Sales of $20-million-plus L.A. homes are rising
A diamond-encrusted lining is emerging in Southern California’s cloudy real estate market.
At least a half-dozen Westside mega-estates have sold for more than $20 million so far this year — creating a deafening buzz in local realty circles. Only a few home sales in other Southland counties have surpassed the $20-million mark.
On the horizon is the close of Candy Spelling’s larger-than-White-House-sized “Manor,” which has reigned supreme from its $150-million listing price perch in Holmby Hills for more than two years and is expected to eclipse last year’s record $50-million Bel-Air sale by a wide margin. A $100-million home sale this spring in the Silicon Valley is believed to have set a U.S. record.
Even though L.A.-area sales in this upper price sphere are outpacing those of the same period last year, this market sliver is still too small to be considered statistically significant. Yet real estate experts and agents are cautiously optimistic that the spate of sales signals a turning point in the larger market.
“It’s highly likely we would not see this activity if there wasn’t a growing belief that we were close to the bottom of the market, " said Stuart Gabriel, director of the Ziman Center for Real Estate at UCLA’s Anderson School of Management. “Certainly on the Westside of L.A. we are close to the trough. That doesn’t mean there isn’t a likelihood of future price drops, but the worst is behind us.”
More than four years into the housing downturn, L.A.-area prices are generally back to 2003 levels, he said. Southern California’s median home price has fallen nearly 45%, to $280,000 in May, from the mid-2007 peak of $505,000, according to DataQuick, a San Diego real estate information service. The decline also reflects increased sales at the lowest end of the market, where cheap foreclosures are attracting cash-rich investors.
“All the increase we saw during the boom period,” Gabriel said, “has been purged from the system.”
Lower asking prices at the high end reflect the drop in many cases, said John A. Woodward IV, who teams with his sister Mary and brother Andrew through Coldwell Banker offices in Beverly Hills and Hancock Park. Among his listings is a 112-acre spread in Brentwood that was just reduced to $28.9 million. Priced at $65 million in 2008, the property went into foreclosure last year.
On the buying side, Woodward landed philanthropist Iris Cantor’s home in Bel-Air for a client for $40 million this spring, public records show — 24.5% off the asking price set in 2009. Its 35,000 square feet of living space includes a three-story entry hall, three kitchens, 12 fireplaces, nine bedrooms and 21 bathrooms.
Setting an asking price closer to the sales mark was actress Jennifer Aniston. Although the exact sale price of her Beverly Hills home has yet to appear on public records, the Trousdale Estates mansion is reported to have sold in the high $30 millions, having been listed at $42 million. The 10,000-square-foot house sits on an acre with ponds, fountains and outdoor living spaces.
As rarefied as this echelon may seem, standard real estate scenarios still play out for the most part. Mary Lu Tuthill, of Coldwell Banker Brentwood, encountered multiple offers recently with a Brentwood listing after a price chop.
“We had three offers on it when we sold,” she said of the ocean view compound containing an 18,000-square-foot main house, a 2,000-square-foot guesthouse, a tennis court, a swimming pool and a one-acre vineyard that went for $26 million. The equestrian property had been priced at $34.9 million in 2009 and reduced to $28.9 million this year, according to Multiple Listing Service records.
In addition to more realistic price setting by sellers, pent-up demand accounts for some of the recent activity.
“People who are buying haven’t just started looking — they’ve been looking for the last year and a half,” said Judy Feder, an agent with Nourmand & Associates in Beverly Hills, who has worked high-end and celebrity deals under the radar for years. “They are now stepping up.”
Feder represented the buyer of a Paul Williams-designed estate in Holmby Hills that closed in May at $21.5 million. The 1936 traditional-style residence of about 11,300 square feet sits on more than an acre. Priced at $28.5 million a year ago, it was reduced to $23.95 million in March.
“Wealthy buyers are taking advantage of the new adjustments,” said Billy Rose, an agent with Rose + Chang, Prudential California Realty, Beverly Hills. “They are picking up trophy properties that come on the market only every so often.”
Other sales this year in the $23-million range include a 12,000-square-foot Bel-Air manse sold by talent manager and serial remodeler Sandy Gallin that had come on the market two years ago at $32 million and a Beverly Hills mansion on nearly two acres. Actress Sandra Bullock jumped in as a buyer in this price range, landing a stately two-story home on four acres in Beverly Hills.
In addition to local names, international buyers also are participating in these mammoth deals.
“L.A. real estate is a bargain compared to other major cities around the world,” said Bret Parsons, an agent with John Aaroe Group. Taking exchange rates into consideration, he said, “we have the most value hands down.”
Parsons expects to see more $20-million-plus sales as L.A.'s Hillside Mansionization Ordinance, which took effect in May, makes it more difficult to build in the hills. “Flatter properties will be worth even more money,” he said. “If you can’t build your mansion you are going to have to buy a mansion that already exists.”
Concerns about inflation are another factor spurring real estate purchases among the very wealthy, said Paul Habibi, a UCLA lecturer and real estate expert. Putting excess cash into real estate can be a hedge against inflation.
“The rich are a pretty good proxy for wise economic behavior,” Habibi said. “On the whole, they tend to make good decisions financially.”
Plus, he said, $20-million sales generate enthusiasm, which can be contagious. “Maybe they’ll bring back what’s left of consumer confidence.”