After months of slow sales, significant price drops, and a decidedly buyer-oriented market, Laguna Beach real estate is set to start 2010 on a more positive note. Economists and real estate experts agree that the city’s economy is well on its way to recovery, albeit a slow one, starting with a more balanced housing market that’s as friendly to sellers as it is to buyers.
Laguna Beach has been among the hardest-hit cities in Orange County, even spending a brief few weeks as having the slowest real estate market. In late 2009, Laguna Beach homes spent over a year on the market before being sold or going into escrow. Price drops were also widespread, with some homes dropping by several million dollars after an unsuccessful run on the listings.
However, research shows that the Laguna Beach economy has held up better than most Orange County cities. While still not at par with its peak performance in 2004-2005, the city has actually seen a rise in overall revenues, bringing a year-by-year increase of about 4%. This goes to show that the upscale city still enjoys ample funding and revenues despite the economic downturn.
Experts point to Laguna Beach real estate as a major player in the city’s relative stability. Property taxes account for the biggest share of the city’s income, adding up to over $20 million in 2009. Part of the reason is the high market value of Laguna Beach homes, with an average home price of about $4 million. While this has slowed down sales last year, it has also kept the economy afloat and even ahead of much of O.C.
Tourism has also been invaluable in keeping Laguna Beach and its housing market on top. According to reports from the Visitor’s Bureau, revenue from hotels and entertainment venues has actually gone up compared to recent years, presumably because cash-strapped tourists preferred domestic destinations over international travel. This trend is expected to continue in 2010 as more Americans seek leisure opportunities at low cost.
The move to a seller’s market means that homes in Laguna Beach will sell quicker and the buyer-seller ratio will even out. The buyer’s market seen in 2009 was marked by a high inventory of homes for sale, with not enough able buyers that could take them up. As a result, Laguna Beach real estate slowed almost to a complete halt later in the year, and many sellers had to slash prices in order to attract more buyers.
In 2010, however, more buyers are expected to enter the scene as homes have become more affordable. The overall economic outlook also predicts reduced job loss, which means that buyers will have more purchasing power. Real estate investors are also set to become more active as they take advantage of below-market prices, particularly in distressed properties such as pre-foreclosure and short sales.
Real estate experts warn, however, that both buyers and sellers have to be careful when entering the Laguna Beach real estate market. While we’re seeing a more even playing field, the market needs time to get back on its feet and it may take a few more years before it returns to its peak performance. The best way to get a good deal, according to them, is to work with experienced real estate professionals who know the market well.