Million-dollar madness in L.A.
By Jill Serjeant
REUTERS
July 31, 2005
LOS ANGELES – House-hunting in Los Angeles County is no place for the fainthearted.
In a market where a software billionaire dubbed "Pacman" has gobbled up a dozen Malibu properties for $180 million and an ocean-view trailer with an asking price of $1.4 million barely raises an eyebrow, buyers need nerves of steel and mountains of cash.
Sticker shock sets in well before buyer's remorse when a $2 million tear-down attracts multiple offers and open houses draw crowds worthy of a rummage sale on Beverly Hills' ritzy Rodeo Drive.
"It's like another planet, and it really is. It's the real estate planet," said Joyce Gottlieb, a Realtor with 25 years experience in the desirable beach cities of Santa Monica and Malibu.
Only 15 percent of households in Los Angeles County can afford to buy the region's $503,450 median-priced home, according to latest figures from the California Association of Realtors.
A literally shifting landscape prone to earthquakes, mudslides and wildfires has failed to dim the enthusiasm.
"Even natural disasters are not keeping people away," said Los Angeles writer Sandra Tsing-Loh, who has humorously chronicled her own, failed, house-hunting travails on KPCC public radio.
"In Los Angeles, houses can actually be dropping off into the ocean and a week later people will be spending a million dollars buying them up. That's a metaphor for insanity," she said.
A landslide in June that destroyed or damaged 18 million-dollar or more homes in picturesque Laguna Beach has had no noticeable effect on prices there, Realtors say.
"I think people are willing to take risks to live in an environment they truly want to be in," said CAR president Jim Hamilton. "It's California – in Florida they get hurricanes, in the Midwest they get tornadoes."
Hamilton recently met a new arrival to California suffering a severe case of sticker shock. "She asked me what you do when houses are a quarter of a million dollars. And I said 'I'd buy 10 of them,' " he joked.
Rising home prices have been propelled throughout the United States by low long-term mortgage rates and borrowing through adjustable-rate and interest-only mortgage loans.
In the Los Angeles area, star power has also played a role. "Celebrities generally buy their first home and then they want to buy those around them. That's what happened with Arnold Schwarzenegger and Sylvester Stallone," said Gottlieb.
That leaves ordinary, middle-class Angelenos who need to buy or move in a quandary.
Tsing-Loh, who lives in distinctly unfashionable Van Nuys in Los Angeles' sprawling San Fernando Valley, noted that some homes in her neighborhood are now worth almost $1 million but statistics show that 90 percent of residents are economically disadvantaged.
"How can it be that a neighborhood is so vastly expensive when most of the kids are poor? The whole thing feels surreal and out of control," she said.
The bottom line is still location, location, location and there is no longer any stigma attached to mobile homes – at least those with a community pool, tennis court and sunsets over the ocean.
"There is only so much land. There is only one Malibu. It will always be an attractive market," said Gottlieb. "That $1.4 million mobile home doesn't really surprise me."
Stunning mountains, bewitching deserts and sunny January mornings on the beach help to compensate for earthquakes and the notorious Los Angeles traffic.
"There is a certain celebrity lure about Southern California. It is part of the mystique of why people come and visit. And a lot of times people come and realize how beautiful it is, and wind up staying," said Hamilton.
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