Wednesday, October 5, 2022
Oct. 5, 2022

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Steve Lopez: A $50 million condo for sale in the land of tents is a special kind of LA crazy

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LOS ANGELES — Just when we thought the real estate market had cooled, along comes evidence that in the land of make-believe, there is no ceiling.

My colleagues Roger Vincent and Andrea Chang have reported in the last few days that even the humble condominium, which once was sort of like a starter house on training wheels, is going for astronomical sums.

Vincent reports that in Beverly Hills, developers of a 17-unit complex hope a single condo can bring about $40 million. That’s a bit steep for me, but I don’t want to rule it out because the features include a butler’s pantry, a full bar in the entertainment room and a 2,500-square-foot terrace.

It’s not clear whether the place is furnished, or whether appliances — and the butler — are included. And those could be deal-breakers for me.

Chang, meanwhile, wrote about the swanky party thrown for top-gun real estate agents to celebrate the listing of $50 million condo in West Hollywood. That would be a record in the county for condos, but in L.A., such records don’t last long. Chang reported that a $75 million condo was about to hit the market.

For the little soiree, by the way, each attendee was assigned a personal concierge in case there was some sort of crisis, such as maybe a temporary caviar blini shortage, an empty champagne glass or an overdone filet mignon with heirloom truffle.

I was not invited to the party, but I wanted to at least have a look at the building, so I went to the 8800 block of Beverly Boulevard and wandered around. A paint-splattered man named Giovani Quijada was on his way into the building to do some drywall, and he was shocked to hear that the unit on the roof could go for $50 million.

“Who has that kind of money?” I asked.

“I don’t know,” said Quijada, shaking his head. He told me that he makes $20 to $25 an hour in construction and owns a $400,000 home in Lancaster.

Just down the street, a woman who gave her name only as Crystal was photographing an artist for what looked like some publicity photos. She said she lives in the San Fernando Valley, where she is unaware of any $50 million condos.

“It’s kind of ridiculous,” she said.

There was, of course, a homeless person less than a block from the luxury condo building. We have 70,000 or so of them in Los Angeles County, and by one count, nearly 50% of renters pay roughly half their income on rent and utilities.

“That’s a lot of money,” Jeremy Poole said when I pointed up at the high-priced condo.

Poole, in tattered clothing, told me he sleeps where he can but didn’t rule out being back indoors again. He looked up at the $50 million rooftop pad, smiled and said:

“Maybe, one day.”

Nicholas Monaco, a production manager, was dining at a Starbucks and did a double take when I told him about the $50 million home 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 a nearby apartment, 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 did point out that on the upside, people who buy expensive homes pay a lot of taxes. If “people are being helped, “ he said, he didn’t have a problem with it.

In 2015, super-agent Jeff Hyland made that point while giving me a driving tour of his Beverly Hills terrain, where homes listed for more than $100 million are not uncommon. Property taxes support government services, Hyland argued, and everyone benefits. On that outing, Hyland took me to a property he had just sold for $35 million.

“It was in absolutely magnificent condition,” said Hyland, but the new owner didn’t like the layout. So he took a wrecking ball to the house to make way for a rebuild.

We do have it all, don’t we? A $35 million tear-down in the middle of a tent city.

Regarding the expected property taxes on that $50 million condo, I called L.A. County Assessor Jeffrey Prang, who helped me crunch the numbers. The buyer is going to have an annual tab of $580,000, give or take.

Of that, about 40% ($200,000) would go to K-12 schools and community colleges. About 24% ($120,000) would go to L.A. County for various services. Roughly 15% ($75,000) would go to West Hollywood, and the remaining 21% to various public 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 tear-down, real estate is a big factor in wealth inequality, and the government subsidizes home ownership through various tax credits and deductions.

And there’s so much wealth in the top tiers in L.A., prices keep rising for everyone, even though the market has cooled a bit lately. Prang says the assessed value of commercial and residential property in L.A. County rose by a record $122 billion last year, to $1.89 trillion. That can be good if you’re ready to cash out, but not so good if you’re struggling to buy your first house or cover the rent.

Prang said many of his employees in the assessor’s office, and other local government offices, commute to Riverside and San Bernardino counties because of greater affordability.

“You can’t go to dinner with people after work, and you can’t go to your kids’ ballgames,” he said of those who lose hours every day schlepping 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 that sell for $5 million or more, and Santa Monica has a proposal to bump the tax on sales above $8 million.

Backers of the L.A. measure — supported by dozens of housing, homeless services and labor 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 your eye on this one, because the real estate industry is girding for battle, arguing that the tax bump will stall sales and drive high rollers out of Los Angeles proper and into nearby locales.

It’s hard to imagine such a hardship, but those who do bail out won’t have to travel far, if they’re willing to live in a condo.

They better move fast, though, because the prices keep rising.

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