By Kaerie Ray
San Clemente Times

The San Clemente real estate market has been on fire for the last five years. Can it continue, or is the Spanish Village by the Sea looking out on stormy waters? Local real estate veterans talk shop about the market’s current trends and how new developments may impact home values.

Mike Cotter has been a real estate broker for 25 years, currently serves as president of the San Clemente Historical Society and is a board member of the San Clemente Downtown Business Association. So when he says he has an active interest in all things San Clemente, one can believe him. And what he’s saying right now is "San Clemente is chock-full of rich people with plenty of money to spend on housing, and that is not likely to change soon." So what does that really mean? San Clemente is approximately 96 percent built out, a record-setting resale price of $7 million is pending in southwest San Clemente and the city’s turnover rate is only 7 percent-about half the national average. But with commercial plans in the works for Marblehead Coastal and North Beach-not to mention the recent controversy in Shorecliffs-how is the San Clemente real estate market going to hold up?

Pretty well, according to Brooke Eubanks, a broker associate at Distinctive Coast Properties and resident of the city. "The Marblehead project, if done right, will increase the value of properties in that area-and all across San Clemente. Pride of ownership and remodeling in North Beach has put the community on a fast track to be one of the more desirable neighborhoods of San Clemente, and the new projects planned for the North Beach neighborhood will make it an even hotter spot with easy access to the beach and the new retail and commercial developments." Additionally,  Eubanks believes that the new $12 million beach trail from North Beach to Calafia will positively affect property values, predominantly due to the convenience that comes along with a beach boardwalk, making getting to the pier and downtown that much easier. "The improved beach access along various points is also a huge bonus," she says.

The pending developments may be just what the market needs to get back to the explosive growth it experienced from 2002 to 2004, but with new construction no longer adding substantial units to the city’s marketplace, as Cotter, who works at Century 21 O.M.A. notes, resales will make up the bulk of activity. The market overall is returning to a more "normal" rate of activity and is seeing a bit of softening. Supply is up, with approximately seven and a half months of unsold inventory available, compared with two to four months during the high period of 2002–2004. Additionally, home owners are not in a rush to sell their homes. They continue to price them higher than most recent comparables and are seemingly unwilling to bargain. Moreover, buyers are taking their time to make their purchases, even in a market as good as San Clemente’s with coveted communities like Cyprus Cove and Cyprus Shores.

One major reason for the soft market, explains Eubanks "is the negative media news that has been promoting doomsday for the market. We have been running into buyers with the impression that it is a 100 percent buyer’s market. They are expecting a steal of a deal. They make low-ball offers, sometimes hundreds of thousands of dollars under asking price, expecting that sellers are desperate." But as she points out, this has been a common suggestion for some time and the market has yet to reflect it. In fact, the median home price is up nearly 14 percent. Remarks Cotter, "This compares to a long-term average growth rate of about 10 percent. The median home resale price in San Clemente is $910,000." Nearby Newport Beach has a median home price of more than $2 million in all zip codes. Most in the area’s real estate arena consider it to be a 60-40 market, representing 60 percent in favor of the buyer and 40 percent for the seller. This is because the buyers have more to choose from and can move on if they are unsatisfied with a price. 

Still, rising interest rates have been another perpetrator of the slowing market. Eubanks points out the need to remember that even though the rates are up from what buyers are accustomed to, they are still historically low and there are loan programs to fit every buyer’s needs. Todd Schiedow, a real estate agent with Coldwell Banker Previews International focusing primarily on home sales just eight years old to new construction, agrees. "The market over the last five years was hot, and now we are back to a more normal market-partially because of the introduction of interest-only loans back in 2000 and the historic low rates that came with the innovative loan programs. Last year interest rates were a little lower and the homes were not staying on the market as long. In the last two years, rates have adjusted 17 times."

However, the consensus is that San Clemente’s market is benefiting from what the rest of the Southern California market is experiencing, which is a sort of "protection" from the recessions that have beleaguered most of the rest of the country in recent years. "San Clemente has the most reasonably priced subtropical coastal real estate in the civilized world," contends Cotter, who suggests that prospective buyers can’t believe their luck when they arrive in San Clemente. "It’s not just a beach town with a few historic buildings; it’s a town practically defined by its historic buildings. It’s authentic. People see movies of Southern California beach towns, but we have the real thing."

So is everything looking rosy for the market as a whole? "Well, with talks of the Rancho Mission Viejo development, I think there is a little concern with the Talega market," begins Eubanks. "The amenities in Talega are desirable but direct newer home competition keeps increasing with the continuing development of similar homes. Depending on how Rancho Mission Viejo turns out, it might have a negative effect. And [the recent drama in] Shorecliffs sent vibrations through the entire community. We do not have view protection ordinances here, yet this is the first instance in San Clemente where a planned community came together to change requirements in a zoning area. It will be interesting to see how it affects the home prices of that area."

Still, what those in the industry continue to reaffirm is San Clemente’s potential. Sales volume generally follows the seasons, and there is little doubt that the Marblehead Coastal development will increase values in San Clemente. Not only is it one of the last developable pieces of coastal land in all of Southern California, it is slated to incorporate a high-end outlet mall and retail center. "We already have clients who are banking on the value this development will bring to San Clemente and are investing in property now to realize the appreciation in prices across our community once these homes hit the market," details Eubanks. Adds Cotter, "With the outdoor shopping center, new stores, restaurants and entertainment, Marblehead Coastal is an awesome addition. Also, the wonderful park that will be beach-close for the whole city to enjoy and the added homes close to the beach are going to be a great attraction for SC homeowners who want to be closer to the beach and for out-of-the-area people moving into SC."

Overall, sales volume is down just slightly over the previous year, inventory is up and interest rates are rising. Although gains may not be what they were in 2002–2004, they are still well above the national average. And it’s still desirable to live by the beach, to live in San Clemente. 

Concludes Eubanks, "Most people shouldn’t wait to buy a home. There is no evidence it will be less expensive next year." And at the rate San Clemente is going, it’s never too early to get in on a good thing. 
Mike Cotter, Broker Associate, DRE #00806890
Century 21 O.M.A., 229 Avenida Del Mar, San Clemente, CA 92672
Mobile 949.322.6009, Fax 949.492.7850
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