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Prices Level Off in Los Angeles, But Market Remains Healthy

Malibu is one of the area’s strongest submarkets

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The view along a beach in Malibu from a home selling for $9.995 million.

Douglas Elliman
The view along a beach in Malibu from a home selling for $9.995 million.
Douglas Elliman

Luxury home prices in Los Angeles are leveling off after several quarters of strong price growth, according to a report Thursday.

While La La Land still has one of the healthiest high-end property markets in the U.S., prices appear to be coming back down to earth, according to a third-quarter report by appraisal firm Miller Samuel for brokerage Douglas Elliman. The median sales price for luxury single-family homes, defined as the top 10% of the market, was $9.3 million—unchanged from a year ago.

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In addition to that, hundreds of overpriced luxury properties have dropped from the market over the past three quarters, leaving inventory at about 60% of what it was last year.

"There’s been a big drop in inventory and a lot of that was overpriced. It’s not because sales are burning it off, they’re just exiting," said Jonathan Miller, president and CEO of Miller Samuel. "That’s a great thing for luxury markets."

Homeowners and brokers look to their comparable neighbors for price guidance, which means a few overpriced listings can lead to a domino effect of unrealistic pricing. The most extreme example of that is the spate of over-the-top spec homes hitting the market one after the other for more than $100 million.

"By clearing the market of that, you get more accurate pricing, and that results in more transactions," Mr. Miller said.

Luxury sales were strong in the third quarter. Single-family home sales were up 30% in the third quarter compared to last year, and luxury condo sales increased 24% from last year.

More:Check Out News from La La Land's Luxury Real Estate Market on Mansion Global

Malibu

One of the strongest submarkets has been the posh beach community of Malibu, which has seen a combination of rising prices and sales activity.

The median price of a single-family home in Malibu rose 25% in the third quarter to $3 million compared to a year ago, when it was $2.4 million. Total sales are up by about 17% year over year.

"Demand has increased a lot in Malibu," said Stephen Kotler, CEO of Douglas Elliman’s West Region brokerage, which opened a branch in Malibu in early September.

Since then, the brokerage has seen a lot of interest coming from East Coast and foreign buyers.

"It’s not so formal," he said. "It feels casual and cool."