A Record-Breaking Year For Southern California Luxury Real Estate Sets The Stage For 2022
From San Diego to Santa Barbara, 2021 was a record-breaking year for luxury real estate setting the stage for 2022. Sales activity reached historic levels in 2021 as did prices throughout Southern California. Here’s a look at what’s ahead in some of the hottest local luxury markets.
Greater San Diego
Andy Nelson, president of Willis Allen Real Estate, a leading luxury brokerage in San Diego, expects 2022 to continue the trend. “It’s basic Keynesian economics of supply and demand fundamentals,” he says. “Right now, the biggest issue is the threat of COVID. Big decisions are on hold. Though I still see future growth in the real estate world.”
According to the Greater San Diego Assn. of Realtors November Housing Supply Overview: “After a year of record-setting activity, homes are still selling quickly and at a steady pace … strong demand and low inventory help insure the market will remain competitive for a long time.”
For the 12-month period spanning December 2020 through November 2021 the overall median sales price in San Diego was up 16.8% to $730,000. The largest price gains were in the single-family homes segment, where prices increased 18.3% to $835,000.
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Nelson cites several reasons for San Diego to continue to be an in-demand market. “The San Diego market has 300 days of perfect weather and so much to do,” he says. “It’s a great place to work remotely.”
Beverly Hills and L.A.
Demand outpaces supply in Beverly Hills, according to Susan Smith of Hilton & Hyland. “There is still no inventory in Los Angeles, and a lot of buyers are still looking,” she says. “I think the market will remain strong through the first two quarters of 2022 because we are in inflation and interest rates are still incredibly low.”
Smith anticipates the trend of buyers with a laser focus on completely remodeled homes to continue in the Los Angeles market.
“I see more buyers looking for done homes because of both supply and demand issues. The cost of construction is up roughly 30% in Los Angeles. Interest rates are low, so buyers are factoring this in their costs to buy so they will pay more for done homes going into 2022,” Smith says.
Her thoughts for both buyers and sellers moving into 2022? “For sellers, if you are selling in the first quarter, I think numbers will continue to remain strong especially in the lower-end market,” Smith says. “For buyers, I would recommend that you work on reducing financing contingencies. This is going to make the difference in acceptance of offers. Interest rates are still below 3%, so buyers’ purchase power is much stronger than a year ago.”
Santa Barbara Area
A ninety-mile drive from Beverly Hills, Santa Barbara expects better news for buyers in 2022, according to managing partner Dina Landi of Riskin Partners at Village Properties. “We anticipate seeing continued high demand with a limited supply of homes for sale,” Landi says. “However, we believe more inventory will be coming on the market at the beginning of the year and into the spring.”
Robert Riskin, a partner at Riskin Partners, has some strategic advice for sellers. “As quickly as the market is moving, there are still some sellers who aren’t seeing multiple offers right away or getting their full asking price. While prices are up from this time last year, properties still need to be positioned appropriately in order to sell quickly and for the highest value.”
Rapid market changes for Santa Barbara don’t appear to be on the horizon, according to Sarah Hanacek, a partner at Riskin Partners. “We don’t forecast any significant changes in our market. We anticipate we will continue to have high demand and limited inventory, which will keep prices strong for sellers.”
Looking ahead to the first quarter, Riskin Partners’ Jasmine Tennis offers this advice to buyers and sellers. “For buyers, be prepared to act quickly and decisively when you find a property you like. For sellers, we often advise our clients to do inspections prior to coming to the market in order to ensure a quick, clean and smooth transaction.”
Southern California’s luxury market appears well-positioned to continue to hit historic highs in the first quarter of 2022 — minus unforeseen market circumstances.
Willis Allen Real Estate, Hilton & Hyland and Village Properties are founding members of Forbes Global Properties, a consumer marketplace and membership network of elite brokerages selling the world’s most luxurious homes.