UPDATED, July 26, 9:10 a.m.: In Los Angeles, the luxury housing market has mirrored the temperature outside: scorching.
Single-family home prices continued to surge in the high-end residential real estate market even as sales have sagged and inventory piles up, according to a second quarter report from Douglas Elliman.
The median sales price for a single-family luxury home grew 5.3 percent in the second quarter compared to the same period last year, to $10 million, according to the report published Thursday. Elliman ranks as luxury as any home with a sale price in the upper 10 percent of all its listings.
Meanwhile, the number of closed sales from April through June dropped 6.2 percent year over year, to 91 homes in L.A.’s luxury market.
In the non-luxury market, the median sales price in L.A. County, primarily Westside and Downtown, slipped for the first time in over five years to $1.3 million. That’s a 7.1 percent decline compared to last year, and the first drop in 23 consecutive quarters. Sales in this segment dropped 5.8 percent to 1,701 homes.
In the luxury market, inventory was not the problem. There were 453 luxury homes listed for sale, up from 346 last year over the same period, and 365 in the first quarter of 2018. It is also taking brokers longer to sell the homes in this segment. The amount of days the homes spent on the market jumped 41 percent year over year to 120 days.
“This is the first quarter we are seeing a break from the multi-year white-hot pace,” said Jonathan Miller, an appraiser and author of the report. “One quarter doesn’t define a trend, but given the easing of sales volume in high-cost housing states on the east coast, this suggests a more modest paced market moving forward.”
Discounts on asking prices also rose to 11 percent, up from 6.8 percent last year. One exaggerated example is Bruce Makowsky’s price chop on his massive spec home. The developer dropped the price of his sprawling Bel Air estate from $250 million to $188 million, after it spent months on the market.
The slowdown in sales is also happening beyond L.A. County. In a new report from CoreLogic, just 22,706 homes sold across six counties in Southern California last month, representing a nearly 12 percent drop year over year. The figure was also 15 percent lower than the average sales since 1988.
In Malibu, things have been different. From January through March, more homes were sold despite the median sales price rising. Homes in the glitzy coastal city also only took just 84 days on average to sell, down from 118 days last year.