According to RE-Insider in an article published 8/14/14, the luxury real estate market is outpacing the rest of the California housing market by a wide margin. “While home sales throughout much of California have remained flat throughout this spring and early summer, a new study has indicated that multimillion dollar homes are selling in record numbers, offering hope that the market is still improving and prompting many to wonder what’s holding the rest of the market back.”
The article went on to state the 2014 luxury home market year to date is up over 9% from 2013 numbers. On the other hand, the rest of the market is down by over 7% for the same time period. Obviously, separate forces are driving different segments of the housing market. These number illustrate there can be several micro markets within locations and price ranges. While the number of California millionaires is on the rise, workers at the opposite end of the income chart are not as fortunate. Job security, and even a job, remain difficult to obtain, while the middle class claws to hold onto the status quo. Many homeowners are still in recovery mode after weathering the recession that saw many of them lose their home to foreclosures or short sales. It’s no surprise this group of homeowners are hesitate to take on a bigger mortgage. Quite the opposite is often true–their goal is to pay off all debt, including the mortgage, so they are never faced with being “homeless” again.
There is little doubt the luxury home buyer is moving the California housing market due to a different set of circumstances. The homes they did not lose during the Great Recession that decimated the middle class homeowner are now worth more. In some areas of CA home prices increased up to 20% in 2013. This increase in value and equity allow thoughts of a move to the luxury home of their dreams to dance in their heads.
Foreign investors are also a driving force in the sale of luxury homes, especially along the coast and they usually pay cash. They are often seeking financial shelter rather than shelter for their family. Many of the luxury homes they purchase are either leased or used infrequently. Add in the hot technology sector in the Bay area, the entertainment sector of Los Angeles area, and you have a high concentration of people with the income and desire to purchase homes in the luxury price range. Per the article, “California in the second quarter set all-time records for the number of homes sold for more than $2 million, more than $3 million, more than $4 million and more than $5 million.”
These higher number of luxury homes sales certainly hold true in my slice of the luxury home market in the South Bay of Los Angeles. Here are the number of luxury homes priced over $2,000,000 by city for 2014 as of August 19, 2014 per MLS records:
Palos Verdes Estates: 33
Rancho Palos Verdes: 23
Rolling Hills Estates: 13
Rolling Hills: 10
Palos Verdes Peninsula (the unincorporated area): 1
The beach cities of Manhattan, Hermosa and Redondo continue to post a high number of luxury sales priced over $2,000,000 for 2014:
Manhattan Beach: 113
Hermosa Beach: 17
Redondo Beach: 6
I actually rechecked the Manhattan Beach total to make sure I did not make a mistake in the calculation. 113 is not a typo, not is it a statistical mistake. These number leave no doubt the luxury market is thriving in the South Bay of Los Angeles.
If you’re in the market to sell or purchase a luxury home in the South Bay of Los Angeles contact Charlemagne Int’l Properties for an update on recent activity in your neighborhood of residence or choice. Allow us the luxury of helping you find your next home in one of our coastal communities.
– Norma Toering, Broker-Owner of Charlemagne Int’l Properties
Palos Verdes Luxury Homes for Sale: $2M to $5M
Palos Verdes Luxury Homes for Sale: $5M+
Hermosa Beach Homes for Sale: $2M+
Manhattan Beach Homes for Sale: $2M+
Redondo Beach Homes for Sale: $2M+