Los Angeles Swings to “Weird” Residential Buyer’s Market

It’s time to start using the B-word in L.A. That is, it’s a buyer’s market.

After months of hemming and hawing and getting mixed answers depending on if someone is speaking on or off the record, those who have no problem telling it like it is are coming around to what this is — with some market-specific caveats.

The shift was perhaps tiptoed into sometime in the first quarter. That’s when Marcy Roth of Douglas Elliman’s Eklund Gomes team, who compiles the group’s weekly signed contracts report, suggested the possibility of a buyer’s market “in the near future.” That’s when the brokerage’s data pointed to weekly growth of luxury listings, without comparable signed contracts to offset the inventory ramp. In the case of the week ended March 15, there were 23 homes that went into contract, while 97 listings were added.

The most recent Eklund Gomes report for the week ended Aug. 17 had 20 signed contracts, while 76 homes were added to the market.

“The word I would use is challenging because the market is shifting, but not completely,” said Christie’s International Real Estate Southern California COO Nina Zokhrabyan. “Yes, it is a buyer’s market, but interest rates are high.”

The part of the cycle L.A. real estate finds itself in is at a “weird moment” in time, she said.

In some cases, sellers still think their properties are worth what they originally asked, and buyers are seeing through the glossy photos and marketing speak.

Much like how the industry talked up good agenting following last year’s NAR settlement over an antitrust lawsuit on commissions, this is where skill matters, some say.

“The sellers and the buyers are now trying to figure out that price, that happy medium, and this is where the agents come in,” Zokhrabyan said. “If you have really good agents on both ends, they’ll be able to navigate and negotiate on the buyer’s and seller’s behalf to make the deal.”

ULA throws off “normal” cycle

There’s more on Zokhrabyan’s point about the market oddities.

That’s so for a couple of reasons that are not cyclical. First off, there’s the Measure United to House LA factor that has impacted the $5 million and above market.

The tiered tax for properties only in the city of Los Angeles kicks in with deals of $5.3 million getting assessed a 4 percent levy and 5.5 percent on those $10.6 million or more. The thresholds are adjusted annually by the city.

The “mansion tax” has been a wet blanket for deals since the November 2022 ballot measure went into effect in April 2023.

The Agency’s Santiago Arana has a client, David Maman of David Maman Design, who in March sold 1050 Stradella Road in Bel-Air for $25 million and had to pay $2 million for ULA. The end result was no profit on the sale.

The developer bought the property in 2018 for $4.8 million, built it anew into a seven-bedroom, 16-bathroom mansion and listed it in March 2024 for $33.8 million.

“ULA, the fires, the economy—all that has created uncertainty in the L.A. market,” Arana said.

The fires factor

The question of insurance bubbles up to the surface when looking at post-fire recovery and dealmaking.

Altadena, Pasadena, Pacific Palisades and Malibu are all coming back from January’s Palisades and Eaton fires. The blazes razed whole neighborhoods and communities, but it also added to jitters around the state’s existing insurance crisis. Insurance, which one needs for a mortgage, is hard to come by or quite pricey.

“Insurance has quietly become one of the biggest deal killers in California real estate,” said Parker Beatty, Compass regional vice president of Southern California and Hawaii. “Post-fires, it’s now one of the first questions a buyer asks, and the rising cost of ownership can spook people. With traditional insurance pulling back, many homeowners are being pushed into the state’s FAIR Plan. Enrollments nearly doubled this year, highlighting both the depth of the problem and the scramble for solutions.”

Those in real estate can usually find the bright side, and Parker said there are opportunities to be had in the challenges: “Those willing to navigate it are finding openings that others overlook,” he said.

Mowbrays’ $65M Moves in Malibu

Brothers Nick and Mat Mowbray found success in toys, but recent real estate acquisitions in Malibu could place them at the forefront of the city’s fire rebuilding process.

The Mowbrays are behind the mysterious buys of nine plots of land on Malibu’s La Costa and Carbon beaches after the fires, spending $65 million on the real estate. The transactions were first reported by Realtor.com, and Kevin Shelburn of Mar Vista-based Shelburn Realty Group sleuthed out the buyers’ identity.

It’s what the Mowbrays plan to do with the land that’s now most interesting. The company did not return requests for comment on the purchases this past week, but one wonders if the oceanfront lots will be case studies for the Mowbrays’ Zuru Tech pre-fabricated housing subsidiary. That’s the software platform that promises the ability to design a custom home or commercial property online, with the components built in a factory and then delivered to the site.

Last year, Nick Mowbray told Bloomberg the business is expected to “dwarf everything we’ve ever done.”

Perhaps Malibu will have a front-row seat to that.

What buyer’s market? $110M listing hits Santa Monica

Branden and Rayni Williams are testing the theory of the ultra-wealthy bubble that can skirt broader market trends.

The Beverly Hills Estates co-founders placed a $110 million listing on the market that is Santa Monica’s priciest home for sale and one of eight in Los Angeles County in the nine-figure club.

For as much as agents talk up “unique” properties selling, 859 Woodacres Road really fits that profile. The 12,000-square-foot residence, asking $9,167 per square foot, sits at the Riviera Country Club’s 7th hole and was designed by the late Howard Backen. The architect was known for his residential and winery work.

The asking price is about a 168 percent jump from the last known trade, which occurred off market in 2017. That’s when the property sold for $41.1 million. At the time, the closing was Santa Monica’s priciest-ever deal.

Chunk of OC history up for sale

Orange County history buffs will appreciate this one.

Compass’ Annie Clougherty and Mike Johnson brought 245 Crescent Bay Drive onto the market with an ask of just under $20 million. The estate of James and Martha Newkirk, the couple who bought the property in 1979, is selling the Laguna Beach home. The four-bedroom, five-bathroom property spans about 6,900 square feet and looks out onto the Pacific Ocean.

The home’s only traded hands a few times since the 19th century.

That starts with the 1905 sale of what was once part of Irvine ranch to the McKnight family from the Irvine family. Irvine Ranch was made up of Spanish and Mexican land grants from 1864 and is the predecessor to the Irvine Company.

The McKnight family’s L.C. McKnight was among a group of individuals who are credited with developing Laguna Cliffs, the first neighborhood in Laguna Beach.

In the 1920s, planes flown by Florence Lowe “Pancho” Barnes passed by and landed close to the Crescent Bay Drive property. Barnes started the first stunt pilots union and broke Amelia Earhart’s air speed record in 1930.

Now, Chateau du Soleil’s big claim is that it sits across from Los Angeles Times’ billionaire owner Patrick Soon-Shiong’s blufftop estate, which he bought for $45 million in 2016.