Rising interest rates and their resulting impact on the stock market had luxury buyers hitting the pause button over the past few months, but activity is expected to pick back up as the busier fall months approach.
“Some houses are sitting on the market, and our inventory levels are higher as we head into one of our busiest seasons,” Villa Real Estate’s Steve High told the Business Journal.
In a sign of the expected rebound, two Newport Beach homes sold for $20 million and $16.5 million at the end of August, following a record-breaking $43.5 million deal in Laguna Beach a few weeks prior.
Still, OC brokers expect to end 2022 at a lower sales volume than the record-breaking years of 2020 and 2021.
“The market was going around 120 miles per hour, so when we slowed to a normal pace it felt drastic,” High said. “It’s definitely not what it was, but we are still in a healthy market.”
After a strong start to 2022, news that the Federal Reserve would raise interest rates in March slowed sales volume. Even though Orange County’s high-end buyers typically pay in cash, the increases rattled the stock market.
“Wealthy people are not that affected by interest rates, but couple that with the volatility in the stock market, and that’s brought about psychological changes in the market,” High said. “If you’ve invested in securities, you’ve felt an impact in the past couple months.”
That slowdown was especially felt during the month of June, when only eight homes sold above $10 million, for a sales volume of $121.5 million, according to real estate website Zillow. That’s down from 16 homes totaling $238.4 million sold in June 2021.
“Demand is down, but buyer demand still isn’t being met,” High said, pointing to the still-prevalent imbalance of inventory for homes for sale and buyer appetite.
Activity is already picking up ahead of the busy September and October months.
A few weeks after a nearly 5,000-square-foot Emerald Bay home sold for a year-to-date record of $43.5 million, a newly built 7,800-square-foot Corona del Mar home sold for $20 million, according to the Altman Brothers, which represented the sellers. Kevin Kanda of Surterre Properties represented the buyers.
The front row Irvine Terrace home finished construction this year with design led by Brandon Architects.
Also at the end of August, a 6,021-square-foot home on Lido Isle sold for $16.5 million. The bayfront home counts five bedrooms, six bathrooms and was built in 1992.
Sterling Coberly and Katie Machoskie of Compass represented the buyer and seller of 920 Via Lido Nord.
Ten homes sold above $10 million last month for a sales volume of $167.2 million. That’s more than the eight homes that sold at that price point in August 2021, for a total of $89.6 million.