The rich may indeed be like the rest of us. Prices of their homes are now falling too.
Gated mansions and hillside estates have held their own through most of the real estate slump, but data released Monday showed big drops in the region's most exclusive neighborhoods.
Median sale prices fell by 13% in Beverly Hills in April, compared with the same month last year. Rancho Palos Verdes dropped 18% over the same period, while Newport Beach's 92660 ZIP Code took a 34% hit, according to DataQuick Information Systems.
Experts say these areas and others are catching up with price declines that struck first in outlying suburbs such as the Antelope Valley and the Inland Empire, where many first-time home buyers purchased their properties with sub-prime loans.
"You can't have one market hugely cheaper than another forever," said UC Berkeley professor Thomas Davidoff, who specializes in real estate.
Davidoff and others say the time lag stems from the fact that affluent homeowners generally don't have to sell under duress, unlike struggling borrowers facing escalating mortgage payments. But wealthy homeowners are increasingly finding out that if they want to sell their homes, they will need to discount the prices.
O. Bruton Smith, an auto dealership and racetrack magnate, more than a year ago put his stately Italianate house in the Beverly Hills 90210 ZIP Code on sale for $12 million. Buyers were scarce, and so in February he cut $500,000 from the asking price.
In March, Smith breached what realty agents say is the Maginot line of mansions in the area: He slashed the price to below $10 million, to $9.995 million. That may have done the trick.
"It's a psychological break point," Michael Libow, the agent listing the house, said of the $10-million mark.
The reduced asking price has been drawing three or four potential buyers a week to see the house, Libow said, and an offer came in last weekend.
The decline in the high-end market can be seen in both the Los Angeles and the San Francisco Bay Area markets, according to a study released Monday by First Republic Bank of San Francisco.
The weak economy suggests that prices will remain depressed for some time, said First Republic's president, Katherine August-deWilde.
"People worry about their jobs and incomes -- even rich people," she said.
Orange County's more expensive neighborhoods are also seeing price declines, DataQuick figures show.
"The market over $1 million has definitely changed," said Aliso Viejo broker Steven Thomas.
Thomas said his review of local data found that the number of Orange County homes going into escrow at selling prices above $1 million was down 30% in April from a year earlier.
Foreclosures, which had been almost unheard of in high-end markets a year ago, now account for a substantial share of listings. In Coto de Caza, where the average listing price is $2 million, 17% of the 167 homes for sale are either foreclosures or "short sales," in which the listing price is below the amount owed on the property, Thomas said.
In Mission Viejo and Laguna Hills, Thomas added, foreclosures and short sales make up more than 40% of the homes for sale. Elsewhere in Orange County, "there is tremendous activity below $500,000," Thomas said.
Despite the recent declines, home values in affluent areas still tend to fare better than in the region as a whole. The median price for a home in Southern California last month was $385,000, DataQuick said. That's the same as it was in March but down 24% from the $505,000 median a year earlier.
DataQuick said 15,615 homes sold in the six-county region last month, down 19% from a year earlier and the lowest number of homes sold in April since 1995.
Though sales were down from a year ago, they did increase sharply -- by 22% -- from March, DataQuick said. Two-thirds of that sales gain was from homes priced at less than $500,000, DataQuick said, suggesting that bargain hunters are snapping up homes being sold at steep discounts or through foreclosure.
Despite widespread declines, a few high-end enclaves are seeing increases in median sale prices.
Although home values declined 18% in Rancho Palos Verdes, for example, homes in the adjoining 90274 ZIP Code (which includes Palos Verdes Estates, Rolling Hills Estates and Rolling Hills) saw their values rise by the same percentage.
In Newport Beach, the coastal 92663 ZIP Code saw an April price increase of 66%, to $2.49 million, DataQuick said. However, only 10 homes were sold, which means that a few extraordinary transactions could account for dramatic percentage changes.
Expensive markets often resist declines for several reasons. Sellers in high-priced areas often have a large amount of equity in their homes or own them outright. That makes them more able to sit on their houses and ride out a market downturn than people desperate to unload a house with a mortgage they can't handle.
But with the passage of time, sellers who want to move but have been waiting for a market turnaround grow weary of waiting, Berkeley professor Davidoff said.
"It's like being in a teakettle. People eventually want to get out," he said.
The weakening overall economy will be another likely drag on prices at the high end, said John Burns, an Irvine real estate consultant.
"Executives are now losing their jobs too," Burns noted.
Finally, tighter lending standards and higher interest rates for jumbo mortgages -- those for more than $729,000 -- are making it harder for some people at the high end to get loans, said USC real estate professor Delores Conway.
Conway believes "sales activity will go up if there is more liquidity."
But some affluent buyers say high prices, not tough credit standards, are keeping them from purchasing a home. It's simple, they say: Just as in the under-$500,000 market, buyers will come forward in expensive neighborhoods when prices fall.
Simon Lee, a commercial real estate investor who has been shopping for a house in Bel-Air, Pacific Palisades and Brentwood, said he believes that prices in those areas are still inflated in today's market.
"I think it needs a major adjustment, 25% or 30%," he said.
Lee said he was among a small group of bargain hunters scouring those Westside neighborhoods for homes priced under $2 million.
"I see the same people every week at the open houses," he said.
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April figures show the median sale prices of homes in some wealthier communities declining from the year before.
*--* ZIP Community Change 92660 Newport Beach -33.5% 90275 Rancho Palos -18.1% -- Verdes 90210 Beverly Hills -12.8% 90049 Brentwood -11.3% 92625 Corona del Mar -8.6% 92037 La Jolla -7.1% *--*