It has been well-reported in national news that home prices are surging across the country.
I have written about this price growth and have confirmed the numbers in our local marketplace as well. If you reference my January 15th blog post, “2020 South Bay Home Numbers Give Clarity to Unprecedented Market,” then you can see those exact gains for yourself.
Furthermore, I have also written about record low inventory levels. More so, the record low inventory occurring on the Palos Verdes Peninsula. To understand that supply squeeze, be sure to reference my February 12th blog post titled, “Palos Verdes Home Inventory at Historically Low Levels.”
So, with all that above, how does a market react in 2021?
Well, this week I want to fully illustrate exactly how surging home prices are going down in Palos Verdes.
To be blunt…it is crazy.
Starting Off 2021
The beginning of 2021 has started off with a bang on The Palos Verdes Hill.
There have been an astonishing 17 properties that have sold for $150,000 or more above their asking price. Without question, selling for over $150,000 happens, but to have it happen in such quantity is amazing.
Below, I will explore three of those sales and try to give you some context on how the market is outperforming.
Valmonte Record Price Per Square Foot
This completely remodeled Valmonte gem came to market in early January asking $1.899 million.
- 4409 Via Azalea, Palos Verdes Estates
- 4 beds, 3 baths, 1,876 sq. ft., 9,738 sq. ft. lot
- Asking Price: $1,899,000
- Sold Price: $2,125,000
This beautiful home was definitely strategically priced to go over asking. But, I want to dive into more specifics on how they arrived at that number and what actually happened.
This flip comp below started the surge higher back in July of 2020…
- 4024 Via Pavion, Palos Verdes Estates
- 4 beds, 4 baths, 2,025 sq. ft., 6,973 sq. ft. lot
- Sold Price: $1,800,000
Originally asking $1.699 million (priced just below the comps), this property had an early pandemic bidding war and sold $101,000 higher to close at $1.8 million.
The next comp, is a resale from homeowners relocating out of the country who purchased their home in 2018 for $1.665 million.
- 4117 Via Picaposte, Palos Verdes Estates
- 4 beds, 3 baths, 2,000 sq. ft., 7,932 sq. ft. lot
- Sold Price: $1,926,000
This one came out asking $1.825 million and again, went $101,000 over-asking to close at $1.926 million, setting an even higher comp just a few months later for our subject on Via Azalea.
Smartly, our subject property, 4409 Via Azalea, strategically priced just below the Picaposte comp asking $1.899 million, betting that its nicer finishes and solid views (a rarity in Valmonte) would perhaps garner the same $101,000 fate over asking.
Surprisingly or not so surprisingly in this market, it performed even better…
The listing on Via Azalea sold for a whopping $226,000 over asking to an all-cash bidder. This, in turn, allowed the home to become the second highest trunkey sale on a price per square foot basis in Valmonte, ever. Wow!
Before the Via Pavion flip, one could surmise that Via Azalea might sell within that range of $1.7 to $1.8 million under a year ago. But with two very comparable properties each selling higher than the other and going for $101,000 above asking, Azalea’s meteoric climb was set.
As a result, this virtuous cycle with higher comp after the next higher comp, has shot rocket fuel into the Valmonte housing market.
Rolling Hills Estates Jump
A flip in a small Rolling Hills Estate pocket crushed it thanks to this incredible market.
- 2 Gaucho Drive, Rolling Hills Estates
- 4 beds, 2 baths, 1,856 sq. ft., 14,038 sq. ft. lot
- Asking Price: $1,500,000
- Sold Price: $1,660,000
This property was originally purchased as a fixer in August of 2020 for $1.060 million.
From the flipper’s perspective, there were two comps that they were looking at to figure out their resale value.
- 27727 Saddle Road, Rolling Hills Estates
- 3 beds, 2 baths, 1,892 sq. ft., 13,300 sq. ft. lot
- Sold Price: $1,395,000
- 27727 Conestoga Road, Rolling Hills Estates
- 4 beds, 2 baths, 1,859 sq. ft., 12,664 sq. ft. lot
- Sold Price: $1,410,000
The Saddle Road comp was close to the bullseye selling for $1.395 million in January with the flipper hoping to sell for a bit higher if their finishes could be nicer quality. The Conestoga sale confirmed that notion in November selling $15,000 higher at $1.41 million.
Well as it turned out, when 2 Guacho Drive hit the market in January asking $1.5 million, it made a deal in just two days and sold $160,000 above asking to settle at $1.66 million.
The flipper did an excellent job and deserved to sell higher than the comps, but not in their wildest dreams could they have expected to sell for a quarter of a million higher than the closest comp when they purchased the property in August.
For this pocket of Rolling Hills Estates (to the east of P.V. Drive East as you head up the hill), the final sale at $894 per square foot is an all-time record by a long shot for this little neighborhood.
Los Verdes Insanity
Finally, the last home is my recently sold listing in the Los Verdes area of Rancho Palos Verdes.
- 28723 Rothrock Drive, Rancho Palos Verdes
- 4 beds, 2 baths, 1,806 sq. ft., 10,232 sq. ft. lot
- Asking Price: $1,449,000
- Sold Price: $1,670,000
When examining the market and speaking with the seller, we felt confident in the home’s value as there was fabulous comp one street away to derive value.
- 28703 Cedarbluff Drive, Rancho Palos Verdes
- 3 beds, 2 baths, 1,780 sq. ft., 12,098 sq. ft. lot
- Sold Price: $1,535,000
This property originally listed in November of last year for $1.449 million, and made a deal in three days selling for over asking to close at $1.535 million.
Although this comp on Cedarbluff Drive was only three bedrooms, it offers close to the same square feet as our Rothrock listing, was in better condition, and arguably had better views from a higher elevation one street up.
So, we strategically underpriced to build momentum, get the seller an efficient sale, and hopefully outperform on price. We decided to list at our comp’s exact same price of $1.449 million, and hope for similar results just three months later.
But, what happened next blew our minds…
Not only did we host 100 tours and receive 17 offers, but the property sold for $221,000 over asking to close at $1.67 million…completely blowing all comps out of the water.
That is $135,000 above our closest comp that we thought was a more desirable property…and it had just sold only three months ago.
And, the buyer was not some weird outlier. In fact, we had multiple cash offers call weeks later saying they would match the price and close if we fell out of escrow. There was a line out the door for this property, price be damned.
Simply amazing happenings here and a huge boost to prices for homeowners in the Los Verdes submarket.
Conclusion
When you pair a pandemic, low interest rates, surging prices with scorned buyers, and tight supply on the Palos Verdes Hill…the sales discussed above are the perfect representation of what we are seeing in the 2021 market.
The real estate market probably cannot keep this pace up for long, but it is going to be breathtaking to watch while it lasts.
And, on a final note, if you liked my listing at 28723 Rothrock Drive that outperformed, then you should go chase down the brand new listing at 28405 Rothrock Drive.
This new listing looks to have a better view and backyard, an additional 600 square feet, and is rehabbed. They are only asking $1.599 million when we sold for $1.67 million. What a deal!
But, it likely will not be a deal for long.
I think this listing will sell many hundreds of thousands above asking…but just in case the agent and sellers missed our comp and do not quite understand the value of what they have, maybe it is worth offering today and see if they’ll take it off the market?
In the small chance they accept an offer at list price, you’ll have yourself a huge score on a great home with hundreds of thousands in equity from day one.
Cheers, and good luck out there.
Richard Haynes
DRE: 01779425
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The Richard Haynes Real Estate ShowA leader in South Bay real estate for the better part of a decade, Richard thrives as an advisor to his clients with over $248 million in sales as a broker or investment principal at his boutique agency, Haynes. Richard is known for his keen local market insights which have been featured in the L.A. Times, The Street, and Forbes, along with his weekly South Bay real estate blog. [read more]