LA’s Trophy Home Market Ranks No. 3 in World

Los Angeles ranks No. 3, just behind London and New York City, for sales of luxury trophy homes, according to The Wealth Report released by brokerages Douglas Elliman and Knight Frank.

The report found that 225 “super prime properties,” or those more expensive than $10 million, sold in Los Angeles in 2022, and 39 “ultra-prime properties,” or those more expensive than $25 million sold. Last year’s Wealth Report did not break out the numbers of super prime and ultra-prime transactions in 2021.

The report’s survey found ultra high-net-worth individuals across the world remain keen on real estate investment. About one-third of their wealth is tied up in residential properties in 2022. The mansions and estates of the Los Angeles area continue to drive interest from individuals in the economic 1 percent. The study surveyed both Los Angeles and Orange counties,

Study authors forecast that the L.A. trophy home market would continue to be lucrative, despite anxiety over the city’s mansion tax, which levies a 5.5 percent transfer tax on real estate transactions above $10 million.

Los Angeles’ trophy home market will remain strong, forecast Stephen Kotler, chief executive officer of brokerage for Douglas Elliman’s Western region. The area’s inventory of trophy homes is bigger than other areas, and the high-net-worth individuals who can afford them are insulated from economic declines. The city remains popular with overseas buyers and wealthy people from California’s technology sector, he said. However, the transfer tax has already had an effect on some trophy house pricing.

“It’s going to reset aspirational pricing. You have some sellers who have been aspirational in pricing over the last two years. With the tax, they’re going to have to get more realistic with pricing if they want to sell it before April 1 before the tax takes effect,” Kotler said.

Compass also recently released a report on ultra-luxury home sales, which came to similar conclusions as the Douglas Elliman and Knight Frank report. Compass surveyed residential transactions at $10 million and above in 53 U.S. markets. Los Angeles was ranked second as an ultra luxury city, following Manhattan. In 2022, about 242 transactions of $10 million or greater took place in Los Angeles, the report found. That figure was down about 18 percent compared to 2021, when 293 properties priced at $10 million or above were sold.