Coastal California has seen a surge of interest as buyers continue to expand out from urban hubs in Silicon Valley, San Francisco and Los Angeles.
Four Golden State beach spots jumped into the top 10 on the luxury segment of the second Wall Street Journal/realtor.com Emerging Housing Markets Index, released Tuesday.
They include Santa Maria and Santa Barbara, California, in the No. 1 spot; San Luis Obispo, Paso Robles and Arroyo Grande, California, at No. 5; and Oxnard, Thousand Oaks and Ventura, California, taking the ninth slot on the ranking, the data showed. Salinas, whose greater metro area includes the highly affluent Monterey area, also made the top 10, ranking No. 8 on the index.
These regions, all north of Los Angeles, offer space for affluent families to continue working and schooling from home without having to entirely pull up roots from California.
“In general, there’s a trend toward areas with less density,” Danielle Hale, chief economist for realtor.com, told Mansion Global. “Buyers are looking for places that are less crowded, where they can spread out and have privacy.”
The index, based on June housing data, uses a slate of indicators to assess the prosperity of emerging housing markets. Those include growth in housing supply and demand; median listing prices; unemployment; wages; a cost of living measure; small businesses; amenities and the share of foreign-born residents—who contribute to the vitality and diversity of the area. In its second edition, local real estate taxes have also been considered.
The 60 metropolitan areas reviewed within the luxury segment of the Emerging Housing Markets Index are ranked based on housing data for the top 1% of each market and the weighted sum of those metrics to determine which have the hottest high-end markets.
California has a mix of densities, from big cities to small towns, Ms. Hale continued, which gives affluent buyers options when they are looking for a new residence. That bodes well for markets in what have traditionally been second-home destinations, such as Santa Barbara’s extremely affluent Montecito and Malibu, but also attractive under-the-radar coastal locales like Oxnard.
“The top markets in the mainstream ranking tend to be not necessarily vacation-oriented spots,” Ms. Hale said of the overall, non-luxury rankings, of which Billings, Montana, came in No. 1 this time around. “That’s not true for luxury.”
The influx from more dense areas like Los Angeles is certainly evident in Santa Barbara, according to Billy Rose, co-founder and vice-chairman of The Agency.
“There are bidding wars on nearly every property,” he said. “Homes are being resold not very long after they were purchased for high premiums and agents are peddling pocket listings more than ever.”
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The Covid-19 pandemic put a greater focus on ‘home,’” Mr. Rose noted, which has benefited the Santa Barbara market.
“People are looking for more in a home, particularly luxury buyers,” he explained. “Santa Barbara delivers so much.”
The city of Santa Barbara not only has properties with plenty of room for work, school, entertainment and exercise, but it offers high-end shopping and dining, outdoor activities such as hiking and biking, and, of course, beaches.
“The weather is great, and it’s a laid-back atmosphere,” Mr. Rose said.
In Santa Barbara county, areas like Montecito have been “hugely popular,” partly because there are larger pieces of land on offer there, he added. Old-world architecture and Spanish-style homes have also been in demand.
“People are looking for great houses wherever they are,” Mr. Rose explained.
That extends to other top-ranked cities such as San Luis Obispo, on the California’s central coast, and the Oxnard, Thousand Oaks and Ventura region, about 40 minutes north of Los Angeles. The latter was predicted to be one of realtor.com’s top housing markets of 2021, according to a December report by the property portal.
“Beach homes in the area are significantly more affordable than those in Malibu or Santa Monica, making this a popular alternative for buyers hoping to get more bang for their buck,” Ms. Hale said in the report.
Some cities on the luxury slice of the Emerging Housing Market Index saw big jumps compared to the first edition, published in April.
For example, Provo-Orem, Utah, took the No. 1 spot on the first luxury index, but dropped to the 42nd place on the list released Tuesday. The ranking for Reno, Nevada, dropped four places to No. 7 in the most recent Index, while Coeur d’Alene, Idaho, retained its No. 2 spot on the luxury segment.
Other emerging luxury markets include Hilton Head, Bluffton and Beaufort in South Carolina, an area that landed at No. 3, and Cape Cod, Massachusetts, which took the sixth slot. There are two Florida destinations in the Top 10, and neither were the typical luxury mainstains of Miami or Palm Beach. Crestview, Fort Walton Beach and Destin, in the northwest part of the state, ranked at No. 4, and North Port, Sarasota and Bradenton, on the Gulf Coast, came in the 10th position.
“Luxury vacation areas continue to dominate the top of this list,” Ms. Hale said. “Places where people live and work, like New York City, Philadelphia, Miami and San Francisco, are still at the bottom. It will be interesting to see how that plays out in the rest of the year.”
(Mansion Global is owned by Dow Jones. Both Dow Jones and realtor.com are owned by News Corp. The Wall Street Journal is also owned by Dow Jones.)
This was article originally posted on Mansion Global.