If Los Angeles real estate agents ever want to reminisce about the good old days, they’ll always have Douglas Elliman’s first quarter report on the downtown and west side residential market.
The market snapshot by Elliman and real estate appraisal firm Miller Samuel finds a record $1.6 million median sales price and a 12.6 percent jump in the number of home sales compared to the first quarter of 2019 in L.A. County’s downtown, Beverly Hills, Bel Air, Brentwood, Century City, Malibu, Santa Monica, Pacific Palisades, and West Hollywood.
There were 1,213 home sales in the area studied, producing a sales volume of $3.1 billion, a nine percent climb from the first quarter of 2019, a moment in time when market observers dinged sellers for overly ambitious pricing.
“It was the culmination of a long stretch where there was more accurate pricing and more realistic expectations from sellers,” said Jonathan Miller, the president and CEO of Miller Samuel.
But buyer-seller harmony and record sales are now on hold by the Covid-19 pandemic, and the conditions that produced such a robust market may have vanished.
The pandemic and ensuing quarantine orders by Gov. Gavin Newsom and local officials “really didn’t affect our first quarter report very much,” said Stephen Kotler, the western region chief executive of New York-headquartered Elliman.
Where the coronavirus toll was indicated, Kotler explained, was a “listing inventory that dropped dramatically in the middle of March.”
The 2,328 homes on the market in the neighborhoods analyzed dropped 17 percent compared to first quarter 2019, which Kotler attributed to sellers either pulling homes off the Multiple Listings Service or not listing during the last two weeks of March. Newsom demanded the effective closure of several industries on March 15, and issued a stay at home order for all California residents on March 19.
How long the inventory freefall will continue remains to be seen.
Open-houses and even most private showings are still banned in L.A. County, relegating viewings to a seller waving a laptop screen around their home.
Miller said he was optimistic current market conditions will create pent-up demand from both buyers and sellers, comparing the current chilled market to the 2008 economic shutdown. “By February or March 2009, you did have home sales recovering and crowded open houses,” Miller said.
However, the market conditions that created a meeting of the minds between buyer and seller might be gone. Already, there are stories of buyers hunting for a bargain but encountering sellers with cold feet. “I don’t think sellers are going to immediately capitulate, and you’re going to have that widened gap again,” Miller said.
There’s also the question of who will have the money to buy a home in the upcoming months, though Kotler downplayed such concerns.
“We are seeing that the stock market has rebounded, helping buyers’ portfolios,” the broker said, predicting that financing would be available for new home sales.