Just hit level 25, and got a new building. The Mythic Cave, the description makes it seem like you are not going to be able to breed the legendary with out it. So i guess wait till level 25 before you even start. The habitat becomes available at level 22 and you can buy the guy in the shop for 1,000 gems.
At level 22 I bread a ground/fire air/water monster and got a ground/water monster. Tried again with a fire/ground air/water, still have 22 hours till my ground/water egg shows up. Guess I'll try again tomorrow now that I have that new building.
My DW3 / DW5 Web Site http://www.geocities.com/amussler01/