Beverly Hills: Swanky Housing in Denial?

"Markets are segmented and the high end benefits from a more affluent buyer class, but it still can't defy the laws of supply and demand," said Stuart Gabriel, director of the Ziman Center for Real Estate at UCLA. "This high-end market will see weaker demand and some slowing as a result -- it just takes a little longer to hit."

The proliferation of investment from non-U.S. citizens has buoyed the market to some extent. The extraordinary drop in the value of the dollar has effectively given foreign buyers a 30 percent discount on top property on both the East and West coasts.

However, the level of interconnectedness of world markets means that if American economic woes spread to the euro zone and Japan then the frailty of such foundations could be exposed, Gabriel said.

"It's a sign of the times that many of our sales are to foreigners and they're paying with full cash or large down payments," said Mel Kimman, who has personally invested $30 million into The Hollywood, a smart, new high-rise located near the Hollywood Bowl.

Kimman admits that the days of an instant fortune from real estate have passed but said he believes investors like him who are in it for the long term will successfully come through this period.

On the face of it, all is well for the wealthy and their housing empires.

Cranes tower over the desirable parts of L.A. and the real estate market is primed for the sale of the 29-bedroom, 40-bath former home of William Randolph Hearst and actress Marion Davies, which is on the market in Beverly Hills for $165 million.

Look a little closer though and you'll meet developers whose ebullience has dampened and you'll find a $165 million mansion that has sat on the list for more than a year.

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