Home prices dip, bubble hasn’t burst

Doomsday real estate predictors have been with us for decades. As recently as 2002, the business school of UCLA predicted “the [real estate] bubble burst will be this year.”

In Laguna Beach, the bubble hasn’t burst yet.

In fact, home prices in Laguna Beach are at a peak, even as the market has slowed. Since 2002, prices in Laguna Beach have nearly doubled “” appreciating by more than 90%.

Data provided by DataQuick Information Services, regarded as the most reliable source because they are based on county recordings, show that since 1988 home prices in Laguna Beach have appreciated more than 204%. This includes the period of real estate downturn in the early 1990s.

The data indicates that the volume of sales since the high of 1,011 sales in 1988, and the second high of 751 in 1998, has declined to 360 sales in 2007.

But that doesn’t mean home prices have slid.

Except for a period of a few years, appreciation rates have been outstanding with positive rates of 22.2% in 2003; 35.5% in 2004; and 14.4% in 2006. In 2007, the bubble didn’t burst despite softening prices, as home prices deflated at a modest level of minus 4.4%.

Sales in Laguna Beach in 2006 and 2007 have been sluggish, with 387 sales in 2006 and 360 sales in 2007. But this has not prevented the luxury buyer from purchasing in our city.

The city had two out of three of the highest-priced home transactions in the county “” at $25 million and $30 million, respectively.

The most expensive home in Laguna Beach was the private sale of an oceanfront home in Irvine Cove. According to a newspaper account, the 3,537-square-foot home had six bedrooms and six baths and is situated on a 13,320-square-foot lot.

At Victoria Beach, $25 million fetched a new Craftsman-style, 10,000-square-foot oceanfront home on a direct-access-to-the-ocean 95,000-square-foot lot. This home has a private pool, gated and private sandy beach, and it houses six bedrooms and 10 baths.

The least expensive property sold in Laguna Beach last year was priced at $450,000, according to the Southern California Multiple Listing Service. This was a 1,500-square-foot, two-bedroom, two-bath condo in the Terrace tract of the Laguna Canyon area. The sale price was down $70,000 from the same tract and same period in 2006.

Several homes sold at the median sale price of $1.53 million. “Median” means that half the homes sold for more and that half sold for less.

For the last two out of three years, Newport Beach and Laguna Beach both scored the most sales of homes costing between $5 million and $10 million in Orange County.

In the $5- to $10-million range and in the $10 million-plus category, there has been a slight decline in sales, indicating a small weakening of the market at the extreme high end.

The county’s priciest home purchase was $35 million paid in Newport Beach for the Nicolas Cage home, next to the former John Wayne residence. Cage bought the home in 2005 for $25 million.

Although there has been a housing correction in 2007, there has not been a housing failure.