Falling inventory and a willingness on the part of sellers to price sensibly helped spark a more than 25-percent jump in sales activity in Greater Los Angeles, according to a new market report from Douglas Elliman.
The number of sales leaped to 1,806, a new record, according to Elliman. Median sales price increased for the 20th consecutive quarter, to $1.4 million, while the average sales price rose 5.7 percent year-over-year to $2.4 million. Properties spent fewer days on the market, something the brokerage attributed to more realistic pricing.
“Sellers are pricing accordingly and that’s attracting buyers,” said Scott Durkin, Elliman’s COO. “That has fueled the markets to record level. The sellers who are unrealistic are not in the market right now, which is making inventory tighter.”
Discounts were deeper in some parts of town: condos in Downtown L.A. were discounted 4.4 percent from their last list price, compared to a discount of 1.4 percent during the same period last year. In the Beverly Hills Post Office area, single-family homes – which had an average sales price of $5.5 million, saw listing discounts of 8 percent. In Malibu, they were discounted 8.8 percent. The findings show price reductions focused on certain markets; across the board, they averaged 3 percent, on par with the 3.1 percent recorded this time last year.
“(The growth) is in line with other markets that are weighted towards the high-end – Manhattan, Brooklyn, Miami, Aspen,” said Jonathan Miller, president of appraisal firm Miller Samuel and author of the Elliman report.
The absorption rate for Greater L.A. stood at 4.5 months in the second quarter, down from 5.9 months during the same period last year. And most metrics point to a thriving market, with higher average sales prices and prices per square foot. Properties are spending fewer days on market – 52 compared with 62 during the same period last year.
“2016 was lackluster and tepid,” Miller said. “But we weren’t expecting a jump like this. This is overcompensation to bring the market to more normal levels.”
The one area that showed mixed results was Malibu, where sales remained stable but inventory was down. The average sales price of a Malibu condo fell nearly 45 percent year-over-year, to $900,567 from $1.63 million.
“A lot of people go shopping in Malibu not realizing what the prices are,” said Durkin. “There’s sticker shock for what you get. You really have to want to be in Malibu; it’s a very specific buyer so there is less fluctuation and homes can take longer to sell.”
Looking ahead to the third quarter, Durkin said the L.A. market was no longer seasonal.
“The thinking is, if you’ve got something to sell, sell it now,” he said. “No need to wait anymore for a certain time of year. And the weather here is always in your favor.”