Q3 2015 Los Angeles Prime Residential Report

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<ul><li><p>TheAgencyRE.com 1</p><p>THE AGENCY REPORT</p><p>Q315</p><p>Q 3 2 0 1 5 L O S A N G E L E S P R I M E R E S I D E N T I A L R E P O R T</p></li><li><p>The Agency Report Los Angeles Prime Residential Market Q3 2015 TheAgencyRE.com2 3</p><p>THE AGENCY</p><p>MAURICIO UMANSKYCo-Founder. Chief Executive Officer</p><p>BILLY ROSECo-Founder. President/COO</p><p>RESEARCH &amp; DEVELOPMENT</p><p>MORGAN BALL Director424.230.3748Morgan@TheAgencyRE.com</p><p>CREATIVE</p><p>HELEN TRUONG Designer</p><p>NICOLE MONTGOMERYWriter</p><p>CAMERON SELMERAnalyst424.231.2412CSelmer@TheAgencyRE.com</p><p>CORPORATE HEADQUARTERS</p><p>331 Foothill Rd, Suite 100Beverly Hills, CA 90210</p><p>424.230.3700Info@TheAgencyRE.comTheAgencyRE.com</p><p>THE THIRD QUARTERReal estate in LAs prime markets continued to climb in value during the third quarter. Condos achieved, yet again, their highest price point ever as measured by average price per square foot, and single-family residences closed the period just shy of record-breaking Q2-15 valuations, at $914/SF. SFR sales volumes, which are typically lighter during the summer months compared to the strong springtime selling season, recorded their 7th consecutive quarter-over-quarter gains, with 993 $1MM+ homes trading hands.</p><p>What we are most proud of this quarter, however, is The Agencys achievement as The Wall Street Journals most outstanding brokerage in LA County, as measured by the number of agents represented in the countrys top 250 realtors. In its 2015 Top 1,000 Real Estate Professionals rankings, The Wall Street Journal ranked 20 of The Agencys associates among the best of the best in the U.S. in several categories. While we are both the youngest and the smallest of the organizations with more than one agent on the list, The Agency led all LA County brokerages with a staggering 13 agents represented on The Journals Top 250 Individuals by sales volume.</p><p>As The Agency continues to play a greater role in LAs luxury real estate landscape, so too do we feel the need to step up our involvement in a community that has given so much back to us since our founding just over four years ago. In July, we launched The Agency Goes Green, an initiative dedicated to environmental sustainability, and devoted to sharing green-themed news, partnerships and events. The Agency has partnered with one of the worlds most innovative companies in paving the way for the future of sustainabilityTesla Motors. As part of our first annual Green Week initiative, The Agency hosted carpool events featuring six Tesla Model S sedans, the worlds first premium electric sedan. </p><p>During the past 3 months, we expanded our association with Giveback Homes and Habitat for Humanity, and again participated in several hands-on build days in Los Angeles. On September 16th, The Agency and Giveback Homes hosted an inspirational charity ride at Soul Cycle Beverly Hills, raising funds to build more homes for families in LA and bringing awareness to the organization. </p><p>While The Agency continues to expand its reach in the Los Angeles market, we remain committed to excellence in servicing all of our clients and the unique challenges presented to us on every deal. We are available to you, as always, to answer any questions you may have as we delve into the last quarter of what has already been a tremendous year in real estate.</p><p>Sincerely, </p><p>Mauricio UmanskyCo-Founder, Chief Executive Officer</p><p>Billy RoseCo-Founder, President / COO </p></li><li><p>The Agency Report Los Angeles Prime Residential Market Q3 2015 TheAgencyRE.com4 5</p><p>SUNSET STRIPDemand remains hot for residences near the Sunset Strip, but the market steadied a bit during Q3; volume remained even to Q3-14 at 90 deals, a slight 4.3% decline from a year ago, and a 15.9% fall from the previous quarter. Pricing also slowed, reaching an average PPSF of $906/SF and an average sale price of $2.45MM. Q3-15 may have experienced a minor slowdown in market activity, but the Sunset Strip market continues to command premium pricing and high demand.</p><p>9</p><p>LOS ANGELES AT A GLANCE</p><p>101</p><p>110</p><p>2</p><p>110</p><p>405</p><p>MALIBUSFR values advanced in Malibu in Q3-15, recording an average PPSF of $866/SF, up 0.2% from Q2-15. Sales volume dropped to 36 deals during the quarter, down 12.2% from a year ago. Though with the Malibu market rarely seeing over 45 deals in any period, we dont view the drop in sales volume as a sign of softening demand for a prime beach address, but rather a cyclical change in an illiquid market. Condos remained a small segment of the Malibu real estate market, with just 14 deals taking place at an average price of $940K. </p><p>1</p><p>PACIFIC PALISADESSanta Monicas next-door neighbor continued to experience substantial increases in overall pricing and valuation, with 71 deals closed during the quarter at an average PPSF of $1,031/SF, up 6.3% from a year ago. Average sale price is also on the rise, increasing just under 10% to $3.8MM, the new all-time high for the neighborhood. More so, homes in the Palisades are selling quickly time spent on market was down to 80 days on average during Q3-15, a significant 18.8% drop from last year. The condominium market recorded 23 deals, its second highest volume in any quarter in the last 5 years, with an average valuation of $598/SF, also a 5-year record high.</p><p>2</p><p>SANTA MONICADemand and value for Santa Monica continues to be explosive. Values rose again in Q3, with SFRs recording an average price of $2.86MM on an average valuation of $1,154/SF, 20.4% and 23.0% YoY surges, respectively. This now marks the 4th consecutive quarter during which average PPSF has increased, and the increases have been significant. Condos, on the other hand, while experiencing a slight decrease in average price this quarter, continue to remain at levels previously unseen in the Santa Monica market until this past year; averaging $1.2MM and $887/SF.</p><p>3</p><p>BEL AIR / HOLMBY HILLSA market with drastically varying product, the Bel Air-Holmby Hills neighborhood often experiences significant swells in average pricing as outlying super-houses skew the market. Over half of the 39 homes which traded this quarter sold for over $2.19MM, a 4.5% increase from a year ago. At the same time, days on market reached a 5-year low in Q3, falling to just 87 days a YoY and QoQ drop of 9.0% and 29.6%, respectively.</p><p>4</p><p>CENTURY CITY / WESTWOODValues of SFRs and condominiums advanced during the quarter, as average PPSF reached $821/SF and $652/SF, respectively - 5.5% and 3.5% increases from the previous quarter. SFR volume surged to 50 deals, up a considerable 25.0% from last period, but down over 15% from a year ago. New luxury inventory continues to play an important factor in the condo markets increasing demand; The Agency has now achieved a 96% sellout at The Carlyle Residences, located in the Wilshire Corridor, with just 3 residences remaining.</p><p>5</p><p>BEVERLY HILLSLAs most prestigious neighborhood saw an explosive spike in pricing in Q3-15, with average PPSF up an astounding 38.8% to $1,527/SF on 39 transactions, the same number of deals as in Q3-14. Average sale price increased 38.8% YoY in LAs toniest zip code, recording an average price of $6.7MM.</p><p>6</p><p>WEST HOLLYWOODAnother impressive quarter for West Hollywood SFRs and condos experienced significant upticks in most of the benchmarks we track. SFR average pricing pushed forward 18.9% from a year ago, up to $1.63MM. Property values, as measure by average PPSF, reached $919/SF, a 5.9% increase over Q3-14. The median price recorded during the period was $727K, a record high for the neighborhood, and a 2.7% rise from Q3 last year. Condos values advanced in Q3-15 as well. The market recorded strong YoY growth in each of the key benchmarks we track, with average price, PPSF, and sales volume up 18.8%, 16.1% and 15.9%, respectively. </p><p>7</p><p>MARINA DEL REYDemand for prime real estate in Marina del Rey is on the rise, with pricing reaching new heights in this beach city; average condo sale price reached $973K on an average valuation of $620/SF, 7.1% and 8.5% increases from last year, respectively. Median sale price for condos broke a record in Q3-15, reaching $875K, a significant 12.9% surge from a year ago, and a 3.2% increase from Q2 of this year. A predominantly condo-oriented neighborhood, SFR volumes remained low at just 11 deals during the period, but achieved a record high PPSF of $812/SF.</p><p>8</p><p>HANCOCK PARKThe historic and charming neighborhoods single-family residences recorded an average sale price of $2.06MM during Q3-15, a 5.0% drop from a year ago, but a solid 2.5% increase from Q2 of this year. Average valuation dropped 2.4% from last year, but remained steady to the previous quarter at $675/SF. Condo sales volume remained near all time-highs, second only to Q2-15 with 34 deals closing during the quarter at an average price of $691K.</p><p>10</p><p>DOWNTOWN LOS ANGELESNew development continues to shape the DTLA skyline, with over 10 projects slated to commence, or currently under construction by the end of Q3-15 and three more to break ground by years end. As for current inventory, average PPSF remained essentially steady to Q2 at $642/SF, but increased over 12% from Q3 last year. Average sale price also remained high, topping out at $807K, 6.6% ahead of last year.</p><p>11</p><p>4</p><p>11</p><p>1</p><p>5</p><p>6</p><p>3</p><p>2</p><p>9</p><p>8</p><p>10</p><p>7</p></li><li><p>The Agency Report Los Angeles Prime Residential Market Q3 2015 TheAgencyRE.com6 7</p><p>Q3-15 YoY % Q3-14 QoQ % Q2-15</p><p>Average Sale Price $971,461 2.0% $952,109 3.4% $939,669</p><p>Average PPSF $633 3.1% $614 2.5% $618</p><p>Median Sale Price $775,000 3.3% $750,000 1.0% $767,500</p><p>Number of Sales 893 5.1% 850 -9.2% 983</p><p>Days on Market 79 -9.4% 87 -4.7% 83</p><p>Listing Discount -1.5% - -1.3% - -1.0%</p><p>New Listings 1,272 6.3% 1,197 -6.9% 1,367</p><p>Q3-15 YoY % Q3-14 QoQ % Q2-15</p><p>Average Sale Price $2,559,756 -4.7% $2,686,810 -6.9% $2,749,670</p><p>Average PPSF $914 2.7% $889 -1.9% $931</p><p>Median Sale Price $1,750,000 -6.9% $1,880,000 -8.1% $1,905,000</p><p>Number of Sales 993 10.9% 895 -5.7% 1,053</p><p>Days on Market 79 -11.3% 89 -7.4% 86</p><p>Listing Discount -2.6% - -3.3% - -2.2%</p><p>New Listings 1,720 19.9% 1,435 -3.6% 1,785</p><p>$1,800,000</p><p>$2,100,000</p><p>$2,400,000</p><p>$2,700,000</p><p>$3,000,000</p><p>200</p><p>425</p><p>650</p><p>875</p><p>1,100</p><p>'05 '06 '07 '08 '09 '10 '11 '12 '13 '14 '15</p><p>PR</p><p>ICE</p><p>SA</p><p>LES</p><p># of Sales Avg. Sale Price</p><p>$500,000</p><p>$650,000</p><p>$800,000</p><p>$950,000</p><p>$1,100,000</p><p>200</p><p>400</p><p>600</p><p>800</p><p>1,000</p><p>PR</p><p>ICE</p><p>SA</p><p>LES</p><p># of Sales Avg. Sale Price</p><p>'05 '06 '07 '08 '09 '10 '11 '12 '13 '14 '15</p><p>Houses in LAs prime markets continued to increase in value during Q3-15. Sales volumes, predictably, eased off of record Q2-15 highs, following a steady pattern that sees real estate transactions decline in number only in each quarter following LAs hottest buying season: springtime. In fact, sales volumes in the period enjoyed their 7th consecutive YoY increase, while values, as measured by average PPSF, increased in 5 consecutive YoY quarters during Q3-15. While we recognize that the rate of growth will likely slow in the coming years, the new value paradigm for houses in LAs most desirable zip codes is a clear reflection of inventory scarcity in this asset class as LA goes vertical, values in the incumbent single-family residence market are only headed in the same direction. </p><p>993 SFR transactions were recorded this quarter, a 10.9% increase from a year ago, and the 2nd highest number of deals in any quarter ever second only to last quarters record-setting performance. Value, or average PPSF, remained near all-time highs, reaching $914/SF by the end of the quarter, a 2.7% YoY increase, and 1.9% below Q2-15s 10-year record of $931/SF. With an average of just 79 days spent on the market, homes are now selling at their fastest pace since Q4-07.</p><p>Q3-15 proved to be yet another period of steady price appreciation in LAs prime markets for condo living. On average, luxury condos priced above $500K reached an average sale price of $971K during the quarter, the highest pricing ever achieved, and a strong 3.4% greater than last period alone. Both median sale price and average PPSF pushed forward over 3% from the same period last year, to $775K and $633/SF, respectively both 10-year highs, and evidence which continues to support a true upward shift in demand for, and value of, luxury condos in the Los Angeles area.</p><p>Median PPSF, at $540/SF in the period, achieved an all-time high and surged more than 6% above Q3-14. And, exactly like SFRs in Q3, LAs prime condominiums spent an average of 79 days on the market, their fastest-selling pace in the last 5 years.</p><p>LA PRIME MARKETS Q3-15 SNAPSHOT</p><p>$2.56MM $971k2nd Highest Q3Avg. Sale Price</p><p>in Last 10 Years</p><p>highest avg. saleprice in last</p><p>10 years</p><p>993 SALES 893 SALES2nd highest</p><p>volume in last10 years</p><p>3rd highest Volume in last</p><p>10 years</p><p>$914/SF $633/SF2nd HighestPPSF in Last</p><p>10 Years</p><p>Highest PPSFof any quarterin Last 10 Years</p><p>10-YEAR SINGLE-FAMILY RESIDENCE VOLUME AND AVERAGE SALE PRICE</p><p>Q3-15 SINGLE-FAMILY RESIDENCE PERFORMANCE Q3-15 CONDOMINIUM PERFORMANCE</p><p>10-YEAR CONDOMINIUM VOLUME AND AVERAGE SALE PRICE</p><p>SINGLE-FAMILY RESIDENCE SALES(OVER $1 MILLION)</p><p>CONDOMINIUM RESIDENCE SALES(OVER $500,000)</p><p>Source: MLS</p></li><li><p>The Agency Report Los Angeles Prime Residential Market Q3 2015 TheAgencyRE.com8 9</p><p>Analysis of the market for SFRs by segment reveals that while homes valued at the highest end of the market experienced lower volume in Q3-15 than the preceding quarter, the largest segment $1MM-$3MM demonstrated very strong fundamentals in the period. 784 homes traded hands at $741/SF, a 2.5% increase from Q3-14, and flat to Q2-15. A 2.0% decrease in average sale price however, from $1.72MM to $1.69MM, coupled with the increase in valuation, implies that the houses sold were, on average, smaller in size. On the whole, we anticipate that homes valued at the low-end of the luxury segment have the greatest amount of headroom to grow, and we expect to see this segment continue to increase in value in coming quarters. </p><p>The $3MM-$5MM segment recorded 4.6% fewer transactions in the period, but average PPSF for the category increased 3.8% YoY, to $924/SF. Average and median pricing increased slightly against both Q3-14 and Q2-15, closing out the quarter at $3.77MM, $3.65MM, respectively. Predictably, volumes and values declined against Q2 metrics, indicating that on a market-wide basis, fewer more expensive homes traded hands in the third quarter. </p><p>Homes valued above $5MM reached record valuations in the period, topping out at $1,536/SF, a substantial 8.8% ahead of the same quarter last year, and 7.7% above Q2-15. With 84 deals recorded in the segment, the second highest number in any historic quarter and only second to the Q2-15 record high of 106 transactions, it is clear that buyers continue to be willing to support a steady ascent in pricing and volume.</p><p>$1,000,000</p><p>$1,250,000</p><p>$1,500,000</p><p>$1,750,000</p><p>$2,000,000</p><p>$600</p><p>$700</p><p>$800</p><p>$900</p><p>$1,000</p><p>'05 '06 '07 '08 '09 '10 '11 '12 '13 '14 '15</p><p>PR</p><p>ICE</p><p>PP</p><p>SF</p><p>Median Sale Price Avg. PPSF</p><p>SINGLE-FAMILY RESIDENCES</p><p>MEDIAN SALE PRICE AND AVERAGE PPSF</p><p>PERCENTAGE OF SALES BY PRICE SEGMENT</p><p>SINGLE-FAMILY RESIDENCE SALES BY PRICE SEGMENT PRIME AREA BY NEIGHBORHOOD</p><p>TOTAL TRANSACTION ACTIVITY BY NEIGHBORHOOD77%</p><p>77%</p><p>79%</p><p>15%</p><p>13...</p></li></ul>

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