Introduction to LA Ultra-Luxury Market
The Los Angeles ultra-luxury market has experienced a significant downturn, with many high-end properties selling for substantially less than their original listing prices. This trend is evident in the sales and listings of homes previously owned by celebrities, which have seen notable price reductions.
Recent Sales and Listings
Some of the biggest mansions in and around Los Angeles haven’t been fetching anywhere near their original listing prices, despite former ownership by some big-name celebrities. This month alone, homes once owned by Milwaukee Brewers minority owner Robert Beyer, singer Ricky Martin, and previously married Jennifer Lopez and Ben Affleck have sold or are asking for well under their listing price, Mansion Global reported.
Notable Sales
Beyer has been trying to sell his custom-built mansion in Brentwood since September 2023, listing it two years ago for $75 million. It sold earlier this month for $44 million, marking a 40 percent discount. The Beverly Hills former home of Ricky Martin and Doris Day before him is on the market for just under $50 million, down $25.1 million from its August listing price of $75 million, per Mansion Global. The 2.4-acre property includes the 9,200-square-foot mansion; Michael Smith, CEO of natural gas exporter Freeport LNG, bought the property from Martin in 2006 for $15 million.
Price Reductions
The former marital home of Jennifer Lopez and Ben Affleck in Beverly Hills similarly took a haircut. That property is asking $52 million, or $16 million less than when it went on the market last July for $68 million. The megamansion is located in the tony Beverly Crest enclave and spans 38,000 square feet. Over the past three years, the only listing over $50 million to sell for close to the asking price was a mansion in Beverly Park formerly owned by Mark Wahlberg. That property sold in June to Paris Hilton for $63.1 million, about $5 million less than the asking price. Wahlberg built the estate in 2014 and asked $87.5 million in April 2022 before finding a buyer for $55 million in February 2023.
Factors Contributing to the Downturn
Measure ULA, the so-called “mansion tax” that went into effect in April 2023, could be one of the reasons L.A.’s ritziest homes are selling at a discount, Santiago Arana of The Agency told the outlet. Under that law, properties sold over $5 million face a 4 percent tax, and sales of $10 million or more are dealt a 5.5 percent tax. The Los Angeles housing market is still feeling the effects of January’s deadly wildfires. Some homeowners in the area are having a harder time securing property insurance as a result of the blazes. The fires that torched homes across the Pacific Palisades, Malibu and Altadena hastened the comedown from a pandemic-era sales boom.
Nationwide Trends
Disconnects between buyer and seller expectations, however, are a nationwide problem — so much so that U.S. home sales have fallen to their lowest levels in decades, the Wall Street Journal reported. Those looking for luxury homes, however, might want to pounce on a property before others start to circle. “In the high-end areas, we’re the last ones to go down and the first ones to bounce back,” Arana said. “So by the time you hear people talking about turning a corner, then it’s too late — you didn’t buy at the bottom. It’s already the time to buy, and, in my opinion, it’s going to start to slowly climb back.”
Conclusion
The LA ultra-luxury market has hit bottom, with many high-end properties selling for substantially less than their original listing prices. While the "mansion tax" and the aftermath of the deadly wildfires have contributed to this downturn, it’s essential for buyers to recognize the potential for growth in this market. As Santiago Arana noted, the high-end areas are often the last to decline and the first to recover, making it an opportune time for investors to purchase luxury properties.
FAQs
- Q: What is the current state of the LA ultra-luxury market?
A: The LA ultra-luxury market has experienced a significant downturn, with many high-end properties selling for substantially less than their original listing prices. - Q: What factors have contributed to the downturn in the LA ultra-luxury market?
A: The "mansion tax" and the aftermath of the deadly wildfires have contributed to the downturn in the LA ultra-luxury market. - Q: Is it a good time to invest in the LA ultra-luxury market?
A: Yes, according to Santiago Arana, the high-end areas are often the last to decline and the first to recover, making it an opportune time for investors to purchase luxury properties. - Q: What is the "mansion tax" and how does it affect property sales?
A: The "mansion tax" is a law that imposes a 4 percent tax on properties sold over $5 million and a 5.5 percent tax on sales of $10 million or more. - Q: How have the deadly wildfires affected the LA housing market?
A: The deadly wildfires have made it harder for some homeowners to secure property insurance, contributing to the downturn in the LA housing market.
