City Behind The Gates
The Rolling Hills market has been struggling over the past twelve months. As noted in my March blog post “Who’s Hot and Who’s Not,” Rolling Hills has been a victim of high inventory and weak sales. Spring and summer brought badly needed sales to the “City Behind the Gates,” but the high-end, luxury homes over $5 million unfortunately received little to no attention.
Currently, there are nine active listings asking $5 million or more in Rolling Hills. In 2017, there has only been one closed sale above that $5 million mark. To be fair, Rolling Hills is a small city with a limited and specific buying pool. Many sellers can afford to wait and, quite frankly, have to wait for the right buyer. That being said, let’s see how this one big sale stacks up to years past…
Closed Above $5 Million
2017: 1 sale (thus far)
2016: 6 sales
2015: 5 sales
2014: 3 sales
2013: 3 sales
2012: 1 sale
2011: 2 sales
2010: 1 sale
As you can see, sales this year are comparable to the years shortly after the financial crisis. It also appears that Rolling Hills hit its sales peak in 2015 and 2016. The lone sale this year was a brand new construction, 6000 sq. ft. view home located at 7 Wideloop Road that closed at $6,200,000.
What’s concerning for a Rolling Hills seller is the discounting in price needed to get the deal done. Take for instance, this gorgeous property at 10 Johns Canyon Road that came out asking $6,500,000. This expansive property included a 123,000 sq. ft. flat lot with a 5,000 sq. ft. 5-bedroom main home, a 600 sq. f.t one bedroom guest house, and a converted barn with a caretaker suite above the massive game room. After two months the price was reduced to $5,700,000. The property looked like a great deal but still after another four months, there were no buyers and the sellers reduced again to $4,995,000 before going to escrow. It took $1,500,000 in cuts (23% reduction) to find a buyer.
The on again off again 3 Appaloosa Lane has been an over-priced spec home listed since 2015 asking $10,900,000. In 2016, it was still over-priced at $8,999,999 and has now been dropped to $7,999,999 and is officially distressed being marketed as a short sale. According to title records, the owners purchased the lot for $900,000 back in 2000 and have at least $6,500,000 in outstanding loans likely used to construct the home and service debt. An almost 20-year investment and the sellers are throwing in the towel to sell short.
Furthermore, the highest sale in 2016 was for $7.3 million yet there are still five sellers asking around that price or higher:
60 Eastfiled Drive for $7,200,000 (78 days on market)
2 Pine Tree Lane for $7,495,000 (210 days on market)
3 Appaloosa Lane for $7,999,999 (823 days on market)
12 Upper Blackwater Canyon Road for $8,500,000 (565 days on market)
1 Buggy Whip Drive for $40,000,000 (600 days on market)
I do not necessarily disagree with these homes holding strong at their pricing, but no question, they have a tough battle ahead of them to find a buyer that will pay their price. The comparables, sales velocity, and time of year are all against them.
There are off-market deals that occur that I do not comment on normally since they are not open market sales. That being said, this post needs a bright spot… 1 Packsaddle Road E sold in July for $8,000,000 off-MLS which was an on-trend farmhouse with jaw-dropping views of the Pacific, Catalina, and Terrenea. Some have said that this sale will help aid the Rolling Hills market, but my opinion is that if it is not public on the MLS then it really does not exist to most agents, appraisers, and buyers.
For now, there are no pending sales asking over $5 million today. The high-end Rolling Hills market could be due for some pain as we head into the New Year with the coming sale at 10 Johns Canyon. Let’s see if a listing will flinch and take a deal that moves this market lower, or if there is an eager buyer that creates a comp to support the market going into 2018.