Los Angeles’ luxury market is blazing—and it has nothing to do with droughts or fires. Median sale prices of single-family homes increased by 37% in Beverly Hills and 12% in Bel Air and Holmby Hills in 2015 compared with the year before, according to Jonathan Miller, a real-estate appraiser who prepares market reports for brokerage Douglas Elliman.
Even in this heady market, some deals stand out. Josh Flagg, executive sales director at Rodeo Realty, sold three houses on behalf of clients last year—twice. In each instance, he sold the homes the second time for roughly $1 million more than the first time—even though no or few improvements were made to the properties, according to Mr. Flagg.
Real-estate experts cite a number of factors behind the sales and quick resales.
Zillow chief economist Svenja Gudell suspects the properties were marketed to developers, who will either fully renovate or raze and rebuild the homes at an even greater profit. “We see in the public record that some of these are trusts that sold to [limited-liability corporations],” Ms. Gudell says. “That can mean families selling to developers. Developers are often more focused on timing and getting the exact property they want, which can make them less sensitive to price.”
Mr. Flagg said the buyers of the Tower Lane and Tower Grove Drive properties were developers. He declined to disclose the names of any of the buyers.
Paul Habibi, professor of real estate at the UCLA Ziman Center for Real Estate also cites economic forces at work: “As the dollar strengthened last year, you saw foreign money get increasingly desperate to park itself into American assets,” he says. “It’s creating a bit of a frenzy, with lots of cash and people bidding up prices. People from out of town are never going to get the best deals, because they don’t have the insider knowledge of the market.”
Mr. Flagg has his own explanation for the seven-figure flips: “It’s the market and the intimate knowledge I have of the L.A. market.”
THREE HOME FLIPS, BY THE NUMBERS
Each one of these Los Angeles properties sold within a year for roughly $1 million over the previous purchase price.
TOWER LANE, BEVERLY HILLS
ORIGINAL SALE: $6 million, April 6
SECOND SALE: $7.6 million, Dec. 29
TOWER GROVE DRIVE, BEVERLY HILLS
ORIGINAL SALE: $6.25 million, May 29
SECOND SALE: $7.25 million, June 30
BEL AIR ROAD, BEL AIR
ORIGINAL SALE: $8.25 million, May 21
SECOND SALE: $9.1 million, Feb. 1
This article originally appeared on The Wall Street Journal.