As evidenced by recent high-profile home sales, now might be the time to find a deal in Laguna Beach
For those with deep pockets, Laguna Beach, California, has long been a favorite spot to invest those monies in housing. Gated neighborhoods, oceanfront views and palatial estates all prove welcoming for those willing to lay down the cash for a slice of real estate heaven.
However, two homes sales, both within the past 60 days, indicate that homestead nirvana is becoming a bit more affordable than in previous years. In September, a 17,000-square-foot home in the oceanside community of Irvine Cove sold for $32.7 million. Impressive for the area as a whole, but the sale was consummated after five years of sitting on the market and after a reduction from the original asking price of $65 million.
One month later, Warren Buffett, investment guru and chairman of Berkshire Hathaway, sold his Emerald Bay home after almost two years on the market. The 3,600-square-foot home, complete with ocean views, was originally listed for $11 million. The price was reduced by nearly 30 percent last month before finally selling for $7.5 million in early October.
The highest end of the market is not the only area experiencing reductions and extended list periods. Zillow shows the median list price for Laguna Beach homes is $2,695,000. The median sales price is considerably less at $2,019,800. Of the homes listed in September, 17.82 percent carried a price cut, a slight drop from the previous month’s 19 percent but still up almost 2.5 percent from the previous year.
When it comes to timing, luxury housing does operate differently than other sectors, as homes at the upper end of the market generally take longer to sell thanks to a smaller pool of buyers. But even at this price level, if a home’s price is too high for the market to bear, it's going to sit even longer.
Laguna Beach is no exception. Inventory is 3 percent higher than it was at the beginning of the year, and data from Redfin indicates that housing stock is spending an average of 115 days on the market.
Laguna and the greater Los Angeles-Long Beach-Anaheim metro area mirror a national trend, as the housing market is making a slight move toward a more buyer-friendly environment.
Overall, this comes as no surprise as interest rates continue to inch up, and recent changes to the property tax deduction (now capped at $10,000) and the reduction in the mortgage interest deduction are changing the affordability of higher-end homes. As a result, sellers are making greater accommodations to convince buyers to move on a house, something unheard of a couple of years ago.
A bright spot for homeowners is that home values are continuing to rise even as the market enters a cooling-off period. Zillow's value index lists the Laguna Beach median home value at $2,137,500, and its forecast anticipates that number should increase 4.3 percent over the next year.