Welcome back to the Real Estate newsletter. In the high-stakes game of luxury real estate, fortunes can be won or lost, and this week, we saw the cost of a listing price that’s a bit too ambitious.
Southern California’s luxury market is so ludicrous, it can be tempting for sellers and developers to shoot for the stars. The saying goes that you’ll land among the clouds, right?
Not for everyone. developer Nile Niami bragged for years about the mega-mansion he was building with a value of $500 million before declaring bankruptcy and selling it at a fraction of the cost. Over in Malibu, one seller is shopping around a one-bedroom home for $18.45 million but finding no takers.
The latest example surfaced this week in Beverly Park, where an Italian-inspired villa got a colossal price cut of more than $40 million.
The saga began in April 2021 when biotech entrepreneur Roy Eddleman bought the home at auction for $51 million. A year later, after minimal improvements, he put it on the market for $120 million. Eddleman died in June, and now his estate has chopped the price down to $79.5 million.
It’s a cautionary tale for multiple reasons. First, if potential buyers see a price cut that big, they’re more likely to hang onto their offers to see if it’ll get even cheaper. Also, property taxes on a house worth more than $100 million can run $1 million or more per year. And then there’s the money that goes into upkeep.
NFL star David Bakhtiari is aiming for a profit on a much smaller scale. The Green Bay Packers star is asking $6.3 million for his offseason spot in Tarzana — or $2.4 million more than he paid for it just two years ago.
The ambition is also spreading to the sky. We checked in on the luxury condo market and found that developers in Beverly Hills are chasing record prices by offering amenities simply not available to those in most single-family homes.
The condos come with butler service and access to a five-star restaurant. Some residents will get their own private pools.
In the wake of all the craziness, columnist Steve Lopez took a moment to reflect on the absurdity on the market. Every city struggles with wealth gaps, but it seems like only in L.A. would a $50-million condo offer views of tents occupied by unhoused people.
We also found time to dive into the rental market and came away with the sobering conclusion that inflation could push rents up by 10% — and in some places, more.
Rent control laws are in place throughout Southern California, but the fine print is tricky. For example, some areas limit annual rent increases by 10%, but only for complexes built before 2007. Others cap increases at 5% annually, but in addition to the rate of inflation. And right now, inflation is pretty bad.
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A $40-million discount
A lesson in ambition is currently unfolding in Beverly Park, where an Italian-inspired showplace known as Villa Firenze just returned to market at $79.5 million — a whopping $40.5 million less than the previous asking price of $120 million.
Over the last few years, no home’s purported value has fluctuated more wildly than that of Villa Firenze. The prized property first made headlines in 2017 when it surfaced for sale at $165 million — one of the highest prices in Southern California at the time.
Clearly overpriced, the 31,000-square-foot mega-mansion lingered on the market for years before it was finally auctioned off for $51 million in 2021. The massive sale made it the priciest home ever to be sold at auction at the time, but it still fell more than $100 million shy of the original price tag.
The buyer was biotech entrepreneur Roy Eddleman, whose plans for the property were revealed a year later when he put the place back on the market for $120 million. He was trying to test the market, according to the listing agency.
Following Eddleman’s death, his estate is chopping the price down to match comparable sales in the area.
Green Bay star looks to sell in L.A.
Weeks before the start of football season, Green Bay Packers star David Bakhtiari is listing his home across the country for $6.3 million.
The offensive lineman bought the offseason spot for $3.9 million in 2020 — the same year he inked a $105.5-million contract that made him the highest-paid offensive lineman in NFL history.
Tucked on half an acre in Tarzana in the San Fernando Valley, the modern home was built in 2019. Bakhtiari didn’t make many changes during his two-year stay. It spans two stories with six bedrooms, 7.5 bathrooms and clean, open spaces across 7,113 square feet.
Luxury condos chase record prices
A $100-million boutique condo complex rising in the vaunted Golden Triangle district of Beverly Hills is escalating Southern California’s luxury vertical-living rivalry with a potential five-star restaurant, private pools and the kind of pampering that might lure elite downsizers from their sprawling estates, writes Roger Vincent.
The swanky 17-unit building where a home could sell for more than $40 million — a price not yet seen in the region’s condo market — will be managed by Rosewood Hotels & Resorts, a Hong Kong hospitality company known for operating luxurious residential-style hotels, developers said Tuesday.
The announcement of Rosewood Residences Beverly Hills comes as top-echelon condominiums are hitting new peaks in Los Angeles County with potential to top the record price of $35 million set in 2010 by Candy Spelling, widow of producer Aaron Spelling, when she bought a penthouse in Century City. At the new 8899 Beverly luxury building in West Hollywood, owners want $50 million for a penthouse.
Massive wealth among massive poverty
Just when columnist Steve Lopez thought the real estate market had cooled, along came evidence that in the land of make-believe, there is no ceiling.
Even the humble condominium, which once was sort of like a starter house on training wheels, is going for astronomical sums in Southern California’s luxury buildings.
Lopez wanted to have a look at the record-setting condos, so he headed to West Hollywood and spoke to those not quite in the market for a $50-million home: a paint-splattered worker installing drywall, a photographer shooting publicity photos and a homeless man.
His conversations show two very different parts of L.A.
Inflation makes rent skyrocket
When Antioch, Calif., resident Teresa Cardenas found a notice on her door May 31 informing her that starting Aug. 1 her rent would go up from $1,181 to $1,542 a month — a more than 30% increase — she was shocked and panicked, writes Summer Lin.
Cardenas, who has lived in the Casa Blanca Apartments with her husband and three children for 11 years, had just seen her rent go up $75 in November. She said she and her family have been living under the stress of possibly being evicted.
Some California landlords can now bump up rent demands by as much as 10%, the maximum annual increase under a law passed three years ago. But the cap doesn’t apply to all buildings — including certain types of affordable housing such as the complex Cardenas lives in.
The tenant protection and rent control law — enacted in 2019 — allows landlords to raise rents by 5% annually, plus the rate of inflation in their metropolitan area, with a maximum of a 10% hike.
But many parts of the rest of the state have no such protections.
What we’re reading
In Indiana, there’s currently a home on the market for $299,000 complete with an indoor basketball court; that’s because it used to be a high school gym. According to Insider, the owners have been remodeling the place for the last two decades and kept one half intact with bleachers and hardwood while converting the other half into a four-bedroom home. One warning: even after 20 years, it apparently still smells like a gym.
The rent crisis is forcing some into alternative living solutions, and one North Carolina woman has racked up 1 million TikTok followers by showing the day-to-day life of living in her Honda Civic. One video details handmade window covers that insulate the interior; another shows how she finds places to park the car at night. New York Post has the story.