LOS ANGELES – By most measures, the housing market these days is a bit sluggish. Prices are flat. Sales are drooping. A lot of people are priced out.
But not everyone. The high end is hopping.
Luxury home sales in Southern California are hitting levels not seen in decades. The number of homes bought for $2 million or more in recent months is the highest on record. Sales worth $10 million or more are on pace this year to double their number from the heights of the housing bubble.
“It’s pretty mind-blowing, to be honest,” said Cindy Ambuehl, an agent with the Partners Trust in LA. “The luxury market has been completely on fire.”
Low interest rates, a strong stock market and waves of cash sloshing in from overseas are boosting demand for high-dollar homes. A record 1,436 homes worth $2 million or more were sold in the six-county greater Los Angeles area in the second quarter, according to CoreLogic DataQuick.
In the more recent third quarter, 1,431 were sold. That was up 14 percent from the third quarter of 2013, and well ahead of any three-month period in the housing bubble years of the mid-2000s. This comes even as the broader market has plateaued, with prices in the region still about one-fifth below their precrash highs and sales at less than two-thirds their 2005 pace.
It reflects a housing market that is now moving at two speeds, said Selma Hepp, senior economist for the California Association of Realtors. Fast for the high end, sluggish for the rest.
“It’s just a completely different story between the two segments of the market,” she said. “Those who are doing well are doing really well.”
A surging stock market has boosted portfolios for domestic buyers in recent years, especially for those who have money to invest. Low interest rates have made mortgages cheap. And banks – still risk-averse – are offering lower rates and better terms to deep-pocketed borrowers than to cash-strapped first-time buyers. Meanwhile, wealthier households have seen their incomes grow faster than average in recent years.
High-end home sales are surging in “Silicon Beach,” too, with tech entrepreneurs and Bay Area transplants scooping up multimillion-dollar homes in Santa Monica, Venice and Marina del Rey. Many of the buyers work in the area, said Miller, and prefer walkable neighborhoods, relatively close to work, to the traditional hubs of Westside glitz.
“These people don’t want to commute an hour and a half to Beverly Hills, which is a whole 13 miles away,” Miller said.
Then there’s the formerly sleepy South Bay. The average sales price in Manhattan Beach through the first nine months of the year topped $2.2 million, said Barry Sulpor at Shorewood Realtors. That’s up from $1.85 million in the same period last year. Even empty lots in the beach town’s “Tree Section” are going for $1.3 million.
“That’s just lot value,” Sulpor said. “And as you get closer to the beach it goes up from there.”