Orange County’s luxe residential sector last year slipped slightly from the blockbuster sales volume reached in 2021.
That was to be expected, with brokers pointing to 2021 as an unrealistic benchmark for the region’s high-end market.
“There were huge deals in 2021 when people were desperate to buy anything,” Steve High of Villa Real Estate said. “It would be hard for any broker to top that sales volume.”
What brokers did not expect, however, was for last year’s metrics to be as strong as they were, considering the midyear economic headwinds such as rising interest rates and inflation that negatively impacted the buying power of current and prospective OC residents.
“After the breakneck pace of 2021, the market started to slow in April of last year, and buyers became more hesitant and thought the market would roll back,” John Stanaland, who left Villa Real Estate at the start of the year to join Douglas Elliman Realty, told the Business Journal.
“We have yet to see that.”
It’s yet another vote of confidence for Orange County’s reputation as one of the most exclusive places to live in California, and its viability to withstand market downturns.
Save for 2021, last year marked yet another record year for the county’s luxe residential sector, with 25 homes selling above $18 million.
The top 25 home sales of 2022 traded hands for a cumulative $616.5 million, or $24.7 million on average.
That’s off 8% from the $668 million sales volume reached in 2021, but is still a 26% jump from the $489 million sales volume seen in 2020.
“Orange County is one of the most highly desirable places in the world, and we will continue to see people choose OC as their new home,” Stanaland said.
Dynamics
Surging sales prices can be boiled down to the continuation of a simple market dynamic: supply and demand.
Demand for new homes has only grown year-over-year in OC, while the region’s inventory of homes for sale continues to dwindle. That imbalance, while sending prices higher, is also responsible for the slowed sales volume in 2022 compared to the year prior, as the county effectively runs out of homes to sell.
As a result of new market headwinds introduced with the first interest rate hikes seen in March as a means to curb inflation, a bulk of the top deals—60%—occurred in the first half of 2022, with just four of the sales occurring in the final three months of the year.
“Though these wealthy buyers often pay in all cash, the rising interest rates changed the psychology of the market, and introduced new volatility to the stock market,” Villa Real Estate’s High said.
There was a “huge slowdown in showings in the latter half of 2022,” according to Rex McKown of the MWA Group at Compass. “2022 was a tale of two markets.”
Data for the list, which begins on page 30, was provided by Irvine-based land brokerage Land Advisors Organization with input from the area’s top brokers. This year’s list only includes on-market transactions and those featured on the Multiple Listing Service, and does not include unique ownership entity transactions, in which buyers and sellers engage in an entity sale rather than a property sale as an added privacy precaution.
Billionaire Buyer Pool
OC was flooded with ultra-wealthy individuals seeking a first, second or third home in the county last year, with many hailing from Los Angeles or other U.S. cities in a trend continuation from the pandemic.
“COVID brought a new wave of buyers to Orange County that we didn’t previously have,” High said, with secondary home shoppers representing a large portion of the high-end buyer pool.
Overseas buyers, meanwhile, “weren’t as prevalent in OC as they have been in the past,” save for the top deal of the year, he said.
The buyers behind the $55 million acquisition of 2 Coral Ridge—which marked the third priciest sale on record for the county—hail from Asia, sources indicate. Those same buyers late last month spent another $55 million for a Beverly Hills mansion from actor Mark Wahlberg, records indicate.
Plastic surgeon Terry Dubrow and his reality TV wife, Heather Dubrow, sold the 22,000-square-foot Crystal Cove estate; they paid roughly $4.2 million for the lot in 2013 and delivered the home in 2018.
In the second priciest home sale of last year, a Nevada LLC with ties to the billionaire Fertitta family (see story, page 18), paid $43.5 million for a just-built Emerald Bay home totaling 4,981 square feet. The sale works out to about $8,733 per square foot, a record price for new construction in OC.
The builders were also the sellers.
David Wojtaszek’s firm, Laguna Beach-based Divita Builders, bought the lot for $8.5 million in 2017 and delivered it in 2022. He and Jennie Wojtaszek sold the home in August shortly after it delivered.
What buyers want in a home hasn’t changed—new construction or turnkey properties will continue to drive higher prices and interest than homes that require work. Privacy has become increasingly important, brokers note, with many paying a premium for gated communities.
“There’s been an emphasis on increased security over the past year,” said Kathryn White—a top area broker formerly with Compass—of Coldwell Banker Realty.
Buyers, Sellers
A notable 2022 buyer is media and entertainment investor Gordon Crawford, who spent $53 million in two of the top 25 home sales.
Crawford, who retired from his role as partner of Los Angeles-based Capital Group about a decade ago, paid $20 million for 33 Monarch Bay Drive and another $33 million for 63 Monarch Bay Drive last year, the latter marking a record deal for Dana Point.
Jonathan Jaffe, the co-chief executive of Miami-based homebuilder Lennar Corp. (NYSE: LEN), which counts a sizable Orange County operational presence, was the seller of 37 Linda Isle, a 6,008-square-foot Newport Beach home that sold for $27 million.
Another well-known seller last year was Bob Olson, the founder and CEO of R.D. Olson Development, who traded his Balboa Island home at 351 E. Bay Front for about $21.9 million. The home served as design inspiration for Lido House, the 130-room boutique hotel that opened in 2018 on Newport Boulevard.
Notes on 2023
Coldwell Banker’s White had three sales totaling $15 million each last year. Those deals would have been included in iterations of the Top Home Sales prior to the new highs reached in 2021, but are missing from this year’s list.
“It’s a testament to the continued strength of the local real estate market,” White told the Business Journal. “Many are wondering how sustainable these pricing levels are, and whether it will cool in 2023. But until inventory levels increase and demand decreases, I don’t see that happening.”
Inventory levels have slightly increased in the first few months of 2023, brokers note, as homes sit longer on the market.
“The average market time 12 months ago was fewer than 30 days. It’s now closer to 60 days,” High said.
Still, “inventory levels are incredibly low,” Stanaland said.
