The Agency’s Rainy Hake Austin talks trends in LA luxury market

Rainy Hake Austin is approaching the four-year mark The Agency.

As president of one of Los Angeles’ largest brokerages, the executive stepped into her role at the height of the pandemic after heading up West Coast operations for Compass. She’s now helping lead The Agency’s business during a period of turmoil for L.A. agents and the entire industry.

Locally, the market has taken a hit from the flight of home insurers from the state and implementation of the Measure ULA transfer tax. Yet, homes under $5 million are enjoying bidding wars. Some high-rises are seeing interest due to shifting lifestyles, including April’s $24 million sale of the Penthouse at 8899 Beverly, which involved The Agency on both sides of the deal. Meanwhile, Malibu can’t stop nabbing record-breaking closings, including the $61 million trade of a spec mansion named The Edge, where The Agency had the listing.  

Austin shared her thoughts with TRD on what she sees in the market, the lifestyle trends driving closings and what the NAR settlement rules could mean for the future.

What do you and your agents see playing out for L.A. residential?

Generally, it has been up from last year, but there are so many market dynamics in flux right now. The luxury market has slowed a little bit, but you’re still seeing large transactions. It’s not dead, but it’s kind of sporadic.

The driver of the overall market uncertainty is interest rates and other things impeding the general supply and demand. But, when you look at the overall, there are lifestyle trends and not just market dynamics happening.

What sorts of lifestyle trends?

One of the things that we’ve seen a lot of is the trend of tech toward next-level smart homes — being equipped with advanced technology features beyond automated systems.

There’s also an increase in preference for eco-friendly homes. Those with solar panels are coming in at a higher valuation. There’s new construction that is more efficient versus some of the older homes that have inefficiencies but maybe more character.  

Another trend is around wellness and general lifestyle amenities. In my opinion, the quintessential Los Angeles lifestyle has never really been about walkability or being close to things. It’s been much more about this luxurious, glamorous piece but also this desire for wellness amenities that has transitioned into homes. 

We’re seeing the cold plunge, sauna and massage rooms inside of homes, where people are dedicating physical space. Even with sports, it used to be basketball [courts] and now we’re seeing pickleball and stickball, converting existing courts for those.

This kind of parlays into the fourth trend, walkability. 

In the years that I’ve seen the L.A. market grow, it’s really been a sprawling L.A. market. It has always been horizontal. I’m finding that’s shifting. We’re seeing walkability increasingly drive demand. 

That’s walkability for shops and restaurants and nightlife. So, we’ve seen branded residences of luxury condos. We see celebrities, from sports to TV and entertainment, who are giving up their mansions and moving into this super luxury condo living, where they have security, walkability and it’s more service oriented.

Have these trends played out as a result of COVID, or did these start pre-COVID?

A lot of them started during COVID, but most of those are at the pinnacle.

The walkability and high-rise demand are definitely post-COVID. That’s much newer. I’ve seen the anticipation of that for developers and we’ve been very involved and represented all the major high-rises.

On walkability, is the demand coming from more inventory available, or from people moving to L.A. from parts of the country or world that are more accustomed to high-rise living?

The market certainly has not always had that type of inventory, and so the availability of that inventory has sparked interest. There has always been migration between the two coasts: San Francisco to New York or New York to L.A., and they are more familiar with vertical living.

In L.A. we’re seeing people give up mansions for vertical living. They can avoid traffic or celebrities can avoid visibility.

What submarkets are seeing the most activity?

There has really been an increased demand for coastal living. The Malibu market ebbs and flows and it’s hot or cold. Right now, it’s pretty hot. You’re seeing a lot of large sales going on. [The spec home at] The Case, the sale there marked one of the highest-priced sales in Malibu this year.

Who is coming and buying in Malibu now?

It’s interesting. A couple years ago, it was international and then there was COVID and some of the international dried up. 

There was a little bit of a pause with [Measure] ULA and also with the macroeconomic and social-political impact on the marketplace, and people took a step back. Now, people are comfortable with the way things are and moving forward with lifestyle decisions. People would rather own in Malibu than maybe fly to Europe and vacation in the south of France.

Has the insurance issue impacted deal flow?

The luxury market has seen a decline in activity due to policies such as ULA, but also due to the difficulty of getting insurance in the state. 

We’ve seen movement to New York, Texas, Florida because affordability is a factor, but it’s also due to some of the policies that have been put in place [in California] and access to basic things like home insurance. But that hasn’t stopped our high-net-worth individuals.

Is there a sense as to what the rest of this year and 2025 might bring for business?

We’ve been experiencing the limited inventory and higher rates than what people had been experiencing during the COVID low-rate season. Because of that, we’ve certainly still continued to see a shortage of available homes. That has led to increased competition, driving prices up. 

Bidding wars at certain price points have come back.

But a lot of sellers are in a bit of a watch-and-wait mode with the elections. So I think in the immediate, it’s going to be a little bit of a slower fall and winter, but then I anticipate that once we get through the election year and everything gets back to normal we’re going to be faced with what is already in existence, which is the limited supply and persistent need for housing.

Many of the buyers who are sitting on the sidelines are going to come to terms and get used to where the interest rates are and start transacting again, which will normalize prices.

I do think there’s obviously the NAR settlement, which will impact the makeup of the market and the professional agents who are here.

Impact the makeup how?

I think there will be those who are seasoned professionals who understand their value and can articulate that. There are people willing to pay for that and I think that will, in many cases, continue as it normally does.

But I think you’re always going to have those who take advantage and, quite frankly, it’s going to be those who don’t add a lot of value. Some people are going to be compelled to the cheaper option and I think there can be the potential for harmed consumer experiences.

Those who will win are going to be those who have compelling stories for those who value a high-end experience. Obviously, at The Agency we put ourselves in that group.

People will have to spend time educating consumers again. Nothing’s really changing; it’s just a matter of how we have those conversations around compensation that are different. It won’t impact people’s abilities to sell, but it will impact valuations of properties. Those nuances are the types of things that have to be worked through.

I don’t think it’s going to impact volume, but it will impact players inside of the market in terms of who’s able to demonstrate their value and stand out from the crowd.