California’s million-dollar cities and towns club got a lot bigger in 2020, with 30 communities joining the pricey list.
A booming demand and dwindling supply are dramatically increasing home prices from Milpitas in the Bay Area to Montrose in Southern California, powering the 24% increase in million-dollar communities statewide during the past year.
In fact, half of the nation’s 312 million-dollar cities and towns are in the Golden State, according to Zillow. And California has two of every three cities that joined the million-dollar list in 2020.
The $6.6 million city — Atherton
The closely watched report underlines the income disparity during Covid and the pandemic-prompted recession, with high-earners affected little, if at all, while lower-income families are struggling, according to Redfin.
Atherton, a suburb of San Francisco home to Golden State Warriors all-star guard Steph Curry and former Google chairman Eric Schmidt (fourth item in CHN Blog), has the highest average home price at $6.6 million in the U.S., up a modest 2.5% compared to a year ago. Bay Area cities of Los Altos Hills ($4.58 million) and Hillsborough ($4.55 million) finished in second- and third-place in the state.
Lexington Hills had a 21% increase in the average home price, from $966,500 to $1.16 million — making the Silicon Valley community a newcomer to the list.
The San Francisco Bay Area has 61 communities on the $1 million-plus list, while Los Angeles has 31. The San Jose-area has 20 cities and towns on the report.
Nationwide, 312 communities boast a median home price of $1 million-plus, 45 more than a year ago — a 17% increase, the largest gain in more than a decade following a decline in 2019, according to Zillow.
Feature photo of Santa Ynez Valley, home of Los Olivos. David M. Schrader/Adobe Stock
Beach fight: CAR nonprofit sues Coronado for allegedly banning ADU construction
One of California’s best-known beach cities has grabbed the attention of the state’s largest housing association, aiming to protect the property rights of homeowners looking to build accessory dwelling units.
A California Association of Realtors (CAR)-affiliated organization alleges in a lawsuit the city of Coronado has refused to accept applications to build ADUs — also known as “casitas” or “in-law units” — during the construction of new single-family homes, violating a state law passed in 2019.
Tiny homes can have a big impact
The state needs 2 million to 3.5 million more homes to meet the housing shortage, and ADUs — self-contained housing units complete with a kitchen and a bathroom that follow building codes — are part of the solution, say housing advocates. But some cities have balked at the ADU mandate, including Coronado, according to Californians for Homeownership, a CAR-backed organization.
CAR says Coronado’s building staff has established a private policy to refuse applications for ADUs, forcing some homeowners to move forward with construction and abandon plans for the ADUs.
“What is happening in Coronado is particularly concerning because it is happening behind closed doors,” says CAR president Dave Walsh. “Because Coronado’s policies look good on paper, it is difficult for state housing regulators to address this problem. And because Coronado is refusing to even accept these applications, its property owners have no obvious way to challenge the city’s conduct.”
The city denies the allegations and says building staff is following state law — and its own requirements.
Coronado city manager Blair King says the lawsuit is “brought by a special-interest group funded by real estate interests that have little to do with affordable but instead are focused on helping applicants exploit perceived loopholes created by state law that would allow them to create super-sized, single-family homes that sell for a premium. The city has accepted complete development applications of all kinds and will continue to review and process those applications consistent with the requirements of state and local law.”
Second lawsuit against a SoCal city
More ADUs in Coronado, just across the bridge from downtown San Diego, could help meet housing needs in the region, says Matthew Gelfand, an in-house attorney for Californians for Homeownership. A months-long investigation followed by negotiations to resolve the issue with the city failed, prompting the lawsuit in San Diego Superior Court in January.
Californians for Homeownership has investigated ADU policies of 200 cities, and has demanded changes to 70% of the municipalities, Gelfand says. CAR filed a similar lawsuit against the city of Whittier in 2019.
“California’s property owners are rolling up their sleeves and answering the call to build new, high-quality housing,” CAR’s Walsh says. “California cities should be welcoming these efforts, but some are actively working to block them.”
Luxury has always come at a price, it’s just much bigger now
No surprise, the rich are getting richer, thanks to higher home prices and record-setting stock gains on Wall Street.
And the deep-pocketed consumers are buying — and often competing for — multimillion-dollar homes, sending prices and sales surging nationwide, according to a Mission Global report.
Six of the nation’s 20 fastest-growing luxury markets are in California, including 40%-plus price increases compared to a year ago in Riverside, San Luis Opispo, San Diego and Santa Barbara counties. Luxury homes are considered the top 5% of homes sold.
Santa Barbara luxury costs almost $19 million
Riverside County’s average luxury home sold for $2.28 million during the fourth quarter, up 46% compared to the same period in 2020, the third-largest increase in the U.S.
Riverside County doesn’t generally conjure up visions of high-end homes, but the county includes Temecula and several higher-priced communities in the desert, including Indian Wells and Rancho Mirage.
San Luis Obispo, San Diego and Santa Barbara counties finished in fourth- through sixth-place for luxury home price gains in the U.S. Monterey and Contra Costa counties ranked at Nos. 9 and 18, respectively.
Santa Barbara County — which includes Montecito, home to Oprah Winfrey, Ariana Grande and Rob Lowe — boasts the highest-priced home prices in the nation at $18.9 million.
Are you equity rich? Many homeowners are in California
Almost half of California homeowners with a mortgage were considered equity rich during the fourth quarter, the second-highest in the nation — and a 16% increase compared to just three months earlier.
Slightly more than 46% of homeowners with mortgages in California were considered equity rich during the October-through-December period, compared to 39.7% for the third quarter, according to ATTOM Data Solutions. The six-plus percentage point increase was the largest in the nation in the fourth quarter.
And five of the cities in the nation with the largest percentage of equity-rich homeowners — those who owe 50% or less than the current value of their home — were in California, led by San Jose at 66% and San Francisco at 58%. Los Angeles (52%), Santa Rosa and San Diego, both at 45%, round out the top five.
ATTOM’s quarterly report is more evidence of homebuyers enjoying huge gains during the pandemic while lower-income residents and non-homeowners are losing ground.
“The housing market kept booming despite damage caused by the virus pandemic to the broader economy — a surge that continued to boost the equity that most property owners have in their homes,” says Todd Teta, chief product officer with ATTOM Data Solutions. “As with many other housing-market metrics, the prospects for equity building even further in 2021 are wholly uncertain because of many questions surrounding the pandemic and the U.S. economy. But for now, homeowners are sitting pretty on a growing reserve of personal wealth.”