Amalfi Estates Founder: Palisades “Not Even Close” to Bottom

Land listings in the Pacific Palisades have slowed in what some fear only kicks the can further out on values hitting bottom.

“A lot of sellers mistakenly think we are at the bottom of the market. We’re not even close,” said Anthony Marguleas, founder of Palisades-based Amalfi Estates, who currently holds the listings for 18 land parcels in the community.

The long-time Palisades broker is finding more sellers waiting out the current 35 percent to 40 percent drop in values. He’s guiding owners to do so if they have the means to hold out until the schools, grocery stores, library and other amenities are rebuilt in the next three to four years.

Nearly every neighborhood within the Palisades, except for the Huntington where values have fallen 10 percent to 15 percent, finds itself flailing in that 35- to 40-percent range. The market requires more burned lots be made available in order for the decline to peak. However, some sellers are hesitant at the thought of losing money.

Marguleas has been tracking listings and sales since the Palisades fire ripped through the community in January and burned some 6,800 properties. Based on the listings that hit the market in March (101) and April (97), he projected the community would see 95 to 100 listings each month, estimating the bottom would be some time in the summer.

The market’s now trending differently.

May is when the slowdown began, with 75 listings hitting the market. In the first 10 days of June, 20 listings were added to the Palisades’ inventory.

“We need inventory to move,” Marguleas said as he walked The Real Deal through his comprehensive data sets and charts. “What this means is the peak of inventory is going to take a lot longer. It’s going to spread out this buyer’s market much longer than anyone expected.”

So far, the Palisades has seen 67 land closings since the fires, according to Marguleas’ data, which is culled from the Multiple Listing Service.

Eight of those were off-market deals, which is on par with what was typically seen pre-wildfires.

The broker’s data analyzed buyers’ mailing addresses instead of by name, to offer a more accurate view of who is acquiring property because identities can be shrouded in LLCs.

While LLCs or corporations on a per-deal basis account for the largest share of buying activity at 29, individual users aren’t that far behind making up 20 of the 67 deals. Eighteen are trusts, according to Amalfi Estates.

Of the buyers making multiple acquisitions, three entities bought two properties. Only one buyer purchased three.

The figures on multiple acquisitions in some ways soothe concerns had by locals of spec developers gobbling up rafts of land and changing the makeup of the Palisades.

“To extrapolate, the town is not being sold to syndicates and large groups, which everyone was worried about,” Marguleas said. “We’re seeing a lot of owners buy the properties, so that’s good.”

Many developers are being pragmatic and factoring in Measure United to House LA, more commonly referred to as Measure ULA, in deciding what they buy.

That’s because the property tax, which went into effect in 2023, is adjusted annually. Currently, sales of $5.15 million to $10.3 million are assessed a 4 percent tax. Deals above $10.3 million are subject to a 5.5 percent tax.

Come July 1 the thresholds will increase to $5.3 million to $10.6 million for the 4 percent tier and $10.6 million or more will see the 5.5 percent assessment.

“Smart developers are buying smaller lots, not bigger ones and building homes that will be under that $5.3 million window to avoid the ULA tax,” Marguleas said.

Of course, another unknown rears its head in speculative development.

Marguleas estimates 30 percent, or 2,000, of the 6,800 properties burned, will get rebuilt. Half, he projected, will be built by developers.

That translates into what Marguleas said will be a “glut” of new builds hitting the market in 24 to 48 months.

“Can the market sustain 1,000 potential buyers buying $6, $12, $15 million homes?” Marguleas asked. “No freaking way. That’s a problem.”