Since the coronavirus pandemic started, Los Angeles luxury real estate brokers talked a big game about pent-up demand — how high-end buyers would gobble-up homes in summer they weren’t able to buy in the spring due to shelter-in-place orders.
“I really think there’s going to be pent up demand,” Jason Oppenheim of the Oppenheim Group said back in late March, adding, “I wouldn’t be surprised if we see our best third quarter in many years.”
Well, it’s now August, L.A. County coronavirus cases are still increasing, and it turns out those luxury brokers were…absolutely correct?
Signed single-family home contracts in L.A. County shot up 22 percent in July to 5,420, according to a report by brokerage Douglas Elliman and real estate appraisal firm Miller Samuel. Not up 22 percent compared to June. Up 22 percent compared to July 2019.
The year-to-year leap was due entirely to the high-end market, according to the report.
Homes sales of less than $600,000 remain down year-over-year. Yet homes put into escrow for more than $2 million dollars skyrocketed 192 percent to 912 deals in July.
“The higher you go in price, the larger the growth in sales,” said study author Jonathan Miller of Miller Samuel. “Wealthy people generally are more mobile, and they tend to take action more quickly than the balance of the housing market.”
As to why high-end buyers would be more active amid a horrendous economy than the relative prosperity of July 2019, Miller cited a couple of factors.
One is work-from-home made those who can afford it hungry to find a place with more space. But the biggest is “not having a spring market.”
L.A. County single-family contracts signed bottomed out in April at 2,400 — a normally strong month. Miller noted that even after the July surge, total 2020 home deals are not what they were for 2019’s first seven months.
If luxury brokers optimism about pent up demand has been validated, pessimism about the condo market is thus far debunked.
July condo deals were actually up 61 percent year-to-year, with 1,585 signed contracts in L.A. County. Again, the increase was most pronounced in the luxury market where deals of over $1 million increased by 151 percent to 233, year-to-year.
Brokers initially warned that the rich would shy away from vertical living, and that L.A.’s sprawl would be an appealing antidote to East Coast high rises (“We don’t move to Los Angeles to live in a condo,” said Josh Flagg of Rodeo Realty.)
However, “There is no actual empirical information telling us condo sales are particularly impaired during the pandemic,” Miller said.