Luxury homebuyers got off the sidelines and into action during the first quarter, cutting the stock of available properties and pushing up prices.
There were 25 sales of homes at $4 million or more throughout Orange County in the first three months of 2012, a 35% jump from a year earlier, according to Ladera Ranch-based market researcher Reports On Housing.
A total of 88 homes in the $2 million to $4 million range sold in the first quarter, a 12% increase. There were 113 sales of homes priced at more than $2 million, up 18%.
“I never thought it could turn as fast as it has turned,” said Gary Legrand, president of Newport Beach-based Surterre Properties IncÂÂÂÂÂÂÂ
Real estate agents report multiple offers on some homes, which has driven prices up and reduced the amount of time properties are on the market.
Among the most notable big-dollar sales lately have been the nearly $12 million purchase of the “Big Blue Swimming Pool” property on Newport Beach’s Bayside Drive. The waterfront property, previously owned by descendants of Irvine Ranch’s founder James Irvine, was first listed for sale this summer at just under $15 million.
High-end broker Bill Coté, who helped sell the Newport Beach property through his Cotél Vasu Preferred Team, said he has several new listings in the works, including a Laguna Beach property that could fetch more than $25 million.
Also selling last quarter: a Shady Canyon mansion trading hands for a reported $12.8 million, believed to be the priciest home sale in Irvine history. It was initially listed at $19 million.
Homes priced above $4 million spent an average of 197 days on the market before selling last quarter, compared to 219 days a year earlier.
Homes in the $2 million to $4 million price range took an average of 153 days to sell in the first quarter, compared to an average of 172 days a year earlier.
Coleen Brennan, an agent with California Prudential Realty’s Corona del Mar office, has three homes in escrow and a dozen more prospective sales.
Surterre had 70% more homes in escrow in the first quarter compared with a year earlier, Legrand said.
Some agents and brokers suggest undecided buyers have been spurred to act as pricing has bottomed out.
“We’ve had pent-up demand from these buyers for the last five years,” Legrand said.
International buyers remain a significant luxury bloc. Chinese buyers began snapping up homes here during downturn, especially in waterfront sections of Newport Beach and newer neighborhoods such as Shady Canyon in Irvine and Newport Coast.
Buyers from other countries with emerging economies, such as Brazil and India, also have been buying vacation homes and investment properties.
Local Buyers
But agents say the bulk of their sales these days are to local buyers.
Almost 80% of Surterre’s buyers are from Orange County, Legrand estimated.
Investment, or “spec,” buyers also are back hunting for deals.
“That really tells you they feel the bottom of the market has hit,” Legrand said.
Meantime, finding the right home may get tougher as higher sales leave fewer on the market.
The number of homes in Orange County listed above $4 million dropped 9.7% to 343 in the first three months of 2012 compared with a year earlier, said Ron Felsot, an agent in the Newport Beach office of Beverly Hills-based Teles Properties Inc. who cited data from researcher Terradatum Inc. in Glen Ellen, Calif.
Inventory Down
The number of homes listed for sale at more than $4 million has steadily declined since the third quarter of 2009, when inventory peaked at more than 500.
“You’re starting to get only the motivated sellers on the market, so the inventory is dropping,” said Pablo Rener, an agent with Century 21 Masters in Irvine, a franchise of Century 21 Real Estate LLC.
The median sale price for homes priced above $4 million rose almost 13% from a year earlier to $5.7 million in the first quarter, according to Terradatum.
Foreclosed homes and short sales have kept a lid on sale prices for the lower end of the luxury home market. That has some local industry observers cautious in their market forecasts despite the strong first quarter.
About 6% of homes listed for sale in Orange County are foreclosures, although far larger numbers are on the market as short sales or other lender-driven deals due to some form of distress, with most are priced at $500,000 or less.
Foreclosures make up less than 1% of the listings for $4 million-plus homes, which are generally sold in cash transactions.
The market for high-end foreclosures is scheduled to get a test later this month with the auction of the unfinished Villa del Lago estate in Newport Coast, which prompted talk of a $57 million price tag a few years ago. Villa del Lago is expected to see at least a credit bid of $17 million from OneWest Bank, which holds a loan of about $21 million on the 12.5-acre property.
Villa del Lago is an outlier. The rest of the high-end could get a boost from activity slightly down the scale.
Perception
Sales of homes in the $1 million-to-$1.5 million price range dropped by 5% to 242 in the first quarter, but the average number of days on market fell from 130 days to 121 during the period—and pending sales rose dramatically from mid-February through the end of March, according to Reports On Housing.
“When the lower-priced homes are being bought up at a rapid pace, it creates confidence in the luxury buyers’ mind that now is the time to buy,” Legrand said. “Perception creates reality.”
