This week, I am going to discuss land and new construction sales within specific pockets of the Manhattan Beach Sand Section.
The neighborhoods highlighted will be the “North Manhattan 400-Block” and the “South Manhattan Flat Walkstreets.”
Both areas feature 2,700 square foot lots and a couple examples of new construction that make it easier to explain values in a blog post format.
North Manhattan 400-Block
Let’s start with new construction examples where developers typically build 4,300 square foot three-level homes with five bedrooms.
This is the latest comparable 2021 spec sale:
- 453 31st Street
- 5 beds, 5 baths, 4,302 sq. ft., built in 2020
- Sold Price: $4,375,000
After coming to market in March of 2020, one of the worst times during the pandemic, this spec home started out its listing journey asking $4.795 million. Patience, a couple failed escrows, and a few price cuts finally got this property sold at $4.375 million in April of 2021.
Compare that sale to two notable 2020 transactions:
- 445 32nd Street
- 5 beds, 4.5 baths, 4,243 sq. ft., built in 2020
- Sold Price: $4,530,000
- 420 31st Street
- 5 beds, 5.5 baths, 4,502 sq. ft., built in 2017
- Sold Price: $4,800,000
The brand new 445 32nd Street sale was an over-the-top finished home with fabulous details to command a high price. This sale put certainty into the sub-market heading into the pandemic summer of 2020 when the market took off.
Interestingly, the 420 31st Street transaction was a resale of a 2017 spec build completed by the same developer in the 2021 home mentioned above (453 31st Street). It is almost a mirror image and it sold in 2018 for $4.637 million. Just two years later in 2020, it resold for $4.8 million.
All in all, seeing a mirror image on the same street sell at a $425,000 discount from a year earlier (yes, there are some location/view discrepancies) is something to watch.
Now, take a look at 2021 lot sales with the context of new construction prices:
- 461 28th Street
- 3 beds, 2 baths, 1,222 sq. ft., 2,711 sq. ft. lot
- Sold Price: $2,400,000
As you can see, this July 2021 lot sale went for $2.4 million. It landed $50,000 over asking.
I will often use about $500 a square foot for new builds, so for a 4,300 square foot home, that would be $2.15 million to build. All-in, someone is in this property for $4.55 million if they choose to go brand new.
- 457 28th Street
- 2 beds, 1 bath, 870 sq. ft., 2,700 sq. ft. lot
- In Escrow Asking: $2,250,000
An even smaller bungalow was marketed as a “coming soon” at $2.35 million and cut its price to $2.25 million right at the official launch. They made a deal almost two months later and are currently in escrow.
Does this one have a chance to go lower than asking? If so, then that could potentially be a couple hundred thousand lower than the previous lot sale discussed above.
While sales are strong and prices continue to rise in Manhattan Beach, it is interesting to note a little “wobbling” in very similar type sales.
Land, as well as comparable new construction, is potentially seeing a slight drop. I don’t see it as worrisome but perhaps the market is finding its footing where buyers now have some negotiating power in a post-COVID environment.
South Manhattan Flat Walkstreets
Nowadays, there are fewer brand-new construction MLS sales on the flat walkstreets, so we will look at “newer” construction resales.
Below, is the only sale we can go off of in 2021, and it is under-sized:
- 325 9th Street
- 5 beds, 5 baths, 3,700 sq. ft., built in 2003
- Sold Price: $5,410,000
As mentioned, this was a smaller home than what I normally would not compare to new, but it will have to do. This is not only a smaller home, but an older product.
It landed $5.4 million thanks to its excellent location, but it is really a heck of a sale when compared to the 2020 closings.
These are the three notable transactions in 2020:
- 501 8th Street
- 5 beds, 4.5 baths, 4,175 sq. ft., built in 2020
- Sold Price: $5,475,000
- 440 6th Street
- 6 beds, 5.5 baths, 4,144 sq. ft., built in 2009
- Sold Price: $5,400,000
- 412 8th Street
- 5 beds, 6 baths, 4,224 sq. ft., built in 2012
- Sold Price: $6,100,000
As you can see, these are the typical sizes to compare and are all newer homes.
It shows you how bullish the above 9th Street sale was in 2021. A brand-new construction (with a worse location) on 8th and an amazing custom-finished on 6th both went in the $5.4 millions and offer more room with better finishes.
The 412 8th Street sale takes the cake at $6.1 million, showing what a fabulous location paired with size and nice finishings can yield.
All in all, strong sales throughout 2020 and the lone 2021 sale shows even more strength with a lack of inventory that is surely in high demand by hungry buyers.
Now, take a look at these strong lot sales below:
- 341 6th Street
- 3 beds, 2 baths, 1,394 sq. ft., 2,691 sq. ft. lot
- Sold Price: $3,575,000
- 444 9th Street
- 3 beds, 2.5 baths, 2,294 sq. ft., 2,706 sq. ft. lot
- Sold Price: $3,300,000
Obviously, two different propostitions here.
The farther east 9th Street would be compared to the brand new spec sale that landed $5.475 million, while the prime 6th Street would be compared to the $6.1 million 8th Street above.
Using the same $500 a square foot to build, or $2.15 million all-in, both land sales can calculate their resale value with the past comps in 2020 and 2021.
The data is out there for you to see.
For North Manhattan 400-Block properties, there is a little blip in the new construction market that might give buyers room to negotiate. However, new construction supply is non-existent.
Furthermore, lots are a bit soft too, but when you break down the land sales, buyers are essentially in the homes at current resale value if they built new. That is a lot of time, money, and work to have no equity, at least according to the comps.
So, if land sales are that high, then new construction will likely hold its ground and any softness will be a “blip on the radar.”
For South Manhattan Flat Walkstreets, new or newer construction homes are bullish and there is zero supply.
Additionally, land sales are like the north 400-block with not a lot of room for profit margin, unless it is a very high-end spec.
These pockets within the Sand Section appear to be stable bets, if not trending slightly higher after the massive run in 2020.