Just when we thought the real estate market had cooled, comes proof that there is no upper limit in the land of appearances.
My colleagues Roger Vincent and Andrea Chang have been reporting for the past few days that even the modest condo that was once something of a starter house on training wheels is trading for astronomical sums.
Vincent reports that developers at a 17-unit complex in Beverly Hills are hoping a single condo can fetch about $40 million. That’s a bit steep for me, but I wouldn’t rule it out, since amenities include a butler’s pantry, a full bar in the entertainment room, and a 2,500-square-foot terrace.
It’s not clear if the place is furnished or if appliances — and the butler — are included. And that could be deal-breakers for me.
Chang, meanwhile, wrote about the swanky party thrown for top real estate agents to celebrate the listing of a $50 million West Hollywood condo. That would be a record in the county for condos, but such records don’t last long in LA. Chang reported that a $75 million condo would hit the market.
Incidentally, for the little soiree, each participant was assigned a personal concierge in case there was a crisis, such as a temporary shortage of caviar blinis, an empty champagne glass or an overdone filet mignon with heirloom truffle.
I wasn’t invited to the party, but I wanted to at least see the building, so I went to the 8800 block of Beverly Boulevard and strolled around. A paint-splattered man named Giovani Quijada was on his way into the building to do drywall work, and he was shocked to hear the rooftop unit could cost $50 million.
“Who has so much money?” I asked.
“I don’t know,” Quijada said, shaking his head. He told me he makes $20-$25 an hour in construction and owns a $400,000 home in Lancaster.
Just down the street, a woman who only gave her name as Crystal was photographing an artist for what appeared to be some publicity photos. She said she lives in the San Fernando Valley, where she’s not aware of any $50 million condos.
“It’s kind of ridiculous,” she said.
Of course, there was a homeless man less than a block from the luxury condominium building. We have about 70,000 of them in Los Angeles County, and by one census nearly 50% of renters pay about half of their income on rent and utilities.
“That’s a lot of money,” Jeremy Poole said as I pointed to the high-priced condo.
Poole, in tattered clothing, told me he’s sleeping where he can but hasn’t ruled out being back inside. He looked up at the $50 million rooftop house, smiled and said,
“Maybe one day.”
Nicholas Monaco, a production manager, dined at a Starbucks and took it twice when I told him about the $50 million house down the street.
“Who the hell wants to live there for $50 million?” he asked, thinking it would make more sense if it was a house in the hills or on the beach.
Monaco, who rents an apartment nearby, told me that if he were rich enough to buy a $50 million condo, he would instead “help some people who need it, maybe downtown.”
I pointed out that people who buy expensive houses pay a lot of taxes. If “people are helped,” he said, he has no problem with it.
In 2015, super agent Jeff Hyland made that point when he gave me a ride around his Beverly Hills compound, where homes listed for more than $100 million are not uncommon. Property taxes support government services, Hyland argued, and everyone benefits. On that trip, Hyland took me to a property he had just sold for $35 million.
“It was in absolutely great shape,” Hyland said, but the new owner didn’t like the layout. So he brought a wrecking ball to the house to make room for a rebuild.
We have everything, don’t we? A $35 million demolition in the middle of a tent city.
Regarding expected property taxes for this $50 million condo, I called LA County Assessor Jeffrey Prang, who helped me get the numbers. The buyer will have, give or take, an annual bill of $580,000.
Of that, about 40% ($200,000) would go to K-12 schools and community colleges. About 24% ($120,000) would go to LA County for various services. Approximately 15% ($75,000) went to West Hollywood and the remaining 21% to various government agencies and special districts.
That’s a lot of money and it has to be paid annually. But as USC professor Jeff Kleinbard argued in my column on the $35 million demolition, real estate is a major contributor to wealth inequality, and the government subsidizes home ownership through various tax credits and deductions.
And there is so much wealth in LA’s upper echelons that prices for all of them continue to rise even though the market has cooled off a bit lately. According to Prang, the appraised value of commercial and residential real estate in LA County rose by a record $122 billion to $1.89 trillion last year. That can be good when you’re ready to cash out, but not so good when you’re struggling to buy your first home or pay rent.
Prang said many of his employees at the appraiser’s office and other local government offices commute to Riverside and San Bernardino counties for better affordability.
“You can’t go out to eat with people after work, and you can’t go to your kids’ ball games,” he said of those who lose hours every day lugging to and from work.
In November, voters in the city of Los Angeles will see a ballot measure that would increase the real estate transfer tax on homes and commercial properties sold for $5 million or more, and Santa Monica has a proposal to increase the tax on sales over 8 US dollars increase million.
Supporters of the LA operation — backed by dozens of housing, homeless services and advocacy groups — say it would generate $875 million a year for homelessness prevention and affordable housing, with the operation managed by a citizen-led committee.
Keep an eye on these as the real estate industry braces for battle, arguing that the tax hike will stall sales and drive high rollers from Los Angeles proper to nearby towns.
It’s hard to imagine such hardship, but those bailing out don’t have to travel far if they’re willing to live in a condo.
However, you’d better hurry as the prices keep going up.
https://www.latimes.com/california/story/2022-08-03/for-50-million-in-the-land-of-tents-this-condo-could-be-yours-as-l-a-prices-and-misery-index-both-rise Column: A $50-million condo in L.A.’s land of tents