Forbes.com Real Estate Spotlight: Rancho Santa Fe, California

Home Improvement
Forbes.com Real Estate Spotlight: Rancho Santa Fe, Calif.
Betsy Schiffman Overview

People often talk about the housing market as if it were a single piece on a board game that moves up or down. That’s hardly the case. Every housing market is unique, and real estate trends often occur regionally.

If, for example, a major employer in Phoenix, Ariz., closes a plant and takes 15,000 jobs down with it, it is bound to hurt the local real estate market. Similarly, if over-eager developers build hundreds of new condos in a small town with a population of 150, the value of residents’ homes will not rise if there is a housing glut.

Our new monthly Market Spotlight feature aims to take the temperature of different real estate markets across the country. By looking at the housing activity in different pockets of the nation, we can help you make informed decisions about your own home(s), and spot trends that may be coming your way before they actually hit.

Rancho Santa Fe, a small area north of San Diego, four miles inland from the Pacific Ocean, ranked ninth on our list of the Most Expensive ZIP Codes in July, coming in with a median home price of $1.7 million in the 92067 ZIP code. A list of local home owners includes some of the wealthiest and highest-profile Americans such as Microsoft (nasdaq: MSFT news people ) co-founder Bill Gates, who keeps a vacation home in Rancho Santa Fe, where he likes to golf, Andre Agassi and Jenny Craig.

The land itself is somewhat limited–there are only 6,200 acres–and it is one of the most exclusive and expensive areas in California. It was never incorporated as a town, but it is a covenant with its own 24-hour security, as well as its own planning department and building department. The San Diego area has always had massive appeal due to its mild climate, proximity to academic and research communities, and its golf courses, but in recent years, the big story in San Diego has been the rise of the biotech industry, and the good fortune of San Diego has run over to its various hubs, including Rancho Santa Fe.

“The population of San Diego continues to see about 50,000 people moving to the region every year, and that continued throughout the recession, despite the fact that the cost of living here may be higher than other metro areas,” says Ryan Singer, Research Analyst of the Economic Research Bureau in the San Diego Regional Chamber of Commerce. “Over the past couple years we’ve seen the rise of biotech, but we’ve also seen a boost in the defense industry after the conflicts with Afghanistan and Iraq started.”

San Diego County also saw employment rise by 24,600 jobs between 2002 and 2003, while there was a net job loss for the U.S. The city’s growth has helped the value of property for longtime residents, but for new buyers looking to enter the market, it may prove challenging.

Indeed, over the last five years, home prices have increased 84% in the San Diego metro area, and over the last year alone they rose nearly 12%, according to the Office of Federal Housing Enterprise Oversight in Washington D.C.

The population of the San Diego metro area is growing, but there are some growth restrictions in Rancho Santa Fe. The Rancho Santa Fe Association limits the lot sizes of all properties to between one acre to nearly three acres (depending on where the property is located). The lot restrictions have helped to maintain a rural feel in a metro area that’s growing rapidly.