No housing slump for super-rich
Joyce Rey stands in the soaring marble entryway of a palatial Bel-Air estate, ticking off its selling points.
Master suites? There are five of them, along with three living rooms, a gymnasium and a library. The dining chamber is “embassy-size,” and the pool and gurgling fountains are on par with those at the finest hotels.
“There are six bedrooms under the tennis courts, and nine more above the 10-car garage,” Rey tells a cluster of fellow sales agents scouting the place on behalf of clients. “And don’t forget to see the kitchen downstairs. It’s a commercial kitchen, and big enough to feed an army.”
At $40 million, it’s not for everyone. Yet Rey knows business has never been better in what’s known as the Platinum Triangle of Beverly Hills, Bel-Air and Holmby Hills.
Soccer star David Beckham, Amazon.com founder and Chief Executive Jeff Bezos and actor Tom Cruise all bought here this spring, paying $22 million to $35 million for their own grand estates.
“Homes like this will always have buyers because this is where the rich want to live,” says Rey, a trim platinum blond who looks at home amid the elegant surroundings in her sleek designer suit and peep-toe heels.
When Rey started selling real estate in the area three decades ago, it was known merely as the Golden Triangle.
Maybe it’s time for another upgrade.
While much of the nation -- and the region -- suffers through a real estate slump, sales in the Platinum Triangle are stronger than ever.
In the first four months of the year, 23 estates selling for at least $10 million closed escrow in the area, according to records kept by local real estate agents, up from 10 last year.
By contrast, home sales in Los Angeles County fell 19.1% through May, according to research firm DataQuick Information Systems.
Property values in the Platinum Triangle area are also outpacing the county overall, climbing 9% from Jan. 1 through May 30, compared with a 3.9% rise countywide. Indeed, the continued strength at the high end of the market has helped mask flat or declining prices elsewhere, such as in the Antelope Valley.
Super-rich get richer
Before the recent cooling trend, of course, most Southern California homeowners saw their properties escalate sharply in value. Still, the numbers sound a bit more dramatic at the upper registers.
“Twenty million dollars is the new $10 [million],” says Cecelia Kennelly-Waeschle, a Beverly Hills sales agent who tallies “the list,” the unofficial log of the Westside’s high-end sales.
Real estate experts say sales are being fueled by several factors, including the growing ranks of the wealthy.
The richest 5% of the nation’s population saw its average household wealth soar 40% (adjusted for inflation) from 1990 to 2005, according to census data. That contrasts with a 7.3% increase for middle-income families.
The super-rich are also getting super-richer: In 2000, 274 Americans on the Forbes 400 list had a net worth of at least $1 billion. By 2006, all 400 on the list had at least that much.
Rick Goodwin, who keeps tabs on the nation’s luxe estates as the publisher of Ultimate Homes magazine, says the U.S. is going through another Gilded Age.
“The wealthy are growing exponentially compared to the rest of us and they’ve got the money to really fulfill their fantasies,” Goodwin says. “One way they do that is by buying trophy properties.”
And few places in the world tout as many real estate crown jewels as Beverly Hills, Bel-Air and Holmby Hills, which typically offer lush, pastoral grounds and sweeping city or ocean views.
“It’s one of the last best places to own,” says Jeff Hyland, a Beverly Hills real estate broker who chauffeurs his clients in a smoke-gray Bentley.
As the film and entertainment capital, Los Angeles also has the advantage of being an international destination. And thanks to a weak dollar, it’s a relative bargain to wealthy foreign buyers.
On a recent Tuesday, Hyland spent his day greeting fellow sales agents at an open house at the top of Hillcrest Road in the heart of the most sought-after ZIP Code -- Beverly Hills 90210.
With floor-to-ceiling windows overlooking the city and the Hollywood Hills, the mid-century modern is owned by the family of the late Nathan Shapell, the Los Angeles developer who created Porter Ranch.
Sitting on a one-acre lot, the house has a list price of $9.9 million. For that bargain price, it’s a fixer-upper.
“We’re looking for a buyer who is willing to spend around $2 million restoring it,” Hyland says.
The Platinum Triangle wasn’t always on fire. During Southern California’s real estate downturn in the 1990s, Beverly Hills was among the first neighborhoods to slump. From 1989 to 1993 prices declined 40%.
“The last time, the high end was leading the charge on the way down,” says G.U. Krueger, who in the 1990s was the chief economist for the California Assn. of Realtors. “Now things are totally different.”
Krueger notes that the 1990s drop was triggered by job losses amid a broad economic downturn. The current housing malaise is largely driven by an affordability crunch at the lower end of the market, he says, as adjustable-rate loans ratchet higher and lenders tighten standards to counter rising defaults on mortgages.
Demand high, supply low
Such problems seem remote in L.A.'s ritziest neighborhoods, where agents say demand usually trumps supply.
“It’s like floor seats at the Lakers games -- there are only so many courtside seats available,” says broker Stephen Shapiro, co-owner of Beverly Hills-based Westside Estate Agency, which almost exclusively sells multimillion-dollar properties.
It wasn’t that long ago that a million bucks bought a true estate in the Platinum Triangle. One of the first sales topping $1 million was Hugh Hefner’s 1971 purchase in Holmby Hills of what would become known as the Playboy Mansion.
It was about then that Rey began her career in real estate, with an eye on selling only high-end homes. At the time she was the wife of the TV actor Alejandro Rey and living in Beverly Hills. Building her client list was made easier by the fact that she was already traveling in Hollywood’s elite circles.
Since then she has filled her resume with a catalog of record-breaking landmark sales in the Platinum Triangle, putting her in the top 1% of all U.S. real estate agents in sales by dollar volume.
In 1978, Rey became the first agent to sell a $4-million house in the Platinum Triangle, which happened to be double the highest price ever paid for a Los Angeles home.
The following year, she won the listing for Pickfair, the 42-room mansion owned by early film stars Douglas Fairbanks and Mary Pickford that had never been on the market before. It was bought by Jerry Buss in 1980 for $5.4 million.
In 2001, Rey closed a $29-million sale in Beverly Hills, at the time the highest price paid in a decade.
Now Rey is on the verge of her biggest deal. In April she and another agent landed the mother of all Platinum Triangle real estate listings -- a five-acre Bel-Air estate known as Fleur de Lys built by Metro Networks founder David Saperstein and his then-wife Suzanne in the 1990s. Asking price: $125 million.
“There just hasn’t been anything on the market like this before now,” Rey says.
The mansion, modeled after France’s Versailles palace, has 45,000 square feet of living space. Features include a ballroom adorned with ceiling frescoes, a library stocked with prized first-edition books and an indoor jogging track.
In the last two months, there have been more than a dozen showings, and the only ones allowed in for a tour are those who can prove they can afford it. In other words, billionaires.
If the property sells for anywhere near its asking price, it would break the record for the most expensive residential sale recorded in the United States. The record currently belongs to another Platinum Triangle address, a Bel-Air estate purchased by telecom mogul Gary Winnick in 2001 for $94 million, according to public records.
Given the strength of the high-end market, breaking another record seems within reach.
“I’m counting on it,” Rey says.