Real estate is changing fast, and so must you. Inman Connect San Diego is where you turn uncertainty into strategy — with real talk, real tools, and the connections that matter. If you’re serious about staying ahead of the game, this is where you need to be. Register now!
Land listings in the Pacific Palisades have slowed significantly in recent weeks, but values are still far from bottoming out, according to local expert Anthony Marguleas.
Anthony Marguleas | Amalfi Estates
“A lot of sellers mistakenly think we are at the bottom of the market. We’re not even close,” the Amalfi Estates founder told The Real Deal.
Land values have dropped about 35 to 40 percent, Marguleas said, and many sellers are taking that as a sign to wait things out for a while, if they have the capacity to do so. Marguleas is also suggesting to clients that they try to wait until more services are rebuilt, like schools, grocery stores and the library, which may take three to four years.
Values have fallen by that roughly 35 to 40 percent range in every Palisades neighborhood except for Huntington, where they’ve only dipped by 10 to 15 percent. A bottoming out won’t occur in the market until more burned lots become available.
In March and April, the Palisades saw about 100 new listings hit the market each month. Since May, however, those new listings have been dragging a bit. Seventy-five new listings came online in May, then in the first 10 days of June just 20 new listings hit the market.
“We need inventory to move,” Marguleas told The Real Deal. “What this means is the peak of inventory is going to take a lot longer. It’s going to spread out this buyer’s market much longer than anyone expected.”
According to the luxury broker’s MLS data, Palisades has seen 67 land closings since the fires broke out in January. Eight deals thus far have been conducted off-market, roughly equal to the proportion seen pre-wildfires.
Previous fears about spec developers snatching up large swaths of land in the area have not come to fruition, Marguleas added. Those buyers who have purchased multiple tracts have kept those bulk purchases relatively minimal — three entities purchase two properties each and only one buyer purchased three lots.
“To extrapolate, the town is not being sold to syndicates and large groups, which everyone was worried about,” Marguleas said. “We’re seeing a lot of owners buy the properties, so that’s good.”
Many developers are also strategically seeking out lots that will help them avoid the ULA tax in the future, which is being adjusted annually, Marguleas said. Currently, a 4 percent tax is levied on properties priced $5.15 million to $10.3 million, and deals over $10.3 million receive a 5.5 percent tax. On July 1 transaction price thresholds will rise to $5.3 million to $10.6 million for the 4 percent tax and over $10.6 million for the 5.5 percent tax.
“Smart developers are buying smaller lots, not bigger ones and building homes that will be under that $5.3 million window to avoid the ULA tax,” Marguleas said.
By the luxury broker’s estimation, about 30 percent, or roughly 2,000, of the 6,800 homes that burned down will get rebuilt. He expects about half of those to be built by developers — which could cause problems for the neighborhood if a slew of them come to market in the next two to four years.
“Can the market sustain 1,000 potential buyers buying $6, $12, $15 million homes?” Marguleas said. “No freaking way. That’s a problem.”
Get Inman’s Luxury Lens Newsletter delivered right to your inbox. A weekly deep dive into the biggest news in the world of high-end real estate delivered every Friday. Click here to subscribe.
