In Los Angeles, even amid growing inventory, a new study shows prices remain largely unattainable for most prospective buyers.
The number of sales in Greater Los Angeles declined for the third consecutive quarter, dropping 5.2 percent year over year to 1,247 homes sold, according to a fourth quarter report from residential brokerage Douglas Elliman.
Prices, however, are showing an opposite pattern. The median sales price increased to $1.5 million, up 3.5 percent from the fourth quarter of 2017, while the average sales price hiked up 3.4 percent to $2.4 million.
The situation is more pronounced in L.A.’s luxury market, which Elliman defines as the upper 10 percent of all its listings. The median sales price of a single-family home in that market rose 10.6 percent to $9.9 million. That’s despite sales decreasing by 7 percent to 66 homes.
Stephen Kotler, CEO of Elliman’s Western region, said he anticipates the decline in sales to continue until sellers step away from “an emotional pricing model,” where asking prices are, in some cases, 50 percent above fair market value.
In the third quarter, the median sales price dipped 7.5 percent to $8.6 million year over year.
Data for the latest Elliman report comes from both off-market sales — those visible in public records — and the Multiple Listing Service, Jonathan Miller, the report’s author, confirmed.
Inventory in the high-end market dropped 4.6 percent to 308 homes, suggesting the spec home construction boom of the past few years may finally be winding down. In the non-luxury market, however, listing inventory increased 33.3 percent to 2,580 homes listed for sale.
Malibu, one of L.A.’s strongest markets, showed some of the steepest declines. Sales there dropped 39 percent to 25 homes, while inventory rose 73 percent to 26 homes.
The number of homes sold also dropped in Venice, Mar Vista, Beverly Hills, Santa Monica and West Hollywood. Other neighborhoods, including the Pacific Palisades, Hollywood Hills, Westwood and Bel Air, fared better, showing an increase in closed sales.
Nationwide, a similar slowdown is occurring. A new report from Redfin reveals price growth will settle at around 3 percent in the first half of 2019, with a small chance it could dip to negative growth for the first time since 2011.