O.C. ‘Executive’ Home Price Is High but Not the Highest
Executive recruiters and relocation specialists complain that clients from out of state often go into deep shock when they compare a $250,000 tract home in Laguna Niguel with their $90,000 manses in Peoria and Omaha.
And home shoppers whose incomes haven’t pierced the stratosphere often despair of finding anything at all in Orange County at a price they can afford. It is pretty tough to shop in the area’s resale market without a ton of equity or a top corporate executive’s salary.
But it could be worse.
Sure, the average home--2,200 square feet, 4 bedrooms, 2 1/2 baths and a 2-car garage--sold for $319,333 in Mission Viejo during the fourth quarter of 1989, according to a study by Coldwell Banker Residential Real Estate. And true, a comparable home in Newport Beach fetched an average of $551,600 during the same period.
But pity the poor folks who just have to have a Beverly Hills address: The average there for what Coldwell Banker quaintly calls an “executive home” was $916,666--the highest average price in the nation, according to the study.
Things being relative, the price tag on that Newport Beach home may sound a bit easier on the pocketbook now. After all, it was in an area whose prices didn’t even rank among the top five in the state or in the nation. It was the U.S.’s seventh-most-expensive market for executive-type homes and the state’s sixth-most-expensive.
And Mission Viejo--way down there at 15th place in the state and 21st place out of 204 markets in the United States, Canada and Puerto Rico--sounds downright cheap.
Of course, comparable homes in Corpus Christi, Tex., were only $81,666 during the fourth quarter. But who wants to live in Corpus Christi? Well, far fewer folks than do in California.
Which, of course, is the reason Southern California homes--be they executive or starter, are as expensive as they are.
The real estate agents have been telling us for years that the three key elements in real estate are location, location and location. Studies such as the Coldwell Banker survey tend to prove them correct.
Almost all the difference between that $551,600 gem in Newport Beach and the $82,666 executive rancho in Corpus Christi--or the $108,666 mini-manse in Omaha--is in the land, said Philip E. Vincent, a vice president and regional economist at Bank of America.
“People are paying for an address and for the scarcity of the land,” he said.
And, in case your horizons don’t expand that far, let us hasten to point out that there is a lot more land in a place such as Corpus Christi, St. Louis, Wichita or Portland than in Beverly Hills or Newport Beach.
Eliminate multimillion-dollar cooperative condos in Manhattan high-rises from the equation, Vincent said, “and all other kinds of data we have suggest that California’s metropolitan areas in general are among the most expensive in the United States. Then only other areas that compare are Boston, Washington, D.C., Honolulu and parts of the New York metropolitan area.”
And all of the price differential, Vincent maintains, “is in the land. The locale, the amenities, the address, the local fees are all capitalized in the land value. The actual cost of building a standard house is about the same.”
Steve Hops, vice president and district manager for Weyerhaeuser Mortgage Co. in Laguna Niguel, agrees with Vincent but adds one other factor.
“The diversity of the economy is important too,” he says.
Translated, that means most people will pay more to live where the economy is booming than they will to settle down in the Rust Belt or, these days, in the Oil Belt or the Lumber Belt or the once-formidable East Coast High-Tech Belt.
Just look at some of the Coldwell Banker study’s findings:
* The best values were in the Southern and Midwestern states, where the average executive home price was below $125,000 in 49 markets.
* The most expensive areas, with average sales prices in excess of $250,000, were in the West--19 markets--and the Northeast--15 markets.
* Of the 42 moderate markets, where prices ranged from $180,000 to $250,000 (these are executive homes, remember), 22 were in the Northeastern states and only five were in the West.
* Although prices overall remained strong in the once-booming Northeast, 18 of the 46 markets surveyed in that region--39% of the total--showed price depreciations. Those ranged from -12.4% in Morris County, N.J., to -1.3% in North Long Island, N.Y.
* Price appreciation in the United States was strongest in the Western states, where the average increase for the year was 11.2%. Within that region, prices in Newport Beach rose 27% but a mere 6.7% in Mission Viejo.
* Canada--for those with thick blood or warm socks--was the leader in price appreciation for 204 regions. The 10-market average for executive homes posted a 12-month increase of 12.4%.OVERALL MARKET SLOWS: Home prices rose only 3.9% last quarter, and sales dropped 20%. D5
COMPARING HOME PRICES
Southern California has some of the nation’s highest home prices. The cost of a typical 2,200 square foot “executive” home ranges from $210,000 in Riverside to $916,666 in Beverly Hills.
1989 Market Price % Change from 1988 Beverly Hills $916,666 25.0 Encinitas 299,600 -1.8 Encino 556,000 6.6 La Jolla 869,000 30.0 Long Beach 407,333 10.3 Mission Viejo 319,333 6.7 Newport Beach 551,600 27.0 Palos Verdes 530,000 18.3 Poway 304,333 25.5 Riverside 210,733 15.0 San Marino 661,333 18.0
Source: Coldwell Banker Residential Real Estate
HOUSING COSTS
LEAST EXPENSIVE
NORTHEAST
Subject Property Total Market 1989 Price 1988-89 City xx Appreciation Pittsburgh, PA $123,983 7.8% York, PA 133,500 12.2% Syracuse, NY 134,851 .0% Buffalo, NY 147,875 12.0% Rochester/Penfield, NY 150,000 6.3%
SOUTH
Subject Property Total Market 1989 Price 1988-89 City Appreciation Corpus Christi, TX 81,666 4.0% Oklahoma City, OK 84,833 -6.2% Columbus, GA 96,078 3.0% Arlington, TX 98,332 -3.5% Baton Rouge, LA 101,200 -2.0%
MIDWEST
Subject Property Total Market 1989 Price 1988-89 City Appreciation Kansas City, KS 93,250 3.0% Evansville, IN 94,330 5.9% Fort Wayne, IN 97,250 7.8% Jackson, MI 100,633 8.4% Greenbay, WI 104,100 1.8%
NORTHEAST
Subject Property Total Market 1989 Price 1988-89 City xx Appreciation Boise, ID 82,667 5.0% Billings, MT 89,333 -1.0% Missoula, MT 100,375 -8.0% Colorado Springs, CO 101,988 .0% Eugene, OR 103,983 8.8%
MOST EXPENSIVE
NORTHEAST
Subject Property Total Market 1989 Price 1988-89 City Appreciation Greenwich, CT 623,000 5.9% Wellesley, MA 418,333 3.0% Stamford, CT 406,666 1.0% Westchester Co., NY 382,000 -1.4% Bergen Co., NJ 369,939 1.8%
SOUTH
Subject Property Total Market 1989 Price 1988-89 City Appreciation No. Virginia, VI 242,611 -13.5% Naples, FL 227,600 22.7% Washington, DC * 214,997 13.0% Washington, DC ** 208,000 1.0% Baltimore, MD 189,333 3.0%
MIDWEST
Subject Property Total Market 1989 Price 1988-89 City Appreciation Wilmette, IL 388,500 2.5% Barrington, IL 245,000 7.0% Libertyville, IL 232,000 12.4% Detroit, MI 215,225 5.0% Ann Arbor, MI 214,667 9.4%
NORTHEAST
Subject Property Total Market 1989 Price 1988-89 City Appreciation Beverly Hills, CA 916,666 25.0% La Jolla, CA 869,000 30.0% San Marino, CA 661,333 18.0% San Francisco, CA 636,700 14.0% Encino, CA 556,000 6.6%
* Outside Beltway
** Inside Beltway
Source: Coldwell Banker
