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Wednesday, Aug 10, 2022
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Looming Redevelopment for Peninsula Point

Recent deals in Newport Beach’s Peninsula Point highlight an ongoing redevelopment trend in the high-end area, located at the tip of the Balboa Peninsula where some homes date back to the 1920s.

In the transactions, four adjacent lots once owned by best-selling author Dean Koontz sold in separate deals for a combined price of $16.5 million.

The property, sold by a family that first bought the site about 15 years ago from Koontz, initially went into escrow with one buyer for a price of nearly $16.7 million.

They nixed the deal after COVID-19 hit, at which point listing agent Kim Bibb of Villa Real Estate decided to take a pause on marketing the property.

“We pulled it from the market, but then I found an interested buyer through talking to a neighbor whose kids were looking to buy,” said Bibb, who has lived in the neighborhood for about two decades.

That family bought the original home located at 1515 E. Bay for nearly $10.4 million. The 8,600-square-foot lot holds a 3-bedroom, 5-bath home on a 45-foot bayfront lot.

The remaining three lots at 1514, 1516 and 1518 E. Bay, which currently hold the homeowner’s garages, a garden and a private tennis court, sold for an additional $6.1 million.

The undisclosed buyer for those sites—represented by Irv Tons from Coldwell Banker—is said to be a developer looking to build three new homes on each lot.

The plans joining a larger redevelopment push for the area that kicked off about five years ago.

“Way back when, all of these houses had additional lots behind them, which have been selling off in recent years, with not too many opportunities remaining to develop,” Bibb said.

Five Homes Underway

In the past five years, Bibb has worked on two other deals like that of 1515 E. Bay, in which extra lots were developed into single-family homes by developers.

Earlier this year, the same new buyer of the three lots on E. Bay bought two lots behind a house at 1416 and 1418 E. Bay Ave.

“So now they are planning to build a house on each of those five lots,” Bibb said.

She also represented the buyer a few years back who acquired one large lot elsewhere on the peninsula and built four homes on the single lot, which later traded for about $4 million each.

Recent pricing on similar deals have been north of $4.5 million, Bibb notes, signaling increased demand.

“There’s a strong need for new inventory, especially from the influx of new buyers coming to Orange County from larger markets like Los Angeles and San Francisco,” Bibb said.

Peninsula Perks

Peninsula Point is differentiated from other Newport markets because of its proximity to less dense beaches, with “the beach and the bay very close together,” Bibb said.

She’s noticed several notable changes in the 20 years she’s been a resident, with older cottage-style homes torn down and replaced by modern, larger two- or three-story properties.

Developers building on a speculative basis are doing more work in the area as of late when compared with end-users, with strong profit margins driving continued investment.

Market Comeback

After the market hit a lull in April and the beginning of May, activity has picked back up and remained strong, with several brokers expecting an even stronger 2020 than the prior year.

A recent luxury home market report by Douglas Elliman notes that median home prices in Balboa Island last month saw a nearly 300% increase to $9.8 million from $2.5 million last year, while months supply of inventory dropped to 12.5 from 15 months last year.

Orange County’s overall median home price is up 11% to $904,000 from $818,194 last September, typically a slower home buying month.

“Pricing has come back stronger, with more buying activity than is typical,” Bibb said.

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