Where is the Playa Vista Market Heading?
It is inaccurate to speak of the real estate market in general in terms of good, bad, or otherwise. Markets vary by location, price point, and localized supply and demand trends. It is similarly inaccurate to refer to the Playa Vista market in general terms since there are wide array of price points, Phase I vs. Phase II with different costs and features, and floor plans with shifting levels of supply and demand. Therefore, it is important to specify different categories of property when considering the state of “the market” and where it is heading.
During some market cycles, prices will all rise or fall across the board in an area, however, currently the Playa Vista market is mixed with most of the cooling off coming in the top end of the price range, which is a trend in many locations. There is still a good amount of demand, particularly as things get more affordable, but many properties are taking longer to sell across all market segments since buyers have become more selective and price-sensitive since there is now several months worth of inventory. Playa Vista is really a tale of four separate markets, described below.
In the short-medium term, I would expect prices to continue to go down for the more expensive houses ($2.0-4.0M+). Jewel has already reduced their prices substantially and more new Collection homes and Marlowe resales are coming on the market at premium prices. These properties are destined to compete with one another for the few buyers willing to pay these prices. Townhomes, such as Tapestry, with their own garages or large single-level condos, such as Chatelaine and Dorian, have a unique value proposition and are not over-built and will be relatively stable under around $1.6M. This is where bang for your buck can be had. Above that price point, considering the HOA fees, possible Mello Roos, buyers have single family home options for a similar payment outside of Playa Vista.
For larger, multi-level condos with a community garage (not true townhomes) between around $1.1M and $1.5M, I expect prices will drop over the next year or two due to oversupply and competing with the rarer and more-desirable options at only slightly higher price points. Smaller, entry level ($800K-$1.0M) condos, should remain pretty stable due to the strong demand and relative affordability.
Of course, this all presupposes a healthy local economy and no major political or geological issues, which we can’t predict. What we do know is that interest rates can’t get much lower, the stock market has tripled in the past decade, unemployment is very low. It’s rare that all three of these things are favorable at once, so if one or more turns, it is likely home purchase demand will wane as well.