Motor another 20 minutes along this iconic stretch of pavement, past the once glorious Sunset Strip and the pink-and-green Beverly Hills Hotel, and you come upon paradise: a necklace of verdant, walled and gated estates, jewels along streets bearing European names like Bellagio and Copa De Oro, literally Cup of Gold.
This is the Bel Air neighborhood, abutting Sunset, where on a recent Sunday afternoon Realtor Myra Nourmand sat in a plush white leather chair just inside a mansion she has listed for a nifty $12.95 million.
Nourmand directed visitors to an expansive all-white kitchen where glasses of iced lemonade were waiting on the imported, polished island. Dialogue drifted in from the film Spiderman, playing in a small movie theater off the kitchen.
At 10,000 square feet, this monster of a house originally listed at $14.5 million but has since slowly drifted downward during the five months it has been on the market.
The people that inhabit this kind of home are accustomed to living as if they are far from the peeling paint of the Paradise Motel down the street, far from the housing "Katrina" that nearly swamped California. If they heard the water lapping at their gilded doors, they were secure in the belief that their upscale neighborhoods were different, somehow immune to the bubble. Until now.
You would expect that as the investment portfolios of Bel Air's elite start to recover, and as the rest of the California real estate market ever so slowly improves, the houses here would be moving again. But the recession that began in late 2008 is only now beginning to hit the extreme high-end real estate market in this tract of Eden along Sunset, providing evidence that frugality has become a way of life—at least in relative terms—even for the super-rich.
"Since January of 2009, only about 12 properties above $10 million have closed escrow in Beverly Hills, Beverly Hills Post Office, Bel-Air, Westwood, and Brentwood," said Michael Nourmand, Myra's son and president of Nourmand & Associates Realtors. "The average days on market for these properties was 265 days."
In the same areas in 2007, twice as many homes sold at that price range and the average time on market was exactly half what it is today.
This high-end market is unusual in many ways beyond what are still stratospheric price tags. A few months ago the average home for sale in California cost just over $300,000 and spent only about 35 days on the market, according to data from the California Association of Realtors.
In the "normal" market, there is some good news. Home prices in most of Los Angeles County have been slowly rising, moving up about 8.4 percent in the last year. And the number of families that can actually afford to purchase an entry-level home has risen 9 percent from a year ago, according to the Realtor data.
Michael Nourmand said those statistics are in stark contrast to the high-end market, where buyers who assume prices are down are expecting to take a big percentage off the listing price from the moment they walk in to see a house.
"This is a market that's testing our drive and perseverance," said Nourmand. The 130 agents at his boutique real estate firm have been forced often this last year to extend their listings beyond the typical six-month contract with sellers. "That means more listings, more ads, more open houses. A lot more work," he said.
While he would not disclose whether Nourmand & Associates saw a profit gain or decline during the last two years of the recession, Nourmand said that across the industry, agents' production is down 50 percent since the real estate downturn began in 2007. He noted that many of the wealthy buyers and sellers were hurt by the stock market crash. And even for the rich, obtaining financing to purchase homes has become difficult.
Nourmand said while many of the properties his firm sells are cash deals, the lending atmosphere for those that are borrowing has changed significantly, one metric among many of the now infamous credit squeeze. The banks have the upper hand. "It's you, the Realtors, accommodate us, the banks. Not, 'We accommodate you.' That's sort of the tone."
"The two worst quarters in the industry were the fourth quarter of 2008 and the first quarter of 2009. During those six months, prices were falling quickly. Since then, prices have continued to stabilize and it has become easier to sell homes, but the process is still challenging," he said.
At another Nourmand & Associates open house recently for a $1.35 million home with a view of the Getty Center across the 405 freeway, agent Barbara Tardif said she has been feeling the crunch. "They say if you feed them, they will come," she said with a laugh. "Where we used to be able to budget $500 for lunches at these open houses, we no longer do."
Tardif said she has also had to think harder about advertising. "Sellers want to see ads. But it's $50 a week, and sometimes the property is on the market for months."
Still, Nourmand says that while the housing slump storyline that has gripped the attention of middle- and low-income Americans for the past several years appears to have reared its head in posh Bel Air, he's not asking for any help or sympathy for his firm or its clients.
"Buying a $10 million house is not the California dream. Home ownership is the dream," he said, adding a firm that deals in houses selling for double-digit millions is always just a few sales away from a banner year. Or, a bad one.