Another hot year for housing prices drove a 15 percent jump in sales among the largest residential real estate brokerages in Los Angeles County, as well as some consolidation among firms on the high end of the market.
On this week’s Business Journal list, the 50 largest firms by dollar volume totaled $86.8 billion in sales for 2017.
Twenty-four of the 50 firms on the list each sold $1-plus billion in local real estate, compared to 21 firms the year prior.
The median price for a single-family home reached $560,000, up 7.7 percent, at the end of last year. An estimated 18 percent sold for $1 million or more, according to market tracker CoreLogic Inc.
Brokerages typically account for a 6 percent commission on deals.
The hot market was the backdrop for several acquisitions that helped move newly arrived Pacific Union International into the No. 2 spot on the list. The San Francisco-based brokerage – eighth-largest in the U.S. – recently expanded into the local market by acquiring three local firms, Partners Trust, John Aaroe Group and Gibson International. All three of the firms were in the Business Journal’s top 25 among local brokerages before the acquisitions.
Pacific Union reported $6.2 billion in sales volume in Los Angeles County, a total that reflected its recent acquisitions, and more than double its 2016 total.
Nick Segal, president of Beverly Hills-based Pacific Union L.A., said the company wanted its Southern California operations to be led by professionals with specific experience and knowledge of various areas of the L.A. market and the complexities involved in each of them. Segal oversees more than 900 employees in 20 offices throughout the county.
Pacific Union’s advantage of scale helps the firm keep clients, Segal said, so someone seeking to move to La Cañada Flintridge from Santa Monica, for example, can stay with their firm and not seek out a broker elsewhere.
“It helps the client and adds to our bottom line,” he said.
Segal said he feels confident about his firm’s place in the local market so early in its existence.
“We’ve already established who we are,” he said. “We look at ourselves at a blue-chip company. We don’t need to pound our chest about who we want you to think we are.”
Pacific Union’s deals shook things up, but didn’t displace the top-ranked brokerage – and distinction that once again went to Coldwell Banker Residential Brokerage. The Beverly Hills-based firm reported $11.9 billion in local sales last year, up 4.5 percent from 2016.
Coming in third on the list is Rodeo Realty Inc. of Beverly Hills, with $5.2 billion in Los Angeles County sales volume, a 4.2 percent year-over-year increase.
The firm added 150 agents to its list of brokers last year, which helped boost its numbers, according to company president, Syd Leibovitch.
Rodeo Realty had several eye-wateringly large sales in 2017, topped off by a two-story Santa Monica home that sold for more than $41 million in August – a record price for that city.
“We sold the most expensive house in the San Fernando Valley – $19 million in Hidden Hills,” Leibovitch said. “We sold the second-most expensive house in the San Fernando Valley – $16 million, also in Hidden Hills.”
“We’ve sold the most expensive Studio City house for two years in a row,” he added.
Number four on the list is Re/Max Estate Properties, based in Palos Verdes Estates. The firm reported $4.7 billion in local sales volume last year, an increase of 4.8 percent from 2016.
The market was so hot last year that the firm had about $100 million worth of homes in escrow every week, said Sandra Sanders, company president.
This year has started more slowly, but that’s likely the result of a lower amount of inventory on the market, she said.
“I think people in luxury areas take their house off for the holidays,” Sanders said. “It usually starts picking up in March.”
The lowering of the mortgage interest tax deduction by Congress last year could have an impact on residential sales, she added, but people who can afford homes worth up to $4 million likely have enough money to not worry.
“I don’t think people really care that much,” she said.
The most dramatic climb on the list goes to Douglas Elliman. The New York-based luxury broker came in eighth with $3.4 billion in sales volume after acquiring Beverly Hills-based Teles Properties last year. Douglas Elliman was ranked 31st in 2016, while Teles ranked 13th.
Coming in sixth is Pinnacle Estate Properties Inc. with $3.7 billion in sales, a 9.2 percent year-over-year gain.
Jeff Black, the firm’s co-founder and chief financial officer, also said low inventory has been a factor so far this year.
“There are a lot of houses selling, but they’re selling very quickly,” he said.
Last year, the firm opened a Westlake Village branch and added 92 employees.
When asked about possible impacts from the emergence of Pacific Union L.A. on the scene, he replied, “It’s not even on our radar.”
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