Demand for Trophy Homes Fuels Price Growth in Los Angeles
Demand for larger, pricier houses drove the median sale price in affluent communities on the West Side of Los Angeles to a near-record high in the fourth quarter of 2020, according to data released on Thursday.
The median sale price across a swath of high-end communities from Downtown west to Malibu hit $1.655 million, the second highest on record and marking a near-10% increase from the previous year, according to the figures jointly released from agency Douglas Elliman and appraisal firm Miller Samuel. Unseasonably strong sales, which were up 11% year-over-year, and a trend toward larger single-family homes amid the Covid-19 pandemic helped fuel the near-double-digit price gains, according to the report.
Like many parts of the U.S., Los Angeles saw a rebound in sales following spring-time lockdowns caused by the pandemic. The city’s housing market, which sprawls across leafy, mansion-lined communities like Beverly Hills and Pacific Palisades, has proved more resilient to the health crisis than its more densely-built peers, including New York and San Francisco.
Total home sales across the West Side and Downtown ended the year down just 3% compared to 2019, even with the market paralyzed for weeks last spring. From mid-December until earlier this week, Los Angeles and other parts of California were in a renewed state of lockdown following a surge in cases that had inundated hospitals.
Still, robust demand for trophy homes has fueled broad price growth, as luxury home sales, which Douglas Elliman defines as the top 10% of the market, rose 17% in the fourth quarter over the prior year. The median luxury sales price clocked in at $10.7 million in the fourth quarter, 11.6% higher than at the end of 2019.
The burst of house hunters, driven by a need for more space and record-low interest rates, has favored some pockets of the city more than others.
For instance, surging demand for big homes in Malibu, a tony suburb with beach homes and ranches, propelled the median price for single-family to an all-time high of $3.2 million. That’s up nearly 45% from a year ago. Rising prices are in some ways a factor of buyers closing on larger houses, Jonathan Miller, president and chief executive of Miller Samuel, wrote in the report.
“Malibu Beach condo sales size surged to their largest average square footage in more than four years,” he wrote, as people craved more space to work and school from home.
Unsurprisingly, denser parts of Los Angeles saw some of the weakest activity last quarter. In Downtown, there were one-fourth fewer condo sales than a year ago, while the median sale price slipped 3%.
By contrast, neighborhoods with generally larger parcels and easy access to hiking and other outdoor activities fared much better. Sales were up over 50% in tony Brentwood and rose nearly 20% year over year in Pacific Palisades, according to the report.
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