovated," according to the listing agent, Paula DelNunzio of Brown Harris Stevens.

Four windows span both the front and the rear facades, "providing remarkable light at all times," according to the listing.

It's half a block from Central Park.

"There is no other renovated 40-foot-wide mansion available right now between Fifth and Madison Avenues," the listing says.

Vincent Viola, the CEO of Virtu Financial, bought the house in 2005 for $20 million, according to The Real Deal.

The opulent six-level home spans more than 20,000 square feet. The floors in the entry hall are heated onyx marble, the listing says.

The formal entry hall has 14-foot ceilings.

As the listing specifies, there's water filtration throughout the house. It also comes with a security system with cameras, not to mention a "heated sidewalk for automatic snow removal."

It opens to a rotunda with 28-1/2-foot ceilings.

The home's "interior design concepts are typical of the great mansions of Europe and of Stanford White in America," DelNunzio told Business Insider.

"The original architect of this mansion, William Bosworth, worked on the Rockefeller family estate, Kykuit in Tarrytown, and under the auspices of John D. Rockefeller Jr., Bosworth was commissioned to restore the Palace of Versailles, France," she continued.

A hidden door off the main hallway leads to the double-height library and office with 24-foot ceilings.

The house was commissioned for an international silk trader in 1883 and then renovated into its neoclassical style in 1913, the listing says.

A colorful mural is painted on the library's ceiling.

On the garden level, an additional entrance to the library offers private access to the office.

"The scale of the interior rooms is beyond belief and without compare, as there are four of the most remarkable rooms ever seen in a New York mansion," DelNunzio told Business Insider.

Viola, the owner, collected art, furnishings, and decoration ideas during his world travels"to combine the very best of the classical tradition with every modern technological convenience," according to the listing.

"As there is no other property like this available in New York, it is for the person who seeks the rarest of the rare," DelNunzio said.

The home almost sold to a Chinese buyer for $80 million in 2017, but the deal fell through, The Real Deal reported.

The house then went up for rent for $175,000 a month before being relisted for $88 million, according to The Real Deal.

The home's third floor includes the 40-foot-wide kitchen, where four windows bring in bright, natural light.

The kitchen comes with "almost every cooking appliance known to a chef," according to the listing.

On the same level is the formal dining room, which was inspired by the Palace of Versailles in France and can accommodate more than 40 people.

Bosworth, the home's architect, was also commissioned to restore Versailles, according to DelNunzio.

The house includes two bedrooms on the fourth level, and a master-bedroom suite with a large sitting room and two full baths on the fifth level.

The two 40-foot-wide bedrooms on the fourth floor "could be converted to four or more bedrooms," the listing says.

The fifth-floor master bedroom also includes two dressing rooms and a separate guest suite.

One of the master bedroom's dressing rooms "is wired as a panic room," the listing says.

The bathroom pictured in the listing looks like it belongs in a palace.

Like much of the apartment, it's decorated opulently. The apartment has a total of nine bathrooms.

On the home's lower level is the saline swimming pool, as well as two saunas and a full bath.

In the rear of the pool is the lower entrance to the split-level home movie theater.

The movie theater spans two levels and includes 12 plush velvet chairs.

In total, according to the listing, the apartment spreads across six floors, culminating in a 2,650-foot rooftop that has a garden — and views of Central Park.

• San Francisco is home to tech millionaires and billionaires, and they want high-end homes to go with their high-paying jobs.
• Real estate agents who work with these luxury clients say that San Francisco neighborhoods like Pacific Heights and Russian Hill are in demand.
• Most buyers looking in these areas want move-in ready homes with modern amenities and private space.
• Visit Business Insider's homepage for more stories.

With a high-paying job and stock options, odds are you're looking to buy a house.

The San Francisco housing market is one of the most expensive in the country, and most high-end buyers share certain demands for the money they're shelling out.

According to Deniz Kahramaner, founder of a newly founded data-focused real estate brokerage called Atlasa, tech millionaires tend to favor the Noe Valley/Mission Dolores area, or the Presidio Heights/Russian Hill area.

So far in 2019, senior executives from Google, JUUL Labs, Postmates, and other firms have purchased homes in the Pacific Heights and Russian Hill areas. Executives at DoorDash, Lyft, Instagram, and more have bought homes in Mission Dolores, Noe Valley, and Eureka Valley, according to Kahramaner.

Kahramaner explained that tech millionaires are drawn to properties with historic charm, like Edwardian and Victorian-style homes, but with modern upgrades. They often buy homes with access to prestigious private schools as well.

Here are the main things San Francisco tech millionaires look for in a home. 

SEE ALSO: Here's how much each iPhone Apple makes costs in 15 different countries around the world

Few wealthy tech buyers have the time to put into a fixer-upper. Instead, they usually buy homes that have already been updated.

Clean, modern finishes are popular.

Realtor Mary Pope-Handy has worked with tech buyers in Silicon Valley for over 20 years. She said that tech millionaires usually look for "expansive and luxurious kitchens" with lots of light.

New appliances in the kitchen are a common request because buyers don't have time to deal with replacements.

Updated bathrooms are also a must-have.

Pope-Handy says that buyers look for homes with plenty of light.

New hardware and updated finishes make homes move-in ready.

Tech buyers like high ceilings, with room for pets and kids.

Most buyers are looking for houses, and condos make up only a small percentage of homes owned by tech millionaires, according to Kahramaner.

Pope-Handy says that hardwood floors are popular.

She says buyers often want open floor plans, with space for entertaining.

Having a private outdoor space is difficult when homes are packed close together in a city.

Tech buyers with money to spend also like outdoor space and privacy is key, especially if they're a well-known figure, according to Pope-Handy.

A fenced-in seating area can be the perfect solution.

Roof decks also check all the privacy boxes.

And beautiful views don't hurt.

Plus, they can also be another place to entertain guests.

Modern updates are popular, but Silicon Valley millionaires also want the charm of historic Edwardian and Victorian homes.

Pope-Handy said that buyers like privacy and private entrances, without windows or shared entryways.

Luxury real estate agent Albert Garibaldi noted that house flippers tend to buy old, historic Silicon Valley homes, renovate them, and sell them to tech millionaires who don't have the time to take on a project themselves.

The Mission Dolores area has convenient access to downtown, where tech offices are located, but most millionaire buyers look at properties in the prestigious north end of San Francisco.

• Tinder cofounder Sean Rad has relisted his Hollywood Hills home for $9.75 million.
• According to the Los Angeles Times' Neal J. Leitereg, he listed the home for $10.9 million last year, but later took it off the market.
• Rad bought the gated Hollywood Hills estate back in 2016 for $7.65 million.
• Visit Business Insider's homepage for more stories.

Sean Rad has relisted his Hollywood Hills home for $9.75 million, the Los Angeles Times' Neal J. Leitereg reported.

Rad is the cofounder of popular mobile app Tinder. He launched the app with Justin Mateen in 2012 and served as the CEO until 2016. In March, Medium reported that the app was valued at around $10 billion.

Read more: Twitter CEO Jack Dorsey listed his Hollywood Hills home for $4.5 million barely a year after buying it — here's a look inside the mansion

Rad bought the gated Hollywood Hills home back in 2016 for $7.65 million. According to Leitereg, he listed the home for $10.9 million last year, but took it off the market.

The property boasts 5,589 square feet of living space and includes a main house, a guest house, a pool, and an outdoor patio.

The Oppenheim Group, the California-based real-estate brokerage featured on Netflix's original series "Selling Sunset," has the listing.

"Just about everyone is interested in a house like this, we already have a couple of serious buyers considering the house. It's in one of the most desirable areas in LA, set on a flat lot in the lower bird streets area of the Hollywood Hills," president and founder of the Oppenheim Group Jason Oppenheim told Business Insider.

Keep reading for a look inside.

SEE ALSO: Scott Disick just flipped another home in California, and it's listed for $6.89 million — double its original price. Here's a look at the transformation.

DON'T MISS: Betsey Johnson just listed her pink mobile home for $1.95 million, and it's located in one of the country's most exclusive trailer parks — here's a look inside

Sean Rad is the cofounder of Tinder. He launched the app with Justin Mateen in 2012 and served as the CEO until 2016.

Source:Business Insider

In September, Rad relisted his Hollywood Hills home for $9.75 million — over $1 million less than what he listed it for last year, the Los Angeles Times' Neal J. Leitereg reported.

Source:Los Angeles Times

Hollywood Hills is a swanky hillside neighborhood in Los Angeles, California, known for its stunning views, ultra-wealthy residents, and high price tags. According to Zillow, as of August 2019, the city's median home value was $1,776,300.

Source: Zillow

The front of the main house is covered in ivy.

Source:The Oppenheim Group

It opens up to wooden floors and an entryway staircase.

The main living area boasts an array of seating options, a fireplace, and a piano.

Source: The Oppenheim Group, The Los Angeles Times

Also on the main level is a family room, a maid's quarters, a kitchen, and a formal dining room.

Source: The Oppenheim Group

The kitchen has a contemporary appearance and features a large island with four bar stools.

Source: The Oppenheim Group

Here's a closer look at the master bedroom ...

Source: The Oppenheim Group

... and the expansive master bathroom.

Source:The Los Angeles Times

Another living area in the main house features doors that open to the backyard.

Source:The Los Angeles Times

The property's studio-like guest house comes with a bedroom area and a small kitchen.

Source:The Los Angeles Times

Outside, there is a patio with a seating area ...

Source: The Oppenheim Group

... and a large swimming pool.

Though Rad is selling this ivy-covered home, he doesn't plan on leaving the neighborhood. In August of 2018, the Los Angeles Times reported that he bought another Hollywood Hills home for a staggering $24 million.

Rad's home isn't the only Hollywood Hills home seeking a buyer this year. In September, Business Insider reported that former professional baseball player Alex Rodriguez sold his Hollywood Hills mansion for $4.4 million — roughly $400,000 less than what he reportedly purchased it for.

Also in September, Business Insider reported that Twitter co-founder, Jack Dorsey, listed his Hollywood Hills home for $4.5 million barely a year after he bought it. 

• Boxing legend Sugar Ray Leonard has listed his Italian-style villa in Pacific Palisades, California, for $51.995 million.
• According to a blog post by Coldwell Banker Global Luxury, which has the listing, Leonard and his wife, Bernadette, built the home 22 years ago.
• The roughly two-acre estate has everything from an outdoor tennis court to stone floors imported from Jerusalem.
• Visit Business Insider's homepage for more stories.

Renowned professional boxer Sugar Ray Leonard has listed his roughly two-acre estate in California's Pacific Palisades neighborhood for a staggering $51.995 million.

Read more: Twitter CEO Jack Dorsey listed his Hollywood Hills home for $4.5 million barely a year after buying it — here's a look inside the mansion

Pacific Palisades is an expensive coastal neighborhood in Los Angeles that sits between the Santa Monica Mountains and the Pacific Ocean.

The Italian-style villa was built by Leonard and his wife, Bernadette, 22 years ago. The property comes with an ivy-covered, seven-bedroom main house, a separate two-story guesthouse, a pool, a home theater, and a tennis court.

Jade Mills and Tiffany Mills with Coldwell Banker Global Luxury are the current listing agents.

Keep reading for a look inside the sprawling estate.

SEE ALSO: Scott Disick just flipped another home in California, and it's listed for $6.89 million — double its original price. Here's a look at the transformation.

DON'T MISS: Betsey Johnson just listed her pink mobile home for $1.95 million, and it's located in one of the country's most exclusive trailer parks — here's a look inside

Sugar Ray Leonard is a famous former professional boxer. He retired in 1997 with a 36-3-1 record and 25 knockouts. That same year, he was inducted into the Boxing Hall of Fame.

Source:Biography.com

Leonard and his wife, Bernadette, built a sprawling estate in the Riviera community in Pacific Palisades 22 years ago.

Source:Coldwell Banker Global Luxury

Pacific Palisades is an expensive coastal neighborhood in Los Angeles that sits between the Santa Monica Mountains and the Pacific Ocean. According to Zillow, as of August 2019, the neighborhood's median home value was $3,037,100.

Source:Zillow

In July, Coldwell Banker Global Luxury, the real-estate company which has the listing, reported that Leonard and his wife are asking nearly $52 million for the home.

Source:Coldwell Banker Global Luxury

The Italian-style villa boasts an ivy-covered, 16,773-square-foot main house, a two-story guest house, and a variety of over-the-top amenities, including a home theater and an outdoor tennis court.

Source:Coldwell Banker Global Luxury

According to Coldwell Banker Global Luxury, the stone floors were imported from Jerusalem ...

Source:Coldwell Banker Global Luxury

... and the fireplaces were imported from Europe.

Source:Coldwell Banker Global Luxury

The center hall in the main house connects to the living room, the dining room, and the kitchen (pictured below).

Source:Coldwell Banker Global Luxury

The two-story guest house, which can be seen across the lawn in the image below, sits adjacent to the pool and includes a bedroom, a bathroom, and a lower-level kitchen.

Source:Coldwell Banker Global Luxury

Along with an indoor home theater and gym, the property also boasts a variety of outdoor amenities.

Source:Coldwell Banker Global Luxury

An outdoor patio is located right behind the the main residence.

Source:Coldwell Banker Global Luxury

For sports enthusiasts, there is an outdoor swimming pool and a tennis court.

Source:Coldwell Banker Global Luxury

There is even a putting green.

Source:Coldwell Banker Global Luxury

The sprawling lawns and views of the mountains can also be admired from the balcony or terrace of the main residence.

Source:Coldwell Banker Global Luxury

The Los Angeles Times reports that if the home sells for what Leonard is asking, it'll be one of the priciest sales in Los Angeles County this year.

Source: Los Angeles Times

• New York City has long been a mecca for celebrities.  
• In trendy neighborhoods like Tribeca and Soho, celebs live in "paparazzi-proof buildings" and multimillion-dollar penthouses with lavish amenities.
• Celebrity apartments in New York feature some outrageous amenities, from Meryl Streep's wraparound terrace at her Tribeca penthouse to Taylor Swift's indoor swimming pool in a West Village rental townhouse. 
• Visit Business Insider's homepage for more stories.

Celebrities have long flocked to New York City. 

Stars such as Meryl Streep, Justin Timberlake, Sarah Jessica Parker, Robert De Niro, Madonna, Sting, and Taylor Swift call the Big Apple home — at least part of the time. And naturally, they live in some of the most opulent homes in the city.

Take a look at some of the most over-the-top amenities in New York celebrity homes, from automated robotic parking and indoor swimming pools to private VIP elevators and IMAX theaters.

SEE ALSO: I spent an afternoon in NYC's richest ZIP code, where celebs live in a 'paparazzi-proof' building and the average income is $879,000. Here's what the trendy neighborhood looks like.

DON'T MISS: Taylor Swift is reportedly house-hunting in London. She already owns at least $81 million in real estate in the US — here's a look at her mansions and penthouses.

New York City has long been a mecca for the rich and famous.

Celebrities including Meryl Streep, Justin Timberlake, Sarah Jessica Parker, Robert De Niro, Madonna, Sting, and Taylor Swift call the city home — at least part of the time.

For 13 years, Meryl Streep has owned a penthouse in Manhattan's celebrity-beloved Tribeca neighborhood. Now, she's selling it for $18.25 million.

Source:Business Insider

The standout feature of the 4,000-square-foot apartment is its 10-foot-wide, fully landscaped wraparound terrace, which offers views of the Hudson River, the Empire State Building, and One World Trade Center.

Source:Business Insider

Actors Peter Sarsgaard and Maggie Gyllenhaal are selling their brownstone home in the affluent Brooklyn neighborhood of Park Slope for $4 million.

Source:Business Insider

In a city where outdoor space is rare and coveted, the home features a 55-foot-deep backyard garden, complete with an outdoor bathtub and shower.

Source:Business Insider

Singer-songwriter Zayn Malik, a former member of the famous pop band One Direction, is selling his four-bedroom penthouse in Soho for $10.8 million.

Source:Business Insider

The penthouse includes a massive private roof terrace that spans 932 square feet.

Source:Business Insider

Taylor Swift once rented a luxury townhouse on Cornelia Street in the West Village. In her new album, "Lover," she mentions "a place on Cornelia Street," presumably referencing the home, which sold earlier this year for $11.5 million.

Source:Business Insider

The West Village townhouse includes a 30-foot indoor swimming pool with double-height ceilings and a chandelier.

Source:Business Insider

In June 2019, Amazon CEO Jeff Bezos dropped about $80 million on a set of three condos, including a penthouse, near Madison Square Park in Manhattan.

Source:Business Insider

The penthouse unit, which spans the top three floors of the building, has a partial rooftop terrace that spans the entire length of the building.

Source:Business Insider

443 Greenwich Street in Tribeca is a luxury residential building that's been called "paparazzi proof" for its privacy-minded features.

Source:Insider

The building has reportedly attracted the likes of Jake Gyllenhaal, Meg Ryan, Harry Styles, Justin Timberlake, and Jessica Biel.

Source:Mansion Global

The building has as its own lower-level parking, but perhaps the most over-the-top feature of the building is that every single apartment has its own private entry elevator, a representative for the building's architecture firm told Insider.

Source:Insider

A 39-residence boutique residential building in Chelsea, the only one in NYC designed by legendary architect Zaha Hadid, has attracted some musically-inclined celebrities.

Source:StreetEasy,Business Insider

Singer Ariana Grande reportedly rented a five-bedroom apartment in the building that spans 4,023 square feet.

Source:StreetEasy

And Sting, former lead singer of the Police, reportedly rented a unit on one of the upper floors of the building with his wife, Trudie Styler.

Source:Curbed

While Sting and Grande's exact apartments are unknown, the building's lavish amenities for residents include automated robotic parking, a spa suite with a whirlpool, a cold-plunge pool, a sauna and steam room ...

Source:Business Insider

... a 75-foot skylit swimming pool ...

Source:Business Insider

... and a private Imax theater.

Source:Business Insider

• A tentative settlement was just reached over the notorious sinking and tilting of the Millennium Tower residential building in San Francisco, California.
• Residents claimed they suffered losses to their properties' value as a result of bad press and the building's poor construction.
• The $100 million plan involves securing the corrupted foundation using a "perimeter pile upgrade."
• Residents will also receive "very significant" payouts, according to one attorney representing a group of Millennium Tower homeowners.
• Visit Business Insider's homepage for more stories.

Millennium Tower in San Francisco is still sinking and leaning.

But there's finally a bit of good news for residents of the luxury building at 301 Mission Street, which has sunk 18 inches and tilted 14 inches since it was completed in 2008.

A tentative settlement was just reached that will require Millennium Partners and Transbay Joint Powers Authority (TJPA) to pay for the $100m plan to fix the building, according to a report by The Guardian. Residents will also be compensated for their financial losses due to the building's notoriety. 

Though an inspection by the city in 2017 showed that Millennium Tower is safe to occupy, the situation has motivated some people to bail out. Residents previously said they sold their homes short of what they paid for them, with about 100 condos falling $320,000 in value on average in 2017.

Here's what we know about Millennium Tower.

SEE ALSO: All the crazy things happening in San Francisco because of its out-of-control housing prices

Millennium Tower rises 58 stories above San Francisco's Financial District.

The city's third-tallest skyscraper contains over 400 multimillion-dollar condo units. It soars 645 feet, giving residents panoramic views of the San Francisco Bay Area.

Source: Emporis, Dezeen

Completed in 2008, Millennium Tower includes top-notch amenities, such as a pool, fitness center, wine cellar and tasting room, movie theater, and concierge service.

Source: Millennium Tower

In the first five weeks of sales, Millennium Tower sold $100 million worth of condos, the San Francisco Chronicle reported. The units ranged in price from $1.6 million to $10 million.

Source: San Francisco Chronicle (1), (2)

Famous tenants have called Millennium Tower home, including Joe Montana, the former San Francisco 49ers quarterback, and Tom Perkins, the late venture capitalist.

Source: Business Insider

But residents weren't happy after learning in 2015 that the building is sinking. By 2018, the building sunk 17 inches and tilted 14 inches.

Millennium Partners, the real-estate developers behind Millennium Tower, have claimed that construction on a massive transit center nearby is to blame for any sinking or tilting.

Source: NBC Bay Area

A transportation hub called the Salesforce Transit Center, formerly known as the Transbay Transit Center, broke ground next door in 2010.

Source: Business Insider

The $2.3 billion bus terminal, developed by the Transbay Joint Powers Authority, a transportation agency, includes a 60-foot hole for the train tunnel and an underground buttress.

Source: San Francisco Business Times

A founding partner of Millennium Partners said at a press conference that there was "only one issue"— construction for the new terminal pumped too much water out of the ground.

Dewatering is removing groundwater or surface water from a construction site to provide a safe work environment and prevent soil erosion.

When the water levels under the Millennium Tower dropped, the sand compressed and caused the building to settle, according to Chris Jeffries, a founding partner of Millennium Partners.

The issue came to light in 2010, five years before tenants were notified, when the Transbay Joint Powers Authority hired a consultant to find out how excavation could affect the tower.

The Transbay Joint Powers Authority maintains it is not at fault in the building's sinking.

The agency released a statement in October condemning the allegations against it as a "distraction from the exclusive cause" of the tower's tilt: "inadequate foundation."

The statement says Millennium Tower's vertical settlement began two years before the Transbay Joint Powers Authority began any underground work.

Read more: San Francisco's new $2.3 billion transit center could be the most expensive bus terminal in the world »

Some critics blame city officials in San Francisco for allowing Millennium Partners to anchor the building 80 feet into packed sand rather than 200 feet down to bedrock.

Millennium Tower sits on an array of nearly 1,000 pillars shoved into the ground.

Its weight, combined with the resistance of the soil underneath, should keep it in place under most conditions, a professor of architectural design told real-estate site Curbed.

The design isn't all that unusual. Some of the city's best-known buildings, including the Embarcadero Center and the San Francisco Museum of Modern Art, were built on sand instead of bedrock.

The biggest cause for concern is the looming possibility of an earthquake.

For years, scientists have warned that the Bay Area is overdue for a devastating earthquake.

Millennium Tower sits on land prone to liquefaction, the process by which loose sand and silt behave like a liquid in the event of an earthquake. The seismic activity causes water pressure in the sediment to increase and grains of sand to lose contact with each other, according to the US Geological Survey. The soil may give out under large, heavy structures.

Often, the solution for tall buildings in liquefaction zones is drilling down to bedrock. Millennium Tower's neighbors, the $1.1 billion Salesforce Tower and the luxury high-rise 181 Fremont, are both anchored to bedrock. They're still under construction.

There's good news and bad news for residents. A study released in January 2017 by the city's Department of Building Inspection found that the skyscraper was safe to live in.

"There was no evidence of life-safety concerns observed during the inspection,"the report said.

Satellite images taken in 2016 that show Millennium Tower sinking suggested it will continue to sink at a rate of 2 inches a year. That's double what engineers estimated.

Source: Business Insider

Gaps found in the walls of some units could also present risks in the event of a fire, according to a report commissioned by the building's homeowners association.

In 2017, the building's homeowners association hired the firm Allana Buick and Bers to investigate a unit owned by Paula Pretlow. She and several other residents had complained of "unexplained odors permeating their luxury units,"NBC Bay Area reported.

The consultants discovered openings around pipes and ducts in the walls. Typically, gaps like these are sealed with fire-resistant caulking to contain fires where they start.

If a small fire were to break out in the unit below Pretlow's, the flames could more easily spread to her condo, or smoke could damage the walls, according to NBC Bay Area.

The report pertained only to Pretlow's unit, though others could be susceptible.

A group of Millennium Tower residents fought to get their money back — and it appears they've succeeded.

Roughly 250 tenants filed individual lawsuits against developer Millennium Partners and Transbay Joint Powers Authority, while the remaining 150 filed class-action lawsuits. According to Niall McCarthy, who spoke with the San Francisco Examiner, residents are set to receive "very significant payments" as a result of their losses due to the building's notoriety and loss of property value. 

On August 30, a $100 million plan to stabilize the building with a "perimeter pile upgrade" was reported to be approved. According to the San Francisco Examiner, the process of stopping the building from sinking any further involves drilling "52 concrete piles down to the bedrock" in order to secure the tower's corrupted foundation.

Source: San Francisco Examiner

A date for the repairs has not been released as of yet. However, this tentative settlement marks a turning point for residents.

The stigma and notoriety of the building, however, may stick, says Niall McCarthy, a legal attorney representing a group of Millennium Tower homeowners.

"Even with the fix, there's still going to be some stigma to the property," he said. "You see tour buses go down Mission Street that stop and point out Millennium Tower. At some point, when these people try and resell their units, the stigma from the sink and tilt will reduce the value of what it should be."

• Read more:
• San Francisco real estate agents reveal most requested features tech workers ask for in buying their multi-million dollar homes
• The most expensive listing in San Francisco just received a $4.5 million price cut, but it's still on track to shatter the city's real-estate record — take a look inside the gorgeous complex
• This former Googler says he's so tired of the astronomical housing prices in San Francisco that he bought land in Austin, Texas, instead
• Disappointing photos show what living in San Francisco on a tech salary really looks like