State of the Playa Vista Market – October 2016
It’s been a wild ride for the housing market over the past 5, 10, 15 years. Whatever time frame you are looking at, there have been very few extended periods of flat housing conditions:
2001-2006: Boom Times – Large price increases due to strong demand, albeit somewhat artificially inflated conditions due to non-existent loan guidelines and financial maneuvering.
2007-2011: The Hangover – Significant decreases in prices due to lack of demand combined with massive foreclosures and distressed sales. Rigid and ever-changing loan guidelines made the recovery difficult.
2012-2016: Back in Business – More reasonable loan guidelines, low interest rates, and inventory shortages created a perfect opportunity for a strong recovery. International economic struggles have increased demand for properties in the U.S. and kept interest rates low.
Where Are We Now? – As we approach the end of 2016, market conditions have become more area-specific and product-specific and buyers are becoming more price-sensitive. Demand is still strong, but the knowledge of serious buyers should not be underestimated. Overpriced listings or products that don’t meet the demands of the market (i.e. less functional or in demand floor plan, poor relative location) are sitting on the market.
What Does This Mean for Playa Vista:
– Overpriced properties are not going to sell. Don’t think for one minute that someone is going to bite because there is nothing else out there. They won’t. This is especially true for detached houses as the market has been flooded with new builds.
– Larger two level “townhome-style” condos are not worth the same price per square foot as smaller ones. Many buyers (due to physical restrictions or other preferences) do not want stairs and the stairs themselves are wasted space. Therefore with these properties, there will not be a significant premium for larger (~1,600 sf) vs. entry level (~1,300 sf). This is less noticeable for single-level condos of similar size because of the scarcity of larger single-levels and aforementioned buyer demand.
– Mid range and entry-level will thrive. By mid-range, I am referring to homes that are around 1,800 – 2,200 sf (i.e. ~$1.1M – $1.5M – Bridgeway Mills, Tapestry, some larger condos like some plans in Coronado, Paraiso, Chatelaine, and Dorian). These are decent move-up options for people who want to stay in the community, but have a growing family and cannot afford upwards of $2M to do so. Entry level (around $800K for a 2 bedroom) should remain a pretty solid base as many people do want to live in this community and many new employees continue to fill Silicon Beach businesses.
– Detached “Single family” homes will fall some more. With Everly, Marlowe, and Jewel in the second phase of Phase II, Brookfield overbuilt these homes and many more are still coming out. These homes are being sold by the builders who are not emotionally attached and must eventually sell, which is driving down prices and increasing the time on market for resales.
– Phase I will outperform Phase II – The reception to Phase II has been lukewarm as complaints include lack of open space, more traffic, more noise, and concerns over access to Playa Vista Elementary School. Buyers will see that lifestyle in Phase I (West of Dawn Creek) is more peaceful than Phase II (East of Dawn Creek). As all properties continue age at the same rate, look for Phase I values to catch up a little over the long term.
I expect the near to mid term market in Playa Vista to be fairly flat overall, a trend we have not seen in some time, however I expect there will be some noticeable product-specific and location-specific shifts in the marketplace. This is a very good reason to work with a real estate professional who is experienced with this area to consult on your purchase and sale objectives.