But wait. Don't bundle old clothes and canned goods into CARE packages just yet. Elaine Young is not talking about unemployed autoworkers in Detroit or impoverished sharecroppers in Mississippi. Young, a Los Angeles real estate agent, is lamenting the slump in the luxury housing market in Beverly Hills. Entertainment superstars who paid millions for mansions in the late '70s, Young says, are now finding it difficult to peddle the properties for the traditional astronomical profits. "I have one client who put a house on the market a few months ago for $3.5 million," she laments. "I got him an offer of $1.9 million cash, which he turned down. But after the house remained unsold, he called and said he was interested in the offer."
Five years ago a house in Hollywood was worth its weight in cocaine. Although one-quarter of L.A. real estate deals are done on a cash basis, in the heyday of "creative financing" anybody who could scrape up the typical 25 percent down payment—and Rolls-Royces, yachts and diamonds were acceptable—would buy a house, hold it for a few months, then sell at a killing. "People would tie up property for 90 days with a promissory note and no money in the bank and go to the Polo Lounge and try to find an investor," remembers veteran Realtor June Scott. In 1977 Scott bought a house in Beverly Hills for $340,000. In 1981, having remodeled it and added a media room, she sold it to actress Kristy McNichol for $1.3 million. "Empty houses were bought, redone and sold for very high prices," says Scott, "and people were standing in line for them."
In the glory days, Beverly Hills real estate agents were stars, not salespeople. Elaine Young, who was married for five years to the late Gig Young, now dates Frank Sinatra's sidekick Jilly Rizzo. Super-Realtor Stan Herman, ex of actress Linda Evans, shares his $2.5 million Beverly Hills pad—and his cozy Malibu beach house—with his wife, former actress-model Denise Vandenberg. But the bubble burst with the rise in interest rates. "The loan market has dried up," says Realtor Mike Silverman. Lack of loans means a lack of buyers, at least for the more "moderate" mansions. "Now nothing under $1 million is selling, and the market for the $500,000 house doesn't exist," Herman laments. "Prices are coming down, and there are some real steals available." He cites Gene Hackman's Beverly Hills house. The actor moved out a year ago and put the four-bedroom, English country-style house on the market. He had bought it five years before for a little more than $1 million. Having made significant improvements, he was asking $2.5 million, but it wasn't selling. This month the price was slashed to just about what he paid for it.
One-third of the buyers today are foreigners. Some are French millionaires who fled the socialism of François Mitterrand; others are wealthy Arabs or rich Iranians who fled the Khomeini regime. Iranian construction czar Iraj Azadi bought a four-bedroom home from actress Jacqueline Bisset for $2.5 million. "It was a Spanish-Mediterranean-style house on a flat acre in Bel Air—and that's hard to find," Azadi says. "The tennis court and the swimming pool and spa below were beautiful. That's why we purchased it, not because it had been the home of a movie star." Now that Azadi's children have moved away, he finds the house "too big" and has put it on the market. The asking price is $3.2 million—just reduced from $4.5 million.
Still, most buyers in Beverly Hills remain entertainment figures; television actors, who can earn up to $40,000 per week, are among the few who can afford even devalued property. But they have proved to be very choosy of late. Real estate agents say that a house's value no longer goes up simply because a star has lived there; indeed, ostentatious homes can actually decrease in value. "Buyers are looking for stability stripped of sham," says Scott. "Ten years ago you had people buying houses who never had large amounts of money before. They hired decorators to give them instant lifestyle and a sense of security. The people who are buying today know how they want to live. They prefer less ostentation. They're more accustomed to the understated elegance of a New York brownstone."
Of course, understatement is relative in Tinseltown. Buyers still demand as basics a pool, tennis court, bidet, sauna, screening room and, recently, a video game room. But the latest demand is a more practical feature: security. Closed-circuit-TV cameras, menacing dogs and 24-hour guards are now common in Beverly Hills. One resident went so far as to create a concrete-and-steel room as a sanctuary against intruders. "When they shut the doors," says June Scott, "it's like being encased in a tomb."
Scott yearns for the good old days—and, even amid the gloom, there are a few signs that the traditional Hollywood excess is not completely dead. This year San Diego Chargers owner Eugene V. Klein sacrificed his Beverly Hills home for $8 million—$4 million less than the asking price. When Klein bought the six-and-one-half-acre property 12 years ago, he razed the existing English Tudor home and replaced it with a French Regency manse. The buyer has gone Klein one better: Besides adding a third story to the home, this new California seigneur, a transplanted Kuwaiti, is having a gaping pit dug where Klein's front lawn used to be. In a few months the new owner will be able to look out from his palace on a true Hollywood status symbol—the only lake in Beverly Hills.