Los Angeles luxury houses (Credit: iStock)
Even the Los Angeles luxury real estate market — with all of its spec home mansions and cliffside estates — is not immune to what has become a nationwide housing slowdown.
Sales of single-family luxury homes took a sharp drop in the first quarter compared to the same time in 2018, according to a Douglas Elliman market report released Thursday.
There were 57 luxury home sales in Los Angeles from January through March, a 31-percent drop from the 83 luxury homes sold in 2018.
Stephen Kotler, CEO of Elliman’s Western Region, said the second quarter should show an improvement. He said there has been more active since the middle of March, thanks in part to improved weather and lower interest rates.
“The overall sentiment from consumers is that the economy is healthy and strong,” he said, “and we’ve seen a big difference the last 30 to 40 days.”
He added that the market had been inflated because of a lot of “aspirational pricing” over the last year and a half, in both luxury resale and spec building. What some industry leaders predicted at the end of last year — that the local high-end real estate market was headed for a “modest reset” — did end up happening.
But despite the drop in prices, some of the homes on the market remain in the stratosphere And while sales dropped sharply, overall prices actually ticked up to $13.7 million in the city’s high-end enclaves, with notable increases in Beverly Hills and Brentwood. That number stood at $13.3 million over the same period in 2018.
Some homes remain in the stratosphere, and may be due for another reset.
The Chartwell estate in Bel Air that previously belonged to the late Univision billionaire Jerrold Perenchio is on the market for $245 million after a year as a pocket listing, priced at $350 million. Overall, the number of such pocket listings fell across most price categories, according to Elliman.
Some of the over-ambitious prices are a result of the time it takes to build luxury homes. Developers who are putting their properties on the market now had purchased the land two to three years ago, and started building when the market was on the rise.
Bruce Makowsky’s spec home on Bel Air Road started at $250 million in 2017, but the price has since been cut twice, most recently to $150 million in January. More recently, a custom home off the Pacific Coast Highway chopped 40-percent off its original listing of $57.5 million.
In Malibu, sales remained well below the levels seen last year, according to Elliman, with an increasing number of smaller homes trading hands. The average sales prices for single-family homes in Malibu was under $2.9 million, marking a 14.3-percent decline from first quarter of 2018.