Is it already time to take a look back?
In telling the luxury real estate story that was 2019, it’s a mixed bag for Orange County, though the local market appears to be ending on a better note than when it started.
Still, overall sales volume is notably down from 2018, a year that marked the peak of this market cycle.
With the economy showing no signs of a significant slowdown, and indicators still trending up, some brokers are scratching their heads.
“The market has been quite slow, and it’s tough to pinpoint why,” said Rex McKown, a principal at McKown Weinstein Associates of Compass.
Wait and See
In a sign of the slowing real estate sector, showings are down significantly over last year as well, according to McKown, a trend that has been “particularly noticeable once you get over $10 million.”
“We’ve also lost a significant portion of Chinese buyers due to their inability to easily move money out of the country,” said McKown.
However, this demographic doesn’t make up the bulk of the high-end buyer market locally, he notes.
Also, “we’re heading into an election year, which are typically slow, but hopefully it will be different.”
Prices have climbed since the most recent downturn, hitting highs in 2017 and early 2018 before falling back to current levels.
Buyers could simply be waiting or discouraged “by the negative drum beating” of news reports of a looming downturn, said McKown.
Bright Spots
The close of 2019 has brought positive signs, including the recent move by the Federal Reserve to hold interest rates steady, with no hikes planned for 2020.
While this doesn’t always impact the luxury sector with financing deals few and far between, Villa Real Estate’s Steve High said it brought new optimism, and a new group of buyers looking to take advantage.
“The first half of the year, we had virtually no deals with financing, but after interest rates dropped, I started to see a new group of buyers utilizing it within the $5 (million) to $10 million range,” said High. “It was a sign of confidence following a slow start to the year.”
A new report out of Chapman University by President Emeritus Jim Doti and Professor Raymond Sfeir forecast the U.S. economy slowing to a 1.9% expansion next year, but with no recession on the horizon.
It called housing a “bright spot” for OC.
“The sharp drop in mortgage rates in 2019 is leading to a pickup in home building and home sales,” according to the report. “That pickup is gaining some forward momentum as we move into 2020.”
Biggest Deals
High notes that sales volume in Orange County for the luxury sector is down probably 15% from last year.
“Still, it was a better year than what I anticipated when the year started,” said High.
The ultra-high end of the market was bolstered by three blockbuster sales, totaling $110 million in the final quarter of the year.
The three priciest reported home sales of 2019 were:
• 28 Midsummer: a nearly 19,000-square-foot home in Crystal Cove that sold in October for $38 million. It set a record for the immediate area and is the priciest reported home sale this year. Property records indicate the buyer is linked to the family behind Panattoni Development, an Irvine-based industrial developer. Rex McKown and Marcy Weinstein of Compass had the listing; Steve High and Evan Corkett of Villa Real Estate represented the buyer.
• 18 Harbor Island: a 16,000-square-foot Newport Beach estate that sold for $37 million. Property records show the new owner is Eric Siliang Tan, the chairman and CEO of Chinese news aggregator Qutoutiao. Tara Foster Shapiro of Pacific Sotheby’s International Realty had the listing.
• 1813 E. Bay Ave.: Known as the “Duffy” house, this Balboa Peninsula mansion sold for $35 million. Coldwell Banker’s Tim Smith had the listing for the 12,710-square-foot home on three waterfront lots.
