Bay Area Gaining on Southland in High-End Sales

A million-dollar turf war of sorts is shaping up between Southern California, the nation’s largest housing market, and its traditional rival, space-constrained Northern California.

Historically, the six-county Southland has bested Northern California in the sale of the most million-dollar homes. But with the booming technology and financial sectors in its corner, the nine-county San Francisco Bay area is gaining ground fast.

Northern California has more than doubled its share of the state’s million-dollar home sales in the last eight years, according to Acxiom/DataQuick, a real estate information company.

The Bay area laid claim to about 41% of the state’s million-dollar home sales in the third quarter of 1999, up from 19% of these sales in the same quarter in 1991.

And earlier this year several Northern California communities bumped Beverly Hills 90210 from its traditional top spot on a list of million-dollar home sales.

Northern California homes have traditionally been more expensive than Southern California residences, largely because the Bay Area’s housing stock is less than half the size of its southern neighbors. (Southern California has about 3.8 million homes and condos; the Bay area has about 1.5 million.)

But the Bay Area market has become increasingly expensive in the last few years as tech workers cash in lucrative stock options to buy homes and longtime residents take advantage of the booming economy to move up in the market.

Some Southern California Realtors admit they’re a bit envious of their fellow brokers’ good fortune.

“We are as brokers not really reaping the rewards they are up there,” said Cecelia Waeschle, a broker with Coldwell Banker Previews of Beverly Hills. “In terms of competition we are a little envious. There’s no effort up there to sell a house--there’s a long line of people waiting.”

Indeed, the demand for luxury homes in Northern California can be almost dizzying. About 600 people attended a recent open house for a 2,800-square-foot Ranch-style home in Menlo Park, said Miles McCormick, a senior marketing consultant at Coldwell Banker’s Menlo Park office. The house, which was originally listed for $1.7 million, sold two weeks later for $2.5 million.

Oldest of Agent’s Buyers Was 42

McCormick, who does about $40 million in sales a year, adds in the last three years only two of his million-dollar home buyers needed a loan and that the oldest one of the bunch was 42. He says that Southern California brokers he runs into at conventions are in awe of his clientele.

“Everyone refers to this as God’s country of real estate,” McCormick said. “When I mention what an acre of prime land goes for here versus an acre in Beverly Hills or Bel-Air, it seems like a bargain down south.”

Fast-paced sales in the Bay Area helped in part to fuel a record-breaking third quarter for million-dollar home sales across the state, with 2,175 residences changing hands.

About 53% of these homes sold in Southern California; 41% were in the Bay Area and the remaining 6% in Monterey, Santa Cruz and Lake Tahoe. The sales total exceeded the previous peak set during the second quarter, when 2,130 million-dollar homes were sold.

The third-quarter results represent a 35.3% year-over-year increase in million-dollar home sales in California, according to Acxiom/DataQuick.

The Bay Area alone saw a 55.1% gain in the third quarter, with 884 million-dollar homes sold, up from 570 sold in the same period last year. In Southern California, the year-over-year increase was 22.1%, with 1,161 million-dollar homes sold, up from 951 last year.

Despite these record-breaking increases, experts said the numbers don’t reflect an overheated market. In fact, values for million-dollar homes are appreciating at the same rate--about 8% to 10%--as those in other categories.

“This doesn’t mean this particular prestige home market is in a frenzy,” said John Karevoll, an analyst with La Jolla-based Acxiom/DataQuick. “It means that homes that one year ago were selling for under $1 million are now selling for over $1 million.”

Rancho Santa Fe, in Northern San Diego County, had the most million-dollar sales in the third quarter, with 76, followed by Saratoga, located about 10 miles southwest of San Jose, with 66; Hillsborough, about 30 miles south of San Francisco, had 57, and Rolling Hills, on the Palos Verdes Peninsula, had 56. Beverly Hills came in fifth, with 49 sales, Acxiom/DataQuick reported.

Of those who purchased million-dollar homes in California in the third quarter, about 15% paid cash, according to Acxiom/DataQuick. The median down payment for those who used a mortgage was $382,500.

The report includes home sales where it could be determined there was a buyer and a seller, that money had changed hands and that there was a legal transfer of property ownership. Sales to companies and trusts were also included.

While Orange, Riverside and San Diego counties saw strong increases in million-dollar sales in the third quarter, Los Angeles lagged behind the pack.

Million-dollar home sales in the Palm Springs, Indian Wells and Rancho Mirage area of Riverside County were up a whopping 144% over last year, Orange County saw a 38.5% jump in these sales, San Diego had a 23% gain.

Los Angeles, however, had only a 12.7% increase in million-dollar home sales over the same period last year.

“We’re hearing stories from Beverly Hills Realtors calling and complaining about not enough activity,” Karevoll said.

Luxury Homes Sitting Without Single Showing

Indeed, some luxury homes here are sitting on the market for months without a single showing, Coldwell Banker’s Waeschle said. She attributed this slowdown to an aging collection of million-dollar homes in the Los Angeles area.

But don’t feel too sorry for the “Platinum Triangle” (Beverly Hills, Holmby Hills, Bel-Air). Sales of homes over $2.5 million continue at a brisk pace.

So far this year, about 274 properties in the Los Angeles area have sold for $2.5 million or more, up 20% from 228 sold in the same period last year, Waeschle said. About 52 of these homes were sold for more than $5 million and six changed hands for more than $10 million.

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Million-Dollar Home Sales

Sales are ranked by the greatest number of homes sold in the community during the third quarter of 1999.

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ZIP Community 3rd Qutr. 3rd Qutr. 3rd Qutr. Code 1998 1999 1999’s Most Sales Sales Expensive 92067 Rancho Santa Fe 57 76 $5.83 million 95070 Saratoga 43 66 $3.35 million 94010 Hillsborough 36 57 $3.45 million 90274 Rolling Hills 39 56 $3.40 million 90210 Beverly Hills 51 49 $12.00 million 90266 Manhattan Beach 21 46 $2.98 million 92660 Newport Beach 23 45 $3.70 million 94920 Belvedere-Tiburon 23 42 $5.56 million 90272 Pacific Palisades 44 41 $3.65 million 92037 La Jolla 25 40 $5.36 million 94024 Los Altos 13 39 $2.25 million 90049 Los Angeles 45 38 $4.43 million 94022 Los Altos 45 36 $4.75 million 94506 Danville 9 32 $1.67 million 92651 Laguna Beach 35 31 $7.00 million 94025 Menlo Park 23 31 $2.20 million 90402 Santa Monica 33 29 $4.26 million 94941 Mill Valley 11 29 $2.95 million 90275 Rancho Palos Verdes 14 28 $2.55 million 95030 Los Gatos 18 27 $3.05 million

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Source: Acxiom/DataQuick Information Systems