By
James Tarmy
July 24, 2020, 5:25 AM PDT
In late June, Lillian Lim, an independent developer whose company Sea Society LLC buys and renovates homes, listed a 2,400-square-foot craftsman-style home a short walk from the Larchmont Village neighborhood of Los Angeles.
She’d bought it for $1.5 million in 2019 and done extensive renovations; within a week of listing it for $2.495 million, she had a firm offer. Soon after, a second, all-cash offer above ask came through, and now the house is in escrow.
“I was nervous, but by the time it was ready to hit the market, there was an indication that people were still buying,” Lim says. “My main motivation was to get it out there by end of June, so I could be one of the first houses back on the market. My real fear was being late.”
The Los Angeles luxury real estate market, which briefly threatened to implode with the onset of Covid-19, is back in full swing.
“Even through May, the luxury market was really under pressure,” says Jonathan Woloshin, head of U.S. real estate at UBS Global Wealth Management’s Chief Investment Office. But the June data held a surprise: In Los Angeles county, the number of contracts signed for homes over $2 million was up 34% year over year. “And that was after May,” Woloshin says, “which was down 48.5%.”
June Rebound
The beginning of 2020 was auspicious for the luxury real estate market in Los Angeles. Before March, median luxury prices were up 4.8% from the quarter before, Elliman reported.
“Los Angeles has pivoted sharply into luxury, more than any market I track,” says Jonathan Miller, the president and chief executive officer of Miller Samuel Inc., an appraiser that prepares the Elliman reports.
But when the city’s shutdown eliminated showings, not to mention entertainment industry jobs that provide sizable incomes to tens of thousands of city residents, the luxury market entered the equivalent of a black hole. “During a lockdown, there’s no price discovery,” says Miller. “People aren’t going in and out of homes,” which is why, he continues, “we saw a 43.5% drop in [second-quarter] 2019 to [second-quarter] 2020 sales.”
When Los Angeles reopened, Miller says, “there was a release of pent-up demand, with surprising strength.”
Other cities have bounced back, too. In the third week of July, 155 contracts were signed in Manhattan, according to a market report from UrbanDigs, nearly double the number of contracts signed the week before. Even so, “it should still be noted that the figure is still lower for the year (-15% compared to 2019).” the report reads.
One reason for the disparity, Woloshin suggests, is that New Yorkers are trying to leave the city, whereas L.A. residents are looking for houses in which they can hunker down for the long haul. “You're seeing some strength in Westchester, Connecticut, and Long Island,” he says. “People want to get out of the city.”
“Is New York as robust as California?” asks Woloshin rhetorically. “No.” To its proponents, the strength of L.A.’s rebound indicates a market that just won’t quit. “Over the past five years, Los Angeles has become more of an international destination because of the lifestyle it affords clients,” Blankenship says. “Now more than ever, quality of life is important to people.”
Connie Blankenship, a director of estates at Douglas Elliman, has been able to work straight through. “I’ve basically sold two properties within the period. I have one in escrow now, another about to go in escrow, and a buyer who’s made offers multiple times.” Prices for the properties, she says, range from $6 million to $20 million. “I don’t want to say there has not been a disruption,” she says. “For most people, there has. But it’s been a case-by-case basis.”
Joe Cilic, a founding partner of Cilic Group at Sotheby’s International Realty, says he and his team have seven transactions scheduled to close in July. “To put that in perspective: The rest of the year combined, I had five. So the market has picked up considerably.”
Most of Cilic’s seven properties had contracts signed within the last 30 days, ranging from about $2.5 million to $7.5 million. “People want their pool; having space between them and their neighbors and having more land is more desirable,” Cilic says. “Clients are less concerned with the size of the house as they are [with] the size of the lot.”
Market HeadwindsBut it’s not all blue skies. “So much is dependent on what happens with the virus,” Woloshin says. “Am I calling for an implosion in home prices? Absolutely not. But,” he continues, “there are certain parts of the market that could be vulnerable to price decline.”
Among L.A. market headwinds is what Woloshin calls “the affordability issue,” meaning that wage increases haven’t kept pace with a rise in housing prices. A ballot measure to be decided in November called Proposition 19 would make it more expensive for family members to transfer primary residences to one another, among other changes.
Plus, there’s an absence of international buyers, who “aren’t coming back anytime soon.”
But, Woloshin says, any bears should remember that California “has an outright shortage of shelter, both for rent and purchase. And that’s going to give some price support” to the market. “We are in uncharted waters,” he says.
" JOE HAS EXCEEDED MY EXPECTATIONS IN EVERY TRANSACTION
THAT HE HAS HANDLED FOR ME.”
JEFF PEREA
MANAGING DIRECTOR, CONWAY MACKENZIE
Joe cilic- Former Practicing Attorney and Brokerage Manager
- Sold or supervised over 4,000 transactions - Totaling over $5 Billion in Sales Volume |
Joe Cilic, a licensed attorney and real estate broker, has sold, supervised or participated in over 4,000 residential real estate transactions totaling over 5 billion dollars in volume.
Chances are if it is residential real estate related, Joe has seen it before and is able to provide his clients with valuable guidance based on actual deal experience. Clients leverage his knowledge so that they can make the best informed business decision possible. His past clients include attorneys, commercial brokers, investment bankers, mortgage brokers, entertainment industry executives and celebrities. Their common trait is that they appreciate sophisticated advice whether they are first-time homebuyers or seasoned real estate insiders.
Joe has a true passion for real estate and has extensive personal experience buying, renovating and selling homes for a profit. His clients often leverage his keen eye for design whether it is to prepare their home for sale or envision the possibilities with a home that they are considering for a purchase.
Joe previously served as Senior Vice President and Branch Manager, having managed 5 different offices and over 400 agents during his tenure. Prior to joining Sotheby's International Realty, Joe worked as an attorney handling real estate-related litigation for a prominent Beverly Hills law firm. He is a Certified Negotiation Expert and has lectured on real estate for Fortune 500 companies, business groups, law school students and public agencies.
Active in the community, Joe has served on numerous homeowners association and charitable boards, including Children Mending Hearts and KIPP Los Angeles where he has helped raise tens of millions of dollars in philanthropic donations.
When he isn't working or volunteering, Joe can be found spending time with his wife and two young children in Pacific Palisades. As a native of Los Angeles, he is knowledgeable about neighborhoods throughout the Westside. His favorites include Santa Monica, Pacific Palisades, Brentwood, Bel Air, Beverly Hills, Westwood, Cheviot Hills, Culver City, West Hollywood, Westchester, Mar Vista, Marina Del Rey, Venice and Malibu.
Tennis fans recognize the Cilic name courtesy of Joe’s cousin Marin Cilic, a top ranked tennis professional. Joe holds a Juris Doctorate from the University of California at Los Angeles (UCLA) and a bachelor's degree from St. Edward's University in Austin, Texas, where he graduated summa cum laude. He is a member of the Beverly Hills/Greater Los Angeles Board of Realtors and the State Bar of California.
Chances are if it is residential real estate related, Joe has seen it before and is able to provide his clients with valuable guidance based on actual deal experience. Clients leverage his knowledge so that they can make the best informed business decision possible. His past clients include attorneys, commercial brokers, investment bankers, mortgage brokers, entertainment industry executives and celebrities. Their common trait is that they appreciate sophisticated advice whether they are first-time homebuyers or seasoned real estate insiders.
Joe has a true passion for real estate and has extensive personal experience buying, renovating and selling homes for a profit. His clients often leverage his keen eye for design whether it is to prepare their home for sale or envision the possibilities with a home that they are considering for a purchase.
Joe previously served as Senior Vice President and Branch Manager, having managed 5 different offices and over 400 agents during his tenure. Prior to joining Sotheby's International Realty, Joe worked as an attorney handling real estate-related litigation for a prominent Beverly Hills law firm. He is a Certified Negotiation Expert and has lectured on real estate for Fortune 500 companies, business groups, law school students and public agencies.
Active in the community, Joe has served on numerous homeowners association and charitable boards, including Children Mending Hearts and KIPP Los Angeles where he has helped raise tens of millions of dollars in philanthropic donations.
When he isn't working or volunteering, Joe can be found spending time with his wife and two young children in Pacific Palisades. As a native of Los Angeles, he is knowledgeable about neighborhoods throughout the Westside. His favorites include Santa Monica, Pacific Palisades, Brentwood, Bel Air, Beverly Hills, Westwood, Cheviot Hills, Culver City, West Hollywood, Westchester, Mar Vista, Marina Del Rey, Venice and Malibu.
Tennis fans recognize the Cilic name courtesy of Joe’s cousin Marin Cilic, a top ranked tennis professional. Joe holds a Juris Doctorate from the University of California at Los Angeles (UCLA) and a bachelor's degree from St. Edward's University in Austin, Texas, where he graduated summa cum laude. He is a member of the Beverly Hills/Greater Los Angeles Board of Realtors and the State Bar of California.
SPecializing in the following areas:
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