Even though the population is thinner in this new area we're living in, there are still a fair number of McMansion-style dwellings we see perched on top of hills with splendid views in all directions. Don and I passed one on the way to town some time back, and we were remarking on how exposed it made the house look. He said something that stuck with me ever since: "They build there so they can see and be seen."
The "see" part I get. Many of these homes command spectacular views. But the "be seen" part baffled me. Who wants to be seen? Maybe we're just odd, but "being seen" is not one of our goals in life. I dunno, maybe that's the difference between introverts and extroverts.
Which leads, in a convoluted way, to an article I saw a few weeks ago entitled "$500 million LA mega-mansion faces default." The article discusses precisely what the headline covers: How a developer built a 100,000 square foot spec house in Bel-Air called "The One" in hopes of making a huge profit. He took out a $82.5 million loan to fund construction.
From the article: "Niami [the developer] has had some bad luck over the last year. He sold an LA mansion called 'Opus' that was once listed for $100 million for a 50% haircut during the virus pandemic. Perhaps the developer has fallen on hard times, or the super-luxury real estate market has stalled. Whatever the issues are, and why Niami can't service his debt on The One comes at a precarious time for the real estate market as interest rates have violently risen over the past few months. ... [T]he lender, who is well aware of market conditions, wants their money back and recently slapped Niami with a default notice. The developer has just 90 days to repay the loan or restructure the agreement in some way so that [the lender] doesn't force the sale of the home. ... Now the developer faces notice of default where the lender could force a sale in market conditions that may not be conducive for top dollar."
There you go, folks. Problems of the rich and famous.
My first thought was, "Who the heck needs a 100,000 square foot home?" The answer is, "Those who want to be seen."
Now segue to this little fluff piece I saw recently entitled "7 Ways to Sabotage Your Financial Future." It contained some decent advice, most of it not applicable to Don and me because we were never "investors."
But one paragraph struck me as something Mr. Mega-Mansion should have taken to heart. One error people can make that sabotages their financial future is "Making big purchases with irrevocable consequences":
"What are decisions that can lead to financial ruin? Big decisions that are hard to undo, such as the purchase of a house, car or boat. There’s a house for sale in my suburban neighborhood that has been on the market for years. It’s beautiful and has truly amazing architecture. The only problem is it is about 10 times more expensive than every other home around it, and nobody else seems to share the owner’s specific taste. Millions of dollars of equity are tied up in a decision to build an asset that can’t be liquidated. I don’t know the owner’s story, but I’ve seen many stories like it, and it isn’t pretty.
Resale value should always be considered when making big purchases. The more unique an asset is, the fewer buyers it brings. This decision could leave you stuck with a unique, but illiquid asset. Tying up a significant percentage of your net worth in illiquid assets can be a great way to sabotage yourself. If and when you need liquidity, there’s no guarantee that a buyer would be willing and able to pay what you need for that asset."
I'd say that applies to the mega-mansion, don't you?
I won't go so far as to say I feel sorry for this developer – there are a lot of people struggling out there far more deserving of pity – but it does make our own modest lifestyle seem wealthy by comparison. We may not own a 100,000 square foot mega-mansion ... but then, it seems the developer doesn't either.
Besides, what does this mega-mansion have that we don't have?
Their living room:
Our living room:
Their library:
Our (partial) library:
Their master bedroom:
Our master bedroom:
Their weight room:
Our weight room:
Their dining table:
Our dining table:
Their patio:
Our patio:
All this, and we don't have to service a $82.5 million loan, either. Now tell me, who leads a more peaceful life?
Perhaps a wish not to "be seen" isn't so odd after all.