Luxury real estate sellers see price cut as last resort

How two high-end coastal markets are coping with recession

By Inman News Feed
Add Comment Add Comment | Comments: 0 | Posted May. 20, 2011

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South of Los Angeles in Orange County, the rugged hills irregularly slouch right down to the shoreline. The combination of elevation and nearness to the ocean marks a number of high-end neighborhoods, including that of the Newport peninsula.

Although the topography may be different from Alpine, N.J., Orange County, Calif., was similar to New York-New Jersey in one regard: The economy was heavily dependent on financial services, as Orange County was the epicenter of the subprime mortgage market. The recession was particularly brutal to the area and that included the pricey Newport Beach market.

"We were definitely affected by the recession and we are still seeing it," said Andy Stavros, a broker-associate with Teles Properties in Newport Beach. "The peak year was probably 2007 and since then the average home price on the peninsula has dropped. On average, for what sold within the last year, prices were probably closer to $2 million."

The problem is a lack of demand. On average, inventory levels per month are approximately 45 to 70 homes, with only a few of them selling each month in that ocean-breeze-stoked area of Orange County.

One would think Newport Beach homeowners would be desperate to sell, but that's not the case at all. From 2009 to 2010, a listed home in Newport Beach stayed on the market for an average of 137 days. From 2010 to 2011, a listed home remained on the market for 186 days.

Just as Sambucci's research indicated, good times or bad times, high-end homeowners are just not going to be moved -- until they are ready.

Steve Bergsman is a freelance writer in Arizona and author of several books. His latest book, "After the Fall: Opportunities and Strategies for Real Estate Investing in the Coming Decade," has been ranked as a top-selling real estate investment book for the Amazon Kindle e-reader.

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