Highend

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Would you believe $10 million for a house? What about $20 million or even $60 million?

Given the red-hot luxury residential market, nothing seems outrageous these days.

With luxury homes in L.A. having regained 80 percent to 90 percent of their peak prices of nearly a decade ago, giddy sellers are listing their mansions at sky-high levels.

“They’re not sure where the market (price) is; to learn it for themselves, they’re putting their homes at a higher list price,” said Linda May, estates director of Linda May Properties at Coldwell Banker’s Beverly Hills office. “Sellers want to test the market because they read that prices are through the roof. The market is better at cocktail parties, but the truth is, it is good.”

Good, indeed. At least 70 L.A. homes have sold for $5 million or more so far this year, twice the number of such homes sold all of last year, according to John Bruce Nelson, an independent broker in Bel Air. Four L.A. homes have sold for in excess of $10 million this year, he said, compared with only two in the previous three years combined.

One of those homes a nine-bedroom, eight-bath home in Westwood sold for $11.5 million in the second quarter.

As eye-popping as that might be, it’s nothing compared to what starry-eyed sellers are seeking.

Currently, there are two homes listed for $20 million in Holmby Hills; another one in that community is being privately marketed off the listing books for $60 million, industry insiders said.

In addition, no fewer than 12 L.A.-area homes are currently listed at more than $10 million rich even by L.A.’s high-end standards.

Nelson said luxury housing prices are “not back to that (late-1980s) price, but at the top end it’s not that far away. We’ve probably recouped 80 percent from the late ’80s.”

While the late-’80s upswing was driven largely by Asian money, the late-’90s surge is being fueled by money made in Hollywood and on Wall Street.

L.A.’s housing recovery has become especially pronounced “at the high end of the market because there had been pent-up demand,” said Leslie Appleton-Young, chief economist at the California Association of Realtors. “Those properties had the biggest downward adjustment (in the early and mid 1990s). Repeat, trade-up buyers were looking at improved equity positions in their homes and may have done well in the stock market.”

The strong demand has not escaped the notice of luxury-home developers and architects.

“To us, this is the strongest the market has ever been,” said Richard Landry, an architect to the rich and famous. “People are back to building beautiful homes.”

The most expensive resales, tear-downs and new developments are mainly scattered around Beverly Hills, Bel Air, Holmby Hills and the so-called platinum triangle of Brentwood, Malibu and Pacific Palisades.

In Beverly Hills, 15 demolition permits have been issued so far this year to raze older homes and replace them with new mansions on pace to easily exceed the 19 such permits issued by the city last year. Both the Tudor-style home of the late actor Jimmy Stewart and the infamous Brentwood mansion of O.J. Simpson have been knocked down to make way for new dream homes.

Jim Schram, vice president of Winters-Schram Associates, a Santa Monica general contractor specializing in high-end homes, said business is booming 75 percent of his business consists of tearing down homes and building new ones in their place.

“We have more offers than we can handle for high-end homes,” he said. “And we are being approached by people to develop high-end speculative houses, which is testament to the increase in values.”

The Hollywood Hills and Los Feliz have also posted increased activity in recent months, as the younger Hollywood crowd moves eastward, said John Aaroe, president of the real estate firm John Aaroe & Associates. A home sold recently in the Hollywood Hills for $6.6 million, and one in Los Feliz went for $2.3 million.

But as was true a decade ago, the current upswing won’t last forever.

“There’s a percentage of homeowners who think if they hold their property for six to 12 months, it might be worth more,” Aaroe said. “The reality is, we’re probably approaching a plateau.”

The inventory of resale homes at the top end of the market is about 15 percent to 20 percent less than a year ago, Aaroe added. That tightening supply, coupled with strong demand, is prompting developers to get busy.

In the Beverly Park and Brentwood Country Estates gated subdivisions, homes worth $5 million to $14 million are currently under construction. One 2.5-acre lot in the latter development is listed for $6.9 million.

“As prices get high, sometimes it’s cheaper to build and you get exactly what you want,” said Dennis Ellman, an attorney with Greenberg Glusker Fields Claman & Machtinger LLP. “We have a bunch of clients either building new homes or expanding existing homes, second homes.”

Many of those new homes are being built on the site of teardowns, partially because new high-end subdivisions are few and far between. Beverly Park and Brentwood Country Estates both are in various stages of build-out, while the remaining 117 luxury homes in MountainGate are on hold pending a lawsuit over a city plan that would slash the number of homes allowed.

“Last year, there was more to pick from. Inventory (of vacant parcels) is a lot lower,” said Gary Gold, an agent with Hilton & Hyland.

Beverly Park’s 80 two-acre lots, which range from $2.5 million to $3 million, have all sold. All but 20 of those lots, situated in the hills above Sunset Boulevard, now have completed homes on them, said Brian Adler, the developer.

Of the 20 without completed homes, most have plans drawn and some are currently under construction, he said.

“What slowed down was, the (buyers’) other homes weren’t selling, so it limited my already-limited audience,” he said. “In the last eight months, the amount of activity and people interested in buying vacant lots and building their dream homes has doubled.”

One Tuscan villa-style home Adler built on speculation with no buyer commitment sold a couple of months ago for slightly less than the asking price of $11.4 million.

And Adler just broke ground on a 25,000-square-foot Venetian-style villa, which will have a guest house, pool, tennis court and large basement under the entire house with garage, gym, screening room, wine cellar and staff rooms.

“When you’re ‘spec-ing,’ you don’t take any chances. You give every possible amenity,” Adler said.

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