The Wall Street Journal hosted a luxury real estate panel at the SLS hotel in Los Angeles last week which had about 200 people in attendance. The panel discussed recent developments in the Beverly Hills real estate market. Jade Mills was one of four real estate experts including Mauricio Umansky and Josh Flagg. The discussion was kicked off with an interesting question: "How high can this kite fly?" referring to the rising real estate prices in Los Angeles and Beverly Hills. The experts agreed that it could go much higher than the current prices because:
1) Los Angeles is still cheap compared to other luxury destinations
2) Los Angeles is a year-round destination
3) The more people move to an area the more expensive it becomes and LA continues to have an influx of people from all around the world
The next question then became what the best neighborhoods in the Greater Los Angeles area for real estate investment are. The realtor's named different neighborhoods including Downtown Los Angeles, the Valley, Century City, and Redondo Beach. They also gave some insight into how to evaluate a neighborhood to determine if a property there might increase in value over the next years. Here are the most important factors that were given:
1) Consider the next generation: does the neighborhood fit their needs and lifestyle?
2) Consider trends within real estate, such as views becoming more popular and large amounts of land becoming less important.
3) Think about where people from wealthier neighborhoods might move when their's becomes to expensive or they get "crwoded out."
The next question aimed at different amenities that home owners look for these days. The panelist all agreed that having a view and tech gadgets is very important to many buyers.
Then the realtors discussed the question if there could ever be a $500 Million sale in Los Angeles. The consensus was that it would be very hard, if not impossible to achieve such a sale, because:
1) An amount like that has never been paid before
2) The square footage for a property like this in an area that would justify the price per square foot is simply not there.
3) Simply calculating square footage times price per square foot for a given area does not work for extremely large properties
All in all it was an interesting discussion with some of the most successful estate agents in Beverly Hills and Los Angeles.