A housing shortage across California has driven prices up to unaffordable heights and locked young house hunters out of the market—and now, even the supply of Los Angeles mansions is starting to dwindle.
Luxury inventory in Greater Los Angeles, defined as the top 10% of sales, has dropped precipitously since last year, according to Douglas Elliman’s second quarter report prepared by appraisal firm Miller Samuel and released on Thursday. The number of mansions listed on the market dropped nearly 45% from a year ago to 347 by the end of the second quarter.
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"The high-end in Los Angeles is one of the tighter markets in the U.S. at least from my optics," said Jonathan Miller, chief executive of Miller Samuel and the author of dozens of market reports from Brooklyn to Miami each quarter.
Single-family homes in posh suburbs like Bel Air, Brentwood and Beverly Hills dominate the luxury market in Los Angeles. And while major cities across the United States are characterized by price cuts and oversupply, L.A.’s already strong luxury market is getting stronger.
There were 97 luxury single-family homes that sold between March and June in Greater Los Angeles, a 26% increase from the 77 sold during the same period a year ago. The median sales price rose 3.1% to $9.5 million, according to the report.
High-end condos, those priced at around $1.7 million or more, also saw increased activity, with 85 units sold, up from 68 a year before.
The plunge in luxury inventory comes down to increased buying coupled with the expiration of overpriced listings that have been on the market for months or years, Mr. Miller said.
"The spread is narrowing between the ask and the buy," Mr. Miller said, adding that buyers and sellers in Los Angeles "are clearly more on the same page than they were a year ago."
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If you are on the sell side, this is one of the best performing markets in the United States with rising prices, rising sales and falling supply, Mr. Miller added. But it’s created a crisis among buyers, even those who can afford the multimillion-dollar homes in areas like Mar Vista and Venice.
In Mar Vista, one of the tightest housing markets in the country, the average single-family home sold in just 40 days in the second quarter. A condo there sold in less than a month on average. The lack of inventory has pushed the median price of a single-family home in Mar Vista 19% over the past year to $1.5 million—higher than the median sales price for a home in Manhattan.
Malibu Beach, a celebrity playground south of Los Angeles, remained stable, with the median sales price at $7.4 million.