Sales of $1-Million Homes Soar to Record in California
Million-dollar homes might evoke images of white columns, expansive gardens and horse stables. But California’s spectacular wealth creation has propelled the housing market so high that buyers might get no more than a 1,000-square-foot tract home for seven figures in some communities.
A record 11,364 homes statewide fetched $1 million or more last year, a sales volume that represents a 51% increase from 1999. What’s more, California accounted for more than two-thirds of all million-dollar homes and condos sold nationwide in 2000, according to a new report to be released today by DataQuick Information Systems.
And for the first time, the Bay Area and its high-tech nouveau riche edged out Southern California, where the entertainment elite had long dominated the high-end market.
“It’s a kind of echo effect of Nasdaq [stock market] and the dot-com society,” said G.U. Krueger, an economist at Institutional Housing Partners, a real estate venture capital firm in Irvine. “This is the affluence of a wannabe economy. Everybody wants to be rich and live the good life.”
Statewide, the big jump in sales last year reflected robust income gains, which have helped push up demand. At the same time, low inventories and sluggish new building in many parts of the state have contributed to a sharp run-up in home prices.
Virtually every major county in California recorded big percentage gains in luxury home sales. Even in Imperial County--with an unemployment rate of 22%--there were two houses worth at least $1 million that changed ownership in 2000, one more than the previous year.
But within California, just how much house a million bucks got you was another matter.
In Pasadena, for example, buyers of a million-dollar home typically got a 3,000-square-foot home, built as far back as 1940, on a quarter-acre lot.
But in affluent Bay Area communities such as Atherton or Hillsborough, that same amount often meant a home of 1,000 square feet or less. “It would be a fixer, if you could find it,” quipped Avram Goldman, president of Coldwell Banker in San Ramon.
Indeed, one home in Atherton with six bedrooms and 6 1/2 baths was sold last year for $22 million--making it the priciest home sold statewide. For less than one-fourth that price, a new owner bought California’s largest home sold last year--a 10-bedroom estate in Coronado near San Diego.
“We saw more high-end sales in my marketplace than any other period I could recall in my 24 years in the real estate business,” said Michael Dilsaver, a broker at Jim Dickson Realtors in Pasadena.
But the big price and sales gains in California’s luxury home market, especially in the Bay Area, signified the widening gap between property values on the high end and the typical home in California.
Overall, the median home price statewide rose 13% last year to a record $209,000, according to DataQuick, the La Jolla research firm that prepared the report.
But the price of luxury homes statewide increased almost twice as much as entry-level homes last year.
And last year, homes that cost $1 million or more accounted for more than 2% of all home sales last year--triple the percentage from five years ago.
Analysts do not expect the high-end housing market to maintain last year’s sizzling pace of growth. Still, few are predicting an outright decline. In the final three months of last year, when signs of economic slowing emerged and the stock market was sluggish, California’s luxury home market streaked higher.
The number of million-dollar-plus homes sold in Contra Costa County, for instance, soared 162% to 165 in the fourth quarter, while luxury home sales in Orange County jumped 45% to 388, setting a quarterly record. That includes existing houses and condos as well as new ones, which typically account for about 10% of the market.
Still, in some analysts’ view, last year’s heady sales of luxury homes may well symbolize the pinnacle of the nation’s long economic boom that has benefited California more than perhaps any other state. DataQuick’s report shows that California accounted for about 70% of all million-dollar homes nationwide sold in 2000.
Despite the current economic slowdown, several leading builders in the state say orders for custom-built and off-the-rack million-dollar homes remain brisk.
“People will take more time to make a decision this year, but we’re not concerned or frightened about the future,” said Barbara Stowers, a vice president at Taylor Woodrow Inc. in Laguna Hills.
Along the coast south of Newport Beach, the company has sold more than half of the 33 homes it built in its Watermark at Crystal Cove project. She said that most buyers used the equity from the homes they sold to buy the new homes, which range in price from $2.6 million to $3.3 million.
Last year, about one-fourth of the million-dollar-home buyers paid cash, and those who financed the purchase made a typical down payment of $400,000.
Though current demand remains strong, Stowers said, the selling pace is likely to slacken later this year and prices should increase only slightly. Even so, Taylor Woodrow plans to build 24 more million-dollar homes in the county later this year.
Overall, the sales of luxury Orange County homes rose more than 53% last year to 1,330, according to DataQuick. That was the second biggest percentage gain in Southern California, behind San Bernardino County, with its 53 high-end home sales last year.
Sales of high-end Los Angeles County homes grew nearly 17% to 2,321 last year, but some areas of the county were hotter than others.
Beverly Hills led Los Angeles County, with 260 sales, but that was down five from 1999. In the Pasadena area, however, brokers saw a stream of buyers, many from the Westside of Los Angeles who sought better bargains.
On the affluent Westside, fewer buyers were seeking homes in the $1-million range in such tony spots as Malibu and Bel-Air, said Cecelia Waeschle, an agent at Coldwell Banker Premier Properties in Beverly Hills.
But sales of homes costing $2.5 million and up remain about the same as a year ago, she said, though multiple offers are only trickling in. For some buyers, prices shot up too quickly. She said buyers in the $1-million range are questioning whether they need to make such a large purchase.
“They are not as gung-ho and willing to step up to the plate. It’s a general cooling period all over,” Waeschle said.
In other Southern California areas, luxury home sales rose 39% to 1,073 in San Diego County, 29% to 347 in Riverside-San Bernardino counties and 46% to 171 in Ventura County.
Overall, 5,244 luxury homes were sold last year in Southern California, a 32% increase over the previous year. Sales in Silicon Valley and Bay Area counties, however, shot up 74% to 5,373.
The 95% jump in high-end home sales in Santa Clara County to 2,087 helped to move the region beyond the Southland numbers. San Mateo sales climbed 41% to 860. Luxury home sales more than doubled in Alameda (522) and Contra Costa (590) counties. San Francisco County sales increased 49% to 857.
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Living Large
The number of homes sold for $1 million or more in the state shot up nearly 51% last year, boosted by tech-fueled Silicon Valley.
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Number of homes sold for $1 million or more.
Statewide: 11,364
Bay Area: 5,373
Southern California: 5,244
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NOTE: Southern California counties: Imperial, Los Angeles, Orange, Riverside, San Bernardino, San Diego, Ventura; Bay Area counties: Alameda, Contra Costa, Marin, Napa, Santa Clara, San Francisco, San Mateo, Solano, Sonoma
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Hottest Markets
Southern California coastal counties helped Silicon Valley set the scorching pace.
A look at homes sold in the top three markets in each area:
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S. California 1999 2000 Gain Los Angeles 1,988 2,321 17% Orange 867 1,330 53 San Diego 770 1,073 39
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N. California 1999 2000 Gain Santa Clara 1,073 2,087 95 San Mateo 610 860 41 Contra Costa 257 590 130
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SOURCE:DataQuick Information Systems, La Jolla
