Despite the COVID-19 pandemic, Los Angeles witnessed a significant increase in the number of residential sales above $10m in 2020, up 26 percent compared to a year earlier, according to Knight Frank.
One hundred and fifty five properties at this level transacted in the market over the year, overshadowing the 123 registered in 2019.
Despite the strong sales rates, the average sale price in LA dipped from $20m to $17m over the same period. However, prime price growth remains strong with the market experiencing an 8 percent increase in prime prices in 2020, making it the 10th consecutive year of price growth.
Knight Frank forecasts further prime price increases of 3 percent in 2021 due to a shortage of quality stock, a result of the post pandemic-induced surge in sales.
“A year from the start of the pandemic, signed contracts in Los Angeles are up 39% year-on-year, confirming the city as a key hub for buyers. Home to 5,507 ultra-high-net-worth individuals (UHNWIs), Los Angeles is the world’s third largest city wealth hub, and according to Knight Frank’s Wealth Report 2021, the sixth most popular city when it comes to where the wealthy want to live, work and invest,” said Kate Everett-Allen, partner, residential research at Knight Frank.
Further analysis of the post pandemic housing market, reveals that the reduction in mortgages rates saw UHNW buyers take advantage of the availability of cheap debt and leverage their assets, resulting in a decline of cash buyers.
Cash buyers as a percentage of total sales in Los Angeles slumped from 41 percent in the second quarter of 2020 to 20 percent in the final quarter, according to Knight Frank’s partners in the US, Douglas Elliman/Miller Samuel.
Looking ahead post-pandemic, the Los Angeles market seems set to continue its upward trajectory. Knight Frank confirms that the city is one of the most liquid real estate markets globally, second only to New York. As an innovative city, due to its quality of academic research, funding and entrepreneurship, it bodes well for post-pandemic resilience.
Los Angeles is set to enter a new phase of reinvention with wellness and sustainability at its core. It has an ambitious plan to reinvent the 51-mile stretch of the LA River.
The brainchild of Frank Gehry, the plan has identified 20 sites in which to invest in green space, from platform parks to green bridges and bike paths, the project will improve the city’s air quality over the next decade. In addition, as the city gears up for the 2028 Olympics, there will be a host of transport and infrastructure improvements.