Girling Real Estate Investment Group Blog

The Girling Team is pleased to introduce the Newport Beach Home Price Index (“NBHPI”). The NBHPI is a compilation of 25 Newport Beach neighborhoods and it tracks prices of closed, single-family, detached residential real estate sales since 2000. The Index shows that home values rose 170% from 2000 until they peaked in 2007, and despite the declines we have experienced, prices are still up 79%, from 2000 to date. The NBHPI also shows that prices are down 33.6% since the peak in 2007 (Q3) through December of 2011. Comparatively, the Balboa Island Price Index (“BIPI”) has decreased by 34.6% since the peak.

The chart above also shows that prices are approaching levels that would have resulted if prices had appreciated at a constant appreciation rate of 4% (see red line).

Since 2007, prices have shown more variability, the result of a greater number of high-end, luxury properties that sold in the period and a reduced number of overall sales each period since 2007. For example, the number of sales in 2008 compared to 2003 was down 53.5%.  As a result, there has been a less orderly decline as compared to the appreciation from 2000 to 2007.

The NBHPI illustrates that the luxury market has been somewhat resilient when compared to other real estate markets, especially in the past 18 to 24 months. One of the main reasons is that there are fewer distressed properties in the Newport Beach market. The NBHPI also shows that prices have leveled and actually shown improvement in some neighborhoods (up 8.1% since Q1 2010). The NBHPI confirms that home values in a luxury home market like Newport Beach perform much differently than other more mainstream markets.

Conversely, the statewide median price of an existing, single-family, detached home fell to $268,280 in January 2012. That is down 6.7% from $285,920 in December 2011. The median price also dropped 3.9 percent from the revised $279,220 median price recorded in January 2011. The decline in the January median home is largely a reflection of an increase in the share of distressed home sales (Source: CA Association of Realtors).

According to the Balboa Island Price Index (BIPI)™, Balboa Island interior lot values for Q4 2011 increased by 6.2% to $1,268,250 when compared to the previous quarter.  For the past three quarters values have moved in a range of +/- 6% and the BIPI has closely tracked the slope of the 4% appreciation rate trend line (see chart below).  Both developments may be a signal that property values are starting to level off.  When compared to late 2006 and early 2007 when average lot values peaked, the current average value of a lot has decreased by 34.6%.  Year over year, values are up 3.5%.

According to the Girling REIG Balboa Island Price Index (BIPI)™, Balboa Island interior lot values for Q3 2011 were valued at $1,194,638, down 2.68% when compared to the previous quarter. Compared to late 2006 & 2007 when average lot values peaked, the current average value of a lot has decreased by 40.7%, reaching levels we saw in early 2003.  Year over year, lot values are down 3.3%.  Since Q1 2011, values have been fairly flat.  In addition, they have been tracking values that would have been expected if prices in 2000 has appreciated at a 4% annual rate (see chart below).

For Q3 2011, 11 properties sold on Balboa Island compared to 12 in Q2 and 11 in Q1. Currently there are 27 properties for sale on both Islands: 5 Bayfronts ranging in price from $3,695,000 to $5,975,000, 1 Grand Canal property for $2,595,000, 4 Little Island properties ranging from $925,000 to $3,295,000 and 17 Big Island properties ranging from $1,200,000 to $2,950,000.  On average, the properties that sold in Q3 sold for 92.9% of the list price.