Luxury housing in Los Angeles tends to be a fairly high benchmark for the high-end housing market as a whole, but what actually defines “luxury real estate”? Well, most professional associations define a luxury single-family property as being in the top 10% of sales by price. This price fluctuates depending where you are on the globe, but Christie’s International Real Estate defines a luxury home in Beverly Hills, CA as costing $8M or more.
While that number might seem imposing to even those already in the luxury housing market, it’s a drop in the bucket for many prospective buyers across the world. A loft in NYC’s Billionaire’s Row may cost as much (if not more) than many mansions in Southern California. The same goes for Lake Shore Drive in Chicago, Los Gatos in the Bay Area, and many upscale neighborhoods in Miami. And despite the fact that many of these ultra high-end properties tend to be somewhat separated from the low- and mid-level housing markets, over the past year the U.S. luxury real estate market has showed signs of slowing. In fact, Redfin reported that in the first quarter of 2016, the average sale price of luxury homes fell 1.1% YOY from 2015.
One cause of this slowdown is tied to the oil industry, as foreign investors have historically been a big chunk of the luxury property market in the United States (214,885 U.S. residential properties purchased by foreign buyers last year, according to the National Association of Realtors®). Another factor is economic instability, like Brexit and the upcoming election. However, this has left the door open for more domestic buyers who are willing to wait for the perfect property to add to their investment portfolio. And with more luxury homes than ever to choose from, prospective buyers are able to negotiate on the price of their dream home. With this in mind, many luxury home sellers are being advised to build in room to negotiate the final sale price.
With all of these factors determining the health of luxury housing in Los Angeles, it can be hard for some to gauge if now is a good time to invest in a new luxury property. Let’s hone in on the LA market to determine the current outlook.
2016 Market of Luxury Housing in Los Angeles
The luxury housing market in Southern California isn’t secluded from high-end real estate trends in general, but luxury housing in Los Angeles has historically proven to be one of the more safe long-term bets when it comes to property. This tends to be especially true when it comes to the ultra-luxury market.
The LA Times reported that there may be as many as 30 brand-new homes priced at or above $30M getting ready to hit the marketplace in the next 18 months. The California Association of Realtors also released data showing that sales of properties $10M and over actually increased in Los Angeles county in the first quarter of 2016 compared to the year before. It simply goes to show that there are different levels of luxury, even within the market of luxury housing in Los Angeles.
Still, even Los Angeles buyers have more leverage nowadays when it comes to dictating price. Angelenos can afford to be picky in the market, especially when they know that there tends to be more wiggle room on price due to low demand. High end housing in Los Angeles may be down slightly in 2016, but buying trends show that homes between $5-$10M are still being snapped up when the location, condition of the house, and demands are balanced.
Los Angeles Luxury Homes Long-Term
Demand for luxury housing in Los Angeles isn’t going away anytime soon. Despite a dip in the luxury market, high-end houses in Beverly Hills, Calabasas, Bel Air and Brentwood will always command a premium. If you’re in the market for luxury housing in Los Angeles, don’t try to guess when the right time to buy is. Find an experienced real estate agent who can guide you on your search. For a free consultation, call (818) 535-5337 today.