The Westside Housing Market 2017 & Tech World Buyer
Many Los Angelenos are wondering what the Westside housing market will be in 2017. Overall, there is a lot of optimism surrounding housing market predictions and some people even go so far to say it may thrive. Realtor.com is forecasting a 6.9 percent rise in home prices and 6 percent increase in home sales, naming the contributing factors as relatively low unemployment, large population of both millennials and baby boomers, and solid home price recovery since the housing market crash in 2008. The Westside continues to be the most desirable place in LA to live, attracting not just locals but East Coast and international buyers because of the schools, quality of life, proximity to everything, and all around lifestyle. However, the tech-creative office boom in Silicon Beach has created a major upsurge in the residential market. The tech world includes non-local buyers that are looking for showcase homes, venture capitalist and post-exit founders and engineers and employees with the income to purchase deluxe homes that are within commuting distance of their workplaces. What they have in common is a desire to enjoy incredible coastal views, privacy and a short ride or walk to the beach.
Transformation of the Westside Housing Market
The amplified surge of growth has literally transformed the Westside housing market. While the tech scene may not be the biggest contributor to the sunny forecast for Los Angeles’ housing market, it has certainly added a new element to a specific market that is both profitable and unpredictable. Silicon Beach – Venice, Santa Monica, Playa Vista – is home to over 500 tech companies and considered the second or third largest tech hub in the world, according to various reports. It is chock-full of start up moguls and millennial millionaires that are moving into the area at a rate that is similar to the Bay Area real estate boom that responded to the growth of Silicon Valley in the 1980’s. Silicon Valley is comprised of seven of the 10 most expensive cities to live and the most expensive housing in the nation. Silicon Valley has been hailed as the leader in the tech and startup world for years, but the appeal of Silicon Beach seems to be growing. Companies and startups continue to move to the sunny city at a rapid rate. Numerous accelerator and incubator companies, tech studios and hacker spaces, combined with readily available resources, talent, and culture, makes Silicon Beach a dream come true for many startups.
Invasion of the Tech Companies
Leading companies like Facebook, Microsoft, AOL, Electronic Arts, YouTube and Hulu are a few of the companies with offices in Silicon Beach. Employees moving into the area are snatching up housing at a fantastic rate. Affluent millennials in the tech world want to live in close proximity to their place of work. Properties that are in walking and biking distance from their jobs are highly coveted. For example, in 2011 Google opened a complex in Venice and now the homes within walking and biking distance are some of the area’s most desirable and expensive. In neighboring Santa Monica, property values have risen 14.7% over the past year. Homes that are close to the recently opened Expo Line are more desirable to this group. Some real estate professionals are reflecting on how living in the hills used to be all the rage, but now it is all about having a walkable lifestyle central to their active neighborhoods. Snapchat, in particular, has expanded its office space multiple times on the Westside and absorbed a significant amount of housing for its workforce. With rental rates on par with a monthly mortgage payment, many people are seeking to purchase homes rather than rent luxury apartments.
Tech World Effect on the Westside Housing Market
The effect of the tech world on the Westside housing market is nothing short of phenomenal. For example, home prices in Venice are continuing to soar, and it has gained the status of one of the priciest neighborhoods in the nation. Median sale prices are approaching $2 million, compared to $1.03 million in Downtown Los Angeles. Yet the average prices in Venice are even more shocking. After rising more than 20 percent over the previous year, the area’s average sale price stood at $2.439 million by the close of 2016. Sharp price increases in neighborhoods adjacent to Santa Monica, Venice Beach and Playa Vista, have drastically changed the housing market and socioeconomic landscape. Many people who work in Silicon Beach
Median sale prices in neighboring Mar Vista rose to $1.49 million in the final quarter of 2016, up from $1.275 million a year earlier. Homes in Westchester and Playa del Rey are also becoming highly sought after. How long prices will continue to rise in the beachfront neighborhoods and even those adjacent to them is unclear. However, it seems unlikely that the average buyer, millennials especially, will be able to afford to buy a home in these areas.
An interesting factor in this trend for the tech world millennials that can actually afford higher priced homes is that they have different priorities when it comes to selecting housing. Most seek high quality design amenities, like spacious layouts, energy efficiencies and a clean contemporary aesthetic. They don’t want a fixer-upper or a property that requires any significant amount of work either. Real estate professionals, developers, architects and interior designers are scrambling to meet their specialized home requirements. Designer-developer Kim Gordon says she “focuses on “high/low” style to serve the “beard and flannel” tech brigade who make up the bulk of her clientele.” Gordon designs with a “kind of fluid flexibility” that her tech clients seek. A well-designed home brings about 20 percent more in price compared to other homes. According to the same interview in The Hollywood Reporter, she recently built a modern farmhouse-inspired home on one of Venice’s coveted walk streets. The 3,200-square-foot home, with oak floors, hand-troweled walls and unique artwork sold last month to a Google exec for $4 million.
Brookfield Residential has opened the latest neighborhood in Playa Vista, Marlowe, which includes 30 family homes with prices ranging from the high-$2 millions to more than $3 million. Marlowe was built with tech executives in mind: category 6 data wire for phone lines and high-speed data connection in all bedrooms, the kitchen, the great room and family room, with terrace views facing the headquarters of Yahoo, YouTube and IMAX.
Westside Hosing Market Trends
Economists at Realtor.com are predicting that home prices and existing home sales will make big gains in 2017, and the Los Angeles housing market is primed to be the second strongest in the nation for 2017. Silicon Beach is proving to be a significant driver for this forecast. Real estate professionals, developers, designers, architects and city planners are working hard to respond to the various needs of this new group of potential home buyers. With specific location requirements and design aesthetics, tech buyers are changing the housing market in ways that are both exciting and unpredictable. Some forecasting suggests that the rapid increase in home prices will make the areas in and around Silicon Beach inaccessible to the average home buyer, but for now startup giants are supplying plenty of employees with the means and desire to purchase what the Westside has to offer.
Please contact Julie Ellis Lovett to receive information on available properties on the Westside of Los Angeles. We are here to help with all of your real estate needs.
