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Monday, Dec 5, 2022

High-End Home Market Remains Tight, Sellers Consider Price Hikes

Even as pricing in Orange County’s luxury housing market hits historic highs, some sellers are electing to add significant price hikes on their listings as a result of strong market fundamentals and an ever-shrinking inventory base.

As a result, buyers still holding out for a deal on high-end homes may be out of luck, top area brokers note, with home options dropping along with the days a home is on the market before being snapped up.

“The days of being able to watch a house for a few months or longer before making a decision are long gone,” said Compass’ Rob Giem.

“Low inventory and strong demand is causing buyers to bid over asking price, which is causing sellers to raise their prices.”

Giem pointed to a recent listing of his in which a Newport Coast home sold about 20% over asking price, a result of buyer competition.

“The last few listings I’ve had have sold immediately, with multiple offers,” added Kathryn White, also of Compass.

Lack of Inventory 

The inventory of luxury homes for sale in Orange County has been diminishing in recent years; this is especially true along the coast, where there’s virtually no available land for new residential development.

“Home inventory is down by more than 50% from recent years,” Giem said.

Home inventory will continue to decline in the coming months as the market enters the slower holiday season, notes White, with some sellers choosing to hold off on listing their home until the New Year.

Low inventory coupled with low interest rates and strong demand for homes in Orange County has created the perfect storm for patient sellers eager to get the highest price for their luxe listing, the brokers believe.

“That strategy works, especially if there isn’t an urgency to sell,” White said.    

Crystal Cove Activity

While the dearth of homes for sale has largely bolstered pricing in OC, it has also dampened some buyer interest among those unable to find a home.

White notes that she has seen strongest demand for homes priced between $5 million and $9 million, largely from out-of-town buyers looking for a seasonal home.

Homes priced above $15 million are seeing longer days on the market, but demand has not let up; White hinted at a top-dollar deal slated to close soon in Crystal Cove, signaling sustained record sales volume for OC’s priciest luxury community.

One home in the private enclave recently traded for $28.9 million. The 15,000-square-foot home at 16 Coral Ridge was built in 2020 and sold earlier this month in the priciest on-market deal year-to-date in Crystal Cove.

“Bottom line is there is not enough inventory to supply demand, and until that changes, we will continue to see record home pricing in Orange County,” White said. 

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