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Luxury homes a hot spot in cooling residential real estate market

Million-dollar homes selling fast

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Buyers are starting to call the shots in many new home neighborhoods around San Diego County, but not when it comes to the luxury segment of the market.

Although sales are generally starting to slow in the county and buyers are getting "picky" and looking for many "perks" as inventory builds, high-end homebuilders and industry experts seem to agree that houses priced at $1 million and up continue to sell well without added incentives.

Residence Three at Davidson's Atrium at EastLake Vistas features an architecturally distinctive second-story covered bridge that creates an expansive forecourt entry for the home.

This four-bedroom, 4.5-bath custom Santaluz home sold recently for $3 million. The custom home and custom home site market at Santaluz is one of San Diego's few remaining housing "hot spots," according to Santaluz Realty.

While the lower ends of the residential real estate market are showing signs of cooling, luxury properties from North County to South County are selling at about the same pace and price as last year, reports Russ Valone, president and CEO of San Diego-based Market Pointe Realty Advisors.

"In the past, the upper end typically cooled along with the rest of the market, but not now," said Valone, whose real estate information service found that the luxury market remained stable from the super-accelerated months of 2005 to the thriving third quarter of 2006.

According to Valone, new home sales (excluding downtown San Diego) priced at $1.1 million and up are showing "amazing resilience and even a small up tick" with 348 sales recorded in the first three quarters of this year, compared to 325 during the same period last year.

He also noted that buyers are getting better value today in the higher price range than in previous years. "The semi-custom production homes now on the market are even more grandly appointed than in the past with top quality designs and premium products, often on larger lots in low-density neighborhoods."

Much of the fast-selling luxury product moving quickly in the market is in highly desirable locations that simply can't be replicated, such as EastLake, Rolling Hills Ranch, Santaluz and StoneBridge Estates, he added.

"Buyers are running out of opportunities to buy a new home in communities close to the coast or on the edge of nature preserves," said Valone. "These areas are hotter than ever."

North San Diego luxury ZIPs

One of the hot spots in the county that is seeing continued interest and sales activity is the premier coastal golf and exclusive club living community of Santaluz.

"It's nuts out here," said Joe Burns, broker manager of Santaluz Realty, which specializes in luxury properties in North County inland and coastal communities. "I think it is a great market for both buyer and seller of custom home sites and custom and resale homes."

According to San Diego Multiple Listing Service (MLS) data, resales at Santaluz in recent months are up from this time last year, and the community's second-highest average resale price per square foot of $501 was posted during July. Also during that month, total home resales at Santaluz hit $13.6 million with the average price of $1.95 million.

"Sales sizzled at Santaluz over the summer and we expect to continue at a fast sales pace this fall as well," said Burns, who oversees the real estate agency that specializes in resale properties and leasing services within the award-winning golf course development and surrounding north San Diego communities.

As another indicator of the community's enduring appeal and increasing property values, Santaluz Realty recently reported that the private enclave of new homes at La Veranda at Santaluz sold out. These 10 semi-custom homes -- averaging approximately 5,000 square feet and priced around $2 million -- were built by McCullough-Ames Development, in partnership with the master-planned community developer DMB Associates Inc.

According to Donald Kent, president of DMB Realty, luxury high-end communities like Santaluz seem less impacted by the homebuyer slowdown than the entry- and mid-level markets.

"There are very few -- if any -- club lifestyle communities like Santaluz in this region, so there will always be more demand than inventory here," said Kent, noting the many social opportunities and recreational amenities available to residents of this private, gated village.

Among these extras are the 18-hole Rees Jones-designed golf course; an 11-acre village green; the 19,000-square-foot hacienda with casual café, outdoor lounging areas, swimming, tennis, fitness center and an indoor basketball court; and the 35,000-square-foot Santaluz clubhouse and spa. The clubhouse features elegant and casual dining, golf shop and amenity-rich men's and ladies' lounges. The clubhouse also includes an inviting private spa at Santaluz, which captivates the senses with gardens, dramatic water features and indoor/outdoor treatment rooms.

Strong luxury home sales aren't limited to Santaluz. At nearby Del Sur, the higher end luxury estate products being built in the new master-planned community are proving to be among the best sellers, said Tamara Tatich, director of marketing for the Black Mountain Ranch development, where seven new heritage-inspired neighborhoods in a variety of styles and prices are now selling.

For instance, she said 18 of the 27 homes released to date have been sold at Standard Pacific's Avaron at Del Sur. Billed as "the ultimate in luxurious, sophisticated living," the two-story residences with up to five bedrooms and ranging in size from 3,951 to 4,778 square feet are selling from $1.3 million.

Avaron offers homebuyers many alluring amenities, including guard-gated access, acres of natural open space and privileges at the adjoining Crosby Sports Club.

According to Tatich, tentative plans call for several prestige homebuilders, including McCullough-Ames Development, to create elite collections of semi-custom estate homes priced at $2 million-plus within the 1,800-acre community located seven miles from the ocean just southeast of Del Mar.

Another luxury home neighborhood making a splash in San Diego is Davidson's Scripps Preserve in The Estates at StoneBridge near Scripps Ranch. The highly anticipated model grand opening of three artfully designed and decorated model homes was held Oct. 14. The new neighborhood is now selling, with the first phase of just 61 homes priced from the low $1 millions. Offering an expansive 4,630 square feet to 5,643 square feet, the two-story homes are designed by Case Group Architects and have four to six bedrooms, 3.5 to 5.5 baths and up to a four-car garage. Additional features include options for casitas, an outdoor kitchen or game room.

South County sales remain strong

Players in South County's luxury home market say demand for expensive homes in the county's southern region also is running high, despite rising interest rates and scarce land in many of the area's most popular and sought-after neighborhoods.

The award-winning homebuilding company of Davidson recently opened three model homes at Atrium at EastLake Vistas, showcasing some of the most distinctive architecture offered in the exclusive Chula Vista master-planned community.

According to Davidson, design elements from Spanish Colonial, Irving Gill and Palm Beach architecture grace the luxury residences.

"The distinct architecture and spacious floor plans of these grand-scale luxury homes are showcased beautifully in the models," said Bill Davidson, president of the Del Mar-based homebuilding company. "One of the most amazing architectural details at Atrium is the second-story covered bridge at Residence Three. In addition to creating a dramatic architectural statement, the bridge creates two separate wings between the home's extravagant master bedroom and the secondary bedrooms. It also creates an expansive forecourt entry for the home's first floor."

Designed by award-winning R. Douglas Mansfield Architects, the two-story homes at Atrium offer as many as five bedrooms plus bonus room, 4.5 baths and three-car garage. With up to 4,258 square feet, the three floor plans incorporate several indoor/outdoor elements, including outdoor rooms, courtyards, inglenooks and covered loggias. The neighborhood gets its name from the interior courtyard that is featured in each of the three floor plans.

Davidson is building just 68 of these luxury homes at Atrium, which are now selling at prices starting in the high $900,000s.

In addition, Davidson recently released the first luxury homes for sale to interested buyers on the priority list for Clearstory at Rolling Hills Ranch. The initial phase pricing starts at the low $1 millions for these spacious homes.

The gated neighborhood of Clearstory at Rolling Hills Ranch in Chula Vista will consist of 48 homes spanning approximately 3,789 square feet to 5,382 square feet. Designed with Spanish Colonial, Mediterranean and Americana exterior styles by R. Douglas Mansfield Architect, the one- and two-story floor plans offer as many as eight bedrooms and 6.5 baths. Other amenities include detached casitas, courtyards, libraries and outdoor rooms, depending on the floor plan.

With three model homes now under construction, the Clearstory grand opening is expected early next year.

Shrinking luxury sector

Indeed, the high end of the market remains buoyant. Still, some experts say these million-dollar-plus mansions are within reach of only so many people, and that finding a continuous stream of affluent buyers can be like finding a decent new home in San Diego County for less than $400,000.

According to Peter Dennehy of the Sullivan Group Real Estate Advisors, now that investment "flippers" and "serial" buyers - those homeowners who take advantage of the white-hot market to keep moving up -- have dropped out of the market, leaving only the truly wealthy, which is a much smaller and more discerning market.

"Buyers in the luxury market are out there, but they're in no hurry," said Dennehy, senior vice president of the San Diego-based company that provides in-depth analytical reports and strategic planning to the nation's housing industry.

"They aren't concerned about interest rates or the market slowdown," he said. "They are motivated by only the best of the best and are willing to wait for the perfect house."

Esterbrooks is a media specialist for Scribe Communications.

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