Preservation, Restoration, and Rehabilitation

Iconic photo of the Singleton House by Julius Shulman

Few would question that architect Richard Neutra was one of the preeminent modernist masters of our time. Some of his most famous works – the Lovell House, the Strathmore Apartments, the Kaufmann Desert House – are considered museum-quality treasures to this day. He had the unique distinction of being featured on the cover of Time Magazine in 1949 – before some of his best works were even on the drawing board. So does that mean his houses should be faithfully restored and impeccably maintained in their original state, frozen in time as the master created them? Or are they homes for the living that need to evolve and adapt to ever-changing lifestyles and to remain viably marketable? (Especially when the alternative is, too often, the wrecking-ball.)

No house has energized this debate more then Neutra’s magnificent Singleton House in the Bel Air neighborhood of Los Angeles. Built in 1959 for the wealthy industrialist Henry Singleton (Teledyne Corp.), and purchased in 2004 by the hair-care tycoon Vidal Sassoon for a reported $6 million, the house was extensively renovated and reconfigured by his wife Ronnie for an attempted “flip” project during the height of the real estate boom. The results, unveiled when the house hit the market in 2008 for an eye-popping $24.5 million, were nothing less than controversial. The milder reviews called the renovation “an act of architectural vandalism” and “hostile to Neutra’s entire vision”.

I’ve toured the house and it remains jaw-droppingly stunning. But is it still a Neutra? What Ronnie did would have been considered brilliant in any other house. She essentially flipped the floorplan around. A small kitchen facing the driveway was moved across the hall to the south side of the house and opened-up to take in the commanding views of the pool and sun-filled vista beyond. This is, after all, where we now spend most of our time with family and friends. (In 1959 the kitchen was strictly the domain of servants.) A row of small bedrooms that turned their backs on the pool and view were moved to where the kitchen used to be on the dark side of the house. A small master bedroom tucked off the living room was converted to additional entertaining space with a built-in bar. And a new wing housing a state-of-the-art master suite with spa-style bathrooms and a screening room was added along the far end of the pool. Ronnie did her best to respect the spirit of Neutra by retaining or replicating the many built-ins throughout the house and matching the original materials in the new bathrooms, down to the 50 year-old fixtures still available at Sears.While still retaining the look and feel of Neutra’s original, there is no doubt the house makes better use of the siting and is far more livable than its predecessor. But the question remains – is it still a Neutra? How would the master himself feel about it? How it will stand the test of time is yet to be determined. After two years on the market, it remains unsold despite a price reduction of over $5 million. And the debate rages on.

What Does the Wall Street Bail-out Mean For You*?

* By “you”, of course, I mean “me” – unless you’re also a Beverly Hills real estate investor and flip-artist.

 

October 3 2008   Excuse me for not posting for a couple weeks, but I’ve been glued to every and any news source I can find to follow the meltdown of our financial system – and staving off my own emotional meltdown in the process.  Regardless of your politics, there’s plenty of blame to be shared across both sides of the aisle and this has been a long-time coming.  Like many of us, I’ve been hearing dire warnings from friends on Wall Street for over a year and dismissed them as kill-joy doomsayers like the crazy guy on the street-corner with the “The End Is Nigh” sign.  Let’s just hope he’s not right, too.

 

The silver lining to this gloomy black thunderhead of a cloud is that this could usher in a whole new era of better government, better oversight, stronger regulation and a newer, stronger, more vibrant and sound economy that opens new opportunities for all of us.  Or not.  We’ll start to find out a month from now.

 

Preparation plus opportunity equals success.  It’s an old saying with many taking credit for it but it’s true and timely.  Every change – no matter how painful – brings opportunity for those who are able to identify it and adapt to take advantage of it.  The real estate business will fundamentally change.  “Flipping” houses may or may not be a viable strategy at least for the near future but plenty of opportunities will exist – some we may not even have thought of yet.

 

The bright spot in the otherwise dreary real estate market up to now has been the high-end.  As the American middle-class weakens, the world’s rich have been getting richer as evidenced by the over-the-top demand for ultra-luxury goods including million-dollar cars and diamond-encrusted human skulls.  The very top-end of the real estate market in the select areas of Beverly Hills, Bel Air and Malibu (“Bevairbu”) has remained strong with a few clever realtors having their strongest years ever.  Houses in $10 to $30 million range in Bevairbu have been selling briskly to all-cash buyers.  When you’re not applying for a loan, you don’t care about mortgage rates.  And you can rationalize paying prices above appraisal values.  This explains the McCourt’s $19 million purchase of a crumbling beach shack on Malibu’s Carbon Beach next door to the Lautner-designed house they bought for over $33 million.  The number of sales of homes over $15 million in Beverly Hills and Bel Air increased over the last 12 months (ending October 1 2008) to a five-year high with more sales than ever getting near or above asking price in fewer than 70 days on market.  Remarkable, given what’s been going on everywhere else.  And positive sales trends in Beverly Hills is reported in a separate posting here.

 

Is that party over?  Too soon to tell for sure.  The world’s super-rich may be too insulated to be affected.  Most of these buyers are foreigners – Russian oligarchs, Middle Eastern oil barons or members of exiled political regimes.  They may be drawn more than ever to the relatively stable market of Los Angeles’ Westside in an increasingly unstable world.

 

My advice for the near term is to move into rental properties, building a portfolio of small homes in solid middle-class neighborhoods with a minimum of a five-year time horizon while keeping an eye on the sales activity in the usually recession-proof Bevairbu. 

 

For more about investing in this tumultuous market, read “Amid the Chaos, Is This Any Time to Invest in Real Estate?

Check back in a few months to see how my advice holds.