CALIFORNIA FOCUS
FOR RELEASE: FRIDAY, DECEMBER 20, 2024, OR THEREAFTER
BY THOMAS D.
ELIAS
“THE LESSON OF ULTRA-HIGH COASTAL REAL ESTATE PRICES: LOOK INLAND”
Not many places
could take a 5 percent drop in their median home price and still remain the
most expensive Zip code in America for real estate. But Atherton did that this
year, taking a $400,000 median price dip, but still maintaining a median of
$7.9 million per property sold.
This brought
Atherton’s 94027 Zip code, in San Mateo County slightly north of Stanford
University its eighth consecutive title as the priciest place in America.
But Newport Beach
is not far behind. The seaside Orange County city has three Zip codes with
median prices topping $4.6 million, all up a few hundred thousand from last
year.
It’s rather
eye-popping, but of the 10 priciest Zips in the nation, seven are in
California. The median is the price level where half of all sales are for
higher amounts and half for lower. For both Atherton and Newport Beach, this
means in practical terms that sales prices topping $10 million have lately been
pretty common.
Only Atherton
among the highest-price California Zips has no waterfront. But not to worry, it
is within a couple of miles of several marinas fronting on the San Francisco
Bay, where homeowners can also park their boats – even if they can’t dock
outside their back doors, like at some properties in Newport Beach.
There’s a lesson
here for young families wanting to live in California, but unable to afford the
ultra-high prices of the most expensive ZIPs: Look inland.
Areas like
Glendale, Pasadena, Rancho Bernardo, Tracy and Elk Grove sport plenty of
extremely livable homes and condominiums at prices far beneath what similar
properties draw in coastal communities. This explains why California’s inland
areas are growing far faster than coastal locales.
In fact, coastal
areas in other areas of the country also boast prices soaring above what almost
any first-time buyer can afford. The three non-California Zips on the national
top-ten list include one in Miami Beach, Fla., and two on Long Island, NY.
High prices that
are nevertheless still rising were common not just in California and the other
top ten Zips, but also nationally, creating a crisis that presidential
candidates last fall promised to fix by spurring the building of millions of
new homes. These would rise in many areas, with inland California boasting
prime areas for development. The prospect of new communities in some currently
vacant desert areas has also been touted by some housing officials as a
solution not only to the affordability crisis, but also to homelessness.
After real estate
prices slipped a little overall in 2022 and 2023, says the Property Shark real
estate research firm which generated the latest top ten rankings, they rose
again this year in most places.
The firm reports
that two-thirds of the nation’s 100 priciest Zip codes saw sale prices increase
in 2024, compared with just 29 percent in 2023. One result was that a record 15
Zip codes saw median sale prices of $4 million or more.
Plus, prices in
large cities pretty much mirrored the top rankings of Zip codes. New York,
which took over last year for Los Angeles as America’s high-price leader among
sizable cities, retained that ranking, even as its toniest Zip, which includes
Tribeca, was only No. 23 nationally. L.A. remained No. 2, with Palo Alto
trailing not far behind at No. 4.
A key finding is
that about two-thirds of America’s priciest Zips are clustered in Los Angeles,
Santa Clara, San Mateo and Orange counties, contributing to the home price
crisis that has driven many young professionals to live in other states while
telecommuting to jobs in California, putting in only occasional appearances at
their nominal offices.
One side effect
has been that neighboring states like Nevada and Arizona are now more
politically centrist than their long history as Republican bastions might
indicate. Ex-Californians have also driven up prices markedly in those states,
as well as Idaho, Texas and Oregon, where many new residents arriving from
California report being ostracized by longer-term residents.
The bottom line:
The priciest California areas show no signs of major pricing retreats, which
leaves few coastal options for young families seeking to buy first homes. That
makes looking inland -- even to deserts -- a must for many.
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Email
Thomas Elias at tdelias@aol.com. His book, "The Burzynski
Breakthrough," is now available in a soft cover fourth edition. For more
Elias columns, visit www.californiafocus.net