L.A. Real Estate Continues to Sizzle, But for How Much Longer?
A new report shows that the number of home sales plunged dramatically in the fourth quarter of 2016 but prices continued to climb upward. Pacific Palisades saw a big year-over-year increase while in Holmby Hills prices (surprisingly) dipped.
Even as the number of home sales plummeted, the high-end swaths of Los Angeles’ real estate market ended 2016 on a high note, with the median sales price for a home climbing above $1 million — and in certain Westside locales like Pacific Palisades the median sales price climbed well above $3 million.
The overall message coming out of a comprehensive year-end report from Douglas Elliman that examined L.A.’s Westside and downtown real estate market was rosy, with the median sales price climbing 7.3 percent year-over-year in the fourth quarter to $1.03 million.
“While the market is softer than a year ago, it is still moving very quickly,” said Jonathan Miller, president of the real estate appraisal firm Miller Samuel and author of the report. “Inventory is rising slowly in response to record prices as more sellers are looking to time the market."
The number of sales in the final three months of 2016 fell a dramatic 12.1 percent to 2,803 from a year prior, which signifies the largest drop in sales since the market crash of 2008. Colin Keenan, senior vp of Douglas Elliman Real Estate said this likely was due to signals from the Federal Reserve that interest rates probably will rise this year and to uncertainty surrounding the presidential election. “Historically election years tend to drive market activity down a little bit. While I am not saying that is the only thing it is hard to imagine that not having an impact,” Keenan said.
Miller concurred. “It appears that the election season caused many market participants to pause, creating pent-up demand. After the election, there was a release and anecdotal feedback suggests that the market has jumped. I don’t think this means higher sales volume will be sustained in 2017. I saw this in 2012 as well,” he said.
The amount of time a house stays on the market increased slightly to 61 days, up from 60 days last year. The report also showed signs of a growing bifurcation in the market with luxury home sales — homes that fall within the top 10 percent of the market — outpacing all other sales. Median sales price for homes in the top 10 percent increased 12.1 percent year-over-year. Transactions in the higher end of the luxury market tend to have more institutional and international buyers, which usually results in more all-cash transactions that skew prices upward.
Jordan Levine, an economist with the California Association of Realtors said that the trends in the Elliman report are more or less being reflected across L.A. County. “In general the trend countywide is that things are slowing down. The market is still growing but the higher-priced homes are staying on the market longer and the premium prices aren’t being met. Folks are starting to get some discounts,” he said.
Some highlights of the report are below.
Neighborhood | Q4 2016 Median Sales Price | YOY Percentage Change
Santa Monica: $2,250,000 | -11.7%
Venice: $1,978,000 | 15.1%
Brentwood: $2,834,000 | -1.9%
Pacific Palisades: $3,225,000 | 22.6%
Malibu: $2,762,500 | 6.3%
Mar Vista: $1,490,000 | 16.9%
Bel Air & Holmby Hills: $1,425,000 | -35.6%
Downtown (condos): $590,000 | 9.3%