Los Angeles’ top residential brokerages say the market’s humming along. Under the hood, the motor sometimes splutters.
“It’s been a really strong spring, summer market,” The Agency President Rainy Hake Austin said, “but it’s also been a mixed market that’s been all over the place.”
High interest rates, last April’s introduction of hefty transfer taxes, an exodus from the state by home insurers and costly listings have all dampened dealmaking.
That shows in The Real Deal’s analysis of L.A. County’s 20 largest residential brokerages by sales volume between May 2023 and May 2024. The annual list counts Multiple Listing Service-recorded deals above $1 million and does not include off-market transactions.
Compass comfortably maintained its top spot on the leaderboard with $12.5 billion in volume across 5,306 deals.
The firm’s regional business is flat so far this year and expected to remain that way through the end of 2024, according to Parker Beatty, Compass’ regional vice president for Southern California and Hawaii.
“It’s not completely stopped, but it is depressed,” he said. “Interest rates are still bogging us down a little bit, especially in that $5 million-plus range.”
Coldwell Banker Realty ranked second, with $4.1 billion in sales volume across 1,518 deals, far behind the frontrunner.
The more challenging environment has made strategizing around pricing and agent expertise even more important than in recent years, pointed out Jennifer Lind, Coldwell’s western regional president.
In this market, agents have to be “heavily involved” in conversations around price with their clients. “You can’t really miss the mark too much,” said Lind.
Unrealistic expectations from some buyers and sellers don’t help.
“You have sellers who think it’s still Covid and they can ask anything for their properties, and you’ve got buyers who think it’s 2008 and 2009 during the recession after Lehman Brothers collapsed,” said Austin.
Rounding out the top three, The Agency placed third with $2.8 billion in volume and 688 deals.
Bright spots
A steady stream of buyers from outside the country, the East Coast, Texas, Colorado and even New Mexico offer some optimism, said Sotheby’s International Realty’s Cristian David.
Sotheby’s ranked fourth in this year’s list with $2.3 billion in volume.
David, the brokerage’s Southern California regional manager, pointed to such submarkets as Beverly Hills and Malibu, where multimillion-dollar homes continue to trade. Both cities are excluded from Measure ULA, which currently adds a 4 percent tax on properties in the city of L.A. that sell for more than $5.15 million and 5.5 percent on sales $10.3 million or higher. (The price thresholds change with inflation.)
“Some of our biggest transactions have been in the Beverly Hills market. Double-digit millions,” David said. “Malibu had a horrible year last year. Now, we’re seeing it come back.”
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Comeback may be an understatement. The market has been home to many of the year’s blockbuster deals, including the $61 million sale of a spec home in Scott Gillen’s The Case community and Laurene Powell Jobs’ purchase of a Paradise Cove home for $94 million.
The current market has also forced agents to work harder, said Stephen Kotler, who leads the western region for Douglas Elliman. The firm had $2.2 billion in sales volume and jumped two spots from last year to place fifth on TRD’s ranking
The pandemic rally made it easy to sell even for those with little skill, Kotler said. Tougher transactions are now testing agents’ abilities.
“If you were more of an order taker and you didn’t have to learn the skills selling, it may be more difficult to maintain your business,” he said. “We’re seeing attrition of the ones that can’t do the work exiting the business.”
Boutiques rising
Although this year’s top four look similar to previous rankings, the rest of the list points to an increased presence from boutique brokerages.
Carolwood Estates and Christie’s International Real Estate Southern California are among the list’s newcomers.
Some say the boutique presence isn’t new, as many smaller firms work with high-net-worth clients on off-market deals, which the list does not reflect.
“We’re seeing more than ever that our highest-level clients prefer to transact off market,” Carolwood’s Nick Segal said. “It helps maintain a sense of both anonymity for the sellers and exclusivity for the buyers.”
Carolwood, which ranked highest of all the newcomers, at No. 8, had total volume of $1.6 billion across 290 deals, according to TRD analysis.
The brokerage said its volume is closer to $2.7 billion with off-market trades factored in for the period from May 2023 to the present.
Boutique or not, market pressures remain the same.
Aaron Kirman, who started Christie’s International Real Estate Southern California, which until recently had Kirman’s initials AKG in its name, with Christie’s in late 2022, called the year an “interesting” one.
He pointed to many of the same factors as his peers in ticking off the challenges around interest rates, Measure ULA and general consumer sentiment and said that he’s hedging against the difficulties by being highly selective about new hires.
“We’ve worked harder. We’ve worked smarter and, thank god, the results speak for themselves, but it’s certainly not an easy market,” Kirman said.
L.A. will likely remain in its holding pattern in the months ahead, as consumers wait for the Federal Reserve’s next move and the election outcome, Sotheby’s David said.
“We see a lot of flux, but there’s a little bit of stagnation before the storm,” he said. “In terms of rates, we don’t know; we’re waiting. There are the elections. We don’t know; we’re waiting.”
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