$12.5 million, and no driveway

Happy Friday. It is quite possible the luxury real estate market is in as much pain as the rest of the residential real estate market, but the press releases and the artist's renderings keep coming.

At right, "Palace in the Sky" a $12.5 million penthouse in the Marina District of San Diego, billed as "a majestic two-story penthouse with twenty-foot cathedral ceilings, exquisite interior details and an expansive open floor plan, giving one the feeling of a 17th-century European estate."

Who's gonna shell out 12 million clams? Here's a hint: The price is expressed as "$12.5 million US dollars."

Closer to home, and closer to the sun, the L.A. Times reports, "Plans for a 45-story, wisp-thin tower of ultra-luxury condominiums between Beverly Hills High School and the Los Angeles Country Club are set to be unveiled today. Developers say it would be one of the most expensive residential buildings in the West."

More: "The $400-million tower along one of the area's toniest corridors would be the first building in California designed by renowned Paris architect Jean Nouvel, known for his daring designs. He is proposing a narrow glass structure with sweeping views through the building and extensive greenery ringing each floor."

The reptilian part of my brain is saying, "weakdollartradedeficitforeignbuyers," but that's probably not entirely accurate -- there's a lot of money sloshing around Southern California.

Your thoughts? Comments? E-mail story tips to peter.viles@latimes.com
Photo credit: www.palaceinthesky.net

Comments

[xtine]

Wow Peter, is that what the reptilian part of your brain says? Mine says sexfoodsleepcookies.

But all right.

Hollywood corps could buy a condo for visiting foreign investors and celebrities and take it as a depreciating loss. Executive pied-a-tiers?

I don't think anyone would make a home in an LA tower when they could have a backyard in a fancy neighborhood. Towers are NY status, not LA.

[Tombstone Realty]

Confucious say "Building That Built Like Twig, Snap Like One In Quake."

[verucca salt]

daddy i want an oompa loompa ............and a 50,000m condo

[Keith]

What? You mean the "affluent foreign immigrants" aren't gonna buy in Irvine? Haven't they heard of the great food at El Torito?

[John]

I'm in agreement with Xtine.

That said, do you think it's that there's a lot of money sloshing around, or that the real estate tsunami has realtors and developers panicking and running to the higher ground that is the higher income bracket?

The thing is, rich folks don't get to stay rich by being stupid, and overpaying for condos when there is beachfront property available at a lower price is a pretty stupid idea.

The ruling class of the Middle East may be almost shockingly lacking in good taste, but even they usually know the difference between a white elephant and an investment.

[MyLessThanPrimeBeef]

Why don't they use the San Diego Palace in the Sky penthouse or the Jean Nouvel (what no Calavatra? No Lord Foster, the guy who designed the phallic Gherkin in London?) Century City tower for a remake of Fritz Lang's Metropolis, except it wouldn't be a sci-fi today, but a reality show?

[MyLessThanPrimeBeef]

I have to believe that the smart oil money is putting their real estate allocation in new cities like Dubai or the currently under-construction King Abdullah Economic City where maids can be governed under Sharia, and not in Beverly Hills.

[mbob]

Dragons of Eden time, hey? Gee, and I thought it was only SUV design that hits all those reep-tile buttons:

an elevated perch safe from predators or from which to snag prey
near feeding areas (cup holders)
not too hot (AC)
not too cold (heater)

So, mammalian hubris aside, uh, I guess a waffer-thin (sorry, John Cleese) tower in one of the planet's most seismically unsound areas is, well, sort of a French kind of idea. I mean, look at the Citroen. Or Peugot. Or Panhard. Or Simca. Or pre-AMC Renault. Or, for that matter, name three French motorcycles (forget the Solex) that can out-rumble a Harley.

I'm not even gonna start on the whole affinity for Jerry Lewis.

[dave]

I track the westside closely (PP, Brentwood, Bel Air, Westwood, Santa Monica) and I have to say I still see a lot of strength there. I must be missing something because I see WELL priced properties $1million and up selling in two weeks still. Some have mulitple offers even. I don't work as a realtor but do have my broker's license and do a few spec homes a year. But I still talk to a bunch of agents. Sure, I'm holding my breath for my spec homes but truly the numbers I'm seeing are not showing much of a slow down. Actually, I'm quite amazed at how fast some properties are still going into escrow.

[Producer08]

Dave February 08, 2008 at 08:47 PM you sound like another realtor who is trying to make us believe that there is still a market in LA, I have a RE license and it has been a starving period for the last 2 years for many of us, ask anyone who is, guys like you are just trying to keep the market up, well guess what ? the longer it stays up the harder and faster it is going to fall down, just admit it the market is no more and maybe then the sellers will start to lower their prices to acceptable levels, like 200k for a condo with views would be a good start vs 1MM in westwood, beverly hills, like it was in 2000. The subprime scam has put this market into an artificial state of madness and no one really knows what it is worth anymore. The only ones who are buying are stars, ceo's and moguls, and that is very few in number. I suspect that you are trying to get rid of your properties and I am sure you will be panicking in the next year or so when you are losing millions on your bad investments. I know that I will be. I predict the following, 4000 point drop in the stock market....and when trillions in lost wealth is made public then there will be a swift drop of 90 percent in the selling prices in LA best case they are at 1998 levels.

[Producer08]

Dave btw if there is so much strength in those areas of BH Bel Air, Westwood like you said then why are over 80 percent of the brokers closing their offices ? Why have numerous broker, agent websites been shut off ?

[MyLessThanPrimeBeef]

Well, I think the Ente (a la the Duck) is kind of cute.

[Nathan]

I think it's ironic that the movie playing in the media room picture at the Palace In The Sky is "Against All Odds".

[Big E]

I live in the same building as the Palace in the Sky, and I've been in the unit several times - it's unbelievably gorgeous; designed and hand-built by the owner.. I just don't see it going for $12.5M though.

[Laker]

Producer08 wrote: "4000 point drop in the stock market....and when trillions in lost wealth is made public then there will be a swift drop of 90 percent in the selling prices in LA best case they are at 1998 levels."

Producer08, it is hard to believe dow at 8000... I see it at 10,000 as there will be huge support level from speculators to enter as they just would see dow that went 35% under...
For LA housing prices, i think prices to get to 1998 level will require rents to go down about 20%...I don't think it is possible unless we have unemployment of 8-9% in cali. I think price will get to 2001 levels and stay there for couple of year. Lower prices than 2001 will get a resistance of cash speculators that will see 50% price drop... Also rents will determine bottom. Unlike many that only equate to mortgage, the smart investors are calculating mortgage+prop taxes+insurance+maintenance+upkeep to equate rent That is why 2001 make a lot of sense.
In any case, send me you address, if your prediction comes true i will send you $100.

[Producer08]

Laker, it the market goes down to 8000 and if trillions of dollars are lost worldwide because of it, who will have the money to buy ?

Have you lived through a real crash ? I have, jobs vanish, whole towns vanish, all I can say is that I hope you are right and I am wrong.

[Producer08]

Laker check out this link, the sign of things to come......

http://www.cnn.com/video/#/video/us/
2008/02/11/wilkinson.foreclosure.flood.kusa

[Producer08]

This is a ideal place of where I think we are at.

Prices have to come down to 80-90 percent to meet the low salaries 50k a year average that famlies bring in every year. The housing prices have gone up 700 percent while the incomes have only gone up 20% in the last 5 years.

The housing prices have gone up so high because honest families were tricked into the idea of the interest only loans which was where you could buy a million dollar home for no money down and make a $1500 a month payment when the payment should have been $8000 a month.

From that fiasco you now have sellers that are in debt to the tune of 90% and no buyers to bail them out at the prices that the sellers need to break even.

This will all become common knowledge in the next 6 months, at that time I am sure the prices will have a huge drop and the stock market will go down 4000 points.

Even if the debts were forgiven by the banks you still have property that is worth 80% of what a buyer is willing to pay.

These prices that real estate are at now should have occured in 2050 in accordance with a 50% increase every 5 years and that is on the low end, somehow in 5 years real estate went up 400% and in some places 800%

A viable solution here is to make minimum wage $40 an hour and white collar jobs start out at 200k a year but then you would have to raise the prices of cars, goods, food by 400%.

What our govt could do is to reset all housing prices back to 80% and start there and make interest only loans illegal as we now know they can bankrupt a super power.

btw agents are now taking 1 percent and below for commissions, gone are the 6 percent commissions and that is a real sign of where we are at, if the majority of the agents now cannot make payments on their own places or investments who is next ?