Three other homes were yellow-tagged as a result of the damage from high tides and swells, according to Jessica Spaulding, a spokeswoman for the city.
Truckloads of boulders were placed along a stretch of beach in an effort to protect properties from pounding surf and tidal erosion. An excavator was seen putting the boulders, some weighing as much as 700 pounds, in place.
One of the red-tagged home was demolished by crews after waves broke through the seawall.
Rafael Heredia, a homeowner who lives nearby, described the situation as "devastating."
"I just was looking at a house that I guess it was red-tagged and the city knocked it down," Heredia told ABC7. "I was told the residents were on vacation in Hawaii. So I can't even imagine coming home and seeing this, where there's no home," he said, gesturing toward the crashing waves.
Despite the offshore hurricane churning hundreds of miles from Southern California beaches, the surf it generated hammered homes in the Capistrano Bay District community on Beach Road.
"City staff have been and will remain on site to inspect damage and, when appropriate, place tags and advise residents to vacate homes that exhibit structural damage that make them unsafe," the city said in a Tuesday news release.
Sinkhole at Malibu house reportedly owned by Nicolas Cage prompts evacuations
Among those watching the damage on Tuesday was Hall of Famer and former Los Angeles Dodger Adrian Beltré and his family, as the deck of a home they had been remodeling collapsed into the waves.
Residents said they have been warning the California Coastal Commission for years about the vulnerability of the shoreline. They said obtaining permits for preventive measures has been nearly impossible and remains a challenge as they contend with the ongoing damage.
Meanwhile, farther north along the coast, a massive sinkhole opened Tuesday in the driveway of an oceanfront Malibu home reportedly owned by actor Nicolas Cage, prompting city officials to declare a local emergency and order evacuations.
Just after 6:20 p.m., the city announced that a local emergency was declared and ordered evacuations for affected properties along Sea Level Drive as the sinkhole continued to expand and restrict access for residents and emergency services.
Evacuation orders were issued for residents of five neighboring homes along the private road, and the properties were red-tagged.