Beverly Hills Remains in a Bubble

servant.jpgI’ve signed up for daily updates from Redfin on the neighborhoods I follow on this blog — Beverly Hills, Hollywood, Westwood.  The updates include new and updated listings in my areas.  Today’s email contained six properties that had received offers over the weekend and were now “contingent,” meaning headed for escrow. Four of the six were $1 million-plus homes; two were multimillion-dollar estates (here and here).

Coincidentally, I came across this press release from Beverly Hills real estate agent Myra Nourmand, entitled “Despite US subprime mortgage crisis, demand for luxury LA real estate remains high.” In the release, Nourmand is quoted as saying:  “There’s no mortgage crisis here. In fact, I haven’t had any clients sell as a result of a foreclosure.” In the Beverly Hills area, demand still exceeds inventory, according to the release:

One reason may be the large number of high-wealth individuals that live in Los Angeles. According to an April 2007 report in CNNMoney.com, L.A. County has the highest number of millionaire households in the country. The region boasts 268,138 millionaire households, which make up 3% of the national total.

So while millions of people are struggling to make ends meet in this country, there is a segment of the population that is completely immune — perhaps blithely oblivious — to the nation’s economic ills.  Am I the only one who finds this disturbing?

Who’s buying these homes?  Besides entertainers, there are probably some CEOs.  Maybe even Angelo Mozilo, chairman of Countrywide, who was awarded $120 million in compensation last year as his company’s subprime loans helped send America into recession and the company itself into near-bankruptcy. Research shows that U.S. CEOs make 600 times what the average U.S. worker makes; in 1980, it was 40 times.

We’re becoming a nation of two classes: the haves and the have-nots. The haves live in happily in a bubble world filled with people like them.  The have-nots overspend and overextend on homes, cars and clothes in an attempt to become haves, only to sink further into have-not-ness. Meanwhile, the haves get rich off the people who overspend and overextend. 

Where is this trend taking us?  Political theory says that this disparity is inevitable in a capitalist society:  Bigger companies swallow up little companies, until wealth is concentrated in the hands of a few. That’s already happening.  What will become of the have-nots if it continues?