Price Cuts Stir Ultra High-End Homes

Crown of the Sea in Corona del Mar: $25 million price down 16% since January By Mark Mueller Orange County Business Journal Sunday, April 11, 2010 Sitting on a seaside cliff near Corona del Mar’s Inspiration Point, 3729 Ocean Blvd. counts 7,000 square feet of spectacular views, an elevator, library, gym and wine tasting room with design flourishes courtesy of Brion Jeannette, a noted area architect. The three-story home, dubbed Crown of the Sea, also has a sizeable $25 million price tag, making it the third-most expensive existing home for sale in the Newport Beach area. But Crown of the Sea’s asking price is $5 million cheaper than it was in January, when it first was put up for sale. “We (lowered the price) to show the owner is motivated,” said Jason Morrison, a broker with Windermere Real Estate who is listing the home. “He realizes the market conditions.” Call it the latest example of the changing market for Orange County’s ultra high-end homes. Demand for cheaper, inland homes has risen in recent months, firming up that end of the market. But for more expensive homes, it’s still “a buyers market,” said Steven Thomas, president of Aliso Viejo-based brokerage Altera Real Estate, in a monthly housing report. For homes “priced above $1 million, there is not a lack of inventory,” Thomas said. For the most expensive homes, it’s even more of a buyer’s market. Through mid-March, there were about 330 homes priced more than $4 million up for sale in the county. Only 12 of those homes had sales pending, giving prospective wealthy buyers plenty of local options, according to Altera’s data. The imbalance is causing high-end home sellers to drop their asking prices at rates approaching the declines seen in the rest of the county’s housing market. The median price for a home sold in the area’s five most prestigious coastal Zip codes fell by more than 25% last year, according to data from Corona del Mar-based Meyers Builder Advisors and San Diego’s MDA DataQuick, a unit of Canada’s MacDonald Dettwiler and Associates Ltd. From a price perspective, it appears to have been the worst year for OC’s high-end homes since the onset of the downturn. Prices for the most expensive homes in and around Newport Beach and Laguna Beach now are off by 35% to 40%, in line with the declines seen in the county’s housing market at large, according to Gary Legrand, president of Newport Beach-based brokerage Surterre Properties. The flipside is that price drops are starting to spur sales, Legrand said. “Business is real good right now,” he said. “A lot (of buyers) think we’ve hit bottom.” Surterre put nearly twice as many homes into escrow in the first quarter as a year earlier, Legrand said. The brokerage just put a $14 million Newport Beach home in escrow, he said. As with the Crown of the Sea, upscale homeowners have been adjusting prices, slashing millions off their asking prices. A waterfront home in Laguna Beach’s Irvine Cove, Abalone Point—Laguna Beach’s second-most expensive home currently listed—saw its initial $40 million asking price lowered to $31.5 million, according to brokerage data. The 10,800-square-foot home has been on the market for about a year, according to data from Seattle-based online housing site Redfin.com. A 10-bedroom mansion on Harbor Island—Newport Beach’s second-most expensive home now on the market—has a $32.6 million asking price, down from $38 million in mid-2008, according to brokerage data. Auctions At Dana Point’s Headlands at the Strand development, sellers are trying new ways to draw wealthy buyers, including a pair of auctions slated for this week. An auction set for Saturday lists two homes previously offered at $15 million. The homes have a minimum bid of $6.9 million and are set to be sold to the highest bidder above that, according to auctioneer Concierge Auctions LLC of West Palm Beach, Fla. Two other Strand homes also are up for auction with minimum bids of $7.5 million. Not all prospective sellers of trophy homes are rushing to discount their properties. A few notable owners, such as software executive Frank Pritt—owner of the $75 million-valued Portabello estate in Corona del Mar—appear to have taken their homes off the market rather than cut their prices. Sales Last year, there were 112 homes sold in Corona del Mar’s 92625 Zip code with a median price of $1.7 million, down 23% from a year earlier. In Laguna Beach’s 92651 Zip code, there were 286 homes sold at a median price of $1.2 million, down 29%. Of the five most expensive coastal Zip codes, the most affordable is 92660 in Newport Beach’s Back Bay, which counted a median sales price of about $1.1 million last year, down 29%. Foreclosures could start to have more of an effect on some of coastal areas in 2010. There are nearly 500 Newport Beach homes in some stage of foreclosure, according to data from Irvine-based RealtyTrac Inc. There are an additional 200 homes in Laguna Beach that are in some stage of foreclosure. Only a small portion of those homes in both cities are listed at more than $2 million, according RealtyTrac.