LA Ultra-Luxury Market Favors Buyers

The whispers began last summer.

“The market wasn’t teetering, but it was very soft,” Coldwell Banker Realty’s Michael Collins said. “Buyers were taking their time. They weren’t rushing into buying. They were talking to agents about comparables. Some homes were sitting on the market for a year.”

The softening was hard to see with the ultra-luxury market still on a roll. After all, two $110 million deals closed last year, at 594 South Mapleton Drive in Holmby Hills and 630 Nimes Road in Bel-Air, and homes in Malibu and Bel Air sold for $80 million and $67.5 million.

But amid that flurry of high-ticket sales, more and more closings were selling for less than the asking price, or they were lingering on the market.

Some refused to say it last year, but agents aren’t holding back on their assessments of the current landscape.

“There’s no doubt the buyer has the upper hand,” said Beverly Hills Estates’ Michael Fahimian. “It is definitely a buyer’s market, but that’s quickly changing, especially as we anticipate interest rates to go down some time in 2026.”

Price chops started becoming more common in the ultra-luxury market in the back half of last year.

Nourmand & Associates’ Rochelle Atlas Maize’s listing of 3099 Mandeville Canyon Road in Brentwood was reduced from $70 million to $58 million in January.

The price cut was a shift in strategy, aligning with what they thought it would sell for rather than pricing it at a bit of a reach, Maize said.

“In the high end, there was a lot of aspirational pricing going on,” Collins said. “Wealthy people were just throwing numbers on homes because some of those properties were extraordinary, and it was difficult for us agents to comp them.”

In January, the mansion at 1200 Bel Air Road, known as La Fin, was reduced to an asking price just under $100 million, after first hitting the market in 2022 for $139 million. Christie’s International Real Estate Southern California CEO and founder Aaron Kirman told The Real Deal at the time that the adjustment reflected a “more pragmatic luxury market.”

Beverly Hills Estates’ Jack Harris said he expects a market warmup to cause this summer to look “completely different” from this year’s sleepy start.

February deals of $5 million or more for the Westside were off 30 percent from last year, Coldwell Banker Realty found. The year-ago comparisons are skewed, however, as the Palisades and Eaton fires of January 2025 prompted those who lost their homes to scramble for temporary or permanent housing. Compared to February 2024, last month’s deals were down 11 percent, according to the brokerage’s data.

Drivers and psychology

In the meantime, agents are begging some sellers to come to terms with reality, Maize said.

She recently co-listed a south Beverly Hills home where the listing agents recommended setting the asking price at $5.8 million. The seller was adamant about listing for $6 million. The agents ultimately convinced the seller the only way to get $6 million was to list for just under $5.8 million. They pulled in nine offers and are now in escrow at $6.3 million.

“It’s a really, really hard psychology for sellers to understand, because they think they’re leaving money on the table, when in actuality it’s the worst thing they can do to themselves,” Maize said.

Many agents cite high interest rates at the top of the list of factors moving the market. While the wealthy tend to pay cash for homes, rates still impact perception. Oil prices run a similar course, chipping away at whether buyers feel wealthy.

There’s also the continued impact of the Measure United to House L.A., the so-called mansion tax, on residential real estate, as sellers price in the cost, Collins said. Then there’s competition from states such as Nevada, Texas and Florida. Although, any mass exodus out of California to income-tax-free states is overstated, he said.

Insurance is the biggest hurdle in Los Angeles, Maize said, amid ballooning costs and insurers refusing to renew or issue new policies since the wildfires.

She estimated about 10 percent of her deals have crumbled due to the insurability factor. With wealthy clientele, most are able to get transactions across the finish line. However, that’s due to those buyers either choosing to self-insure, or they take on the risk of being underinsured.

Discipline and savvy

For high-end home developer Oren Levy, founder of Gesh Group, buyers have been “recalibrating.” That’s a shift that began two or three years ago by his estimate.

Even with the cooling, the last six months yielded an increase in luxury homes north of $10 million, he said, but they were priced right.

“The days of aspirational pricing, where you’re throwing a number, those days are over,” Levy said.

Gesh Group will test that assertion with its recently listed 694 North Tigertail Road in Brentwood. The six-bedroom, eight-bathroom spec home is listed for just under $24 million, or $2,263 per square foot.

The rest of the year will hinge on individual submarket demand, interest rates and insurance, Maize said.

“If we were looking at one factor, it would be easier to predict,” she said.

For developers, such as Levy, the market has corrected to a more disciplined approach. There’s less money to be made for high-end homebuilders, forcing the need for speed to keep carrying costs light.

Many are still hopeful $100 million-plus deals will return to L.A. this year in submarkets such as Bel-Air or Brentwood. After all, money’s still circulating.

Said Collins: “It’s a weird time in real estate but thank God the rich stay rich.”