Amid Real Estate Boom, Los Angeles Real Estate Gets Latest Crop of Luxury Condos
Small lots and palatial penthouses are among the offerings, but some experts wonder whether oversupply is looming.
The overall Los Angeles real estate market remains busy and robust―with nine-digit homes continuing to make headlines―but there are some concerns about oversaturation down the road, especially in Downtown LA.
“Our market is really strong, especially on the luxury front, both single-family and condo, and both absorption rates and price per square foot,” said Hana Cha, managing director of new development for Compass California.
The number of sales in the greater Los Angeles area reached a record high during the second quarter of 2017 as inventory declined and overall price trend indicators moved higher, according to Douglas Elliman Real Estate’s 2017 Greater Los Angeles and L.A. Submarkets Market Report, which was released in late July.
The median sales price increased year over year for the 20th consecutive quarter, and luxury market prices increased as inventory fell sharply, according to the report. The median sales price increased 2.2% to $1.4 million in the second quarter.
“Generally speaking, we have more new development and new construction in the pipeline than we have had in over a decade,” Ms. Cha said.
“The concern is how much inventory is coming to market,” she said. “There is too much inventory at the higher end of the market. How is that sustainable?”
Ms. Cha also worries about coming higher prices in the luxury segment of the Los Angeles real estate market.
“In downtown, the average blended price, across the board, is between $700 and $750 a square foot,” she said. Some of the new luxury condos coming on the market in 2018 and 2019 will have prices “north of $2,000 a square foot. Who is actually going to buy this stuff, especially if there are 500 of them, or 1,000?”
