The days of mega-mega-million home sales may be coming to an end, at least in Los Angeles.
Several seven or eight-figure properties in the city have seen their prices slashed, as the real-estate market comes up against lower demand and other factors giving potential buyers pause, The Wall Street Journal reported on Thursday. In total, the volume of deals in the luxury segment—which is made up by the top 10 percent of sales—dropped 51.9 percent in the last quarter of 2022, compared with the same time period in 2021, according to a Douglas Elliman report.
“No buyer at this juncture wants to feel they’re paying 2021 or 2020 prices,” Beverly Hills Estates’ Rayni Williams told the WSJ.
Some of the biggest adjustments are happening with the biggest homes. A massive Bel-Air estate with an indoor pool, a movie theater, a basketball court, and a 1,200-bottle wine cellar was listed for $100 million in 2018. Last month, it was relisted for a much cheaper—although still expensive—$59 million, a 41 percent drop. A five-acre Beverly Hills home asked $135 million in 2018, but its price has been cut 12 percent, to about $75 million. Around the city, in L.A.’s toniest enclaves, the same is true across the board.
While part of this is due to the larger slowdown occurring in the housing market generally, L.A. also has a few unique reasons for the drop-off in the ultra-luxe sector. In April, a “mansion tax” is set to take effect: A 4 percent tax will apply to sales of property between $5 million and $10 million, while those $10 million and above will face a 5.5 percent tax. Agents say that’s caused sellers to lower prices in the hopes of offloading property before the tax comes into play.
On top of that, a local ordinance meant to protect wildlife would prevent mega-mansion development in areas like the Hollywood Hills and Bel-Air. While it hasn’t yet been approved, fewer developers are looking to scoop up properties, lowering the prices on homes and lots that would have appealed to them. “Developers aren’t really buying anymore,” Williams said. “There’s too much restriction.”
If you are in the market, though, and you’ve been biding your time for a good deal on a massive, amenity-loaded L.A. home, now might be your chance.