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Higher Values, Fewer Sales for Los Angeles Prime Market

Second quarter saw record prices per square foot amid rising demand

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Single-family residences in Los Angeles recorded an average price per square foot of $940 in the second quarter, its highest level ever.

rappensuncle /Getty images
Single-family residences in Los Angeles recorded an average price per square foot of $940 in the second quarter, its highest level ever.
rappensuncle /Getty images

Values of luxury homes in Los Angeles reached their highest levels ever in the second quarter of 2016 despite fewer transactions in the city’s traditional peak selling season, according to a new report.

Single-family houses valued at more than $1 million recorded an average price per square foot of $940 between April and June, the highest ever, according to The Agency’s Q2 2016 Los Angeles Prime Residential Report, released Saturday. That topped the $937-per-square-foot figure recorded in the first quarter.

A total of 2,047 luxury single-family homes entered the market in the second quarter, a 14.7% year-over-year increase, and 997 properties found new owners, a sales volume second only to the same period in 2015, when 1,053 homes changed hands.

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“Lower sales volume during the period underscores the emergent disparity in supply/demand dynamics in a luxury market whose housing stock is as limited as it is coveted,” according to the report.

Top Selling Neighborhoods in Q2-16

Neighborhood # of Sales
Sunset Strip 80
Palms-Mar Vista 78
Pacific Palisades 67
Brentwood 65
Santa Monica 63

Source: The Agency

The average sale price also dropped, to $2.673 million, a 2.8% decrease compared with the second quarter of 2015.

Malibu Beach saw the highest average sale price—$8.35 million—with a total of 10 transactions.

In the top tier of the market, homes valued above $5 million, sales slowed 15.1% from the second quarter in 2015, to 90 transactions. The average price was $9.22 million, 1.8% higher than a year ago.

The Agency, a brokerage based in Los Angeles, attributed this slowdown in part to a growing number of homes trading off-market, meaning they are not publicly listed.

Q2-16 Single-Family Residence Performance

Q22016 YoY %Change
Average Sale Price $2.673 million -2.8
Average PPSF $940 0.9
Number of Sales 997 -5.3%
New Listings 2,047 14.7

Source: The Agency

As far as high-end condos, those valued above $500,000, The Agency said a pent-up demand amid an “extremely limited supply of new inventory” kept prices moving higher.

The average price per square foot for a condo reached $647, up 5% from a year ago. Half of all condos now trade above $805,000—the highest median sale price ever achieved—with the average sale price reaching $979,000, a 4.2% increase from last year. Sales volume went down by 3.9%, to 945 deals, second only to the period from April through June 2015.

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In Downtown Los Angeles, the price per square foot rose 4.4%, to $675, an increase attributed mainly to lagging inventory. Sales there went down 22.7% in the second quarter, but The Agency forecasts an uptick, as close to 500 units are expected to hit the market by year’s end.

Q2-16 Condominium Performance

Q22016 YoY %Change
Average Sale Price $979,105 4.2
Average PPSF $647 5.0
Number of Sales 945 -3.9
New Listings 1,406 2.9

Source: The Agency