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Palos Verdes Luxury Property: Years to Sell & Huge Discounts

Richard Haynes
Palos Verdes Luxury Property Years to Sell & Huge Discounts

The Palos Verdes Peninsula luxury real estate market typically moves slower when compared to the Beach Cities these days.

Farther removed from major economic centers like Downtown L.A., Santa Monica, the Miracle Mile, and Silicon Beach, the pool of wealthy buyers is smaller in Palos Verdes than areas like Manhattan Beach, Beverly Hills, or Brentwood, to name a few.

That said, the past couple years for luxury sales has slowed for Sellers on the Palos Verdes Hill.

In “boom” years like 2014 and 2015, the Palos Verdes Peninsula had home sales of $6 million or above much more frequently, with 12 sales and 13 sales respectively.

Most notable was in 2015 when those 13 sales of $6 million and above averaged under six months on the market.

Over the last two years, the trend has been a different story.

In 2018, only eight sales above $6 million occurred.

Year-to-date in 2019, there has been just seven sales above that mark with no pending escrows.

Although 13 sales versus seven sales is only a difference in six sales, it is significant for the luxury home market and for Sellers looking to move property efficiently and at a “reasonable” price.

Years to Sell

As you begin to look at the 2019 sales, one will notice that the majority of the sales did not take months to sell, but in fact YEARS to sell.

Let’s look at the sales from this year…

No matter which way you spin it, that is a long time on the market to get a home sold. The median time on market to get a $6 million plus home sold in 2019 was two years. Ouch…

Huge Discounts

When you look at the 2019 sales beyond days on market, the picture does not get much prettier.

Luxury listings sold in Palos Verdes this year are taking large discounts from their original asking prices to get deals done. Take a look at the major discounts these properties took in order to their homes sold.

The median discount above is a 21% price cut.

Statistically, the Hill has been recently selling all homes at just a 3% price cut from its original asking price. Luxury homes sales are expected to have greater discounts, but 20% or more is huge.

Much of the discounting has to do with Sellers confidence from past sales and many slowly coming to the reality that the luxury market seems to have shifted in Palos Verdes.

If you listed your home two or three years ago as many of these completed sales had, Sellers were looking at record 2015 prices and speedy sales.

At this time, those record sales are not coming to fruition and the Sellers are finally coming to grips with reality that homes will now sell for less.

Growing Inventory and Major Adjustments

As a result of the slower sales and lower prices, we have seen growing inventory and major price cuts to try and get deals done…these price cutters are the real Sellers.

Of the 18 active listings on The Hill above $6 million, these are some of the listings that have cut significantly in hopes of making a deal.

Not only have some of these homes been cutting their price after significant periods of time on market, but reductions of 30% to 50% is pretty incredible.

These cuts and discounts are not limited to one or two overpriced outliers, but in fact, a very large portion of the entire luxury market selling at big discounts to asking prices and many current Sellers making big adjustments.

There are other Sellers still holding firm on price after a year without reductions in hopes they will land the perfect buyer. Others are even getting creative.

One of the most creative tactics belongs to the most expensive listing in all of the South Bay at 909 Via Coronel in Palos Verdes Estates asking $27.5 million.

Rather than cut their price significantly like other competing listings, it got creative and recently updated the buyer’s agent commission to 7.5%. That is a triple commission.

Assuming the listing sells at asking price, the sale would compensate a buyer’s agent over $2 million in commission. How about that!?

Conclusion

There is not much to this other than three things that are very clear about the luxury market in Palos Verdes:

  1. It is taking in many cases YEARS to get deals done.
  2. Record asking prices have to take BIG reductions.
  3. Current inventory is reacting to discount sales with very big price cuts of their own.

The 20%, 30%, and 40% or more discounting of property should not be happening in a properly functioning market, even in the luxury ranks.

It seems the sugar high from the “boom” years is finally wearing off and Sellers are coming to reality in P.V., as well as current listings cutting their prices to get closer to market comps.

Things can change in a moment’s notice in the luxury market with a few big sales to the upside.

We’ll watch and keep you posted on if the winds suddenly change.

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