Raphael Stevens

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    Opinion: The elements for a big stock market drop are aligning. Here’s why investors shouldn’t panic

    Traders work on the floor at the New York Stock Exchange.
    Brendan McDermid | Reuters

    When is the next stock market crash taking place?
    It’s a question I get asked often since I wrote “A History of the United States in Five Crashes — Stock Market Meldowns That Defined a Nation.” Until now, I’ve always been able to counsel that stock market crashes are comfortingly rare events that occur only when elements align, and that a crash is unlikely in the near future. Is this still the case?

    It’s always helpful to examine the elements that foster a crash.
    The first is a frothy stock market.
    It is no accident that the first modern stock market crash, the Panic of 1907, occurred after the biggest two-year rally in the history of the Dow Jones Industrial Average. The benchmark gained 95.9% from 1905 to the end of 1906. The crash in 1929 occurred after the second-largest two-year rally ever, up 90.1% from 1927 to 1928. More recently, the S&P 500 was up 43.6% for the year on Aug. 25, 1987, and the largest crash in history occurred 38 trading days later, wiping away all those gains and more.
    The second element for a potential crash is rising interest rates. It was the Federal Reserve that pushed short-term interest rates from 1% in May 2004 to 5.25% in September 2006 and unsettled the shadow economy — while making stocks less attractive, as you could make a decent return with no risk by buying T-bills.
    The third element is some newfangled financial contraption that injects leverage into the financial system at the worst possible time. In 1987, it was the ill-named portfolio insurance — which was really just a scheme to sell stocks or stock index futures in increasing numbers as the market fell. In 2008, it was mortgage-backed securities and their metastatic offspring such as collateralized debt obligations, collateralized loan obligations and credit default swaps. During the 2010 flash crash it was naive algorithmic trading and the even more naive institutional users who again failed to think about capacity issues.

    The most capricious element is a catalyst. That often has nothing to do with financial markets. In 1907, it was the San Francisco earthquake. During the flash crash, it was turmoil in the euro zone that nearly resulted in the collapse of the common European currency. Sometimes the catalyst is legal or geopolitical.
    But, for the first time in more than a decade, the elements for a crash are aligning. This certainly doesn’t mean one is inevitable. The elements are necessary, not sufficient, but they’re there.
    The S&P 500 has rallied 140% since March 2020, and its forward price-to-earnings ratio is now 20.3. This is only the second time it’s been above 20 since 2001, FactSet data shows.

    Stock chart icon

    Interest rates have stopped their climb, but the yield on the 10-year Treasury has quadrupled over the last three years. Now, expectations for lower rates are evaporating; option traders would call that a synthetic rate hike.
    There’s no telling if there will be a catalyst, but since the catalyst for the 1929 crash was legal and the one for the 1987 crash was geopolitical, we’re primed.
    Finally, we come to the contraption. Historically the risk generated by the new contraption that fuels a stock market crash has been both opaque and enormous in size while seasoned with a dash of leverage. That’s why I’ve always said it’s unlikely to be crypto; there’s not enough leverage. But now we’re faced with a collapse in the private credit market, which is essentially hedge funds serving as banks and making loans.
    The private credit market is huge — some estimate it’s as large as $3 trillion in the United States alone. There’s a reason these private borrowers don’t turn to traditional banks — they’re usually riskier than a traditional bank wants to deal with. The International Monetary Fund in April warned about private credit by saying: “Rapid growth of this opaque and highly interconnected segment of the financial system could heighten financial vulnerabilities given its limited oversight.” That’s a heck of a contraption the hedge funds have there: enormous, risky, opaque and highly interconnected. It sounds frighteningly familiar.
    So how does the prudent investor respond? Not by dumping all your stocks and climbing into a bunker. That’s generally what happens after a crash — investors swear off stocks for a decade or a lifetime and miss all the later gains. It’s not by speculating on a crash. It’s both expensive and impossible to pick a top, and even if you do, you also have to pick the subsequent bottom at a time when fear dominates and greed disappears.
    Fortunately, the things that do work are simple and straightforward. Do you have the right sort of diversification? A traditional 60/40 portfolio still works, and it would be easy, given this year’s price action, to be overweight stocks and underweight the bonds that benefit from a crash-induced flight to quality.
    Are you overweight this year’s highest fliers? Congratulations if you are, it means you’ve done well. But the S&P 500 Index is up 12% this year while the S&P 500 Equal Weight Index is up just 4%. That means the biggest names and highest fliers are responsible for the bulk of the market’s gains this year.
    Finally, stick with your plan. Looking back, all those crashes seem like wonderful buying opportunities. That’s because the American stock market is the place to be, even if it’s occasionally painful.
    — Scott Nations is president of Nations Indexes, Inc. More

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    Roche alleges counterfeit diabetes medical devices were sold on Amazon

    Roche in a lawsuit accused manufacturers and sellers based in India of selling counterfeit versions of its Accu-Chek devices on Amazon.
    Roche said the test strips are expired or nearly expired products that are repackaged with counterfeit labels bearing Roche’s registered U.S. trademarks and fake expiration dates.
    Amazon is not a defendant in the case but is alleged to have held the counterfeit products at U.S. facilities and shipped them to customers.

    Roche, one of the world’s largest biotech companies, said “dangerous counterfeits” of its diabetes medical devices ended up for sale on Amazon to be bought by patients throughout the United States.
    Roche accused manufacturers and sellers based in India of selling counterfeit versions of its Accu-Chek devices, which are used to test blood glucose levels. The company made the claim in a federal lawsuit unsealed late Friday.

    “Patients know that Roche’s Accu-Chek medical devices are safe, sterile and accurate,” the complaint said. Roche said the counterfeit test strips are expired or nearly expired products that are repackaged with counterfeit labels bearing Roche’s registered U.S. trademarks and fake expiration dates.
    It warned that the counterfeit devices are “likely to give false or inaccurate measurements of blood glucose levels, putting patients at risk of severe and life-threatening complications, such as hyperglycemia and over- or under-dosages of insulin.”
    The lawsuit, which was filed under seal in May in the U.S. District Court in the Brooklyn borough of New York City, named as defendants four companies and their executives, all based in India. Roche is seeking unspecified damages.
    After the suit was filed, a judge granted Roche’s request for a temporary restraining order to stop the defendants from selling the counterfeit products. The Amazon stores that were offering the products for sale appear to have been taken down.

    Roche Diabetes Care Inc. Accu-Chek brand glucose test strips are arranged for a photograph in the Brooklyn borough of New York, U.S., on Thursday, April 4, 2019. 
    Alex Flynn | Bloomberg | Getty Images

    Amazon is not a defendant in the case, but Roche claims that as part of the alleged scheme all of the counterfeit products sent to the U.S. were stored at Amazon warehouses across the country, including in Brooklyn. The products are typically shipped to businesses and individuals within 48 hours of landing at Amazon facilities.

    “Amazon currently has untold numbers of these dangerous counterfeit medical devices in its warehouses across the country, ready to deliver to unsuspecting American consumers at the click of a button,” the complaint said.
    Roche said the counterfeiters participated in Amazon’s Fulfillment by Amazon program, through which “Amazon agrees to receive, store, and accept orders on behalf of the counterfeiters; to pick, pack, and ship the counterfeit goods; and to provide customer service for the counterfeiters. … Amazon, in return, receives a sizable percentage of the revenue from the counterfeit sales,” according to the complaint.
    An Amazon spokesman told CNBC that the company has “a zero tolerance policy for counterfeit products. We have proactive measures in place to prevent counterfeit products from being listed and continuously monitor our store. If we identify an issue, we act quickly to protect customers and brands, including removing counterfeit listings and blocking accounts, and collaborating with brands and law enforcement to protect our customers from bad actors attempting to abuse our store.”
    The complaint was filed on behalf of Roche Diabetes Care Inc., Roche Diabetes Care GmbH and Hoffmann-La Roche Inc, by attorneys with the New York-based law firm Patterson Belknap Webb & Tyler.
    The defendants are JMD Enterprises doing business as DKY Store USA, JMD Enterprises founder and owner Dileep Kumar Yadav, JMD International, JMD International owner and founder Abhishek Jain, Medical Hub_USA Store, Medical Hub_USA owner Ratnakar Sharma, Authentic Indian Store and Authentic Indian Store owner Atikur Rahman.
    CNBC contacted the defendants for comment, but has not yet received responses.
    A spokesperson for Roche told CNBC that the company does not comment on ongoing lawsuits.

    Counterfeit medical devices

    Roche’s Accu-Chek diabetes care medical devices, used by millions of patients, include Accu-Chek glucometers, blood glucose test strips and lancets. The company’s blood glucose test strips and lancets can be purchased with or without a prescription at pharmacies and online marketplaces, including Amazon.

    Roche Accu-Chek SoftClix
    Source: Roche

    The lancets are specialized disposable needles used to draw blood for testing.
    The packaging on the counterfeit devices at the center of the lawsuit includes a misspelling of the name of the product as well as fake serial numbers and expiration dates, according to the complaint.

    Arrows pointing outwards

    These counterfeit Roche products show the product’s name misspelled.
    Source: U.S. District Court filing

    The company launched an investigation into the counterfeits in late March when a whistleblower reached out with information, according to the complaint. Its investigators then purchased the products from the three Amazon stores listed in the complaint, the lawsuit said.
    As recently as May, a customer left a negative review on Amazon’s platform, complaining that he had ordered test strips from the DKY Store but received a different product. In March, a different customer said the lancets she purchased from DKY were fake.

    Arrows pointing outwards

    Fake identical serial numbers on the packages are another indicator of counterfeits.
    Source: U.S. District court filing

    Roche did not specify how long the counterfeit items were being sold on Amazon, or how many ultimately made it to customers.
    The issue of potentially dangerous glucose test strips emerged in 2019 when the Food and Drug Administration warned against using test strips from a previous owner or ones not authorized for sale in the U.S. At the time, the FDA said faulty test strips were being sold via online marketplaces and individual sellers.
    In 2011, Johnson & Johnson said it found counterfeit versions of its glucose test strips in India.
    CNBC in March reported findings of an investigation into stolen items sold on Amazon’s marketplace via organized retail crime rings. The report centered on millions of dollars of items stolen from Ulta Beauty that were being sold for more than a decade on the platform.
    And in 2023, a CNBC investigation revealed how counterfeiters illegally alter prescription medications, which are then funneled into a gray market supply chain for resale to pharmacies and ultimately to patients. More

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    Delta to launch premium economy service on NYC-LA flights in air travel upsell race

    Delta is planning to launch its premium economy service on some transcontinental flights.
    Premium economy seats can cost twice as much as standard economy for some flights.
    Delta has said revenue from seating like premium economy or first class is growing faster than sales from standard economy.

    A Boeing 767 passenger aircraft of Delta Air Lines arrives from Dublin at JFK International Airport in New York as the Manhattan skyline looms in the background on Feb. 7, 2024.
    Charly Triballeau | Afp | Getty Images

    Delta Air Lines said Monday that it will bring its premium economy service to transcontinental flights in September, its latest attempt to boost sales of higher-priced tickets to customers willing to splurge for more space and perks.
    Premium economy is a relatively new class of service that major airlines offer on longer, mostly international flights. It sits between first or business class and the rest of economy and can command a ticket price often twice as much as standard coach.

    Delta and its rivals like United are locked in an arms race to outfit planes with more premium seating, upgrade lounges and sell more rewards cards to capitalize on higher-spending travelers, while airfare overall slips. JetBlue Airways this year said its turnaround plan will emphasize profitable routes that offer its Mint business-class cabin. Even Southwest Airlines, under pressure to increase revenue, is considering a more expensive seat on its planes, breaking from its decades-old business model.
    Ticket revenue from Delta’s main cabin rose 4% in the first quarter to $5.4 billion from a year ago, while premium-product revenue came in 10% higher at $4.4 billion.
    The added service will start Sept. 10 on four of 11 peak-day flights between Los Angeles and New York’s John F. Kennedy International Airport on Boeing 767s. Delta said it plans to expand service later this year.
    Delta customers who purchase standard economy tickets will be able to pay for upgrades to premium economy on the transcontinental flights.
    Delta said Medallion elite members of its loyalty program, will be eligible for complimentary upgrades to so-called Delta Premium Select, but they will also be able to list for upgrades to its top-tier Delta One product on those flights.

    Some of Delta’s planes flying some routes previously had premium economy seats on them, but the carrier wasn’t offering the service that comes along with it, like amenities kits, noise-canceling headphones, a full meal and a blanket. The seats were sold as extra legroom tickets, which are a rung below premium economy.
    Some American Airlines’ shorter domestic flights operate a similar model, featuring lie-flat seats but not the Flagship service offered on international flights. More

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    China is distorting its stockmarket by trying to prop it up

    Investors in China’s stockmarket have been doing handsomely this year. The Shanghai composite index has risen by 13% from a multi-year low in February, notwithstanding a recent drop. Equity analysts and state media alike are cheering. For Xi Jinping, China’s leader, the rally was a relief, since retail investors own at least 80% of the market. A previous rout hurt them badly, adding to anxieties about the country’s future. To many, the recovery reflected good governance and fortune.Part of the rally came from the purchase of tens of billions of dollars-worth of shares by the “national team”, a group of state-owned institutions that ride to the rescue when China’s markets wobble. For Mr Xi, the bill may appear worth it. But the state has also tinkered with the market in other, more destructive ways. In an effort to boost share prices, it has put an end to a bonanza in initial public offerings (IPOs). With fewer exit opportunities for private investors, state capital has become more dominant. The danger is that these distortions will crimp the growth of China’s most innovative firms. More

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    Elliott takes $1.9 billion stake in Southwest Airlines, seeks to oust CEO and chair

    Activist Elliott Management has a $1.9 billion stake in Southwest Airlines and plans to push for leadership changes at the struggling company.
    The stake makes Elliott one of Southwest’s largest shareholders.
    Southwest has struggled with challenges including Boeing’s 737 Max delivery delays.

    A Southwest Airlines jet comes in for a landing at Laguardia Airport in New York City, New York, U.S., January 11, 2023. 
    Mike Segar | Reuters

    Activist hedge fund Elliott Management has amassed a $1.9 billion stake in Southwest Airlines and plans to push for leadership changes at the airline that has lagged big rivals.
    The stake makes Elliott one of Southwest’s largest shareholders, according to FactSet. Shares of Southwest were up 7% in premarket trading Monday.

    The company had a market capitalization of $16.6 billion as of Friday’s close.
    Southwest has struggled with delays at Boeing of new 737 Max planes, the newest models of the plane which the carrier exclusively flies, as well as shifting travel demand patterns after the pandemic.
    The airline’s leaders are now looking for new ways to drum up revenue to better compete with rivals that offer travelers more perks and products. Southwest CEO Bob Jordan, who took the helm in February 2022 after decades with the airline, told CNBC in April that the carrier is considering ditching its single class of airplane seating and longtime boarding method.
    The airline also faced a reckoning from a holiday meltdown at the end of 2022 that cost it more than $1 billion and forced the airline long known for good customer service to win over the flying public and make quick fixes to its internal staff scheduling software.
    Southwest shares are down by more than 50% from three years ago when travel demand, led by domestic trips, was starting to come back. In contrast, Delta Air Lines shares are up around 10% over that period and United Airlines are down about 7%.

    Elliott’s campaigns at other companies have likewise centered on a change in leadership. Elliott’s second campaign at Crown Castle in 2022 and settlement agreement with automotive parts supplier Sensata earlier this year are just two instances.
    In just the last few months, the activist has taken a $2.5 billion stake in semiconductor firm Texas Instruments, a $2 billion stake in Japanese conglomerate SoftBank and a $1 billion stake in mining concern Anglo American.  More

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    Family offices are planning big investments in private companies

    A majority of family offices made at least six direct investments last year, where they buy a stake in a private company or provide lending, according to a survey by BNY Mellon Wealth Management.
    Investing directly allows them to contribute their expertise and management advice to the portfolio companies, as well as their capital.
    Private companies are increasingly attracted to family offices as banks tighten lending and private equity firms do fewer deals.

    Westend61 | Getty Images

    Family offices are increasingly becoming their own private equity funds and investing in companies directly, according to a new survey.
    A majority (62%) of family offices made at least six direct investments last year, where they buy a stake in a private company or provide lending, according to the survey of family offices by BNY Mellon Wealth Management.

    An even larger number of family offices (71%), plan to make the same number or more direct investments in 2024. With the number of family offices tripling since 2019, and their total assets reaching an estimated $6 trillion or more, the flood of family office money into private companies could reshape private markets and the private equity industry.
    “Direct investment presents exciting opportunities for family offices to leverage their unique competencies,” according to the report.

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    Family offices — the private investment arms of wealthy families — are often founded by entrepreneurs, who are skilled at running a private company, according to the report. Investing directly allows them to contribute their expertise and management advice to the portfolio companies, as well as their capital.
    At the same time, private companies are increasingly attracted to family offices as banks tighten lending and private equity firms do fewer deals. Family offices have the advantage of offering more patient capital, since they’re typically investing for decades or even generations.
    “Successful private market deals capture the illiquidity premium, meaning that they can potentially achieve significantly higher returns than are available through public markets or even pooled private market investments,” the report said.

    Family offices are also co-investing alongside private equity firms, which can reduce the fees and increase carried interest payments.
    Direct investing has its challenges, of course. Family offices typically succeed in industries where the family office built their fortune or have special expertise, which can limit their investing range. Doing proper due diligence – a deep dive into the financials and management of a company – can be difficult for small family offices. As a result, many are seeking help from larger wealth management firms and deal advisors.
    While two-thirds of family offices do their own internal due diligence on direct investments, nearly half also seek input from an investment consultant.

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    Moderna’s combination Covid, flu vaccine is more effective than existing shots in late-stage trial

    Moderna said its combination vaccine targeting Covid and the flu was more effective than existing standalone shots for those viruses in a late-stage trial. 
    The biotech company is the first to release positive phase three data on a Covid and flu combination shot, giving it a potential lead over rivals Pfizer and Novavax. 
    Moderna plans to file for regulatory approval for its combination jab this summer in the U.S. and hopes it can enter the market in 2025, said the company’s CEO Stephane Bancel.

    Moderna on Monday said its combination vaccine that targets both Covid-19 and the flu was more effective than existing standalone shots for those viruses in a late-stage trial. 
    The biotech company is the first to release positive phase three data on a Covid and flu combination shot, giving it a potential lead over rival vaccine makers Pfizer and Novavax. 

    Moderna plans to file for regulatory approval for its combination jab this summer in the U.S. and hopes it can enter the market in 2025, the company’s CEO Stephane Bancel said in an interview. 
    Moderna, Pfizer and Novavax have said that combination shots will simplify how people can protect themselves against respiratory viruses that typically surge around the same time of the year. The added convenience is critical as fewer Americans roll up their sleeves to get vaccinated against Covid. 
    Bancel added that combination shots could reduce the burden of respiratory viruses on pharmacists and the broader U.S. health-care system, which has been grappling with a labor shortage that has many workers stretched thin.
    Moderna’s messenger RNA combination shot, called mRNA-1083, is made up of both the company’s vaccine candidate for seasonal influenza and a newer, “next-generation” version of its Covid shot. Both of those experimental vaccines – mRNA-1010 and mRNA-1283 – have shown positive results in separate phase three trials. 
    The ongoing late-stage trial on mRNA-1083 examined the combination shot in 8,000 patients. 

    The study compared the combination shot with an enhanced flu vaccine called Fluzone HD and Moderna’s currently licensed Covid shot, Spikevax, in one group of patients ages 65 and above. The trial also compared Moderna’s combination jab with a standard flu shot called Fluarix and Spikevax in another group of participants between the ages of 50 and 64. 
    In both age groups, a single dose of Moderna’s combination vaccine produced “statistically significantly higher” immune responses against three strains of influenza and the Covid omicron variant XBB.1.5.
    Moderna said the safety of the combination shot, along with how well patients could tolerate it, was acceptable. The most common side effects were injection site pain, fatigue, muscle pain and headache. The majority of those effects were mild to moderate in severity. 
    Moderna is also developing a combination shot targeting the flu and RSV, and another vaccine targeting all three respiratory viruses: Covid, flu and RSV. 
    Meanwhile, Pfizer and BioNTech also are studying a vaccine that targets both Covid and the flu in a late-stage trial. Novavax is developing a combination for those viruses as well, but its Covid shot uses protein-based technology.

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    Buying a house of ‘Home Alone’ or John Lennon fame? There’s a premium for that

    A number of famous homes are for sale. They include the houses in “Home Alone” and “Full House,” as well as properties owned by Beatles member John Lennon and Yoko Ono, and actor Paul Reubens, known for his character Pee-wee Herman.
    Renowned homes typically fetch a price premium, according to luxury real estate agents.
    Wealthy buyers who view the homes as collectibles are generally willing to pay anything, they said.

    The original house used in the “Home Alone” movies on Nov. 8, 2021.
    Erin Hooley/Chicago Tribune/Tribune News Service via Getty Images

    An array of iconic homes are for sale — and buyers will almost certainly pay extra for that pedigree.
    However, that premium is hard to quantify since some uber-wealthy buyers will pay almost anything to own a piece of pop culture, according to real estate experts.

    “It’s like owning a Picasso” or a Fabergé egg, said Tomer Fridman, a real estate agent based in Los Angeles who specializes in luxury and celebrity homes.
    “You’re buying something that’s super unique and something that is very rare,” he said.

    Buying for ‘Hollywood cachet’

    Among recent notable listings: The Victorian home depicted on the sitcom “Full House” hit the market Thursday in San Francisco for $6.5 million. Last month, the “Home Alone” house — the brick estate famously boobytrapped by character Kevin McCallister — listed for $5.25 million.
    John Lennon and Yoko Ono’s first New York City home, a two-story SoHo loft, also hit the market for $5.5 million in May. The Los Angeles home of the late Paul Reubens, best known for his character Pee-wee Herman, is also for sale, for about $5 million.
    More from Personal Finance:36% of Americans think real estate is best long-term investmentInvestor home purchases jump for the first time in two years20% down payment is ‘definitely not required’ to buy a house

    Luxury real estate prices recently hit a record high. The uber-wealthy are largely insulated from high mortgage rates since many can afford to make all-cash deals, according to real estate experts.
    Famous homes generally command even loftier price tags than their market equivalents, those experts said.
    Josh Altman, a luxury real estate agent in Los Angeles who is featured on the Bravo show “Million Dollar Listing,” estimates the premium can be perhaps 5% to 10% if the home is tied to a “household name” celebrity.
    “There’s definitely this Hollywood cachet of ‘I bought so-and-so’s house,'” said Altman. His firm’s clients have included stars like Justin Bieber, James Cameron, Alicia Keys and Britney Spears.
    “Home Alone” is “one of the most famous movies ever,” he added. “That’ll definitely get a premium, in my opinion.”

    The rich often pay ‘whatever it takes’

    The ultimate price tag on such homes generally doesn’t matter to their uber-wealthy buyers, said Fridman, who has sold properties owned by celebrities including Marilyn Monroe, Sylvester Stallone, and Kylie Jenner and Travis Scott.
    Many view the house as a collector’s item and make an “emotional purchase,” Fridman said.
    Sellers can rake in a premium for a particular famous property via an initial pie-in-the-sky asking price or if potential buyers get into a bidding war, experts said.
    “They’re one of one,” said Amanda Pendleton, a home trends expert at Zillow. “Some people with means will pay whatever it takes to own that home.”

    Fans gather to take photos at 1709 Broderick Street, the house depicted in the filming of the TV show “Full House.” 
    Carlos Avila Gonzalez/San Francisco Chronicle via Getty Images

    The listing for the “Home Alone” property, outside Chicago, leans into its collector status, spotlighting the “rare opportunity to own one of the most iconic movie residences in American pop culture.”
    An offer is pending on that home and was made within a week of being on the market, said Andrea Gillespie, a spokesperson for Coldwell Banker Real Estate. The sellers’ asking price is more than triple the $1.585 million they paid in 2012.
    The listing for John Lennon and Yoko Ono’s residence — the first time it’s been for sale in 53 years — also plays up its former occupants’ fame.
    “Anywhere that they lived is going to have some sort of value,” according to Philip Norman, author of the biography “John Lennon: The Life,” recently told The New York Times.
    Buyers of the “Full House” home have the option of getting handprints in concrete stones of the show’s cast members, including Bob Saget and John Stamos, according to Architectural Digest.

    Infamy sells, too

    Infamy can also fetch a higher price, said Arto Poladian, a Redfin luxury real estate agent in Los Angeles.
    In 2021, Poladian sold the so-called LaBianca house — the home where Charles Manson’s followers killed Leno and Rosemary LaBianca in 1969 — for $1.875 million.
    The property’s notoriety generated interest and attracted more prospective buyers — “and ultimately with that interest you get a little bit of a higher premium than without it,” Poladian said.
    The listing was geared to buyers like “history buffs” or those who wanted to “add their touches to reimagine one of LA’s most unique properties.”

    It’s like owning a Picasso.

    Tomer Fridman
    luxury real estate agent

    Sometimes, even being in the vicinity of a famous residence can help, he added. For example, in 2018 he sold the house next door to the one used for the filming of the original “The Karate Kid” movie.
    “Any type of famous home — or a home next to a famous home — will draw interest from prospective buyers and lookie-loos,” he said.
    There’s sometimes a ceiling to what super fans are willing to pay, said Pendleton.
    She cited the “Brady Bunch” house as an example: The Studio City, California, home — which was remodeled to look identical to the home on the TV series — sold for about $3.2 million in 2023 after months on the market; it had been listed for $5.5 million.
    The publicity attached to certain properties is likely a “turnoff” for some would-be buyers, Pendleton said.

    Similarly, a superstar’s home won’t command as much of a premium if it’s not updated and move-in-ready, said Poladian.
    For example, Kanye West — the rapper who now goes by Ye — bought a Malibu, California, mega-mansion for $57.3 million in 2021. However, he has struggled to sell the home, which he gutted and left in disrepair; he listed the home last year for $53 million but recently dropped the price to $39 million. (A contractor also sued West in January and a lien was placed on the property, potentially complicating a sale.)
    “Kanye West can’t give his house away in Malibu,” said Altman, the Los Angeles real estate agent.
    Ultimately, though, a home’s value — whether a sprawling, renowned estate or a run-of-the-mill bungalow — is in the eye of the beholder.
    “At the end of the day, a home is worth whatever the person is willing to pay for it,” Pendleton said.

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