The new clans of Calabasas: Resi brokerages invade the area, but is it worth it?
“Where the money goes, real estate companies will follow.”
When the history of residential brokerage in Calabasas is written, April will be remembered as the time when the Mongols arrived.
Armed with a war chest of venture capital, Compass lured over top agents at Sotheby’s-affiliated Ewing & Associates, including Tomer Fridman, the go-to broker for the Kardashians. It continued to poach agents in such a frenzy, sources said, that it shuttered Ewing’s Calabasas office. Then, John Aaroe Group took over the Ewing space, and earlier this week, Wish Sotheby’s International Realty opened a new office in the area.
All these moves – and Ewing’s demise – are signs that the once-obscure city, catapulted into the zeitgeist by “Keeping up with the Kardashians” and a growing crop of celebrity residents, is becoming a serious enough market that the big brokerages have decided it’s worth betting on.
“Where the money goes, real estate companies will follow,” Fridman said. “These agencies have all had their eye on Calabasas for a long time. It’s a little market, a suburban market, but it’s a loud suburban market with high-net-worth and high-profile residents.”
But even as residential firms push their way in, amping up competition and setting up what is bound to be an extended series of skirmishes, some believe the market might not warrant all the attention.
“I don’t expect big growth there,” said Michael Nourmand, president of Nourmand & Associates Realtors. “You have a finite number of sales and more companies opening offices, so the pie is going to be split more ways.”
Keeping up with Calabasas
The city of Calabasas has an identity independent of Los Angeles, with its own highly rated school district and local amenities, said Wish Sotheby’s president Ernie Wish, who lived in Calabasas until the mid-90s. But it wasn’t until the glitterati started snapping up luxe properties and allowing TV cameras into their Calabasas homes that the market really started to change.
“Ten years ago, people didn’t know where Calabasas was,” Wish said. “What put Calabasas on the map were the celebrities who moved here and the attendant publicity.”
The area, home to 25,000 residents, had a median income of $125,000 in the period from 2008 to 2014, according to U.S. Census Bureau data. It rose almost 8 percent from $116,000 in 2011. Many in the industry say the influx of celebrity real estate buyers is changing the area.
“All my athletes and celebrity clients want to live in Calabasas,” said Lee Mintz of Partners Trust, who has repped Rihanna and other celebs.
Celebrities such as Justin Bieber, Selena Gomez, Britney Spears and the Kardashian clan have been joined in Calabasas by pro athletes. The 2016 return of the Rams NFL team from St. Louis to L.A. stationed players less than an hour from the city.
Many of them turned to the Oaks, a gated community with custom mega-homes in Calabasas, situated just inside the southwestern corner of the San Fernando Valley. The Estates at the Oaks is the development’s inner sanctum, accessible only through a second guarded gate. Here, 1950s-style privacy can be had, with the comfort of knowing dinner at Mr. Chow is just 20 minutes away.
Here be dragons
According to Compass data, median home prices were up 3.4 percent year-over-year in the second quarter. Redfin’s data on median price per square foot showed a year-over-year increase of 14.6 percent.
With all the star power came the outsiders, and drama. For example, Compass, whose most recent fundraising round last August gave it a $1 billion-plus valuation, poached not only Fridman, but also top producers like Dana Olmes and Jeff Biebuyck, who represented “Dances with Wolves” producer James Wilson in the record-setting $14.9 million sale of his Calabasas compound.
Within weeks of Compass’ strike on Ewing, another 25 agents left Ewing’s office for Wish Sotheby’s. Ernie Wish insists he “didn’t try to poach any of [Ewing’s] agents.”
“It was them coming to me after Ewing & Associates was out,” he added. “Because of our past relationships, 25 of them have joined me. It’s really that simple.”
Then, John Aaroe Group picked up Ewing’s old office, and The Agency moved to 23622 Calabasas Road across from The Commons, an open-air retail and entertainment complex, to secure a foothold in the area.
Wish, whose office has 39 Calabasas listings, has a lot of catching up to do. Compass has 117 listings in the city, including a $15 million, 7,500-square-foot property at 24900 Paseo del Rancho. The Agency, meanwhile, has 245 Calabasas listings, according to its website.
“Compass has attracted the top agents in this area, causing other offices to close, and sending newcomers scrambling to find their place,” said Kofi Nartey, who oversees Compass’ sports and entertainment division.
But brokerages would do well to enter the market with their eyes open. According to Nartey, luxury pads in the $5 million-plus range – possibly overpriced in only the way celebrity homes can bear — will be sitting on the market much longer. Most homes in Calabasas sell in an average of 58 days, according to Redfin, compared to 31 days in Los Angeles.
There have been 163 total home purchases in Calabasas in the first half of 2017, according to Mintz, which means that this year is likely to surpass 2016, which saw a total of 189 homes sold. However, this doesn’t mean that sales volume will keep climbing.
And with a growing number of players here, expect brokers to have greater leverage to negotiate commission splits and financial packages. That would eat into firms’ profitability, and put pressure on them to justify their investment in the area.
“Newer companies usually have to give away better deals to recruit agents from established companies,” said Nourmand, who has offices in Beverly Hills, Brentwood and Hollywood. “So their margins are going to be slim.”