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Billionaires own homes worth their riches

How does the other half live? Well, it depends. Try more like how the other .00001% lives.
An aerial view of Microsoft's Bill Gates' estate.Dan Callister / Getty Images file
/ Source: Forbes

How does the other half live? Well, it depends. Try more like how the other .00001 percent lives.

According to the National Association of Home Builders, the median American house size is slightly more than 2,000 square feet. Compare that to the domicile of the world's richest man: as might be expected from one with that sobriquet, Microsoft founder Bill Gates' house is more than 30 times that size. The NAHB says that most houses have three bedrooms, one fireplace and are sided in vinyl or aluminum. Some billionaires' homes have more than a dozen bedrooms; the only vinyl is in the rare-record collection housed in the custom-built listening room.

(MSNBC is a joint venture of Microsoft and NBC)

Yet as extravagant as some of their mansions may seem, the homes of the superrich are not out of proportion to their wealth. In fact, they can seem comparatively downright modest.

A report released by the National Association of Realtors last year pointed out that in the U.S., about a fifth of a household's wealth is composed of home equity. Let's say that held true for Warren Buffett. The mastermind behind holding company Berkshire Hathaway is second on our list of the World's Richest People, with an estimated net worth of $42 billion. If he sank the average 20 percent into his home, the property would have to be worth ... oh, approximately $8.4 billion. In other words, the gross domestic product of Libya.

Instead, Buffet lives more like a millionaire than a billionaire. For nearly 50 years, he's bedded down in the same Omaha house he bought for $31,500. Although far from elaborate, it is still more than adequate. In 2003, the local assessor pegged its value at nearly $700,000. Buffett disagreed — he thought it was worth more like $500,000.

Buffett's not the only penny-wise homeowner on the list. Ingvar Kamprad, founder and former chief executive of home furnishings giant IKEA, is a notorious tightwad who drives a second-hand Volvo despite his estimated $28 billlion fortune. His house in Lausanne, Switzerland, though hidden behind a high hedge, is said to be surprisingly unremarkable. He does indulge in winemaking, at his small vineyard in Provence, but has been known to complain that it's an expensive hobby.

And even though Gates' sprawling estate is tremendous and impressive, it's not Xanadu through and through. Sure, there's the tremendous main staircase, the 60-foot-long swimming pool ... but countless luxury estates have 20-room theaters. Just try peeking into a few Beverly Hills mansions.

Don't get us wrong, though. There are plenty of opulent estates in private and well-manicured hands.

Prince Alwaleed bin Talal Alsaud of Saudi Arabia, No. 8 on the list, has a 317-room palace in Riyadh, which reportedly cost $130 million to build. Totaling 400,000 square feet, it has a soccer field, eight elevators and more than 500 television sets. Then again, his $20 billion in riches, includes the largest individual stake in Citigroup.

Lakshmi Mittal, the Indian steel tycoon who is the world's fifth-richest man, set a worldwide price record for a single-family home in 2004 when he spent $128 million for a London townhouse. It's not just near a palace, it's outfitted like one. Even the columns by the swimming pool are said to be encrusted with gems.

And why not? Even if you don't need the mortgage-interest deduction on your income taxes, there are practical reasons to own a mega-mansion. If you want to pack some political punch, for example, you'd best be prepared to host some high-profile fundraisers. Hollywooder David Geffen boosted the campaign coffers of Bill Clinton and Al Gore with events at his Beverly Hills estate.

The GOP also has plenty of friendly fundraisers with big houses. In 2003, President George W. Bush visited cellular phone magnate Craig McCaw (and collected campaign money from deep-pocketed donors). The event also drew protestors to the wealthy enclave of Hunts Point, Wash.