Category Archives: Laguna Beach Real Estate

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Lansner: Sky-high premium for O.C. homes

OC Register

Published: May 27, 2014 Updated: May 29, 2014 12:00 p.m.

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While Orange County homes are selling at prices that have yet to exceed their pre-bubble-bursting peaks by most measurements, the relative cost of a local home has never been higher – according to one of my favorite affordability benchmarks.

I’ve long tracked the relationship of Orange County home pricing to nationwide values as my “Orange Premium.” It measures, in essence, how much extra we pay to live in relative paradise.

My math is simple: Compare the National Association of Realtors’ median selling price of single-family residences in Orange County and the U.S. In the first quarter, the local median price tag was $669,800, up 12 percent in a year, vs. $191,600 for the nation, up 9 percent in a year.

My trusty spreadsheet tells me that this “Orange Premium” was at 3.50 for the start of 2014. That is, you could get one Orange County home for 31/2 homes at the national median price.

(Curious note: At this moment, the national price happens to be the same cost as a Las Vegas single-family residence – if you need a better mental image of the comparable properties.)

How high is this premium? The first quarter’s “Orange Premium” topped last year’s cyclical peak of 3.4 U.S.-homes-to-one-here ratio in the first quarter, and the old record peak of 3.41 in 2004.

If so many folks speak of California economic challenges, why is this premium surging?

One key factor is Orange County’s faster-than-elsewhere home-price recovery. Since the “Orange Premium” hit its most recent bottom – at 2.99 homes-to-one in 2012’s fourth quarter – Orange County home prices are up 38 percent through 2014’s first quarter. Nationally, price gains are just 18 percent over the same period.

That rebound left Orange County prices only 6 percent below the 2007 peak. National pricing is still 14 percent below its 2006 peak.

This price gap isn’t just fodder for real estate pros or statistical junkies. High housing costs are a major challenge to the local economy – hurting our chances to attract and retain employees and employers, and concentrating the finances of Orange County residents on house payments and diverting it from the rest of the economy.

But the fat home-price premium is also the byproduct of the area’s economic oomph. The region’s long history of job growth has brought more house shoppers to Orange County. Coupled with laggardly homebuilding, which limits the supply of housing to buy, that pushed home prices skyward.

In the last three decades, Orange County job-growth pace has outpaced the nation by 30 percent – a 1.7 percent average annual growth rate vs. 1.3 percent. That’s a noteworthy and long-running edge, especially in an area with limited raw land suitable for cheaper housing and where developers, as well as city leaders, seem to prefer building pricier homes to residences that mainstream shoppers could afford.

PRICEY BY ANY MATH

The local housing crunch isn’t only found in my mathematics. Other, more complex measurements of housing affordability also show just how costly local real estate can be.

Take the Housing Opportunity Index from the National Association of Home Builders and Wells Fargo. This metric juggles local pricing patterns, income levels and mortgage rates.

It shows Orange County was the second least-affordable major market in the nation in the first quarter – only 19 percent of the local homes sold were “affordable” to the median-income household, lowest level since 2008. The only place that was less affordable? San Francisco.

Orange County fares no better with a National Association of Realtors’ calculation of the qualifying income needed to buy the median-price local single-family residence. By this math, an Orange County shopper with 20 percent down in the first quarter needed $130,000 household income to buy. Only three U.S. markets – Silicon Valley, the Bay Area and Honolulu – had heavier salary demands.

One quirk inside these affordability indexes is that most people don’t earn the median salary. Online property tracker Trulia broke the homebuying income challenge into some key educational categories.

So while just 24 percent of homes listed for sale in Orange County in May were “affordable” to the median-income household – third-lowest in the nation – that affordability fell to 9 percent for local folks with at most a high school degree, and rose to 59 percent for Orange County residents with graduate degrees.

And apartment tracker Green Street Advisors says the typical house payment required to buy an Orange County home is twice the local rent – well above the national average of 1.3 times and the highest mortgage-to-rent ratio among 30 major U.S. markets.

LONG-RUNNING HURDLE

Let’s be honest, though. No matter how you do the math, it’s fair to say that Orange County has long had a home-affordability problem.

In 1982, the first year of my Orange Premium database, local house prices ran nearly double that of national costs. Cry, or laugh – that was when the Orange County median home sold for $129,641!

The Orange Premium exploded to 2.7 in 1989 – amid the region’s late 1980s real estate boom – but then cooled off in the ugly 1990s California housing slump.

The premium bottomed at 1.84 in 1996, perhaps the last whiff of local affordability.

Unfortunately, no major affordability index has a long history on Orange County. The NAHB/Wells index dissects Los Angeles house prices back to 1992, and that metric shows regional affordability in the mid-1990s rising almost to the national levels, as Los Angeles home prices fell while incomes soared in a fast-paced regional business climate.

As the new century neared, though, the local housing market recovered with gusto – and higher prices made my Orange Premium and other affordability measures turn painfully unaffordable. Orange County’s median home price soared 232 percent in the decade ending in 2006. U.S. prices jumped, too, but just by 92 percent.

The local price boom around the turn of the century wasn’t just a byproduct of that era’s generous mortgage standards. Orange County’s economy was cooking – growing its workforce by 28 percent in the decade ending in 2006 vs. 14 percent job growth nationwide.

When the easy lending ended, the housing-dependent economy – and housing itself – turned sour. Curiously, the downturn hit hard all corners of the nation, so Orange County affordability barely improved. Local pricing was off 31 percent in the four years after 2006. Nationally, it was a 28 percent dip.

The affordability question doesn’t just rest on prices. House shoppers complain about what you get for Orange County’s stretched housing dollars.

That disparity is captured by a study from Trulia, showing that Orange County homes for sale in May that were “affordable” to the median-income household (24 percent of all listings) had a median size of 1,100 square feet. Compare that to the most “affordable” market – Akron, Ohio – where 86 percent of homes listed were “affordable” at a median size of 1,300 square feet.

NO EASY CURE

Orange County’s surprisingly vigorous housing rebound highlights some of the challenges the region faces when anyone from government leaders to real estate insiders try to tackle the affordability issue.

Let’s pray we don’t get the pure economics fix again – a dramatic decline in housing prices. Let me warn you that the last two similar surges in my Orange Premium – in the late 1980s and again in the middle of last decade – did not end well.

Constructing enough new homes to dramatically lower overall prices isn’t realistic, even over the medium range. Building far more affordable housing is possible, but tell me this: Which community in this NIMBY-thinking world would encourage that kind of massive development?

Incomes won’t jump broadly enough, either. Orange County’s job growth is creating a split class of residents – well-paid folks who can somehow afford today’s house prices and lesser-paid workers who don’t even dream of homeownership.

And a rush of investors and out-of-towners to Orange County further clouds affordability.

Folks looking for rental properties to own like the fact that Orange County has some of the nation’s highest rents – at $1,639 a month, the nation’s eighth-highest, according to rent tracker Reis Inc. – and a healthy appetite for single-family homes to lease. This buying is another strain on the for-sale supply.

Plus, house shoppers from other parts of the globe are attracted to Orange County’s economy, climate and diverse population, and don’t see our housing prices as high compared with other major world cities. For example, Los Angeles was only the 27th-most-expensive place to live out of 131 major cities ranked worldwide by The Economist magazine.

The bottom line is that no matter how you measure the price gap, you will pay way more to live in Orange County vs. many other places. A hearty chunk of that extra cost is for good reasons (lifestyle, opportunity, etc.) And some of the expense reflects basic economics (heavy demand, limited supply.)

That’s why an Orange Premium exists – as very tangible validation that Orange County is a well-above-average place to be.

 


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Woods Cove – The Story

 

Woods Cove – The Story

Starting with the twin cities – Arch Beach and Laguna Beach

In the late 1800s, the Woods Cove area was originally called Arch Beach and was a separate town from Laguna Beach.

It even had its own post office.

The reason for the twin city effect was that wagons could not go between the two towns due to the deep gullies of Bluebird and Sleepy Hollow Canyons.

So while Laguna Beach could be accessed by the Laguna Canyon, Arch Beach could only be accessed by Aliso Canyon. In fact, to get to Laguna Beach from Arch Beach you had to go all the way around Aliso to El Toro to Laguna Canyon.

 

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The Arch Beach Tavern was built to house visiting potential buyers of Arch Beach properties. It later housed actors for the movies made in the area. It is now an apartment building at the corner of Moss and Catalina.

As with much of the surrounding areas at the time, it was primarily used for farming, and even had a pier off of Diamond St where they exported barley hay via ship to San Diego for feeding the stage coach horses. Alas this was short lived once the railroad came to SoCal.

The farms were replaced with a resort destination hotel, called the Arch Beach Hotel. The forerunner of the tourist destination town we have today.

It was located at the corner of Diamond and the Coast Hwy. and was very successful until the late 1800’s when a financial and real estate bust be felled the country.

But never- the- less the word was out. Laguna is a great place to visit, as well as to build your beach house.

For more pictures and a place to submit your stories please visit facebook.com/woodscovelagunabeach

Residential Development

It wasn’t till 1915 through the 20’s that they started building the many summer cottages, artists’ studios and dream homes that we still see to this day.

There was no design review or governing body prior to 1927 so it was fair game to build with has much individuality as you liked.

The spontaneity of development can still be seen in the informal layout of the streets (no curbs or gutters), irregular setbacks, odd-shaped lots and, most importantly, the lack of uniformity among the architecture.

In other words, it was the foundation of the quintessential eclectic Laguna Beach.

Click here to see current homes for sale in Woods Cove

Name Change

An interesting tidbit is that the neighborhood’s name was changed to Woods Cove after a businessman from Colorado, Harry Woods, bought the land around the cove.

Note: It’s Woods Cove and not Wood’s Cove

A few of the Historical People and Celebrities that lived in the area:

The famous actress Bette Davis had a home you can still see today on the bluff on Woods Cove.
William Wendt, one of Laguna’s premier original plein air artists had a studio, that is still there, on Arch Street.

Even Woodrow Wilson convalesced in a house on Moss Point after his stroke during his presidency.

 

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“The Way it Was” watercolor of the old Wood’s Cove staircase by Roger Folk, long time exhibitor at the Festival of the Arts. Nowadays staircase is all concrete and iron rails but not nearly as fun to descend as it’s rickety, rotten predecessor from the ’60’s.

Architecture:

There is almost every type of architecture imaginable in the Woods Cove community.

First, there are the big luxury homes that sit on the cove bluffs, then the small bungalows, as well as the craftsman style houses. And that just the beginning with modern, mid century, Tuscan, adobe and normandy also sprinkled in throughout the area.

Walkability:

One of the other reasons the area is so popular is you can walk to the beach and local stores in just minutes and to the Laguna downtown area in about 15 to 20 minutes via the beach or along the scenic back roads.

It’s about as far South as you can go and still have a comfortable walk to the village.

Also, the locals love to walk their dogs and meander through the neighborhood, especially on Glenneyre, the old goat path, where they’ll pass many of their neighbors doing the same thing.

Ocean Views:

Woods Cove has a mild uphill slope from the ocean providing many homes with an ocean view. This results in the double benefit of view and walkability which is usually sacrificed when living on the steep hillsides.

The Coves:

A unique attribute of Woods Cove, and Laguna in general, is the many relatively small but world class coves, such as Moss, Ruby, Agate and Woods Coves. They have beautiful flora rich cliffs, as well as ocean bluff homes of every shape and architecture.

The crystal blue water is great for diving and exploring the kelp beds.
The locals enjoy walking down to the beach after work, take a swim, hang out with their friends and take the edge off with a glass of wine.

So say ‘hi’ when we see each other walking in the area. Everyone else does.

For more pictures and a place to submit your stories please visit facebook.com/woodscovelagunabeach

*Trivia: did you know that the Fairview Development Company/ Santa Ana Immigration Association had laid out a town called “Catalina-on-the-Main” just southeast of Arch Rock in 1888? They applied for and received a US Post office but it was never built, as this venture failed shortly thereafter. Also in the early 1900s, what is now the “Woods Cove area” was planned to be developed and called “Seawood” as a seaside resort. The property was owned by Clemma E. Woods.(Were we get “Wood’s Cove” from) The site was surveyed and a tract map filed with the County on February 19, 1907, and they received a Post Office commision, but once again the project never came to
fruition. Had these projects succeeded “Arch Beach”, “Catalina on the Main” & “Seawood” would have all predated “Laguna Beach” as townships by several years. *edited text from the Orange County Historical Archives & the National Archives materials.

 

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John Garfield and Lana Turner, Woods Cove. *during filming of “The Postman Always Rings Twice”, 1946


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Laguna Friends of Architecture (LFA) bus tour of the Historical Districts of Los Angeles

Laguna Friends of Architecture (LFA) bus tour

of the Historical Districts of Los Angeles –

Saturday, March 15th

    Come and join your fellow friends that have a passion for architecture on a 50 seat bus tour of L.A.’s historic districts and architecture.

Art Deco, Victorian, French Revival, Mid Century, you name it, will be visited, as well as, a stop at the Museum of Art & Design.

The bus is half full already so step up and RSVP right away.

It’s going to be fun and informative.

BYOB on the bus (yes it’s a wet bus). We’ll supply to music.

Click here for more detailed information and how to sign up.

 


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The Laguna Lady Story

If You Love Laguna’s Historical Past

You Can’t Miss This One

Horst Noppenberger, the prolific local architect, is going to make a presentation at the site where the 9,000+ year old Laguna Lady was found. Besides telling the story of her discovery he’ll be showing his plans for a mini museum at the site, as well as, the remodel plans for the homes on the property.

As a regular reader of my newsletters you probably know this great story of the Laguna Lady.  It’s a reader favorite since she was found in our own backyard and hardly anyone knows of this remarkable find.

If you’re not familiar with the Laguna Lady here’s a quick summary:

Back in the 1930s when they were building the Coast Hwy they had to grade down the land on St. Anns Drive from Glenneyre, since it had a higher elevation. This exposed the fresh cut swath on both sides of street.

Two local boys who loved hunting for Indian artifacts in the area took advantage of this and went exploring.

St. Ann’s Drive location

 Laguna Lady’s head (my type)

Typically they found artifacts like arrowheads and bones in loose dirt, but to not this time.

To their surprise they found a skull and shoulder fossilized into the stone and a little too aggressively cut it out with their tools.

For one reason or the other, it was kept in one of the boy’s closet in a shoe box for decades.

It wasn’t until a friend of theirs said Dr. Louis Leaky, the world famous discoverer of the oldest human being Lucy, was coming to Newport and since he was friends with the doctor he would introduce them so they could show their find.

The bottom line is Leaky said ‘we have something here’ and got it carbon dated and the results were incredible. 9,000 years old and probably more since it’s been oxidized while in the shoe box.

Arguably the oldest person in the Western Hemisphere and you probably go by it every day. Incredible.

For a more detailed story click here. It’s a fabulous read.

 

Event Details:

Date: Wednesday, March 5th

Location:  255 St. Ann’s Drive (across from the Woman’s’ Club)

Time: 6 o’clock

Dress warm and bring some wine to share.

All this is weather permitting of course

See ya there. Sean and Laguna Friends of Architecture


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21692 Ocean Vista Drive, Laguna Beach, CA


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New ‘Pocket’ Listing – My clients get the first chance at this beauty

I’ve a single story 3 bedroom, 2 bath 2,000 sqft condo pocket listing with panoramic ocean views. It is actually 2 side by side condos with the wall taken down between them.

The condo has been completely remodeled with a large kitchen with 3 sinks, 2 refrigerators, granite countertops and new high end cabinets.

There are slate floors throughout the living area, all new windows, crown molding and an ‘open’ office converted from a bedroom.

The large patio, with sliding doors and ‘dutch’ doors give a nice indoor/outdoor feel. The ocean view can be seen throughout the condo with the exception of the bedrooms.

This won’t be in the mls for another week or two. So if you’re interested please let me know asap if you’d like to see the property.

3 blocks to the magnificent beaches in front of the award winning Montage Resort.

21692 Ocean Vista offered at $1,470,000

Click Here to see all photos

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21692 Ocean Vista