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Southern California Unreal Estate

You'd Be Surprised What a Mere $10 MILLION Can Get These Days.

Well, the Good News is: Southern California Leads the Nation in This Price Range. The Bad News: the Price Range.

December 08, 1996|ANN W. O'NEILL | Ann W. O'Neill is a Times staff writer in the San Fernando Valley. She lives in a $200,000 house that used to be worth $250,000

Imagine drifting off to sleep in a revolving round bed that, at the push of buttons, has you facing the Pacific Ocean, under stars revealed by the retractable, 18-foot domed skylight. Or buying an Italian quarry to ensure that the lilac-hued marble floors match. Or building a tennis court off the side of a cliff so there's room for the putting green.

Real people have actually done this. Real people who live in $10-million--and more--houses in Southern California.

There are about two dozen of these palaces scattered from the rocky shores south of Laguna Beach--where Pacific Reflections, the high-tech marvel with the revolving bed, sold a few weeks ago for a reported $14 million--to the promontory overlooking Benedict Canyon, where a speculator is building a $12.5-million villa on the very spot followers of Charles Manson murdered pregnant actress Sharon Tate and four others.

"It's not the same house," the broker says hopefully. "It's not even the same dirt."

It's not the same real estate market, either. And so, the house with the 17 bathrooms and a notorious location sits unfinished and unsold, even though the price recently dropped to $8.9 million and the seller is willing to consider a trade.

For 20 years, Southern California's high-end residential real estate market spiraled unchecked into the stratosphere after breaking into double digits for the first time in 1980. Since then, sales at or above $10 million have averaged about one or two a year.

In fact, John Karevoll, financial editor at DataQuick Information Systems in La Jolla, says that while 2,000 million-dollar-plus homes have sold this year in California, only the one has fetched more than $10 million.

Beverly Hills real estate agent Joyce Rey remembers how everyone went gaga when the sale of the Playboy Mansion broke the $1-million mark in 1971. Then, five years later, Rey's company became the talk of the town by selling a nine-acre estate called The Knoll to Italian film producer Dino De Laurentiis for a record-breaking $2 million.

Small change compared to the $14.5 million that same house fetched from country singer Kenny Rogers in 1981, or the cool $20.25 million oil billionaire Marvin Davis snapped it up for three years later. And mere peanuts compared to the $47.5 million that entertainment mogul David Geffen paid for the Warner Estate.

"When you think that in 20 years we've gone from $2 million to $47 million, it's a little frightening," says Rey, who was married to the late actor Alejandro Rey and in 1979 co-founded Rodeo Realty, the first company to cater to buyers of million-dollar homes.

In 1990, the $10-million bubble swelled to near bursting, with a half-dozen sales, including Geffen's. After 1993, it popped. Just three sales for more than $10 million have been reported over the past three years. All were outside the Beverly Hills/Bel-Air areas: Andy Granatelli's $14-million sale of his Montecito ranch, which also involved a trade of a Dominican Republic compound; Barbra Streisand's $12.5-million purchase of three blufftop acres near Malibu's Point Dume and the $14-million sale of Pacific Reflections last month.

Even as the Southern California market for mere million-dollar homes shows signs of recovering from six years of grinding recession, most people who live and breathe big-bucks real estate believe Los Angeles itself has probably seen the last of the $10-million sales for a while. "I think those days are gone. They're over," says Beverly Hills real estate broker Cecelia Waeschle, known by her colleagues as "the Keeper of the List." She has tracked every big home sale since 1986, and her list is in high demand in a market where finding similarly priced "comp" properties can be difficult.

With the tightening of cash comes the reduction in flash. "There's no demand right now. People are totally going the other way. They don't want that showy extravagance anymore," she says.

Developer Brian Adler agrees. "My experience is a double digit is a mental block to a real estate broker after everything we've been through in the past few years. You just don't do that," says Adler, who is marketing three new Beverly Park estates, built on speculation and strategically priced at $9.2 million, $9.5 million and $9.8 million. Monthly dues for the homeowner's association run about $1,100 and are used to maintain a four-acre topiary park, landscaping along the boulevard-style streets and the sidewalks in the community that's a leisurely 10-minute drive north of the Beverly Hills Hotel. But the dues haven't deterred people like Pia Zadora, Rod Stewart and Magic Johnson. Denzel Washington is building a massive estate on a double lot.

In response to the soft market, Bruce Nelson, the Bel-Air broker who was involved in more $10-million sales and appeared on more television talk shows than anyone else, has packed away his Hawaiian shirts and sold his canary-yellow Corniche convertible, taking a more subtle approach fitting for a market punch drunk from the recession.

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