I am on a short week to enjoy time on vacation with my family. So, the blog this week will be concise.
This week I cover:
1. A new California law regarding security deposits
2. And, a South Bay beachfront sale at a big loss
If you follow my Instagram (@richardhaynesrealestate), then you will have seen a reel on the new security deposit law. I also recorded an ADU condo video that will be up next week. Going forward, I am really pushing for fast, easy, and digestible real estate content on America’s favorite social media platform, Instagram.
But, if you prefer reading your real estate news, then my blog is still a great place to come every week.
Security Deposits to be Limited in AB 12
This new bill limits residential security deposits to one month’s rent.
I want to emphasize that this applies to all residential units with an exception for small property owners with a maximum of two properties and four units. However, this exception is waived when the tenant is a member of the military or the property is owned by a corporation or real estate investment trust.
The law officially goes into effect on July 1, 2024.
There is another law, AB 1033, that was also signed into law that will have an effect on many properties throughout the state. I will cover that on Instagram next week and write about it in future blogs, as well as my podcast.
Beachfront Home in Hollywood Riviera a Loser
Back in 2017, a listing in Redondo Beach P.O.’s Hollywood Riviera (city of Torrance) offered one of the most expensive properties for sale in the South Bay ever.
The listing included two beachfront properties on the coveted street of Paseo de la Playa.
At the time, the listing debuted at $25 million in September of 2017, eventually selling for $22.65 million in February of 2018, which was a record for a residential sale at the time.
Interestingly enough, the property re-listed less than two years later at $26,995,000.
417 Paseo de la Playa, Redondo Beach
7 beds, 8 baths, 10,000 sq. ft., 62,800 sq. ft. lot, built in 2015
Asking: $26,995,000 (December of 2020)
As you can see, it truly is an inspiring property with two parcels, two separate homes, all located on the Hollywood Riviera bluffs with access to Torrance Beach. A main house, companion house, pool, etc…you get the idea.
But, reselling ultra-luxury property in the South Bay in just a short period of time is risky. And in this case, it did not work out for the sellers. See the asking prices below over the course of its listing:
• $26,995,000 (December 2020)
• $22,995,000 (March 2021)
• $24,995,000 (May 2022)
• $19,995,000 ( November 2022)
• $18,900,000 (March 2023)
• SOLD: $17,500,000
There were attempts in between to sell the parcels off individually but to no avail.
If you are doing the math at home, a $22.65 million acquisition and a $17.5 million resale five years later is a significant loss.
To be exact, that is a $5.15 million loss…and that is not including agents fees or selling costs. Ouch.
Not only was this one of the highest residential sales in the South Bay ever, it could be one of the largest losses ever, too.
It is a word of caution to luxury home buyers that while real estate long-term can create massive wealth, it can also create losses in the short-term if you are not prepared to hold out for an extended period of time.
If you are not careful, real estate can hurt you!
Do your homework, buy at sound prices, and be prepared to hold for the long-term.