Building dreams

Christine Carrillo

The progressively higher prices for homes in the Newport-Mesa area

have failed to deter home-buyers from putting their money in

residential property purchases, dramatically increasing the number of

transactions compared to past years.

The average prices of homes, which have nearly doubled during the

past five years, in Newport Beach, Corona del Mar and Newport Coast

combined have reached about $1.2 million, while homes in Costa Mesa,

though significantly less, are valued at slightly more than $430,000,

according to the Orange Coast Realtors Assn.’s statistics ranging

from Jan. 1 to Aug. 15 of 1997 and 2002.

The dramatic increase in price has been offset by low mortgage

rates -- which are hovering at a 30-year low -- that are enabling

home-buyers to continue moving from home to home or move from rental

properties.

“If you’re in a low-price range or a first-time buyer the low

interest rate will be what enables you to buy a house,” said Steve

Sutherlen, manager for Coldwell Banker’s Corona del Mar and Newport

Beach offices. “Everybody wants into the market now and a lot of this

is very interest rate sensitive.”

As a result, sales in the Newport area have jumped from 494

transactions in 1997 to 672 in 2002. In Costa Mesa, sales have

climbed from 282 to 406 in the same time frame.

“Our activity in July and August was more like the May activity,”

said Sutherlen, who added that real estate market activity usually

follows a seasonal curve that experiences one of its peaks in May.

“That number of transactions in those months is really unheard of.”

At least part of the climb, experts say, comes in response to the

recent tumble of the stock market.

“A lot of people are uncertain about corporate America with

all the Enrons and WorldComs out there,” said Steve High,

president of Strada Properties

in Newport Beach. “We’ve seen a lot of money funnel into

the residential real estate market.”

The uncertainty of the stock market and lack of faith in the

corporate world have actually provided an answer for people looking

for more secure investments.

“Many buyers in the market today are citing their concern about

investing in the stock market....,” said Patricia Moore, executive

vice president of the Orange Coast Assn. of Realtors. “The nice thing

about property investments is they never devalue.”

While that certainty may serve those investing in a home well, it

has also acted as a barrier for people looking to purchase one. As

more people look to the Newport-Mesa area as a residential

destination rather than a temporary passing ground for corporate

moguls traveling from one job to the next, the demand of houses has

begun to surpass the inventory, particularly amid mid-range homes.

The Newport Coast market, which consists of high-range homes

exceeding $2 million, has faced the opposite problem. Although the

sales activity in that market has remained the same, the supply is

much greater than the demand.

“We’re starting to see a lot of the custom home sites in the

Newport Coast area just coming out into the market,” High said. “We

have sold more homes over $2 million than ever before. The sale

numbers are the highest they’ve ever been ... and the demand for

water-oriented properties are still at all-time highs.”

So what’s the bottom line for the home-buyer in the Newport-Mesa

area?

“People can really extend their purchasing power now with these

low interest rates,” High said. “It’s your classic American housing

that we don’t have a lot of.”