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Wednesday, Sep 28, 2022
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County’s Luxury Real Estate Market Hits Highest Levels Since 2007

Luxury real estate has been a relative bargain in San Diego County since the market downturn in 2008. Those with the cash and the circumstances have been able to capitalize on the opportunity to buy property in one of the most desirable areas of the country.

This is apparent from a recent report from DataQuick, a San Diego-based real estate data and statistical analysis company, which said 3,519 homes that were priced at more than $1 million were sold in the county in 2013. That’s the highest number since 3,888 were sold in 2007. Nearly half of those sales, 46.2 percent, were sold in seven cities of the county’s 81 cities.

In Rancho Santa Fe, the report noted, virtually all of the home sales were in the million-dollar category.

The two ZIP codes in Rancho Santa Fe — 92067 and 92091 — saw 276 detached homes sold with a median price of $2.27 million, according to data provided by the San Diego Association of Realtors.

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John Walsh, president of DataQuick, said prior to 2006, higher-priced homes in San Diego saw less appreciation than the market overall saw.

“The reason for this is probably that much of the overall market appreciation was driven by easy credit. This had a larger impact on lower-priced homes because although credit was easy, multimillion-

dollar homes remained out of the reach of most buyers,” Walsh said. In addition, in lower-priced areas there were “large pockets of new development where entire tracts were financed at the same time with the same risky loan products.”

Post-2006, there has been less appreciation in higher-priced areas than for the market overall. Higher-priced markets didn’t experience as rapid an increase as the overall market and hence didn’t have as far to fall but, nevertheless, did decline.

Leslie Kilpatrick, president of the San Diego Association of Realtors, agrees that the high end didn’t suffer as much of a drop in values as the general market because there were fewer sellers in distressed financial situations where they absolutely had to sell.

“Buying and selling is more of a choice at the highest price levels as opposed to a necessity for shelter or a need to regain financial footing,” Kilpatrick said.

Walsh said the luxury home market is unique. “It responds to its own set of economic factors.” Job growth, mortgage interest rates and migration patterns do not play the same role as initial public offerings, stock market performance or how well one type of investment does compared with another, and where one wants to park one’s excess money,” he said.

Kilpatrick said it is extremely difficult to predict an appreciation rate in the high end at $2 million and even more so at $3 million plus “because there is not a set base to establish the rate.” The properties are so different and it depends on the hot buttons of the buyer; oceanfront only or extreme quiet and privacy on a large parcel or architectural design, she said.

DataQuick also reported that statewide homes above $1 million rose last year to the highest level in six years. A total of 39,175 homes were sold, up 45.1 percent from 2012. Statewide, 840 homes sold for more than $5 million, an all-time high and up 20.3 percent from the previous high of 698 for 2012.

The report also noted that 27 percent of the homes that sold in 2013 for $1 million or more were bought with cash, a record number and up 36 percent from 2012.

Kilpatrick said San Diego’s high-end neighborhoods are still somewhat of a bargain compared to some parts of Orange County, Beverly Hills and Santa Barbara. The buyers are making decisions based on their perception of the real value of the community, the home and its features.

“They often have flexibility in where they chose to live, and we [San Diego] compare favorably in terms of value to other areas of Southern California,” Kilpatrick said. “That said, the luxury buyers are back and we expect a strong year.”

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