The Hollywood Hills is known for more than the iconic Hollywood sign. Situated within the Santa Monica Mountains, the neighborhood is considered the most centrally located area in Los Angeles. With this ideal location, one can easily get to any point in Los Angeles and enjoy the vibrant scenes around the City of Angels.
The Hills is also known for being a melting pot of creativity, luxury, and wealth. It’s no wonder celebrities, business moguls, and tech pioneers all want to have their own residence and settle here.
There’s no shortage of glamorous options for homes and properties in the Hollywood Hills. From refurbished Mid-Century properties to newly-built contemporary homes with glass windows and ceilings, every house for sale reflects the glitz and glam of upscale Los Angeles.
Thinking of living the Hollywood Hills lifestyle? Before anything else, you must familiarize yourself with the area’s real estate market and how it will move in the coming months. This guide will take you through the important numbers and the trends that can influence the Hollywood Hills real estate market.
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Home prices for Q1 and Q2
Home prices all around the country saw an increase during the past year. According to CoreLogic’s Home Price Insights, home sale prices went up by 18.3% in June, 2022 compared to prices in the same period last year. Comparing the monthly rates, we see that home prices went up by 0.6% from May to June.
The same growth in home prices can be observed in the Hollywood Hills real estate market. As of July 2022, the median home price was at $1.715 million, which was 2.7% higher compared to the numbers in July 2021. The median home price in July 2022, however, was slightly lower compared to the preceding month’s $1.8 million.
Still, this was a higher figure compared to the median home prices during the first and second quarter of the year. The beginning of the year saw median home prices at $1.695 million, which then went up to $1.770 million at the end of the first quarter. Though median home prices slightly went down in April 2022, it immediately rose to as high as $1.85 million in May. So far, this is the highest median home price recorded this year.
Sale-to-listing price ratio for Q1 and Q2
Despite these seemingly high home prices, the Hollywood Hills real estate market remains competitive. Most properties sold in the area receive multiple offers, and an average home remains in the market for an average of 36 days. In-demand properties, meanwhile, are only in the market for around 23 days.
In most cases, homes and properties are sold above their listing prices. As of July 2022, the sale-to-listing price percentage is at 106.6%, a slight decrease from June’s 106.8% but still higher than the 100% ratio recorded back in January of the year. Average homes are being sold for 5% above their listing price, while hot and in-demand homes were sold for 12% above their listing price.
Keep in mind, though, that this is not true for all properties. Based on recent data, about 65% of homes are being sold above their price list in July. This figure is higher than the percentage recorded in January, which was at 51.3%.
Predictions for Q3 and Q4
Will the Hollywood Hills real estate market see a continued rise in home prices amid a supply shortage? Will the economy have an effect on the market, and will demand for luxury homes in Hollywood Hills cool down? Let’s take a look at the trends and the factors that may affect the area’s real estate market in the last two quarters of 2022.
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Current data
Looking at the data collected so far this year, the median house prices in Hollywood Hills rose and fell month by month. The median price rose in January, March, and May, and fell in February, April, and June. Data from July indicated that the median house price in Hollywood Hills went down further by 4%.
This year, the median price for homes in Hollywood Hills often ranged between $1.7 million and $1.9 million. It could either breach the $2 million mark or settle in the $1.6 million mark before the year ends, depending on the state of the general real estate market in Los Angeles, among other factors.
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National forecasts
CoreLogic’s Home Price Insights indicate that house prices around the country have started to slow down compared to last year. While prices grew by 18.3% between 2021 and 2022, the monthly growth this year tells a different story. The report showed that house prices only grew by 0.6% between May and June, and are expected to rise by the same percentage between June and July.
If this trend continues, experts predict that house prices will only increase by 4.3% between 2022 and 2023. Factors such as concerns with the slowing economy and rising mortgage rates may come into play and affect housing demand, which in turn will also affect home prices.
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Continued low inventory
Another factor affecting the real estate market all over the country is the low inventory, especially among houses in the top 10% of the market. There was a period in 2021 when there were 55% more properties being sold than new properties entering the market. This, in turn, pushed home prices up.
Chances are, the low inventory of available properties will continue until the end of the year. This means that properties listed for sale will see plenty of competition from homebuyers.
On the other hand, savvy home sellers may make the most out of the low supply and have their property renovated and sold at a premium. Apart from new properties, there is still a high demand for turnkey properties, and buyers are more than willing to enter bidding wars and pay a higher price for them.
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International buyers and migrations
Now that travel restrictions have eased around the US, international buyers are slowly but surely reentering the real estate market in the country. These affluent buyers have already expressed their interest in buying properties in the US, specifically for second homes.
Most of these international buyers are after turnkey properties with additional space and security features. California is one of the top destinations among these buyers, and it’s expected that some of these buyers will be looking at Hollywood Hills as well.
Apart from international buyers, the real estate market will also likely see buyers migrating to another state or city. In 2020, these buyers moved out of densely-packed cities in favor of suburbs and small towns. This year, however, with the easing of social distancing and other pandemic-related restrictions, buyers are moving back to cities and urban areas. Los Angeles is one of the cities that will see a plenty of interest from domestic buyers.
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Millennials in the market
It took a while for this demographic to embrace the idea of homeownership. In fact, millennials–those born between 1981 and 1996–are known to be reluctant or are unable to buy a home.
However, things changed in 2020. According to the National Association of Realtors, millennials were the largest group of homebuyers that year, accounting for 37% of all total home buyers. Now that millennials have overtaken the baby boomers as the largest living adult generation in America, expect that there will be more millennials in the real estate market.
Millennials, in particular, are driving the demand for luxury properties all around the country. Faced with a low inventory of properties in urban areas such as DC, there’s a chance that millennials will find their way into high-end housing markets such as Hollywood Hills.
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Demand for second homes
Many high-end buyers aren’t looking for primary residences; rather, they’re looking at properties that they can call their second (or third) homes to diversify their portfolios. The idea of owning a second home first became popular during the pandemic, and, based on experts’ insights, the demand for second homes will remain strong until the end of the year.
Recent numbers indicate that the sale of second homes rose by 25% during the second quarter of 2022 compared to the same period last year. This also marked a 235% increase in sales compared to the first quarter of 2020, the period when the pandemic first hit the US.
What’s driving the demand for second homes? For one, real estate is known as a stable asset. Compared to more volatile assets such as stocks and bonds, the real estate market – particularly the luxury sector – remains more stable in times of economic uncertainties.
Second home investors also worry less about rising mortgage rates because it has little impact on them. In fact, more than 50% of second home buyers pay for their new properties in cash.
With its central location in Los Angeles, Hollywood Hills is a desirable neighborhood for upscale second homes, particularly among high net worth individuals from around the world.
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Demand for homes with sustainable designs and features
More buyers are now aware of the effects of climate change, which influences their decision on which home to buy. Millennials in particular are seeking properties that incorporate personal and environmental wellness in its design and features.
These features are practical as well, as they can protect the property from natural disasters and extreme temperatures caused by climate change. In fact, properties that have sustainable features can charge a premium of 10% to 25%, or even more.
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A-listers entering the Hollywood Hills real estate market
One thing about Hollywood Hills is that no two homes are the same. Each property offers its own set of features and details fit for an A-list celebrity. Hollywood Hills has always been home to some of the most glittering names in entertainment, and as demonstrated over time, the celebrity effect has consistently driven home values up.
Hollywood Hills is constantly in the news with high profile transactions grabbing the attention of real estate watchers. The most recent examples include:
- Rihanna’s contemporary Mediterranean-inspired house which sold for $6.6 million in August, 2022. Before closing the deal with the unidentified buyer, Rihanna had her property rented out for $35,000 a month.
- The Big Bang Theory star Johnny Galecki’s Spanish-style home which is listed for $11.9 million as of August, 2022. The property was formerly owned by actor Jason Stratham. Before being listed in the market, Galecki’s property has been available for lease for $45,000 a month.
- Grammy-winning musician Beck’s Craftsman residence which is listed for $2.95 million as of August, 2022. The property can be found in the exclusive enclave of celebrity-owned homes known as The Oaks.
Why hire an expert when buying property in Hollywood Hills?
Considering the outlook on the Hollywood Hills real estate, buyers can expect a highly dynamic market where conditions can change fast. In such a scenario, you will need a local expert who can guide you in one of the biggest investments you will ever make.
An experienced and highly knowledgeable real estate professional can help you with the following:
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Find the perfect home faster than you can do it alone.
A Realtor specializing in Hollywood Hills and the surrounding communities knows where and how to find the property that best matches your needs and preferences. They also have the inside track to homes that have not been publicly listed, and with their relationship with other Realtors in the area, can give you a head start in viewing or making a bid for your chosen property.
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Help you make data-driven decisions
Buying or selling a home can be an emotional journey, which can lead to costly mistakes. A local expert can provide you with the advice and information you need to make wise, objective decisions.
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Negotiate strongly on your behalf
The luxury real estate market is highly nuanced, and it often takes years of experience to master its unique quirks. A Realtor who specializes in luxury homes and neighborhoods like Hollywood Hills has the skills and knowhow to give you the right representation and make sure you close the best possible sale.
Find the Hollywood Hills home of your dreams with the Clutch/Abode team
We are a boutique real estate serving the most distinguished clients in Los Angeles. With over 20 years of experience, our founder and head broker Clinton Wade has formed lasting relationships with key people in the market, and has a track record of closing multi-million dollar sales in LA’s most prestigious neighborhoods, including Hollywood Hills, Beverly Hills, and Bel Air, among others.
Our key connections with the area’s agents, brokerages, and contractors allows us to give our clients a smooth and hassle-free real estate transaction. You can rest assured we at Clutch Abode will deliver our tested brand of responsive and hands-on service to you.
Get in touch with our team by calling 310.403.9497 or sending an email to this address.