Is the Luxury Market Finally Taking a Hit?

The L.A. Times’ Peter Hong this week reported that many high-end areas of Southern California, such as Beverly Hills and Newport Beach, are finally succumbing to price pressure. 

Gated mansions and hillside estates have held their own through most of the real estate slump, but data released Monday showed big drops in the region’s most exclusive neighborhoods.

Median sale prices fell by 13% in Beverly Hills in April, compared with the same month last year. Rancho Palos Verdes dropped 18% over the same period, while Newport Beach’s 92660 ZIP Code took a 34% hit, according to DataQuick Information Systems.

What’s causing the change?  The story says many people in wealthy areas have enough equity to ride out bad markets, but eventually they get sick of waiting for the market to turn and decide to sell.  Also, the economy is causing wealthy execs to lose their jobs. And lastly, even affluent buyers think prices are too high.

A look at the inventory in Beverly Hills confirms that prices are indeed coming down.  Examples:

135 Monovale Drive
Current listing price:  $9,995,000
4BR/4.5B/7,438 square feet
History:  This house came on the market in January 2007 for $12 million.  A month later, it was reduced to $11,500,000.  In March of this year, it was slashed to its current price.

1914 Shangri La Drive
Current listing price:  $9,995,000
5BR/8.5B/12,000 square feet
History:  Came on the market Aug. 23 for $13,500,000; reduced a month later to $12,995,000; three weeks later to $11,995,000; and to its current price on Valentine’s Day.

1133 Tower Road
Current listing price:  $9,995,000
5BR/8B/6,350 square feet
History:  Originally listed on Feb. 7 for $11,500,000.

1121 Marilyn Drive
Current listing price: $7,995,000
6BR/8.5B/$7,583 square feet
History:  This still-under-construction house came on the market in November for $8,995,000.

And these are just asking prices; we don’t yet know what they’ll sell for.  But one potential buyer in the story believes prices in luxury areas need to come down another 30 percent.