Can Russia Save the U.S. Housing Market?

In this summer of high-end real-estate purgatory, New York real-estate circles are abuzz over some good news. In early July, a town house on a gilded block of East 64th Street changed hands for $42.5 million. The buyer hasn't been publicly identified. But speculation is centering on Leonard Blavatnik, a Russian oil magnate who last fall paid $50 million to buy the neighboring house from Seagram's heir Edgar Bronfman Jr.

A quarter century after the debut of "Red Dawn," in which Patrick Swayze and Charlie Sheen fought back against a Soviet invasion of a bucolic Colorado town, Russians are again occupying promontories in the Rockies. This time they come bearing hard currency rather than Kalashnikovs. Roman Abramovich, the Russian billionaire whose holdings include London's Chelsea soccer team, in May paid $36 million for a 200-acre ranch in Aspen. Recently, Dmitry Rybolovlev, a 41-year-old fertilizer multibillionaire (net worth: about $13 billion), agreed to pay Donald Trump $95 million for his 62,000(!)-square-foot beachfront mansion in Palm Beach, Fla. According to the hyperbole- prone Trump, it was the most expensive purchase of a single home in the nation's history.

And you didn't see many Americans at Trump's open house. The credit crunch has removed an important source of support for the penthouse floor of the housing market. When they made their millions, subprime barons and hedge-fund parvenus cemented their status by purchasing (frequently gauche) trophy properties. Just in time, a new class of nouveau riche buyers with dubious taste and a penchant for conspicuous consumption has arrived on the scene: Russian oligarchs.

Booming commodity markets have turned entrepreneurs from the steppes of Central Asia into gazillionaires. Several factors—the weak dollar, concern about stability at home and the age-old international playboy's desire to establish footholds in global capitals of fabulousness—are bringing them here. No truth to the rumor that HGTV is developing a new show about the makeovers: "Flip This Dacha."