When Melanie Brown — better known as Scary Spice — listed her home perched high in the Hollywood Hills for $2.9 million, it was snatched up by a young, wealthy woman for more than its asking price — $3.14 million — after only one day on the market.
If only things were always that easy.
"Mel B’s home is an exception to the rule," said Ginger Glass, an agent with Coldwell Banker Previews in Beverly Hills, who has a number of young Hollywood clients. "I thought that was extremely overpriced, and I can’t think of anyone else doing a purchase for that price, but I would imagine that a 24-year-old girl was impressed she was buying a Spice Girl’s house."
The cache of a celebrity home has been one of the last few glimmers of hope for Southern California real-estate agents trying to hang on in the current economic climate, which has left sales volume in upscale areas like Beverly Hills deflated.
Many stars — including Britney Spears and Christina Aguilera — are feeling the effects of the slowdown.
Nicolas Cage, who has a number of pricey properties around the world in locations like the Bahamas and Las Vegas, has been trying to unload his 11,817-square-foot brick Bel Air home since September 2007, according to the blog Real Estalker, which tracks the happenings of celebrity houses. Now the nine-bedroom, nine-bathroom mansion has dropped to nearly half its original asking price – from $35 million to $18.7 million. (See accompanying story for more celebrity real-estate dealings.)
"If they have to reduce the price, they reduce the price — these are business people. They know what’s going on," said Richard Klug of Sotheby’s International Realty in Beverly Hills, who recently sold the Malibu home of singer Beck. "Their ego isn’t going to get in the way of them selling a house."
"Since September, people have run into trouble with their finances because of the recession," Mike Simonsen, the CEO of Altos Research, a company that provides real-estate statistics, told TheWrap. "So the pressure to sell is happening now at the higher end, and you have a lot of the more expensive properties coming on the market."
Indeed, in the elite 90210 zip code, there are far more homes on the market than in years past — 211 properties, as compared to 158 last year at the same time, reports Altos.
Glass says people may have been hanging on to their properties because they’re not willing to take the loss.
"People used to move from house-to-house and then on to the next thing they see," she said. "Now they aren’t making those fast sales because they aren’t going to sell their expensive property in a bad market."
The time that these properties are on the market — from an average of just over three to five months, according to Simonsen — is also climbing as inventory rises.
"What’s happening is that the market is shifting," Simonsen said. "There’s more supply at the high-end, but there’s nothing to say that there’s more demand, and that bodes negatively."
Many agents say they are seeing a celebrity migration away from the the so-called trendy areas of the city towards the outskirts of Los Angeles — like the San Fernando Valley or Los Feliz — because they’re seeking a different quality of life where they’ll get better bang for their buck.
"People are moving out of the Sunset Strip, saying, ‘It was fun for a while, but it’s too much per square foot,’" Ginger Glass said. "Instead of gravitating towards one area because they’re ‘supposed’ to, celebrities want to go back to what’s important — and that’s definitely related to the economy because the world has changed."
Los Feliz is one of the few neighborhoods that’s seen a boost in the last year’s challenging market: The median sales price for a single family home rose by nearly $200,000 to $931,250 and sales volume in the area increased by around $6 million to $13.7 million, according to the Multiple Listings Service.
While Los Angeles certainly isn’t impervious to the recession that’s wreaking havoc nationally on the housing market, many agents remain optimistic about the upscale areas of the city with unique clientele who they believe are going to resume spending sooner rather than later.
"Frankly, the people in L.A. have plenty of money. They may have less this year, but they’re not going to stop spending altogether," said Klug.
Joyce Rey — an agent with Coldwell Banker Previews International who is listing a home belonging to Hugh Hefner next door to his famous Playboy mansion, which went on the market for $27.9 million last month — agreed: "Our prices have dropped somewhat, but most celebrities are in a position to buy and sell at their discretion."
The fact that the film business isn’t faring as poorly as other industries also has many hopeful about the real-estate market’s prospects over the next few months.
"There are too many people on the Westside that are affluent that want to live and enjoy life out here," Glass said. "They aren’t going to wait out the market to enjoy the next couple of years."