A desire for a serene coastal experience continues to fuel the luxury market in Orange County.
Orange County, California used to be defined by citrus groves and theme parks, but has evolved into one of the nation’s premier luxury residential markets. While some prices have begun to soften, several of the region’s top agents see strength moving into 2020.
Berkshire Hathaway HomeServices California Properties’ Mariann Cordova reports luxury sales activity eased in 2019, but submits low interest rates and a fundamentally strong economy provide a counterbalance to negative sentiment generated by political uncertainty. “When people are making money, they’re spending money,” insists Cordova, who reports coastal areas like Laguna Beach and Newport Coast hold value best, followed by prestigious inland gated communities like Shady Canyon and Coto de Caza. The agent currently lists a 9,400-square-foot Mediterranean estate — the seller is former hockey superstar Teemu Selänne — in Coto de Caza for $6.9 million.
“The luxury market has suffered more than any other sector,” maintains Surterre Properties’ Chris Valli, who notes the trend began at least two years ago. He suggests the Orange County market has been impacted by the new tax laws, which effectively penalize high-value/high-tax states like California, but also reminds clients the market is experiencing a natural cycle.
“For over five years we went straight up and buyers began thinking prices were getting too high,” says Valli, who expects activity to rebound in the second half of 2020. He believes buyers waiting on the sidelines will soon enter the market and reports election years are historically active. The agent currently offers a sleek 6,500-square-foot ocean-bluff home in Laguna Beach — the charming beach town is becoming a showplace for modern residential architecture — at $13.5 million.
PHOTO COURTESY OF THE SMITH GROUP
Newport Beach, a perennially fashionable community where yacht slips are as important as driveways, remains a strong market. Coldwell Banker Residential Brokerage’s Tim Smith set the record last year for the most expensive sale on Newport Harbor, which he believes represents the quintessential luxury Orange County lifestyle — even more so than the region’s signature coastal bluffs. “There’s a connection to the ocean you experience when you live on the harbor that you can’t get anywhere else,” insists Smith, dubbing the area “Billionaires’ Bay.”
Characterizing the market as fragmented, Smith explains, “For new construction in great locations, we’re still setting records,” but acknowledges price pressures on less pristine properties. Smith currently offers a 9,609-square-foot, design-forward home in the oceanfront community of Corona del Mar for $24.995 million.
Jacqueline Thompson of Surterre Properties reports 2019 was among her best years and knows of many clients waiting to buy in 2020. “The number of international buyers, especially from China, has declined, but local money is very viable and results in many all-cash offers,” she says. Thompson concedes luxury purchasers still gravitate to the coast, and currently lists a two-estate compound on Newport Coast’s Pelican Point for $19.5 million. However, the agent closed two $11 million-plus cash transactions in Irvine’s amenity-rich Shady Canyon last year.
Orange County offers a wide range of properties, from glass-ensconced beach houses to palatial Mediterranean estates like La Casa Pacifica, listed by Compass’ Rob Giem for $57.5 million. While Thompson’s all-cash offers are illustrative, some agents insist that even super-affluent buyers can be motivated by low interest rates, choosing to put their own funds to work elsewhere. The cumulative effect of recent interest rate cuts, according to Coldwell Banker’s Smith, results in a 12-15 percent increase in purchasing power.