If you think these must be tough times for real estate agents, Andrew Nelson has news for you.
"The current market is great for us," said the president and CEO of La Jolla-based Willis Allen Co., one of San Diego County's oldest real estate firms specializing in multimillion-dollar residential properties. "We've had wonderful sales this year and are very hopeful that next year will be even better."
The market for ultra-luxe homes is still flying high even as sales sag in the overall real estate market. According to DataQuick, a Southern California market research firm, sales of homes priced $5 million and above jumped 31 percent in 2007. Not surprisingly, real estate professionals like Nelson who sell luxury homes are optimistic about the upwardly mobile affluent market.
Nelson expects that Willis Allen will handle more than 1,000 transactions this year at an average sales price of $1.5 million -- a slight increase over the volume and values posted by the company in 2006. Even his staff is up by 15 members from last year, for a total of 180 sales agents operating out of seven offices from rural-rich Fallbrook to old-money Coronado.
"Considering all the news about the depressed state of the housing market, it's amazing what is going on at the luxury end," Nelson said. "That market is still quite strong, especially in the coastal communities of La Jolla and Del Mar where there are lots of different priced luxury properties."
Admittedly, sales have slowed some from the hectic pace during the recent housing boom, and wealthy buyers are being more cautious about the prices they pay. Still, Nelson anticipates solid growth in sales and steady prices to continue in the year ahead.
"San Diego is a highly desirable market with its clean high-tech and bio-med businesses, highly acclaimed scientific research and educational institutions and, of course, gorgeous weather," Nelson said. "These elements add up to a lot of appeal for wealthy clients."
Typical luxury homebuyers are between 40 and 65 years old -- in their peak earning years -- and get much of their income from stock compensation and market gains, enabling them to make cash deposits covering about a third of their purchases on average.
Besides selecting exclusive communities such as Rancho Santa Fe to reside in, Nelson said these well-heeled buyers want spacious homes averaging 4,000 square feet, with four or five bedrooms, three or four bathrooms, gourmet kitchens, master bedroom suites, high-end appliances, home office suites and theater rooms.
The rich also remain bullish about real estate as an investment. Nelson said a recent study by Sotheby's International found that 36 percent of affluent families nationwide planned to invest in housing despite the collapse of the market last year. Their unimpaired enthusiasm has driven up sales of luxury homes in top-flight places, including San Diego.
"We're extremely excited about the growth of the luxury segment," he said, calling it a "silver lining" in the otherwise moribund housing market.
High-end houses are definitely staying on the market longer than in recent heydays that brought bidding wars, but prices are holding firm or dipping only slightly. "San Diego continues to be a destination where people want to live, work and play, and interest rates don't seem to be a factor at all," he noted.
Today's market doesn't compare to the dismal conditions that prevailed when Nelson, a former Navy pilot trained at Miramar, landed at Willis Allen in 1977. Back then, President Jimmy Carter was in the White House, inflation and energy prices soared, unemployment was 7.5 percent and volatile interest rates reached as high as 20 percent. "That's not to say people aren't concerned about where our economy is headed right now," he said. "But in my mind, our biggest problem locally at this time is transportation. We need to work as a community to make major adjustments to create efficient transit corridors."
Other factors that will influence the real estate market in 2008 are the ongoing Iraqi war and fall elections.
"These are potentially fearful times, but Willis Allen has nearly a century-old track record of long-term success," said Nelson. "This strong foundation was built by hiring people with impeccable ethics and unwavering commitment to serving their clients. And that often means spending more time educating and explaining changing market realities."
Buying and selling a luxury home is a huge financial decision. With the general real estate market in many areas stagnant at best, Nelson said his clients want to make sure they have all the facts before moving forward.
"Today's consumer is smarter and more empowered than ever before, yet buyers and sellers both still look to the expertise of the traditional broker for counseling," he said.
This year marks the 93rd anniversary of Willis Allen, a family-owned and operated company that, according to Nelson, has provided "the ultimate in service to generations of family members who return to us again and again, knowing that we are people to be trusted with the most important business."
In addition to being knowledgeable and experienced in local real estate markets, Willis Allen sales associates -- some of whom have been with the company for 25-plus years -- are involved in the neighborhoods where they work and live by donating time and money to area schools, youth sports leagues, churches and arts organizations.
Nelson leads the company's philanthropic efforts by example, and is currently active in such health-related organizations as Scripps, Sharp and Children's hospitals. "We as an affluent society must generously give back to the community," he said.
Esterbrooks is a San Diego-based freelance writer.