L.A.’s Home Sales Slowdown Sparks Increase in Luxury Rentals – The Hollywood Reporter

This renovated 1923 Spanish-style compound within walking distance of Chateau Marmont features five bedrooms, a saltwater pool, an outdoor gym and a pond with koi fish. It’s listed with Levi Freeman of Nourmand & Associates for $27,500/month.

Courtesy of Nourmand and Associates

As interest rates soared and Measure ULA (aka the mansion tax) scared off potential sellers, 2023 became the year of the luxury rental in Los Angeles. Celebrities have hopped on the train, with Rashida Jones, Leeza Gibbons, Maria Bello, System of a Down’s Serj Tankian and podcaster Bill Simmons all offering up homes for rent. Even Walt Disney’s former Tudor mansion is up for lease. And the rent (no doubt bumped by star cachet) can be pricey. This month, NBA star Tyson Chandler put his Newport Beach mansion up for rent at a whopping $70,000 a month.

But it’s not just celebrities who are choosing to rent. According to Nourmand & Associates, between January and Nov. 30, 2022, its residential leases increased from 291 to 490 leases in 2023. The Agency saw L.A. leases increase from 719 in 2022 to 884 in 2023, while Douglas Elliman saw a 13 percent jump in L.A. County.

“Interest rates got so high, and then there was so much buyer fatigue,” says Kevin Krakower of Douglas Elliman. “People just got exhausted, and they decided just to lease.”

Uncertainty not only scared off buyers but also potential sellers. “All you heard was that there was a recession coming, the yield curves inverted, all these tech layoffs are happening, there’s an entertainment strike,” says Nourmand & Associates president Michael Nourmand. “So, you have all these things squeezing everybody, and leasing becomes a little bit more of a temporary thing to see how things go.” (Current luxury rentals at Nourman & Associates include a 1923 Spanish-style compound above the Sunset Strip, listed with Levi Freeman for $27,500/month.)

This wait-and-see approach meant leasing for both high- and mid-end properties made sense for many owners. Many would-be sellers in the luxury space were also waiting out court cases challenging the new ULA tax (which have failed to overturn the law). However, leasing has also caused some headaches for owners. “The problem becomes no one’s going to treat a house like you would as a landlord,” says The Agency’s Zach Goldsmith. “So, your house can get trashed. There could be damage. People may not want to get out. We have that instance right now where we’re doing a sale … and the guy who’s leasing won’t leave.”

Regardless, real estate brokers are seeing a new glut of luxury rentals from $20,000 and above, with the many of the highest-end homes sitting empty, waiting to be…