What a difference a single floor can make in Los Angeles real estate. At least that’s the case on the rare occasion that we see a penthouse for sale. It’s simplifying things a bit too much to claim it all just boils down to a superior view. Rather, factors like environmental science, economics, and even human psychology all play their parts. But don’t take our word for it. Let’s let the research speak for itself.
Height Has a Measurable Impact on Value
When appraisers scrutinize a property, they tend to consider a floor’s height and view as two distinct drivers of value. It’s almost tradition at this point. Appraiser Jonathan Miller of Miller Samuel clarified that a floor’s level, regardless of view, typically adds about one percent to a unit’s value per floor. Factors like the abundance of natural light, reduction of street noise, and perceptions of security are also up for consideration.
This isn’t a uniform premium that spans an entire building, however. Second and third-floor units surge significantly from ground-level units. But the value jump tends to level off on the middle floors before climbing again dramatically toward the top of the building. The most significant surges happen with the top three floors, often augmented by unobstructed views, design improvements, and an inherent sense of exclusivity. It’s enough to add anywhere from a 3% to 5% premium over the lower units.
MIT published a thesis supporting that oceanfront condos in Miami progressively increased their value with height. Units on floors 11 through 20 enjoyed a 6.1% higher value than ground units. Units on floors 21 through 30 were 12.8% higher, and units on floors 31 through 40 were 13.5% higher. When we see a penthouse for sale in American markets, it typically boasts anywhere between a 10% and 20% premium over a comparable unit in the lower floors of the same building.
You’re Paying for More Than a View
The power of the view can’t be contested. But there’s more at play in the high price tag that accompanies a penthouse for sale in LA.
Peace and Privacy
Distance from the street also means less city noise (barring the occasional helicopter flyover). Traffic jams, passing sirens, and the general buzz of metropolitan life fade away in a penthouse. Owners of penthouses also don’t need to worry about upstairs neighbors. No late-night stumbling from above? That’s a hot commodity in a city like LA. Penthouse units also tend to share hallways with fewer neighbors (maybe even none). A luxury penthouse for sale could even boast private elevator access.
California Sunshine
It’s no secret that LA’s weather is one of its top selling points. Higher floors are less obscured by the cityscape, allowing for a greater wealth of direct natural lighting. If you find a penthouse for sale that clears all neighboring rooflines, expect to pay for that sun-kissed splendor.
Exclusivity
If we’re going by the universally accepted definition of a penthouse, you’ll only find a single penthouse per building. With scarcity being a strong driver in real estate, it’s important to recognize that there is no rarer apartment than a penthouse. With such a limited supply, demand for a penthouse for sale in LA remains high, regardless of broader market shifts.
The Psychology Behind a Premium Penthouse for Sale
These practical benefits spell out part of the premium of a penthouse for sale, but it’s still not the full picture. Research into luxury real estate buyers indicates that status and identity also play strong parts. Luxury Portfolio International published a study revealing 90% of luxury buyers hold views and natural surroundings in high regard when choosing a property, while 87% considered location a deciding factor.
But there’s also a symbolic weight attached to every penthouse for sale. It’s the social milestone attached to owning the top floor of a building. In cities across the U.S., the penthouse apartment is synonymous with achievement and success.
Even in softer markets than LA’s, this psychological component sustains lofty penthouse pricing. It’s a rare luxury for a guest to step off a private elevator into a sky-high private residence. And luxury buyers are still willing to pay top dollar for it.
Buying a Penthouse in LA’s Market
In LA’s market, a penthouse for sale falls along a vast spectrum of price points. For example, a converted warehouse penthouse in the Arts District is going to command a vastly different premium than a full-floor residence overlooking the Sunset Strip. Both are penthouses, undoubtedly securing higher values than lower-floor units in their respective buildings. But they’re also subject to the same core factors of lighting, privacy, peace, views, and scarcity.
The penthouse appeals to a very specific type of luxury buyer. Understanding what factors drive the pricing of a penthouse for sale can help buyers realistically determine whether the property’s value aligns with their personal values. Sometimes, a unit a few floors down is good enough!
With a brand that says as much as JohnHart’s, Senior Copywriter Seth Styles never finds himself at a loss for words. Responsible for maintaining the voice of the company, he spends each day drafting marketing materials, blogs, bios, and agent resources that speak from the company’s collective mind and Hart… errr, heart.
Having spent over a decade in creative roles across a variety of industries, Seth brings with him vast experience in SEO practices, digital marketing, and all manner of professional writing with particular strength in blogging, content creation, and brand building. Gratitude, passion, and sincerity remain core tenets of his unwavering work ethic. The landscape of the industry changes daily, paralleling JohnHart’s efforts to {re}define real estate, but Seth works to maintain the company’s consistent message while offering both agents and clients a new echelon of service.
When not preserving the JohnHart essence in stirring copy, Seth puts his efforts into writing and illustrating an ongoing series entitled The Death of Romance. In addition, he adores spending quality time with his girlfriend and Romeo (his long-haired chihuahua mix), watching ‘70s and ‘80s horror movies, and reading (with a particular penchant for Victorian horror novels and authors Yukio Mishima and Bret Easton Ellis). He also occasionally records music as the vocalist and songwriter for his glam rock band, Peppermint Pumpkin.
