About a week after NASA released satellite imagery of California’s precipitously low water reserves, Douglas Elliman published its market report for Los Angeles’s second quarter.
Price trend indicators, Elliman found, were among the highest they’d been in at least 17 years. “All of California, especially southern California, is booming,” says Jonathan Miller, president and chief executive officer of appraiser Miller Samuel Inc., which compiled the report. “Beginning with the end of the lockdown, even with rising Covid infections, it’s continuing.”
Housing trends are rising across the U.S., in fact, with median single-family home prices in the second quarter up by at least 10% from the previous year in 61% of the U.S. counties surveyed by the industry database Attom.
Luxury sales in many of these areas matched or surpassed other categories, with strong results from downtown Boston (condo sales are up 118% from the preceding year, according to an Elliman report) to the San Francisco Bay Area, where the number of $3 million-plus house sales in June were higher than they’ve been since at least 2018, according to a Compass report.
But some of the top performing luxury markets in the U.S.—specifically Southern California, Colorado, and South Florida—have something less rosy in common: They’re all in the throes of extreme climate-related events.
“There’s awareness and discussion about it, but it doesn’t seem to be modifying behavior yet in the markets I cover,” says Miller.
If anything, he continues, events such as flooding and hurricanes seem, at least anecdotally, to encourage high-end construction rather than deter it. “After Hurricane Sandy, there was a tremendous discussion about flooding,” he says. “And what we ended up seeing was middle-class housing being leveled by the storm and higher-end properties taking their place.”
Climate change, Miller concludes, “doesn’t discourage development, and I think it shifts the mix from affordable to more expensive.”
Unprecedented Demand
No place is immune to climate change; just ask New Yorkers who saw the sky darkened for days by forest fires 2,700 miles away. But there are some locations, such as Los Angeles, where the luxury real estate market appears particularly impervious to external events.
“You were seeing packed open houses where you could see smoke [from forest fires] in the background,” Miller says, of recent years when the city was threatened by nearby wildfires.
Growth in LA’s luxury market, accounting for the top 10% of sales, has been particularly pronounced. A whopping 112 houses, primarily in the city’s west side and downtown, sold in the last quarter, according to the Elliman report, for a 138% rise over the same quarter last year; the average sales price was just under $17 million.