Despite record-setting spec mansion listings, it appears that buyers in L.A.’s luxury market have pumped the brakes a bit.
Luxury homes are sitting nearly twice as long on the market as they did in the same period last year, according to a new quarterly report from Douglas Elliman Real Estate. In the third quarter, luxury listings took approximately 123 days to sell on average, up from 85 last quarter and 82 last year, or 45 and 50 percent respectively.
Inventory also decreased 40 percent year-over-year to 377, down from 629 in the third quarter 2016. Although usually a positive indicator, a tightening of inventory paired with longer days on the market could suggest demand for luxury residences may be slowing down.
Jonathan Miller, author of the report, attributes the drop in inventory to the fact that “overpriced listings are being allowed to expire.” In other words, sellers who aren’t catching bait for their aspirationally priced homes are now taking their estates off the market in fear of them growing stale.
He also claims the longer time frame is due to firm buyers who are unwilling to go out of their comfort zone for price. “This is forcing sellers to shift to more realistic pricing,” Miller said.
In fact, the average price for a luxury, single-family home in Los Angeles fell 6.7 percent to $11.67 million in the quarter. Luxury, in DE terms, means any home in the upper 10 percent of sales.
On the non-luxe side, the median sales price in the Greater Los Angeles region continued its steady climb in the third quarter, reaching nearly $1.44 million. That’s 2.8 percent higher than what was reported last quarter and a year prior. More importantly, it marks the 21st consecutive quarter where prices have gone up.
“Price trends are grinding higher as inventory remains limited and the regional economy remains strong,” Miller said.
Per usual, the wealthy ocean-side neighborhoods largely led the region with the most expensive homes. Santa Monica posted the greatest change year-over-year in single-family homes, followed closely by Malibu. The median home price for Santa Monica rose nearly 32 percent in the last year to $3.03 million, roughly 25 percent higher than what was reported last quarter.
The amount of available homes on the market shrunk 6 percent to 218 in the quarter in the Malibu and Malibu Beach submarkets. As a result, the median sales price rose to $3.76 million in the quarter – making it the most expensive area in the county. Malibu surpassed the Pacific Palisades, which posted $3.2 million in median sales.
Sales remained strong. While slightly lower than they were in the second quarter, sales surged 27.8 percent to 1,753 homes when compared to the same quarter last year. Absorption, or months it would take to sell current inventory, decreased to 4.3 months.