After shrugging off the real estate downturn and showing appreciation when the market as a whole was down, the Palisades Riviera is headed towards a significant downturn in 2009.
Sitting on the mesas above the famed Riviera Country Club, The Palisades Riviera is a neighborhood of homes with gracious lot sizes, wide streets and a climate that has attracted the wealthy and famous for over 75 years. Most home sales in the Riviera are above 4 million and can be 20 million plus.
The tough economic times and lack of jumbo financing is obviously the main cause for a stagnant market. However, adding further downward pressure is 6 newly built homes that are on the market from $6,495,000 to $11,850,000.
In the past few weeks, 981 Napoli was reduced to $6,995,000 from an original asking price of $8,600,000. The same developer just finished the house next door and that debut this week at $6,495,000 (1,000 sq. ft. smaller 981 Napoli). According to sources, 981 Napoli has received offers but not at a price and terms the developer is comfortable with. After closing costs, it looks like both of these properties could sell at a loss.
532 Spoleto Drive (over 10K square feet) has been reduced within 70 days from an initial asking price of $13,850,000 to $11,850,000. This property could easily see a further reduction into the low $10,000,000 range before they start getting serious interest.
The cause for the Spoleto and Napoli properties is further hindered by two newly built homes hitting the market within the past three weeks priced at $8,995,000 and $9,495,000.
With developers having equity tied up in these homes and construction financing being extremely difficult to find, the tear down lots available in the Riviera are also stagnant and seeing price reductions. Currently, the Riviera has eight tear down lots available with half of them providing views. Slightly over a year ago most of these lots would be sold before they even hit the market.
According to the MLS, only 1 home in the Riviera is in escrow. 3 sales have closed in the area (1 off market) this year.
The good news for the Riviera residents is that buyers are out looking. The broker caravan this week was the busiest it has been all year with people touring properties with realtors.
The high end is starting to pick-up with a flow of jumbo money becoming available in the next few weeks. A few Westside properties priced over $4,00,000 went into escrow this past week.
The bad news for the neighborhood is that buyers have plenty of options, leaving the developers to continue to drop their prices at an accelerated pace if they want to get out of this market anytime soon.