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Tuesday, Jun 28, 2022

Signs of Life for Luxe Market?

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Cautious signs of optimism are breathing life back into the local luxury real estate market, with brokers noticing a renewed pickup in buyer interest.

Just as positive shifts in the coronavirus pandemic rallied stock markets in the past week, consumer confidence appears to be picking up too, with buyer activity starting to move a market that’s been stalled for the past two months, according to some of the area’s top brokers.

“Prior to the shutdown, everything was rocking in a good direction, with strong market fundamentals, boosting buyer demand and pricing,” said John Stanaland of Laguna Beach brokerage The Stanaland Group, part of Villa Real Estate. “The United States is definitely ready to get back to business, and there seems to be a lot of confidence for a quick recovery when everything reopens.”

While stay-at-home orders have hindered dealmaking for luxury homes, other factors have buoyed the market, preventing thus far “the real estate crash that many predicted,” notes Stanaland.

“Many of the prediction models were incorrect, and buyers still see the value of real estate.”

Anxious Buyers

“Prior to COVID-19, we had low unemployment, low interest rates and a strong stock market, all of which incentivized buyers,” said Kathryn White of Compass. “At the onset of the coronavirus, residential real estate noticeably slowed with buyers adhering to stay-at-home orders.”

Now, buyers that were waiting on the sidelines are coming back to the market, White said.

“Our phones are ringing again; there are more showings, and more deals going into escrow.”

White and Stanaland attribute this new engagement to market fundamentals, like low interest rates and a shortage of inventory that has been depleted further by sellers taking listings off the market, as well as an impatient buyer pool that’s looking to make deals, and get back to the status quo.

Brokers note that buyers had been looking to make advantageous deals in the slowed market, but have been thus far unsuccessful in their attempts to make high-end sellers budge, creating a return to the balanced market that was seen prior to the pandemic.

“After several years of a seller’s market, we transitioned into more of a balanced market in 2019 and 2020 with properties trading at or near market value. During the recent slowdown, buyers were eager to get a great deal, although sellers were holding firm on their pricing.”

Stanaland has also not yet seen any significant price cuts, though the higher the price point, the more room for cuts.

“Though we wouldn’t call it a normal market for what we would experience this time of year, the market is picking up, and there are deals happening in all price ranges,” said Stanaland, with the lower-priced luxury market seeing more movement.

“There’s not a lot of movement for the $10 million and above range.”

New Construction

Maintaining demand will largely depend on the reopening of businesses, as well as a push by sellers to list, or re-list, their homes.

Orange County had already been experiencing a lack of inventory, specifically for new construction, where most buyer demand lies.

“We won’t be able to see where the market is until homes come back online,” notes White, who has two listings hitting the market next month.

Both homes are new builds—one a 4,000-square-foot home listed for $7 million in Corona del Mar, another a contemporary estate listed for about $10 million.

White is listing the homes with her business partner Andre White.

“We are excited to bring both of those on, because new builds tend to sell quickly, and it will help us gauge where the market is.”

The team had put another listing, a four-bedroom, five-bath home at 1020 Emerald Bay, on hold when the pandemic hit, and took the time to make improvements, adding new flooring, paint and lighting fixtures, among other changes.

The property is back on the market for just under $7 million.

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