The credits may be rolling on the Los Angeles luxury real estate market’s latest upswing. According to appraisal firm Miller Samuel, median prices across the high-end neighborhoods in the downtown and westside areas of the city fell 4.5 percent from this time last year, only the second time annual price growth has been negative since 2011. That area of LA includes Sunset Strip and Malibu.
Jonathan Miller, CEO of Miller Samuel and author of the Douglas Elliman reports, cited a lack of inventory and pressures exerted on owners of luxury homes via the Tax Cuts and Jobs Act, passed in 2017, for the decline in value. “The new federal tax law combined with a chronic lack of inventory for the past four, five years, have pressed affordability lower,” he explained, adding, “Now buyers are taking a breather. LA’s luxury market had previous resisted the national downward trend in luxury sales exhibited in pricey locales like New York City. Since the beginning of 2019, however, sales have fallen by 26 percent, with areas like Malibu posting sales volumes of less than half of what they were a year ago.
Pocket Listings Falling as Well
Another indicator that this slowdown could last for a while is the decline in pocket listings, off-market sales often preferred by the mega-wealthy in an effort to retain a modicum of privacy while listing their homes. Off-market deals are down about 4 percent, Miller noted, adding, “When you have more supply, you have more competition and the pocket-listing phenomenon is much less effective.”
Could Netflix Bring Things Back?
While luxury home sales may be falling in Malibu and elsewhere in LA, Netflix producers think the price tags are plenty high enough to attract eyeballs. The company’s new reality real estate show, “Selling Sunset,” launched with a full eight episodes on March 22, 2019, and although the show is not getting rave reviews (“gouge your eyes out” reads on Rotten Tomatoes opinion), the show, which has been described as “’The Hills’ for people in their 30s with real jobs,” is certainly getting plenty of attention.
The show features homes with price tags around $5 million, but they occasionally treat the audience to glimpses of $40 million options in the area, such as one such mansion currently under construction that the featured agency plans to list this summer. The show is also likely to further skew audience perspective around the concept of improving a home before you sell, thanks to commentary such as this gem of advice given to Orlando Bloom, who is hoping to sell his $9 million Beverly Hills home: “It is imperative for a house of this magnitude and quality that you spend the money for a zero-edge pool.” That pool will cost Bloom about half a million dollars.
Tell us what you think:
- Are you worried about the LA luxury market?
- Do you think LA’s upper-tier market will suffer long-term?
- Do you watch reality real estate?
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