New Complex on Pacific Coast Highway
Last week a stunning new 7-unit contemporary town home complex debuted in Hermosa Beach on Pacific Coast Highway (PCH). The turnkey units offer three bedrooms and three and a half bathrooms ranging from 2,000 to 2,200 sq. ft. over three levels. Atop each unit is the main living space adorned with shiny new finishes, an open living concept, and a deck to enjoy warm summer nights. Additionally, each unit has views from their rooftop decks perched high above the street. Take a look at 1828 Pacific Coast Hwy, Hermosa Beach for reference.
The asking price for all but one unit is $1,769,000 ranging between $795 and $876 per sq. ft. Normally, any new construction in the Beach Cities with oceans views asking under $800 per sq. ft. would be eye catching but these town homes are located on one of the busiest sections of PCH.
What is the Value?
It is hard to value new PCH developments in Hermosa Beach because they are rare. Not only is it hard for developers to find big enough land for sale, but the boundaries of small Hermosa Beach only allow for about 1.5 miles of PCH to pass through the city.
Since 2000, the city has only had one other new town home development on PCH which was located at 801 – 813 20th Street. Another 7-unit development, the mediterranean style 20th Street town homes came to market in 2006 right at the height of the housing bubble.
Per the MLS, three of the 20th Street 4-bedroom units sold between $1.125 and $1.140 million in 2006/2007. Just a few years later, during the carnage of the housing crash, a 4-bedroom unit sold for $975,000 in 2009 and another sold for $1,025,000 in 2010.
More recently, a 4-bedroom unit sold for $1,150,000 at (811 20th Street) in 2015 and just this past October another unit at (807 20th Street) surged higher selling for $1,387,500 setting a new record for the complex by a long shot.
So what is the value of the new contemporary new construction? Again…it is hard to tell.
Would you rather have a brand new contemporary 3-bedroom unit with rooftop deck for $1,769,000? Or, would you rather snag a clean 12-year old mediterranean 4-bedroom unit for $1,387,500 at almost a $400,000 discount to new construction? In my opinion, the most prudent financial decision is to take a discount and buy the 12-year old complex as soon as one of those listings become available. But I guess we will find what buyers are really willing to do as these new builds test the market.
Conclusion
The rarity of new construction town homes on PCH may officially go from very rare to common in 2018. A “coming soon” 6-unit coastal plantation development, on 19th Street and PCH, consists of a very familiar sized 2,200 sq. ft. and 3-bedroom units. It is scheduled for completion in Q1 of this year and they will be listed for sale. Per the MLS, it looks like this coastal plantation project may already have an interested party for 811 19th Street (it is active under contract) at what looks to be a $130,000 discount to the new contemporary style asking prices.
Will these big new development prices, much higher than the 20th and PCH comps, attract buyers? And are there enough buyers/demand to gobble up 13 town homes on busy PCH with price tags over $1.6 million?
I will circle back around in a few months to check in on the contemporary and coastal plantation offerings, as well as any wily owner at the 2006-built mediterranean complex that might list their home to tempt buyers with deep pockets away from the more expensive new construction offerings.