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Key Takeaways From Pacific Union’s Los Angeles Real Estate and Economic Forecast to 2020


On Nov. 29, Pacific Union held its first annual Los Angeles Real Estate and Economic Forecast in partnership with John Burns Real Estate Consulting in order to project market activity through 2020. Below are some key, high-level takeaways from the live event. To watch the full one-hour presentation, click here.

  • Both short-term and medium-term, most housing markets across the country remain at low to normal risk.
  • Mortgage rates are projected to grow by about 80 basis points by 2020, increasing annually at about a 20 basis-point pace.
  • The Los Angeles housing market is currently at normal risk, with some potential increase over the next couple of years.
  • The Los Angeles economy continues to grow solidly, with all job sectors except motion picture and sound recording showing positive year-over-year growth. Specific occupations in this sector include actors, audio- and video-equipment technicians, cashiers, motion-picture projectionists, producers, and directors, whose average annual wage is around $96,000.
  • Nevertheless, income groups with higher relative increases in employment over the last year have been those making between $140,000 and $200,000, which has boded well for the local economy and housing market.
  • The Los Angeles economy has also benefited from solid stock-market gains of large, local, publicly traded companies by market cap. For example, Bank of America, Boeing, Activision Blizzard, and CBRE Group have all seen year-over-year increases in stock values of more than 50 percent.
  • Proposed tax changes could significantly reduce future homebuyers’ deductions, making it more expensive to own. Also, the proposed changes could further disincentivize current homeowners from selling, thus exacerbating the region’s inventory shortage. According to an analysis by the Fisher Center for Real Estate & Urban Economics, the elimination of state and local income-tax deductions would cost middle- and high-income Californians an additional $37.9 billion in taxes (at a 35 percent federal tax rate), which translates to a 2 percent to 3 percent decrease in economic activity in California.
  • This year saw more strong home price growth in California. In Los Angeles, the median home price increase averaged 8 percent year to date through September 2017.
  • An analysis of individual Los Angeles communities shows that there is continual variation in home price fluctuations. Changes are driven by local conditions and relationship to prices in neighboring communities, but most importantly by jobs and income growth.
  • In segmenting the markets by median home price changes, we use four categories: normal, double-digit, heated, and slowing.

Normal (up to 10 percent median price growth): While the majority of Los Angeles markets fall into this category, lower single-digit percent median price growth was more evident across South Valley neighborhoods such as Van Nuys, Calabasas, Arcadia, and Sherman Oaks. Higher single-digit percent growth was seen in areas adjacent to central Los Angeles, such as Culver City, Studio City, and Highland Park, but also in more affordable communities on the eastern side of the metro area. Santa Monica, West Hollywood, and Pasadena posted solid 5 percent to 6 percent median price growth. These relatively higher-priced areas saw normalization in appreciation from last year, when median prices increased by 19 percent in Calabasas, 16 percent in Malibu, and 13 percent in West Hollywood. Median homes prices in areas with growth up to 10 percent averaged about $640,000.

Double-Digit (10 percent to 20 percent median growth): Somewhat contrary to expectation, higher appreciation was seen in relatively more expensive neighborhoods, where median prices averaged about $820,000. Many of these markets are again adjacent to central, desirable Los Angeles neighborhoods but offer a slight affordability differential, including Compton, Inglewood, Toluca Lake, North Hollywood, Valley Glen, and East Los Angeles. This range also includes neighborhoods that have solidly benefited from the Silicon Beach tech influx, such as Manhattan Beach and Venice. Pacific Palisades also enjoyed double-digit percent price increases.

Heated (20 percent-plus median price growth): Zip codes in Playa Vista — also popular with Silicon Beach workers — South Pasadena, and Beverly Hills were among the few in the Los Angeles metro area to see price appreciation of more than 20 percent. Those three cities’ median price averaged about $1.5 million year to date, with Beverly Hills at $2.8 million. A few neighborhoods in South Los Angeles also posted median price gains of more than 20 percent.
Slowing (median price decline to flat): Neighborhoods where prices lost steam over the last year averaged a median price of about $943,000. Many saw strong appreciation in the year prior and have now experienced a pause in buyer enthusiasm, including Westlake Village, Rolling Hills, and El Segundo, where price growth exceeded 20 percent in 2016. On the other hand, San Marino, where Chinese buyers drove demand in 2016, is now seeing a pause due to China’s amended restrictions on capital outflows.

  • Affordability and access to transportation continue to drive differences in home price appreciation. The highest appreciation was seen in markets where job growth with higher-income jobs led the local economy. Overall, homebuyers have experienced heightened competition, with more homes selling over the asking price — 42 percent versus 38 percent last year. Areas where more than six in 10 homes sold for above asking price include South Pasadena, Culver City, and East Los Angeles. Fewer homes sold over the asking price in areas such as Malibu, Calabasas, and Beverly Hills.
  • Condominium prices in Los Angeles for newly constructed units continued to firm up, with October prices up 6 percent year over year to $795 per square foot. Resale pricing was also up solidly by 31 percent to $732 per square foot. Following the influx of new construction over the last couple of years, such inventory was down by 30 percent in October on an annual basis, with about 400 units currently on the market. Absorption has remained steady, averaging 14 units per month over the last year. Going forward, there are about 12,000 units currently under construction; however, the development pipeline is heavily weighted with for-rent projects instead of for-sale condominiums. Slow growth in condominium construction should ensure solid price growth in 2018.
  • From 2018 to 2020, home prices are projected to increase by 13 percent in Los Angeles, with most of the growth occurring in the next year.
  • Lastly, the panel agreed that prices will level off through 2020 rather than decline as they did following the housing crisis a decade ago. Nevertheless, unexpected changes to housing supply and demand or job and income growth would destabilize the housing market and lead to a different outcome.

Selma Hepp is the Chief Economist and Vice President of Business Intelligence for Pacific Union International. Her previous positions include Chief Economist at Trulia, senior economist for the California Association of Realtors, and economist and manager of public policy and homeownership at the National Association of Realtors. She holds a Master of Arts in Economics from the State University of New York (SUNY), Buffalo, and a Ph.D. in Urban and Regional Planning and Design from the University of Maryland.

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Partners Trust Unites with Pacific Union International

Two of California’s most reputed real estate powerhouses, Partners Trust and Pacific Union International, announced today that they will merge, creating the largest independent luxury real estate brokerage in the state of California and establishing the dominant independent force in Los Angeles — all while maintaining the nimbleness of a neighborhood-focused, independent brokerage.

Founded in San Francisco, Pacific Union is the eighth largest real estate brokerage in the U.S., with 2016 sales volume of $10.15 billion. Through its merger with Partners Trust, a leading Los Angeles-based independent luxury brokerage with more than 240 associates, the combined company is now projected to exceed $15 billion in sales in 2017.

This unprecedented merger follows the recent merging of Pacific Union with Beverly Hills-based John Aaroe Group and Pacific Union’s acquisition of The Mark Company, the premier sales and marketing firm for new luxury urban developments in the Western U.S., in 2015. The merger with Partners Trust now unites 47 offices and more than 1,400 real estate professionals in Northern and Southern California. Northern California markets, led by CEO Mark A. McLaughlin, include San Francisco, Marin, Contra Costa, Alameda, Napa, and Sonoma counties, Silicon Valley, and the Lake Tahoe region. The company will continue to serve Partners Trust’s current Los Angeles markets, including Beverly Hills, Downtown, The Westside, Malibu, Calabasas, and the San Fernando and San Gabriel Valleys.

Below, Partners Trust CEO and Co-Founder Nick Segal answers questions regarding the merger.


Why did Partners Trust make this decision?

This merger represented an ideal opportunity to propel our brokerage, and our entire team of partners and associates, toward greater success and production. It allows us to increase our financial strength, penetrate new markets both locally and globally, gain incredible market share in our home markets and be an innovative force, all while maintaining the nimbleness of an independent brokerage.

With Pacific Union’s exclusive real estate technology tools, fueled by Silicon Valley innovation, we’re able to deepen our marketing and technology resources with proprietary products like its Best Buyer Report and tap into their global digital advertising platform that reaches real estate investors in the leading international markets of China, India, Brazil and the U.K. Pacific Union will also make available to us the firm’s proprietary economic forecasting models as well as urban sales and marketing authority, The Mark Company, which was acquired by Pacific Union in 2015, and leads the West Coast in the sales and marketing of new, luxury high-rise residential condominium projects.

With all of this, we immediately strengthen our position as a market leader and expand our global reach. Furthermore, this family of leading real estate brokerages aligns with Partners Trust’s core vision, allowing us to better create the ideal road map for the ultimate client experience in Los Angeles.

Will decisions be made locally?

Absolutely, yes. As CEO and co-founder of Partners Trust, I will continue to guide the ship at the local level. Management and staff of the unified firms will remain the same across the board, working in tandem to ensure that our real estate professionals and clients receive access to both companies’ respective networks and best practices. Pacific Union will embrace the Partners Trust brand and leverage our company’s resources to promote it in Southern California.

Will the Partners Trust name change?

Partners Trust will continue to operate as a separate brand with its current leadership and respective offices, and will incorporate Pacific Union’s innovative marketing and business intelligence assets into its real estate practice.

The full press release may be read here.

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Meet the Man Behind Malibu’s Ultimate In-Home Car Museum

Poised upon a prime 32-acre site bordering national parkland, the PT-represented Yellow Hill Retreat, designed by architects Hagy Belzberg and George Wittman, is as rare and captivating a property as they come—but don’t be fooled into thinking that the drama ends there. Owner Bata Mataja, founder of Big American Dream Company and former vintage car racer, yearned to bring his lifelong infatuation of automobiles a little closer to home. Such is the reason why, in addition to a 15-car motor court, Bata and Hagy devised a custom gallery to exist inside the 7,500 square foot Malibu residence.

From his first acquisition, a 1957 Karmann Ghia coupe, to a more recent 1949 Buick Roadmaster Convertible, which he converted from a 4-seater to a 2-seater, Bata has owned 60-70 cars throughout his life, restoring them as often as he could between client projects and running his business.

In this exclusive interview, Bata shares the inspiration behind his in-home gallery, how his environment heightens his hobbies, and why he’s definitely not a “Garage Lover.”


PT: Why incorporate a car gallery into your actual home?

BM: I wanted to simplify the process of tending to my vehicles as well as avoid having to leave the house, hence the inspiration to design a mini car museum of sorts that can accommodate three cars at any time. By way of a series of curved glass walls, I can see and marvel at my collection from multiple areas of the home, including the kitchen, outdoor patio, and living room.

PT: How is a visitor first introduced to the car gallery?

BM: The home’s front glass pivot door opens up to reveal a second glass pivot door that lets you gaze right into the gallery, so from the foyer you are immediately invited into this automotive dream space.


PT: As a collector of art, what else have you filled this space with besides cars and motorcycles?

BM: You would be quick to discover memorabilia and artifacts such as marble sculptures of cars, vintage toys and models, tapestries, a collection of checkered flags from my racing days, and even an inflatable Michelin man that used to accompany my son and I on the racetrack.


PT: If automobiles are an art form, shouldn’t they be admired from afar?

BM: Ironically, when I buy a classic, I’ll open up a bottle of wine, pour myself a glass, and literally look at the car for hours on end. I really enjoy that. But contrary to the persona of a “Garage Lover”, I believe that a car was created for the feeling of driving it and have spent countless hours navigating the roads that surround my estate.

PT: What makes Malibu’s terrain ideal for a car enthusiast?

BM: Beyond the soothing oceanic backdrop that puts one’s mind at ease, the area is brimming with backroads where you can really feel the car. I compare the act of driving to a ballet: feeling and responding to the subtle movements of the road, the engine, etc. This home and the surrounding landscape contributes to this choreography.

I’ll add that the light changes up here all the time, and that lighting affects the look and even shape of my cars…you start to see movement akin to time-lapse photography.


PT: An architectural triumph no doubt, why else is this mountain-top estate a true rarity in Los Angeles?

BM: It’s difficult in L.A. to find a place where you can escape to and yet still be close to civilization and the amenities you desire. My wife and I are absorbed in beautiful scenery and privacy here but can be in L.A. proper in 30 minutes via multiple routes. Gates and a 1,300 foot-long driveway create distance between us and “the world” yet watching sailboats skating across the water, for instance, keeps us feeling connected. Additionally, the guesthouse offers the most spectacular views as it enjoys the highest elevation on the property—nobody can ever build up above us because of the protected natural parkland.


PT: What about the land attracted you to Yellow Hill Road in the first place?

BM: My wife and I gravitated towards this property because of its prime position overlooking Leo Carillo State Beach. Perched on top of a mountain and facing south, we are able to see the water breaking as well as enjoy 360 degree views—even the Channel Islands on a clear day.


PT: How does this home lend itself to creativity and imagination?

BM: From a design standpoint, the home has inherent flexibility. This is a home that somebody can continue to modify and not have it impact the house or land. For instance, our guest room currently serves as my Man Cave, the car gallery can be easily converted into a home theater or media room, and there’s potential to add a deck or additional structure to the property—whatever fits the needs of the next resident.


PT: Would it be fair to assume that you favor the car gallery over the rest of your hilltop home?

BM: It would be easy (and expected) for me to say that the car gallery is where I spend most of my time, but in truth, this home affords a profusion of enjoyable and inspiring spaces. The reading room, located off the kitchen, is a place I love to sit during the early morning before I go up into my office and watch the sunrise coming off the mountains. Also upstairs is a balcony where I’ve been known to smoke a pipe and watch for wildlife. Gardening is a favorite activity of mine—nearly all of the plants are from seedlings planted when we first acquired the land in 1992—and I also love retreating to the saltwater pool to sketch.

Yellow Hill Retreat is offered at $12,500,000 and listed with Founding Partner Malibu Katie Bentzen, Partner Mimi McCormick and Managing & Founding Partner Malibu Sarah Kosasky. For more information, click here.