Appreciating Rancho Santa Fe Real Estate
by Ryan Thomas

The original Rancho Santa Fe Land Grant consisted of 9,000 barren acres originally purchased as a spot on which to grow eucalyptus trees for railroad ties. When it was discovered the trees were too weak to use, early developers decided to build the Lake Hodges Dam instead, solving a flooding problem that had been plaguing residential development. Architect Lilian Rice’s designs became the basis for the new community, and throughout the 1920s, her vision of a Spanish village with centralized amenities and surrounding groves and fields kept free for the locals to wander in, was well underway. In 1927, the Rancho Santa Fe Association was formed and the Protective Covenant recorded a year later to ensure the land remained lush and private.

Because of these early preventative measures, the type of sprawl that has marred other San Diego communities has been drastically reduced. Homes here are bought for their sense of privacy, land is purchased because it is indeed land, with roaming horse trails and sprawling groves. The Association maintains the overall environment, enforces CC and Rs, and ensures any new development doesn’t encroach on others’ privacy or offend aesthetics. Aside from the Village, a few short streets in the center of town, there’s very little commercial development.

All of this seclusion and serenity makes Rancho Santa Fe one of the strongest and most sought after real estate markets in the county, if not the state.

“The value in the Ranch is in the land,” says Jason Barry of Barry Estates. “Openess, usability, views. You don’t get that outside 92067.”

True, in the Ranch many homeowners don’t even see their neighbors because of all the landscaping. It’s no surprise then, that in a time when development is razing much of the greenery in the county, available land such as that in Rancho Santa Fe has nearly doubled in price — and this is an area in which prices were high to begin with. It’s one thing to discuss double digit price increases when starting in the low hundred throusands, and quite another when beginning price points are already well over $1 million.

“Five years ago, entry-level prices were around $1.5 million,” says Barry. “Now you’re looking at at least the low $2 millions. Quite often more.”

To cite one example of increasing prices in the Ranch, a home that sold for $1.7 million in 1995, sold in April of 2004 for $3 million. As for the demand of such rapidly appreciating homes, Barry claims to be 40 percent more active now than he was at this same time last year.

“Right now,” explains Ken Crosby, broker associate with California Prudential Realty, “at the entry level price of $2 to $2.5 million, you’re looking at a home size of about 3,500 square feet. The farther you go from the Covenant, the more prices begin to drop.”

Interest rates have played a big part in the increase in sales this past year, especially in the Ranch where large estates are the norm. “We were doing deals at $12 million,” says Catherine Barry, also of Barry Estates, “and the buyer didn’t put down a penny, just borrowed the $12 million because it was so cheap to borrow money. Some of the people paid cash because the money wasn’t doing anything at the bank.”

Low interest rates aside, one reason 92067 prices are rapidly appreciating is that those five numbers carry an immense amount of prestige. Living in Rancho Santa Fe is akin to belonging to an elite club, especially after the Robb Report placed it in the top ten most affluent zip codes in the nation just five years ago. That’s one reason so many new developments are being constructed on the outskirts of the Covenant, where the zip code still applies.

“These outlying communities,” says Jason, “these cluster homes, offers incredible lands and phenomenal views. Places like Cielo and The Crosby Estate, while they’re not considered central Ranch properties, are very successful because they offer more for the money.”

More, in the sense they come with tennis courts and country clubs, are hardwired for the Internet, even have their own golf courses. And you can still claim 92067 as your zip code.

“We’re finding that the definition of Rancho Santa Fe is not as firm as it used to be,” says Crosby. “The lots in the Covenant are large and tend to house estates. But in places like SantaLuz or The Bridges at Rancho Santa Fe, Cielo and the Crosby, places that may not be in the Ranch but feel like they are, these little communities are good for second homes.”

Add to the recent low interest rates a school system that ranks as one of the highest in the state, and the result is that a lot more young families are moving into the Ranch. “The first reason the value is so high is the land” states Jason, “but the second is the schools.”

Whereas a few years ago the average age of homebuyers in the Ranch was 40-50 years old, now, in large part due to the schools, many 30- and even 20-somethings are buying up lots in developing communities in which to raise children. This increase in student population has been a source of contention for some this past year, as over-crowding in schools has brought about demand for a new school. Development, thus far, is still in the debate stage.

“The school issue could become a problem if they don’t resolve it,” says Crosby, “but there’s no backlash yet with buyers.”

Though the area is increasing in population — traffic congestion is a concern on many Ranch residents’ minds these days — there is still enough open space to attract the rich, famous, and those looking for seclusion. This is in part because the Covenant got involved many years ago with concerns over subdivision of lots, and created a minimum lot size to ensure properties remained reasonable.

“The center of the Ranch is high density,” explains Keith Behner, planning director of the Rancho Santa Fe Association. “Then there’s an outer ring where minimum lot size is two acres. A third outer ring maintains lots at nearly three acres.”

Behner cites this early decision to keep lots large as a major reason Ranch property remains so coveted. On top of that, any new development has to pass through two regulatory committees. “If anyone wants to develop property, they have to be okayed by both the county and the Association. Generally, because the Association’s process is so arduous, they come to us first, and if they get approved then they go to the county. This establishes our high standard of aesthetics, which has worked well for over 70 years.”

Keeping the community aesthetically pleasing and offering amenities such as the golf course and riding trails certainly boosts the appeal of the Ranch. On the flip side, the Association has the power to revoke membership to these perks should homeowners break guidelines. Though Behner notes, “That kind of situation is extremely rare.”

The first celebrity to purchase land in the Ranch was Bing Crosby, who brought with him the pastime of golf. Since then, many of today’s celebrities and bigwigs have followed suit and moved to the Ranch to build their estates and live in relative seclusion.

“The Ranch doesn’t advertise. Celebrities move here to get away to relax,” says Catherine. “CEOs of companies, people looking for privacy — it’s very low key, and because of that it attracts money.”

For now, the market in Rancho Santa Fe remains on the upswing, though according to Jason, at a slower pace. “The indicators are telling us stability will maintain. It will increase, not at the rate it did, but it will go up.”

Crosby notes that there is one situation on the horizon that will become a major issue facing new homebuyers in the Ranch. “Once all the few remaining lots sell off, such as in the Crosby and Cielo, there won’t be any fresh lots left to build on. Things will have to change. Builders will have to adjust.”

And supply will once again tighten in a community already so highly in demand.