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It wasn’t all glitz and glam in La La Land last year when it came to luxury-home prices.
The median sales price of luxury homes in Los Angeles in the fourth quarter dropped 17 percent compared to the same period in 2016, signalling a slowdown in the ultra-niche market.
Single-family homes sold for a median price of $8.9 million, down from nearly $10.8 million from the year prior, according to the latest report from residential brokerage Douglas Elliman.
The average price for a luxury condo also dipped 11 percent year-over-year to $3 million.
That’s less dramatic than the 18 percent year-over-year dip reported in single-family luxury homes, where average prices clocked in at $12.3 million this quarter. Elliman ranks luxury as any home in the upper 10 percent of sales.
One example of the cooling market could be seen in the Beverly Hills’ estate formerly owned by Cher and Eddie Murphy. Despite its celebrity pedigree, the 20,000-square-foot home failed to sell at its initial asking price of $89 million in 2016, and has now been listed at $69 million. That’s a 20 percent drop in just two years. Meanwhile, Fleetwood Mac guitarist Lindsey Buckingham’s just re-listed his Brentwood manse for $22.5 million, after it spent six months off market.
Inventory in the high-end of the market also fell 32 percent year-over-year to 323 homes last quarter. There were 478 homes on the market in the fourth quarter of 2016.
That — paired with more realistic pricing — has contributed to faster sales activity, according to Jonathan Miller, author of the report. It took about 86 days to sell luxury homes in the fourth quarter of 2017, down from 123 days over the same period in 2016.
“We’re seeing older inventory that is not priced correct coming off the market,” Miller said. “Clearing the market of excess overpriced supply helps clean up what pricing should actually be, so I think this is a good development for the market.”
Meanwhile, the median sales price in the non-luxury market continued to rise, as it has for the last five years. That number clocked in at $1.4 million in the fourth quarter, up from the $1.4 million reported last year. Average sales price, however, dipped about 10 percent, to $2.3 million.
Sales in that market remain tight. And the number of closed sales went up 13 percent to 1,316 homes.
“The pace of the market is moving much faster because we’re continuing to see a shift from larger properties to smaller,” Miller said. “The spread between the ask and sale price is narrowing and part of that is just because the newer product coming in is closer to market.”
Malibu continued to dominate the market, with condo sales far outweighing supply. Approximately 26 condo sales closed, up from just 6 at the end of 2016.
The wealthy enclave could even see additional increased activity as residents are displaced from Montecito, which has been devastated by mudslides caused by the Thomas fire, and by heavy rainfall. “It adds a new source of demand for this market, which is already plagued by limited supply,” Miller said. “It’s just going to tighten the market even further.”