Wednesday, January 18, 2012

Hollywood Hills Smackdown 2012: "Hills West" Catching Its Breath While "Hills East" Gains Footing; "West" Median Price at 6-Year Low at $1.06 million; "East" Median of $828K Up 26% from 2008 Low

Hollywood Hills Smackdown

Now that 2011 is behind use, we thought we'd do a "Hollywood Hills West" vs. "Hollywood Hills East" smackdown, to see how these two adjacent neighborhoods fared in terms of pricing in the 2006 - 2011 period.

Although collectively known as "The Hills" the two neighborhoods are distinct markets divided by the 101 Freeway (or back in the old days, the Cahuenga Pass.)  

Hollywood Hills West

The larger "Hills West" includes the Bird Streets / Doheny Estates, Sunset Strip, Laurel Canyon, Mount Olympus, Nichols Canyon and Outpost Estates.  

Top Sale "Hills West" 2011: 9050 Oriole Way
In the "Hills West", the top sale in 2011 was 9050 Oriole Way in the Bird Streets that sold for $14.5 million.  This renovated 1979 home has 3 bedrooms, 5.5 baths, and is set on a magnificent 3/4 acre.

Median sale price in the "Hills West" reached a 6-year low in 2011, at $1.058 million, down 31% from the high attained the "go-go" year of 2007.

"Hills West" -- Prices in 2011 were down 31% from highs of 2007
Hollywood Hills East

The "Hills East" includes Vine HillsBeachwood CanyonBronson CanyonLake Hollywood, the Hollywood Knoll, the Hollywood Dell and the Hollywood Manor.  (I know, that's a lot of Hollywood).

Top Sale "Hills East" 2011: 3235 Durand Drive, $3.2 million
In the "Hills East", the top sale in 2011 was 3235 Durand Drive that sold for $3.235 million.  This sprawling newly-built home has 5 bedrooms, 8 baths, 7,500 sq ft of living area on a 6/10 of an acre lot.

"Hills East" -- Prices in 2011 were down 26% off highs of 2007

The median price of the "Hills East" has actually been rising since a dramatic low of $660,000 in 2008, and now sits at $828,000, 26% off the high attained in 2007.

Analysis of the Smackdown

We think in the "Hills West" and "Hills East", there is a "flight to quality" and that the best properties are selling.  It's the average to below-average properties, and the distressed properties that are putting a dent in the median sale price.  The "mediocre" properties are not attracting buyer interest, and must be discounted to generated a sale.  The short sales and bank-owned properties are sold at a "gray-market" discount of 2 - 10% and are driving down the market.

The steady decline in the "Hills West" median price over the past four years is in part due to the lack of financing for homes in the $1.0 million+ price range.   Many owners who are "upside down" (which includes most people who bought after 2003) and who cannot refinance their onerous loans are electing to sell.  Move-up and first-time buyers cannot obtain loans for homes in this price range.  Both of these forces have an effect of driving down the median price.

The improvement of the "Hills East" median price can be in part attributed to financing.  The maximum Fannie-Freddie backed loan amount in LA County is $729,750.  The median "Hills East" price has been bouncing around this level for the past four years.

What Should Buyers and Sellers Do?

Buying opportunities exist in both of these neighborhoods, and buyers should be "cherry picking" from the best 25% of the market inventory.  Sellers who own the "best quality" homes should not hesitate to sell.  However, Sellers with the average "Hills" home should try to stay put a couple of years while the market in these neighborhoods stabilizes.

What We Do

We represent Buyers and Sellers of home in the Hollywood Hills.  If you have questions about the "Hills", or would like to know more about properties there, please call Adner Realty Group at (310) 845-6810.