On the heels of Brexit, the ultra-luxury housing market is in question.
Mega-mansions and lush estates in Los Angeles are prone to price cuts, according to a recent story in the Los Angeles Times, but the slowdown was somewhat expected this year even before Britian’s vote. The oil turn, global economics and rising home prices in the U.S. have all added fuel to the fire.
And although L.A. isn’t seeing nearly as impactful a shift as Manhattan and other condo-driven, ultra-luxury markets, the market is still slowing in the long run, according to real estate analysts.
Christie’s International Real Estate’s annual study Luxury Defined examined data from 100 luxury real estate markets worldwide, finding a general slow in growth among most markets. So while the number of L.A.’s $1 million-plus sales are still growing, it’s at a more modest pace than earlier, according to the study.
New York City slid backward in growth by about 5 percent, and Miami fell by a sliver.
The price cuts reported in ultra-luxury markets could be what the Christie’s analysis called a “return to realism for prime property prices.” In more than 100 surveyed markets throughout the world, the highest price home sold for an average 19 percent less than the asking price. The added punch is that fewer buyers in this bucket are making offers with cash-in-hand, the study says.
But, of course, it depends on the market.
In 2015, Miami recorded its highest price for a residential sale in the four years reported, at $55 million. However, slightly more mature ultra-luxury markets like L.A. and NYC, reported higher 2015 top price tags of $60 million and $92 million, respectively, despite an annual fall.
There are some “game changer” markets, too, like Atlanta, where the entertainment industry is growing and luxury home sales increased 25 percent annually, with prices trending upward so far this year. Portland saw an increase of 40 percent, and Detroit, which had its best year for $1 million-plus homes in a decade, saw an uptick of 17 percent.
While the auto industry is booming after a record year in 2015 and the tech hub is fueling growth throughout the nation, L.A. and NYC have their stake in the ground as the most influencial ultra-luxury markets in the country.
