Well, the longstanding rivalry between the Bay Area and LA continues–even in real estate. As the Bay’s has pulled back in valuations, LA’s has continued to expand.
• Luxury home sales took a pause in the third quarter after a strong second quarter, particularly in the Bay Area, although they were in line with seasonal trends seen in prior years.
• While Los Angeles luxury home sales have generally trended higher since 2016, the Bay Area saw a dip in luxury sales in 2017 followed by a 2018 rebound.
• Luxury buyer sentiment was stronger in Los Angeles in the third quarter than in the Bay Area, with an improved list-price-to-sales-price ratio and fewer days on the market.
• Bay Area luxury buyers were hesitant, with homes lingering longer on the market and larger average discounts.
• The inventory of luxury homes in Los Angeles continues to increase, especially in the third quarter.
• The inventory of luxury homes in the Bay Area retracted in the third quarter. Sales of luxury homes picked up over the last two years in the Bay Area and Los Angeles housing markets. However, with home sales activity generally slowing since the summer, it appeared that high-end activity might pull back. With more September activity, though, the quarter ended on a solid note — or at least in line with third-quarter activity seen in the two previous years.
Luxury homes are defined here as those priced higher than $20 million in Los Angeles and higher than $10 million in the Bay Area, since the latter has relatively fewer sales of homes over $20 million. The data in this analysis encompasses transactions recorded in local MLSes, and thus off-market transactions are not accounted for. In Los Angeles, sales of homes priced above $10 million in 2017 increased by 39 percent compared with the same period in 2016 and 42 percent in 2018 compared with 2016. In the Bay Area, sales of higher-end homes saw a dip in 2017, followed by a 2018 rebound above the levels seen in 2016. Figures 1 and 2 illustrate quarterly sales activity of luxury homes in Los Angeles and the Bay Area. In the Bay Area, the strongest activity for luxury homes was in the second quarter of this year, with sales almost double the sales during the same period last year. The third quarter reversed from the second-quarter high and brought sales back in line with last year’s third quarter in both regions. While third-quarter activity totaled less than half of the prior quarter’s sales, the pullback may indicate normalization of luxury sales or some reservation among high-end buyers.