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Some Luxury Homeowners Scale Back on Extra Bedrooms

Jeff Grinspoon’s 7,569-square-foot Chicago home has five decks and terraces outfitted with an outdoor theater and hot tub. There is a 900-square-foot gym, an oak-paneled library, and a barrel-vaulted penthouse for entertaining.

Yet there are just two bedrooms—and that’s by design.

“Honestly, we don’t want a house full of guests,” said Mr. Grinspoon, a 53-year-old real-estate developer. He and his husband and business partner, Jon Foley, spent about $4 million in 2004 on the land and custom home, agreeing that having rarely used bedrooms would be just a waste of space. Now that the couple is building a new home in Aspen, Colo., they are listing the home for $4.995 million, with the hopes of finding a like-minded buyer.

Fed up with dusty, unused bedrooms—or lingering house guests who can’t take a hint—some luxury homeowners are scaling back on sleeping quarters in their spacious spreads. That can translate into more space for hobby rooms and other amenities that raise the value of a home. But when it comes time to sell, a low bedroom count has its risks.

“There’s always going to be a narrower market” for a home with fewer bedrooms, said Javier Vivas, economic research manager for real-estate website realtor.com®. It’s what the homeowners do with that extra space that counts, he said.

In an analysis of the 50-largest metro areas last year, realtor.com found that luxury homes with more living space and fewer bedrooms commanded higher sale prices than comparable listings in their markets, but they took longer to sell. The analysis looked at homes valued in the top 10% of a region’s market.

The typical luxury home for sale in 2016 measured a median 4,706 square feet and had five bedrooms—or roughly one bedroom for every 1,000 square feet. Homes with a higher living-space-to-bedroom ratio (more than 1,500 square feet per bedroom) spent an average 117 days on the market, 15% longer than typical homes. Homes with less than 750 square feet per bedroom—meaning those that squeezed more bedrooms in the layout—sold the fastest, with just 91 days on the market. (News Corp, owner of The Wall Street Journal, also operates realtor.com under license from the National Association of Realtors.)

Homes that have other desirable amenities, such as larger entertaining spaces, could offset the low bedroom count when it comes time to sell, Mr. Vivas added. These homes, with large spreads and relatively few bedrooms, sold for an average $1.42 million. That is 31% higher than luxury homes with a typical number of bedrooms ($1.08 million), and 55% higher than homes that crammed in extra bedrooms ($915,000).

This is in part because large homes with fewer bedrooms tended to have more living space overall, and weren’t necessarily more valuable on a price-per-square-foot basis, he added.

In Malibu, Calif., Catherine Mathews and her family are listing a 3,218-square-foot, one-bedroom beach house for $5.995 million. Built in 1979, the three-story contemporary home allocated much of the floor plan to the double-height great room, clad in redwood paneling, with a south-facing wall of glass that overlooks the ocean. The only bedroom, a lofted space above the living area, has clear views of the Pacific Ocean, where pods of dolphins can be seen.

“You can sit in one spot and watch the sun rise and set, and you never have to move,” said Ms. Mathews, a 55-year-old fiduciary for the family estate, who lived in the home from 2011 to 2013. “It’s a huge luxury to have a [big] one-bedroom all to yourself.”

Her uncle, the late Irwin Allen, a film producer known for such films as 1972’s “The Poseidon Adventure,” bought the home with his wife, actress Sheila Mathews Allen, in the late 1980s. “It was perfect for a couple,” Ms. Mathews said, especially since they didn’t have children.

After Mrs. Allen’s death in 2013, the family decided to sell. The home was listed in 2014 for about $8 million; in July it was relisted for just under $7 million, and lowered to the current price of about $6 million in January.

Ms. Mathews says the lack of bedrooms puts the home at a disadvantage in the neighborhood, where similar homes typically have three or more. Adding bedrooms to a coastal property such as this is possible, a representative with the City of Malibu Planning Department said, but can become more complicated if exterior walls or plumbing is changed.

The luxury market for two or fewer bedrooms is small. In 2016, 97% of all new homes for sale asking for $1 million or more had at least four bedrooms, according to census data reviewed by the National Association of Home Builders, a trade group. In a survey of 4,300 people released in January, NAHB found that 51% of buyers between 35 to 44 years old wanted a home with four or more bedrooms. Three bedrooms was the most popular choice across other age groups.

For the subset of buyers that care less about bedroom count, interesting choices abound. Matthew Katzenson, 53, and his partner Antonio Aguilar, 50, searched for 1½ years before finding their two-bedroom, Midcentury Modern home in Glendora, Calif., a suburb of Los Angeles. They bought the 2,600-square-foot home for $540,000 in 2011, city records show.

Built in 1963, the minimalist, L-shaped home was to be the prototype for a community of modernist homes in the neighborhood, said listing agent and architectural historian Matt Berkley. But the plan was scrapped in favor of more traditional ranch houses, and this was one of only two built. “It was too avant-garde. People were afraid of being labeled Communist,” he said.

For Mr. Katzenson, the owner of a gift and home-furnishings sales agency, the home’s architectural style was a major lure. The original open floorplan, with walls of glass opening to the backyard, were largely intact. Aside from restoration projects, such as refinishing the pockets doors and original built-ins, the couple spent most of their effort on redesigning the landscaping around the home, to reinforce the outdoor-living feel.

“We don’t have kids, so having a much larger house or a third bedroom was never a consideration for us,” said Mr. Katzenson.

The couple is now looking to sell the home because they plan to move to southern Oregon to buy more land and focus on Mr. Aguilar’s horticultural work. They expect to list the home for about $1.1 million, or roughly double their purchase price when they bought at the bottom of the market six years ago.

“When you have a two-bedroom in a bedroom community like Glendora, it is antithetical,” said Mr. Berkley, the listing agent. But he still expects to get offers in excess of their asking price, because of the high demand for original Midcentury Modern design.

To improve the odds of selling his home, Mr. Grinspoon, the Chicago homeowner, is now marketing his place as a three-bedroom property, since the library could be converted into a guest room, he said.

He’s also emphasizing positive traits, such as a corner lot that creates light-filled formal living and dining areas. Where others shoehorn a guest room, his home has a grand staircase with leather-wrapped handrails and 18th-century balustrades imported from England. After that, he said, homeowners should be honest.

“Really, when is the last time you used bedrooms four and five?”

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