Carmel Highlands Or Carmel-by-the-Sea For A Second Home?

Wondering whether your second home should feel like a private cliffside retreat or an easy village getaway? If you are choosing between Carmel Highlands and Carmel-by-the-Sea, the right answer usually comes down to how you want to spend your time, how much upkeep you are comfortable with, and whether rental income is part of your plan. This guide will help you compare privacy, convenience, maintenance, and ownership rules so you can make a clearer decision with confidence. Let’s dive in.

Carmel Highlands vs. Carmel-by-the-Sea

If your priority is privacy, views, and a more tucked-away setting, Carmel Highlands often stands out. Monterey County describes it as the most rural residential enclave in the Carmel area, with the largest average parcel sizes, the lowest density, and narrow, steep, winding roads. Those same planning materials also highlight shoreline and ocean-view protection, along with bluff-top setbacks and slope and cliff constraints, which shape both the lifestyle and the ownership experience. You can review those county planning details in the Carmel Area Land Use Plan materials.

If your priority is walkability, beach access, and a simpler lock-and-leave setup, Carmel-by-the-Sea is usually the stronger fit. The city’s housing element states that Carmel-by-the-Sea has a walk score of 96, that most daily errands do not require a car, and that all residents live within a half-mile of transit stops. The city also maintains parks and open-space areas and offers direct beach access from the village core, which supports a more convenient day-to-day second-home experience. You can find those details in the city’s adopted housing element and parks information.

Why Carmel Highlands Appeals

Carmel Highlands is ideal if you picture your second home as a place to unplug. It is an unincorporated coastal enclave between Point Lobos Reserve and Malpaso Creek, and county materials describe parcels there as generally ranging from one-half acre to one acre. That lower-density pattern can give you more separation from neighbors and a stronger sense of retreat.

The setting is a major part of the draw. County policies place a clear emphasis on protecting shoreline and ocean views, which helps explain why so many buyers are drawn to the area in the first place. At the same time, those same policies mean development near cliffs, bluffs, and ridgelines can involve stricter review and setbacks, so the beauty of the site often comes with added complexity.

What ownership can feel like

Owning in Carmel Highlands can be rewarding, but it is rarely casual. The roads are narrow, steep, and winding, and the county notes that the area lacks certain public services and facilities compared with more urban neighborhoods. For a second-home owner, that can mean a quieter, more private feel, but also more planning around access, maintenance, and property systems.

Maintenance deserves extra attention

This is one of the biggest practical differences between the two options. Monterey County notes that the Carmel Highlands Onsite Wastewater Management Plan was adopted because of longstanding septic concerns tied to steep slopes, shallow granitic soils, and design and maintenance factors. If you are considering a home here, it makes sense to look closely at wastewater systems, drainage, slope stability, and any coastal-development conditions that could affect future repairs or improvements. The county outlines that context in its onsite wastewater management information.

Why Carmel-by-the-Sea Appeals

Carmel-by-the-Sea is usually the better match if you want your second home to be easy to use on short visits. Instead of a secluded hillside setting, the city is built around a compact village core with close access to shops, restaurants, parks, and the beach. That setup can make a weekend stay feel effortless.

The beach access is a real advantage for buyers who want a simple coastal routine. The city highlights direct access to Carmel Beach from Ocean Avenue, along with multiple stairways along Scenic Road. When you can step out and enjoy the village and shoreline without relying heavily on a car, the home often functions more like a true lock-and-leave base.

The city has its own quirks

Carmel-by-the-Sea is charming, but it is not typical. The city notes that it does not use conventional street addresses, and that properties are identified by location descriptions or assessor parcel numbers for utilities and permit work. You can read more on the city’s address information page.

That does not make ownership difficult, but it does mean some services and logistics can feel more idiosyncratic than in a standard suburban neighborhood. For some buyers, that is part of the appeal. For others, it is simply something to understand before buying.

Exterior changes often require review

If you like the idea of updating or customizing a second home, this is an important point. The city states that most exterior alterations require Design Study approval, and some projects may also go to the Planning Commission. According to the city’s remodeling guidance, that review process is intended to preserve the area’s scale, character, and compatibility.

In practical terms, that means exterior work may involve more time and planning than you expect. Repainting, changing windows, adding hardscape, or altering the exterior appearance can trigger review. If you want a home that is ready to enjoy with minimal changes, Carmel-by-the-Sea may feel much easier than buying a place you plan to heavily remodel.

Rental Rules Matter in Both Places

If you are hoping your second home will double as a short-term rental investment, it is important to go in with realistic expectations. In both Carmel Highlands and Carmel-by-the-Sea, the rules are restrictive enough that buyers should evaluate these homes first as personal-use properties.

In Carmel Highlands, Monterey County says homestays and limited vacation rentals are allowed countywide, but commercial vacation rentals are not allowed in the Carmel Area Land Use Plan’s low-density residential area that includes Carmel Highlands. The county also defines a limited vacation rental as a whole-house rental where the owner does not stay, limited to one to three times per year, while a homestay requires the owner to stay in the home. Those rules are outlined in the county’s vacation rental materials.

In Carmel-by-the-Sea, the city states that transient rentals under 30 days are not allowed in single-family residential zoning, except for legal nonconforming permits and certain housing-incentive permits in other districts. For most second-home buyers looking at cottages or single-family homes, that means short-term rental income is very limited. In both locations, it is wise not to underwrite a purchase as a conventional nightly-rental play.

Ask Yourself These Four Questions

Do you want privacy or walkability?

This is often the biggest deciding factor. Carmel Highlands leans toward seclusion, larger parcels, and dramatic coastal settings. Carmel-by-the-Sea leans toward village convenience, beach access, and a more spontaneous day-to-day experience.

How much maintenance are you comfortable with?

A view property can be incredibly special, but it may also come with more site-specific issues. In Carmel Highlands, slope, septic, drainage, and coastal constraints deserve close attention. In Carmel-by-the-Sea, the maintenance picture may feel more straightforward, though exterior changes can involve more review.

Will you actually use it as a rental?

Because rental flexibility is limited in both places, your answer should be practical rather than aspirational. If you plan to use the home mostly for yourself and occasional guests, either market could work. If rental income is central to your decision, you will want to study the rules carefully before moving forward.

Do you want a retreat or a base?

A retreat usually means more privacy, more scenery, and sometimes more effort. A base usually means easier access, simpler routines, and less friction during shorter stays. Neither is better across the board, but one will likely fit your lifestyle better.

Which One Makes More Sense?

For many buyers, Carmel Highlands wins when the goal is a true escape. If you want a dramatic setting, larger lots, and a quieter ownership experience, it can be a compelling choice. You just need to be comfortable with the realities of a more site-sensitive property and the limited rental flexibility.

For other buyers, Carmel-by-the-Sea is the smarter second-home move. If you want to arrive for the weekend, walk to daily amenities, enjoy quick beach access, and keep things simple, the village often checks more boxes. You may trade some privacy and lot size for convenience, but that trade can make a lot of sense if you plan to come and go often.

The best second home is the one that fits how you will actually live, not just how the photos make you feel. If you want help comparing specific properties in Carmel Highlands or Carmel-by-the-Sea, Alex Brant can help you evaluate the tradeoffs with clear, local guidance.

FAQs

Is Carmel Highlands or Carmel-by-the-Sea better for a lock-and-leave second home?

• Carmel-by-the-Sea is usually the more practical lock-and-leave option because the city reports high walkability, close transit access, parks, and direct beach access from the village core.

Is Carmel Highlands better than Carmel-by-the-Sea for ocean views and privacy?

• Carmel Highlands is often the stronger choice if you want a more secluded, view-driven second home with larger average parcel sizes and lower density.

Can you use a second home in Carmel Highlands as a short-term rental?

• Rental use is limited, and Monterey County states that commercial vacation rentals are not allowed in the low-density residential area that includes Carmel Highlands.

Can you rent out a Carmel-by-the-Sea second home for less than 30 days?

• In most single-family residential situations, no, because the city states that transient rentals under 30 days are not allowed except for certain legacy or special permit cases.

What should buyers check before buying a second home in Carmel Highlands?

• Buyers should pay close attention to septic or wastewater systems, drainage, slope stability, access, and any coastal-development or site-related restrictions.

What should buyers know about remodeling a second home in Carmel-by-the-Sea?

• The city states that most exterior alterations require Design Study approval, and some projects may also require Planning Commission review, so updates often take more planning than buyers expect.