The spring has shaped up as one of the slowest selling seasons on record for Southern California homes. Over the last year, Los Angeles home prices have followed national trends of decline, but have shown resilience and rebounded incrementally in recent months. Experts tell TRD that the L.A. market has avoided major price drops due to a lack of inventory, even as last year’s “aspirational pricing” has been squeezed out of deals by rising interest rates and other economic headwinds.
Home prices have inched up month to month in 2023, said Odeta Kushi, an economist with First American.
“The Los Angeles housing market continues to face a long-run supply shortage, and any seasonal uptick in demand against a limited supply of homes for sale is Econ 101 for house price appreciation,” Kushi said.
Compared to the bonanza market of last year, prices have dropped, First American found. The median home price in Los Angeles was $870,000 in March 2023, compared to $912,000 a year earlier, a decrease of almost 5 percent. However, median prices have climbed since the beginning of the year. There was an almost 3 percent increase between February, when the median was $845,000, and March.
Price drops have become common in the luxe and ultra luxe sectors. Some of Los Angeles’ leading houses have experienced big price corrections. Celebrities Ben Affleck and Jennifer Lopez made headlines when they purchased 2571 Wallingford Drive in Beverly Crest, for less than $61 million earlier this month. The home’s asking price in March was $75 million.
Other megamansions with price cuts include 55 Beverly Park Way, which is owned by California Pizza Kitchen co-Founder Larry Flax. In February it was listed at $48 million; in May it was relisted at $42 million.
Price corrections have occurred in the single-digit luxe market as well. A newly constructed home in Hermosa Beach, 133 W. 31st Street, fell from an ask of almost $6 million in February to a listing price of $5.5 million in May.
A Culver City home at 3256 S. Sherbourne Drive has lopped $150,000 from its price since March, when it carried an asking price of $1.6 million. It currently lists at $1.45 million, said Evan Haug, founder of Always Buyers, a platform for discounted properties.
“Aspirational pricing is getting corrected. You need to manage expectations now,” Haug said.
“Listings under $2 million are more sensitive to macroeconomic pressures of supply and demand. There is not a lot of supply out there; inventory is not keeping up with demand,” he explained. “There are also pressures on the demand side. Affordability is going down as interest rates rise and confidence in the market is declining. We don’t see the price growth we used to see. We’re seeing bidding wars, but not the crazy bidding wars of 2022.”
Price cuts also reflect flexibility by sellers. During the first interest hikes in 2022, many sellers resisted advice to lower the price of their home. Derek Reilly, an agent at Westside Expert at Lyon Stahl Investment Real Estate based in West L.A., said discussions with sellers on adjusting prices are easier this year.
“In any market, it is all about the seller’s motivation. If they are just testing the market, they will not be open to reductions,” Reilly said. “There are only three reasons why properties don’t sell: Price, price and price.”
Read more
Residential
National
Home prices post steepest annual decline in 11 years
Residential
Los Angeles
LA’s luxury home market shows slow recovery in May
Residential
Los Angeles
LA single-family home sales show slight uptick in May