T
he Los Angeles luxury residential market is navigating uncharted territory as we head into the final quarter of the year. Turbulence caused by the presidential election, dwindling home insurance options, and Measure ULA taxes has made it challenging for buyer agents to close deals. However, some brokers are optimistic about the future.

    Bjorn Farrugia, a Beverly Hills-based broker with Carolwood Estates, believes business will improve in the coming quarters. He notes that every location is different, with areas like Beverly Hills Flats and Santa Monica experiencing high demand, while others struggle to find buyers. The key factor is price point, with homes under $5 million remaining relatively stable.

    However, a recent shift has been observed in the market, particularly in the $2 million to $3 million range. The bid-ask spread between buyers and sellers is widening, making it harder for deals to close. Michael Nourmand, president of Beverly Hills-based Nourmand & Associates, cites an example where a seller re-listed their property at a higher price after receiving an offer that was only $1,000 over the asking price.

    Anthony Marguleas, founder of Pacific Palisades-based Amalfi Estates, notes that more escrows are falling out due to buyer anxiety caused by factors like property condition, mortgage rates, insurability challenges, and election uncertainty. The market is also being impacted by insurance carriers leaving or reducing their presence in California.

    Lower interest rates have helped stabilize the market, but concerns about a potential recession and upcoming elections continue to weigh on buyers' minds. Historically, elections tend to slow business, but Marcy Roth, California managing director for Douglas Elliman's Eklund Gomes team, advises clients that the country will still be here after the election.

    Measure ULA, which applies a 4 percent tax on properties sold for $5.15 million or more, remains a concern for some sellers. However, others are willing to take a loss as they navigate the market. Expectations of lower interest rates in 2025 are helping to breathe new life into the market, with some brokers predicting a slight improvement in luxury sales next year.

    As we look ahead to 2025, declining rates and an inventory shortage will likely lead to more demand, fueling price increases. Unique properties will continue to command higher prices, while average properties will be price sensitive.