Email this page
Print this page
FeedHigh-End Coastal Properties Ride the Real Estate Wave
IF YOU STAY ABREAST on the news even in the least, you’ve undoubtedly heard doom-and-gloom stories about the real estate market. And while there is certainly a softening market for some, these reports do not tell the whole story. Specifically, there are indications that the upper-tier of the real estate market remains strong.
According to the 2007 Coldwell Banker Previews International ® Luxury Survey, luxury homeowners—defined as homeowners whose primary residence is valued at over $2 million in California ($1 million nationwide) and who have investable assets of more than $1 million—are so positive about the real estate market that 40 percent of respondents are considering purchasing a home in the next year as a secondary residence for family use, with 38 percent interested in purchasing as an investment and 22 percent purchasing a retirement property.
Many local real estate agents and brokers confirm that houses in the upper tier—from $2 million to tens of millions of dollars—are indeed still hot properties. And within this grouping, the coastal areas have the strongest foothold on the market.
“We have a very sound, stabilized market,” says Greg Noonan, an agent and broker who specializes in San Diego County’s coastal zones and is located in La Jolla’s Prudential office. “When it comes to high-end real estate, it is not yet a buyer’s market.”
He attributes this stabilization primarily to the fact that prime real estate, especially on the coast, is a limited commodity. Using La Jolla as an example, he says, “We’re out of land.” Noonan adds that there are only so many high-end homes that are ready for move-in. He further explains that there are very few empty sites available that could be built from the ground up. Of course, there is always the option to renovate an existing home or raze a building and start from scratch. “[But] it takes about a year to get the permits and a year and a half to build it,” says Noonan. “And the cost of construction is at an all-time high.”
“What causes prices to drop is oversupply,” Noonan says. “[But] that is not what is happening here.”
Shawn Hethcock, an agent in the Del Mar office of Willis Allen Real Estate, has also found that the high-end market remains strong. “It’s true that across the board we have seen a slowing, but it does not affect the high-end markets the same way it does the lower-end markets,” she says. She notes that one reason the higher-end market is more stable is that this market has avoided some of the troubles of lower-tiered markets—specifically with sub-prime lending issues, which have affected people who had difficulties qualifying for loans. “In our areas, that is not even relevant,” she says.
As with La Jolla, Hethcock finds that Del Mar is more protected from downturns in the market. “Coastal property tends to be more insulated from price fluctuations,” she says. “There’s no empty land there. So, because of supply and demand, there is never an oversupply of good properties.”
Another coastal area that shows resilience despite the ups-and-downs of the market is Coronado. “We have such a desirable location that we still seem to be favoring multiple counter-offers on great properties,” says Gwen Hovland, an agent located in the Coldwell Banker Coronado office. “We haven’t seen any change in the upper-tier market, and we haven’t seen any great adjustment in price. Our market may level off and slow down, and it may take longer to buy the estates. But it doesn’t nosedive.”
Adding to the continuing demand for Coronado properties are out-of-state buyers who are looking for second, third, fourth or fifth homes—buyers who create demand for the entire high-end coastal market. “Buyers this time of year come from hot [climates], like Texas, Palm Springs and Arizona,” says Hovland. “And in the winter, they’re from cold places like Chicago and New York.”
Despite the continuing demand for high-end coastal properties, it would be oversimplifying to say this market segment is entirely rosy. “What we are seeing is that it is taking longer, but sellers are able to get their homes sold,” says Noonan. “They just have to be patient.”
Hethcock agrees that the market has slowed a bit, demonstrating a shift in the high-end market. “These are savvy business people,” she says. “[They see that] there has been a bit of a correction, even in the high-end market. So there is less impulse buying. In a really hot market, sometimes you don’t have time to make a decision.” Now, she says, people are definitely weighing their choices. “People are thinking more about their purchases,” she says. “They may even consider waiting to get a better deal.”
But, Hethcock says, this is not a “sky is falling” scenario. “The bottom line is that good properties that are priced right will sell,” she says.
Brian Guiltinan, president of the Estates Division of Prudential California Realty, believes the future of luxury real estate in San Diego County is not only strong, but is on the rise. “You can bank on this: We haven’t seen anything yet,” he says. “There are homes that have been built and are being built right now that take luxury real estate to a different level. Whether it’s two months or two years from now, they will eventually come on the market and will demand a number we’ve never seen. San Diego is ripe for $75 million to $100 million properties.”
Do you like what you read? Subscribe to San Diego Magazine »
