IF you had walked down Avenida del Mar in San Clemente, Calif., 10 years ago, you would have found a down-at-the-heels beach town that didn’t seem to have much going for it. It had a smattering of intriguing boutiques, a longtime surf shop and an excellent deli and a Jamaican restaurant, but many shops along Del Mar stood empty.

The reputation of this hideaway between San Diego and Los Angeles wasn’t much helped with the mid-1990s releases of the locally filmed surf videos “What’s Really Going On” and “What’s Really Going Wrong.” Produced by Lost Enterprises, back then an underground surfing-products company, the video gave the impression that San Clemente, the site of the “Western White House” during the Nixon administration, had become little more than a barrio of talented, drunken surfers.

But those who lived there knew better.

Local residents gloried in the rolling hills, the cliff-lined beaches with perfect surf, the epic sunsets and the temperate Mediterranean climate. So what if there weren’t many places to eat or shop? A wood-frame bungalow near the Pacific could be bought for $250,000 to $300,000, a funky 1970s triplex with plenty of rental options was going for around a half-million dollars, and a sublime beachfront cookout at San Onofre State Beach waited just down the road.

Gradually, word leaked out. And an influx of second-home buyers and retirees, local real estate agents said, have been moving to the older neighborhoods on the ocean side of Interstate 5 the last few years.

“It’s drawn a multitude of people,” said Yvonne Dougher, who with her husband, Don, bought a second home here a year and a half ago. “But it’s still more an isolated kind of beach town rather than a tourist trap.”

The transformation of Lost Enterprises into a successful surf company in the last decade has roughly mirrored the change in San Clemente. Today, the town is a center of West Coast surfing culture and one of those few corners of Southern California where, as in Malibu, development is hemmed in by protected wild areas, in this case including the Camp Pendleton Marine base.

Real estate prices have risen markedly. But if you think that same wooden bungalow is expensive today at $750,000, consider that you’re likely to find absolutely nothing for that price just 15 miles up the Pacific Coast Highway in Laguna Beach.

The Scene

Avenida del Mar, the town’s main drag, is riding the wave of San Clemente’s renaissance, which was spurred by a booming coastal real estate market and a 4,000-home, Spanish-style inland residential development called Talega. In many ways, though, San Clemente, especially west of Interstate 5, is still rough around the edges and relishes its surfer-in-flip-flops sensibility. Most of the country’s major surf magazines are based there, as are a healthy number of executives at the world’s top surf companies.

Norb Garrett, editor of the weekly San Clemente Times and a former publishing director at Surfer, Skateboarder and Snowboarder magazines, said Talega was a catalyst for change. “Suddenly there were homes that young families could get into and bring a much younger spirit,” he said. “The town had to respond, and it’s brought a ton of good new restaurants and boutiques.”

Avenida del Mar today is a pedestrian-friendly area of boutiques, galleries and up-and-coming places like the BeachFire, a popular restaurant, bar and surf-art gallery. Along the Pacific Coast Highway, near the tiny, original Lost surf shop, talk has turned to the multibillion-dollar shopping and residential development known as Marblehead Coastal and the possible renovation of the long-defunct Miramar, a dilapidated Spanish Colonial-style theater and casino at the town’s north end.

Scott Nelligan, 56, a film distributor and real estate developer from Costa Mesa, has been working with the owner of the Lab, a shopping complex there, on a renovation of the Miramar that would include retail space, a theater and a boutique hotel. He said he hoped to buy as a second home one of the 160 or so Spanish-style cottages sprinkled around the center of San Clemente. These were built in the late 1920s by San Clemente’s founder, Ole Hanson, who dreamed of building a Spanish village by the sea.

“I’ve always wanted to live here,” Mr. Nelligan said. “So why not buy one of these original Spanish-revival homes?”

Mike Cotter, a real estate agent and president of San Clemente’s historical society, said Mr. Nelligan’s search may take awhile. “The Ole Hansons usually get snatched up quickly and cost from $900,000 to $2.8 million,” he said. “There are rarely more than two or three on the market at a time.”

John Brincko, who specializes in turning around troubled companies and lives in Los Angeles, said he and his wife, Debbie Waadt-Brincko, were drawn to the challenging waves and serene scene around Califia State Beach at the town’s southern end.

They recently spent $1.55 million for a two-bedroom, two-and-a-half-bathroom condo with an ocean view in what was once a huge late 1920s bluff-top home. They said they planned to spend a lot of time here with their 13-year-old son, gazing at the surfers, picnicking families and sunsets.

“My mother has a place on the bluffs at Malibu,” Mr. Brincko said, “but we like it so much better here. It’s a real community with a lot of old-time, funky charm.”

Pros

A perfect climate and a clean ocean fronted by cliffside trails along sandy beaches are among San Clemente’s assets. Just to the south of town are Trestles and San Onofre, two legendary surf spots.

Cons

Even though San Clemente is more affordable than many California beach towns, a median home price of more than $800,000 makes it far from cheap. The town’s acreage is nearly built out, but Talega, Marblehead Coastal and more development along San Clemente’s northern and eastern fringes will mean that generally sticky traffic will probably become even thicker.

The Real Estate Market

San Clemente real estate began to surge in 2000, agents said, after a decade in which the average price neared $300,000, with the market finally cooling in 2005.

According to a survey in April of the Multiple Listing Service by Mr. Cotter, the median home price in San Clemente is $842,000, a 7 percent drop from $905,000 in April 2006. Total home sales in April 2006 were 71, versus 55 last month.

Mr. Garrett of The San Clemente Times said that houses on the ocean side are in a seemingly random mix of styles — from Ole Hanson to Craftsman to bland 1970’s stuccos.

Some of the larger stuccos are two- to four-unit apartment complexes. Mr. Cotter said these have become an attractive option because the owner can rent out the spare apartments for $1,000 to $2,000 a month.

That was the route taken by the Doughers, semiretired owners of a mobile-home park. Parents of two children ages 8 and 11, they split their time between their 7,000-square-foot house in San Diego and their 1,200-square-foot master unit in a triplex they bought in San Clemente for $1.1 million. Ms. Dougher walks regularly to the beach, coffee shops and the local farmers’ market.

“I lived here 10 years ago, and the town was all run down and full of thrift stores,” she said. “Now they’re taking all those stores and turning them into surf shops, boutiques and nice shops. It’s turned into quite a little retreat.”

Lay of the Land

POPULATION 60,235, according to a 2005 estimate by the Census Bureau.

SIZE 18.4 square miles.

LOCATION The southernmost tip of Orange County, between Los Angeles and San Diego.

WHO’S BUYING Young upper-income families are moving to the areas around Talega. Second-home buyers include well-to-do surfers and beach lovers from areas as diverse as suburban inland Orange County, Malibu, Long Beach, Los Angeles and San Diego. Retirees are buying, too.

GETTING THERE The nearest airports are John Wayne Airport in Santa Ana, Long Beach Airport and San Diego International. Direct flights run from major cities in the East to all three airports. San Clemente is on Amtrak’s Pacific Surfliner route.

WHILE YOU’RE LOOKING For a true luxury hotel, there’s the Ritz-Carlton, Laguna Niguel (1 Ritz-Carlton Drive, Dana Point; 949-240-2000; www.ritzcarlton.com), eight miles up the road. Rooms are $375 to $875 in spring. The Beachcomber Motel (533 Avenida Victoria, 949-492-5457; www.beachcombermotel.com) is funky; it has small, well-kept rooms ($140 to $375) and terrific views of the Pacific and San Clemente Pier.