By FRAN FLANAGAN and LIZ JONES | Special to the Palisadian-Post
The 2021 market, unlike other years, was driven by the exuberant strength of the $10 million+ market. What is happening right here in our home-sweet-home real estate market in Pacific Palisades?
Was that major sale at $83 million in the Riviera this year a one-off or something more? It actually is both. This sale, as well as several others, represents a trend that has arrived in the Palisades real estate market: maximizing value by amazing design, off the charts quality, and the “wow” factor on steroids. This property was also completely done, fully furnished and equipped with curated dishes, linens, kitchen equipment—everything.
The more extravagant the better. It’s more than mansionization. It’s ‘luxflation.’
Luxflation is a made-up word intended to mean that any commodity, like an ice cream cone, can cost $8, or even more, if it is fancy enough.
In certain restaurants, a hamburger can cost $50, a car can cost hundreds of thousands of dollars. A cut of prime beef can be $400 or even more if it is blessed with special aging and a celebrity chef. Wine, art, watches, purses, sneakers. It’s just crazy, but it is as real as real can be. Luxflation is everywhere.
We all know this trend, we see it every day and it has become a topic of conversation everywhere you go. Our sleepy, little Palisades has upscaled in a big way in the last two years. As home prices have soared and buyers scramble to get in, luxflation has invaded real estate.
In 2021, jaw dropping residential sale numbers reached far and wide within the Palisades, with 37 sales greater than $10 million—up 208% from the year prior.
In 2020, there were 12 homes that sold for over $10 million, and in 2019, there were eight.
Major changes occurred in the $10 million+ market in 2021, spreading the wealth in neighborhoods new to the price range.
Of the 37 $10 million+ sales in 2021, there were 18 in the Riviera, five in the Huntington, three on Shadow Mountain, three on Via Mesa, two in Rustic, one in Rivas, one on Paseo Miramar, one on Marinette, one on Alcima and two on Chautauqua.
In 2020, seven of the 12 sales over $10 million were in the Riviera, three were in the Huntington, one was on Chautauqua and another was in Marquez.
There are certain factors that are a “given” when factoring price in real estate, such as lot size, privacy, view, age, condition and size of the home. But luxflation is a whole other ballgame. Selling in the top tier requires more.
Start with exciting provenance, such as a famous current/former owner with a storied architect and an A+ builder.
Then the magic: vast open spaces, rooms that flow from one to the other, great art walls, natural lighting.
Smart-home elements are taken to the highest power: lights, music, window shades, cameras and temperature are controlled electronically.
Materials for floors, cabinets and countertops are often imported from the finest resources from across the world. Kitchens are designed by noted celebrity chefs and have exotic appliances in custom colors, with wonderfully designed fixtures and lighting. Many kitchens have separate spaces for caterers.
Outdoor space is a whole thing, made even more popular by the pandemic. Outside dining pavilions, living rooms nestled around fire pits, kitchens, lighting, heating and entertainment provided with special focus on the view, convenience and privacy.
The pool is not just a pool. Music, color-changing lighting, water features and fountains add to the swimming experience now.
Movie theaters have evolved to have higher quality screens and sound, amazing lighting, larger and more comfortable seating.
Landscaping may include a vineyard, organic orchards and gardens.
What was optional has become a “must have” above $10 million.
Is this trend going to continue? In our humble opinion, yes it will, at least for the next several years.
All the sales less than $10 million become the comps for the next sales, and on it goes. In this time of the pandemic, home has become everything.
Isn’t “everybody” moving away for tax reasons? Not really—37 eager and happy buyers, in 2021 alone, paid $10 million or more to buy in.
Fran Flanagan and Liz Jones are Luxury Estate Directors for COMPASS Real Estate. Flanagan can be reached at 310-801-9805 or fran@franflanagan.com, and Jones can be reached at 310-780-1473 and liz@franflanagan.com.
This page is available to subscribers. Click here to sign in or get access.
