I'm happy to welcome Peter Viles to the blog today--a real estate reporter from the LA Times who blogs about all things housing. (Please check out his blog.) I asked him for some insight into the always tricky L.A. market, and here are his thoughts:
Sticker shock: A handsome but unremarkable 5-bedroom home on a 60-foot-wide lot two miles from the beach in Santa Monica was listed in late May for $5.095 million. The aggressive pricing caused a lot of talk--one local blogger was incredulous, asking, "Aren't you supposed to get a faux chateau for that?"
But the house sold within days, to the second buyer who walked in the door, for $5.1 million-- $50,000 above the asking price. "It's pretty wild out there" says the listing agent, Michele Hall of Coldwell Banker. "Anything that has a real flair to it, anything that's been remodeled tastefully, anything move-in-able, will get a premium," Hall says.
This is the conundrum of high-end real estate in Los Angeles right now: despite numerous signs of a slowing market -- rising inventory, weak overall level of sales -- parts of the high end are holding steady, and in some cases up and down the Westside -- which runs from Malibu to Manhattan Beach -- well-priced homes are still attracting multiple bids over the asking price.
In fact, DataQuick stats indicate the $800,000-and-above market is responsible for the trend that shows median sales prices still rising on a year-over-year basis in Los Angeles County. The low end of the market has stalled, the level of sales has fallen 305, but high-end homes are pulling the median higher, to $550,000, a gain of 6.8% from May 06 to May 07.
Realtors describe three markets within the high end:
1. $800,000 to $1.1 million, which on the Westside is a first-time buyer, and is generally holding steady, though buyers are definitely more picky than in the recent past.
2. $1.1 million to $3 million--the "move-up" market, where inventory is mounting in many areas, and prices are softening, because prospective buyers are also sellers first--they have to sell their old homes before they can move up and buy another. Case in point: there is a glut of $2 million to $3 million McMansions in Manhattan Beach, where lots are small and houses are big; homes in that price range are sitting on the market for months, and often selling only after price reductions. Local blogger Manhattan Beach Confidential tallies four houses in this range that sold only after price reductions of $149,000 to $299,000.
3. $3 million and above, which is a market unto itself fueled by global wealth -- buyers often pay cash -- and continues to raise eyebrows. Case in point: "Spider-man 3" star Toby Maguire recently sold his 5,000-square foot Hollywood Hills home for $11.5 million -- he had bought it five years ago for $3.7 million.
Questions? Comments? RealtyCheck@cnbc.com