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A Banner Year

This past year was another banner year for real estate, the agents and the investors. While most of the country wallowed in indecision, there was no such animal around when it came to west side real estate. Beverly Hills to the ocean once again proved to be an excellent investment strewn with investor “wanna bes” who blamed everyone in the world but themselves for missing the opportunities that 2015 offered. It was a “damned if you do and you’re damned if you don’t” type of year as the cautious waited on the sidelines and the aggressive took the plunge.

Beverly Hills took the lead for value, as it normally does. But curiously enough, condos in Beverly Hills experienced a 7% drop in $/sq ft, from $715 in 2014 to $665 in 2015. A further look at the numbers also tells us that unit sales went from 116 to 129 in 2015, but the average condo sale rose a paltry 3.5% from $1,282,952 to $1,327,283, representing a smaller increase than expected. The only explanation for the 7% drop in $/sq ft can be the difference in unit size and age between both years.

Homes in Beverly Hills took a more normal swing between 2014 and 2015. Average price of a home rose 10.5% from $5,766,754 to $6,295,461, an increase fueled by a corresponding increase in the $10M and above market. Total home sales as reported by the MLS in 2015 rose over the billion dollar mark to $1,013,569,300. Can you imagine that home sales in tiny 5.2 sq miles Beverly Hills rose to a level higher than the entire GDP of many third world countries? That’s scary. Negotiations were tough though. Whereas the condos showed a steady ratio of 97% of Listing Price to Selling Price in both years, they were only 94% for the homes.

How about my home town of Westwood and Century City? Although not carrying the sex appeal of Beverly Hills, Westwood is still the home to UCLA, many more museums and theatres and a wonderful place to raise a family, as Lynn and I did. Remember that average of a 3.5% in average condo sales in Beverly Hills? We saw the same kind of surprise in Westwood, basically remaining stagnant from $1,097,468 to $1,094,407 in average condo sales. That was largely due to the unit increase which saw 554 condos sold in 2014 versus 599 in 2015, boosting up total condo sales from $607,997,519 to $655,550,009 in 2015. But the mix again had an effect, because the average $/sq ft rose a minor .08% from $582 to $587, which I attribute to a higher percentage of units sold in non-doorman buildings. Homes were stronger with a decrease in unit sales from 172 in 2014 to 161 in 2015. Average sales did break the $2.0M barrier by increasing 10% from $1,984,537 to $2,131,961 and we saw a 6.4% increase in $/sq ft from $765 to $813 in 2015, reflecting the minimal inventory levels and their effect on overall demand.

The recent performance of the stock market has once again focused the spotlight on real estate as an investment vehicle. I’ve seen a shift in our business to income properties. I am involved in my own IRC Section 1031 exchanges right now, after entering escrow with a large warehouse in Vernon that I own with my sister. Maybe in the next couple of blogs we’ll look at the performance of income properties, 4 units and less, on the west side of Los Angeles.

More to come, including an announcement of my first “author talk” scheduled for March 22nd in Hancock Park at Chevaliers Books on my book “23 Hours” now available at Xlibris, Amazon or www.twentythreehours.com