It can be hard to grasp the wealth of Jeff Bezos, the planet's richest man. Thankfully his decision to spend $165 million on a Beverly Hills mansion last week -- a California record -- offers some clarity.
For starters, there's this easy calculation. Amazon's stock, the source of Bezos' fortune, bounces around daily, but as of the close of markets last week, Bloomberg's Billionaires Index calculated his net worth at $130 billion despite a $833 million stock market hit Friday. That means the nine figure sum he's shelling out for the former estate of movie mogul Jack Warner amounts to only 0.13% of his net worth, rounded up ever so slightly.
Not too many Angelenos could spend such a small fraction of their net worth and buy something they wouldn't be embarrassed to show off to their friends. Consider the median household income in L.A. County -- just $68,093, according to U.S. Census data. Now sock away 0.13% of that and see what that $88 buys. You might go for an eight-person tent at Walmart, barely leaving enough change for drinks at your house warming.
Getting a bit more real world, what would your net worth have to be to spend just 0.13% of it on the median priced house in L.A. County? With the median sales price surging to $628,250 in December it turns out, quite a lot: a fortune approaching $500 million. Which says a fair amount about the L.A. housing market and the kind of people who can afford to live in its upper reaches, both literally and figuratively.
The nine-acre Warner estate was built in the 1930s and was acquired by record industry titan David Geffen in 1990 for $47.5 million, at the time the highest price known to be paid for a home in the country. And, yes, it's a step up from Bezos' other local real estate acquisitions.
In 2007, he spent $24.45 million for a Spanish-style estate on two acres in Beverly Hills, and a decade later bought the 1950s house next door for $12.9 million. Bezos also owns homes in Seattle, Texas and Washington, D.C. Last year, he reportedly spent about $80 million on a trio of adjoining apartments in New York City, with his cumulative holdings making him one of the country's 100 largest landowners by acreage, according to the 2019 Land Report.
But this latest purchase shattered the California home price sales record, which was just set in December when Rupert Murdoch's son Lachlan dropped $150-million on Bel-Air's Chartwell, also known as the "Beverly Hillbillies" mansion for its setting as the home of the fictional Clampetts. And that sale broke an L.A. County record set only last summer when Petra Ecclestone, daughter of Formula One billionaire Bernie Ecclestone, sold the Manor in Holmby Hills for $119.75 million ... which broke a $110 million sale record in 2018 ... which topped the region's first nine-figure sale, of the Playboy mansion in 2016.
The Los Angeles housing market is notoriously expensive and has recovered fully from its lows at the depths of the financial crisis. In the past 10 years, L.A. County home values grew about 60% but the median value of the top 2% of homes nearly doubled to about $5 million, according to Zillow. It's the tippy top of the market, however, that has been going berserk.
"What's driving it is people with a lot of money," said high-end real estate broker Stephen Shapiro, co-founder of Westside Estate Agency, with offices in Beverly Hills, Malibu and Miami. "You would think that that is a lot of money for Bezos but in reality it's not. The more expensive the house, the lower percentage of net worth it is (for the buyer.) A million or two million, you are probably talking about the vast majority of someone's net worth."
Or take the typical home buyer trying to afford the median-priced L.A. County house. That requires a household income probably no lower than, say, $120,000, which means nearly the entire net worth of the buyer will likely be wrapped up in the home.