When locally-based real estate developer and investor Khosro Khaloghli bought a new home in Orange County last year, he downsized—to a $25.1 million mansion in Crystal Cove.
His new estate overlooking the ocean in Newport Coast at 37 Del Mar runs nearly 15,000 square feet. It has six bedrooms, eight full and three half baths, and “hosts a vast array of amenities, including a library, temperature-controlled wine room, home gym, private bar, state-of-the art theatre, and a luxurious master suite,” note marketing materials for the home.
The estate runs a bit small for Khaloghli, who immigrated to the U.S. from Iran in the 1960s, and now runs Irvine’s KB Investment Development Co. With over 40 years in real estate, his firms have built more than 7,000 residential and multifamily units and more than 11 million square feet of industrial and office properties.
Known to friends as KK, his best-known home is in Cambria, an 80-acre estate south of Hearst Castle dubbed Castello della Costa d’Oro. It runs a reported 33,500 square feet and has drawn its share of national reports for its opulence and design. That estate has been on and off the market for over a decade, with an asking price in the $60 million range.
His family splits time between Cambria, OC and other spots, sources that know Khaloghli tell the Business Journal.
Record Setting Year
In normal years, Khaloghli’s purchase of 37 Del Mar could have been tops among home sales in OC.
2020 was no normal year, as the record price paid for a home in the area was shattered twice in a matter of months.
And like Khaloghli, the buyers are local businesspeople with a wealth of real estate knowledge.
Those are some of the takeaways from the Business Journal’s third annual listing of OC’s Top Home Sales, which begins on page 30.
Another clear takeaway: Last year was a banner year for luxury home sales.
After a decline in sales volume in 2019, 2020 brought about a rebound for the luxury housing market, with high-end homes trading at top-dollar prices and many local brokers experiencing their strongest year ever by total sales volume.
The cumulative sales prices for the top 26 deals here last year rose some 5% from year-ago levels to a little more than $500 million, according to data in this week’s listing, which was provided by Irvine’s Land Advisors Organization and the Multiple Listing Service, and supplemental with data from area luxe brokerages.
“2020 was an incredibly strong luxury market as the flow of buyers increased in Orange County while listings continue to decrease,” said Compass’ Rob Giem.
In addition to the top two deals, both record-breakers, several other deals inked in 2020 marked new records for their respective neighborhoods.
The average price for homes on the list: $19.6 million, up from $18.6 million last year.
“There’s limited supply and high demand, and we are seeing record sales all over as a result,” said John Stanaland of Villa Real Estate.
The median price paid for a house in OC last year was nearly $800,000, up 8% year-over-year, according to a 2020 housing report by Irvine-based CoreLogic Inc.
A pullback from the foreign buyer pool that started several years ago didn’t have a significant impact on local sales volume, especially in 2020.
An influx of Chinese buyers in sought-after OC markets such as Irvine and Newport Beach helped drive pricing increases and a frenzied pace of sales from 2011 to 2015 in particular, according to brokers.
That’s tapered off in recent years, in part due to the Chinese government’s tightening control on outside investment and a weakening yuan. It was exacerbated this year as the pandemic halted international travel.
Local buyers have largely stepped up to fill this gap, with many of the top home sales in 2020 involving local buyers, or those who already own properties in the area.
The top three deals—representing a whopping $136.1 million in sales volume—all sold to local business execs with familiarity of the area.
In the top deal of 2020, Anthony Hsieh, the billionaire founder of Foothill Ranch-based loanDepot Inc., paid $61 million for 15 Del Mar, a 18,717-square-foot Crystal Cove estate that sold just months after hitting the market for $68 million.
Coldwell Banker’s Tim Smith represented Hsieh; Giem represented the seller.
The deal bested the prior local record sale set just months before when 1 Canyon Terrace in Newport Coast sold for $50 million.
Stearns Lending LLC founder Glenn Stearns, who now runs Kind Lending in Santa Ana, bought the 30,000-square-foot estate from best-selling author Dean Koontz in an off-market transaction.
Rex McKown and Marcy Weinstein of Compass represented Stearns in the deal, while Evan Corkett and Steve High of Villa Real Estate represented Koontz, who now lives in Irvine’s Shady Canyon.
John Cain of Pacific Sotheby’s International Realty had the listing for the Crystal Cove home that Khaloghli paid $25.1 million for, which ranks No.3 among 2020 sales. Coldwell Banker’s Jeff Ewing represented Khaloghli.
Perfect Storm for Pricing
A bevy of market conditions and cultural shifts brought about Orange County’s gains in 2020. One surprising catalyst was the pandemic that hit the region last March, shuttering businesses and halting travel.
After a short pause in dealmaking, buyers jumped off the fence and resumed activity, with many choosing to relocate from denser metropolitan areas like San Francisco, Los Angeles and New York to safer urban areas such as Orange County, which had seen relatively lower case rates.
“Buyers are wanting to get out of the big cities and enjoy the lifestyle here along the coast,” said Kathryn White of Compass.
With stay-at-home orders, individuals had the flexibility to work from anywhere, causing many to rethink their living situation, or shop for a second family home.
“The market has shown that ‘home’ now means more than it ever has, which has motivated people to find properties that meet all of their needs,” said Cain, who was involved in six of the top 25 deals.
Stock market gains and historic low mortgage rates help to paint the picture of 2020’s success.
On a national level, home sales surged nearly 61% year-over-year in the three months ending Nov. 30, the biggest jump seen in nearly a decade, according to real estate brokerage Redfin.
Buyer, Inventory Pool
Orange County in particular saw an increased buyer pool, with out-of-area shoppers looking for large, coastal, turn-key homes.
“Droves of new buyer profiles from around the country, especially those fleeing for urbanized areas, supplemented our local buyer traffic and elevated demand to unprecedented levels,” Cain said.
The region also continues to see the effects of limited inventory, with a growing dearth of new homes, land and resale listings, particularly in the luxe market.
“We have seen inventory steadily decline for several years and it is changing the market,” notes Giem, as buyer demand continues to outstrip supply, creating upward pressure on pricing.
“I don’t think we are too far away from a permanent seller’s market,” he added.
Carrying Over to 2021
Local brokers indicate buyers continue to want new homes that require little to no work, with outdated or older homes sitting on the market.
As the buyer pool increases and inventory decreases, pricing in the sector is expected to continue to climb.
“In the coming 18 months, I expect we will see noticeable jumps in selling prices for certain properties in the luxury sector,” Giem said.
Giem points to Emerald Bay as an example of a market with shrinking inventory.
“It’s the first time in more than a decade that nothing is for sale on the oceanfront in Emerald Bay,” he said.
Giem is one of several local brokers who enjoyed record sales volume in 2020.
This could be true again in 2021 as market fundamentals remain strong, inventory remains low while demand has not slowed.
“The Orange County real estate market forecast in 2021 remains strong with limited inventory in many of the luxury areas, continued low interest rates, and continued buyer confidence to invest in coastal properties,” said White.
“We are seeing this strong sales trend carry over into this year, and that’s likely to continue for the foreseeable future,” Stanaland said.