Friday, July 14, 2017 / by Joe Corbisiero
Luxury housing market picking up after slow start
No expense was spared at Del Dios Ranch.
The 210-acre estate in Rancho Santa Fe features an indoor swimming pool that looks like it belongs at Hearst Castle, a main residence with vaulted ceilings made of redwood milled on the property, heated marble floors and other meticulously planned details throughout.
When the ranch went on the market in late February, it made national news, mostly because of its price tag of $92 million.
There were 779 homes in San Diego County that sold for more than $2 million in 2015, an increase of nearly 20 percent from the year before, CoreLogic said.
Still, a slowdown in sales at the start of the year had many worried. Real estate agents and some experts were predicting the market would cool as prospective buyers and investors in the U.S. and abroad weathered tumultuous stock markets brought on by financial trouble in China and parts of Europe, among other factors.
But, the data show otherwise. Forty-three homes for $4 million and up have sold so far this year in the county, according to data from Steve Thomas of ReportsOnHousing.com. That’s three more than the same time last year. In 2015, 112 homes sold in the county for more than $4 million and 104 in 2014.
Thomas said the luxury market started slow but is making up for lost time. He said an increase in available luxury homes for sale may make selling more difficult, but the market is just fine.
“Right now, I’m seeing anything under $3 million being the most active,” said Linda Sansone, the agent who is marketing Del Dios Ranch. “Over $5 million is quieter and more difficult to sell.”
Just two homes in Rancho Santa Fe over $5 million have sold this year, which Sansone, who has sold luxury homes for 17 years, said has less of a foreign influence than one might think.
She said of the 16 homes sold over $5 million in the exclusive ZIP code last year, 10 buyers came from San Diego County, one from Beverly Hills, one from Michigan, two from Utah, one from Connecticut and one from Illinois.
But, does the high-end market mean anything for the rest of the market?
Homes costing $4 million and up were just 4 percent of all the homes for sale in the county at the start of May, according to data from ReportsOnHousing.com.
Alan Gin, an economist at the University of San Diego, said there are just too few luxury homes to consider it an indicator of the economy.
“I think a better measure of the broad health of the economy of the housing market is the middle ground,” he said.
For the ultra-rich, there may be deals to be had.
Christel Carlyle, an agent with Carrington Real Estate Services is selling a 12-acre property in Rancho Santa Fe for $23 million, one of the most expensive homes on the market in San Diego County.
It features a saloon, pool and water slide, a six-stall stable, pastures, tennis court, sand beach volleyball setup and other equestrian features.
“You could not duplicate this property with that much land and quality of construction ... for how much we’re asking,” Carlyle said.
A 3-acre property in Rancho Santa Fe sold for $4.1 million in January, $3.6 million less than it went on the market for in September 2015.
Real estate agents selling high-end properties, despite the chance at a high commission (typically around 4 to 5 percent, agents said), must also be ready for the long haul.
It takes an average 147 days on market for a $4 million home to sell in San Diego County, said ReportsOnHousing.com, as opposed to homes under $500,000 that sell in an average of 53 days.
Excluding a property in Del Mar that has been on and off the market since 2007, the average days on market for the 10 most-expensive homes in San Diego is 168 days. The total cost of the 10 homes equals $315 million.
However, San Diego’s lower-end luxury market appears to have a leg up on other high-end locales.
Sales of homes more than $1 million increased 19 percent in 2015 over 2014 in San Diego County, ranking it No. 5 among luxury markets with the biggest gains in 2015, said a recent report from Coldwell Banker. It was topped by Austin (32 percent), Fort Lauderdale (31 percent), Seattle (30 percent) and Atlanta (21 percent).
But, a $1 million home in San Diego isn’t as impressive as it is in Cleveland. The median home price in San Diego County was $455,000 in February, CoreLogic said.
“Unfortunately, though it is a luxury number, the over $1 million mark is — sad to say — our regular sale in San Diego,” said Shannon Hagen, an agent with San Diego-based Coldwell Banker Previews International. “The $1 million sale is unfortunately out of reach for a lot of people, but it is pretty much entry-level for a regular family with a couple little babies.”
La Jolla had the biggest increase in home sales over $5 million in 2015 out of any metro area in the nation, the Coldwell Banker report said, but that only represents 28 sales.
The number of listings doubled sales in some areas. Rancho Santa Fe had 59 homes listed at more than $5 million in 2015 and La Jolla had 52, said Coldwell Banker. Both had more than Honolulu’s 49.
A slowdown in Rancho Santa Fe may be more of a sign of the times than something to do with the economy.
“The drought affected a lot of it,” Hagen said. “People are not necessarily excited about spending $5,000 for their landscaper.”