Some of the most desirable real estate in all of the South Bay, maybe even all of Los Angeles County, exists atop the Palos Verdes (P.V.) bluffs. The combination of privacy, big views, and the sound of waves crashing is virtually unmatched in Southern California.
A majority of these bluff top homes are located in Lunada Bay. That said, Malaga Cove, West Palos Verdes, and even the Palos Verdes (P.V.) Drive South areas have a few fabulous bluff properties to offer from time to time.
2017 Bluff Sales
Probably the most fruitful year of recent memory for bluff sales was 2017.
The old Toyota Motor Sales home that had been owned by the company since 1988 was the last really big headline transaction on the bluffs. Listed at $13.9 million, the property at 1721 Paseo Del Mar sold in a little over a month for $13.84 million. At the time, this sale was the second highest ever in Palos Verdes.
I had a highly sophisticated real estate client who toured the home back in 2017 and he mentioned that he thought 1721 Paseo Del Mar was a “tear-down” as written in my past blog posts, “Ultra-High Priced South Bay Real Estate” and “Notable Sales on The Hill.” Today, the home still stands and has been remodeled by the new owner.
As a result of the strong demand and the $13.84 million sale, two additional Lunada Bay properties sold quickly for big prices in 2017…
- 2801 Via Segovia
- 5 bed, 5 bath, 4,750 sq. ft., 21,290 sq. ft. lot
- Sold: $5.9 million
- 2101 Paseo Del Mar
- 3 bed, 3 bath, 2,815 sq. ft., 18,691 sq. ft. lot
- Sold: $6 million
Both of these properties were wonderful but they needed work. The Paseo Del Mar home especially needed work, which was sold as a lot sale off-market. In my opinion, this “land sale” marked the near-term high of the bluffs.
Since then, the market has rolled into some weakness during 2018 and 2019 calendar years.
Big Bluff Sale
Although impossible to compare any sales to the Toyota Motor Sales house, the next biggest transaction was located in Malaga Cove at 609 Paseo Del Mar, which began its listing journey back in 2016.
- 609 Paseo Del Mar
- 5 bed, 6 bath, 7,590 sq. ft., 23,854 sq. ft. lot
- Sold: $9.25 million
Listed in June of 2016, this 1994-built Italian estate was listed at $11.9 million and failed to sell after eight months on the market. In early 2017, the property was re-listed at $11.9 million and then faced price cuts all the way to $9.875 million. However, the home still failed to find a buyer even after the Toyota Motor Sales house completed its sale.
With a new agent, and yet again another reduced price to $9.5 million in late 2017, the listing finally closed for $9.25 million in an all-cash transaction.
By no means was this a failed sale, but it did take a full two years to get the home sold and surely with some help from the recent comparable sale of the Toyota house during its listing tenure.
This was a strong closing but certainly not at the speed many in the bluff top marketplace may have hoped. Many believe this to be the proper price, but the manner in which it sold seemed to give future buyers pause.
Low Bluff Sale
Fast forward to 2019…
This month perhaps fully tilted the scales to a buyers market of bluff top homes, all thanks to the recent closing of 145 Rocky Point Road.
- 145 Rocky Point Road
- 5 bed, 6 bath, 5,178 sq. ft., 18,417 sq. ft. lot
- Sold: $6.3 million
Previously purchased in 2012 for $5 million, the owner brought the home to market in May of 2018 asking $8 million. The starting price felt reasonable, not only being the appropriate discount to the Toyota Home and Malaga Cove sale (which were far superior homes), but also because the Southern California luxury market had had an amazing run up in price since 2012… The owner’s investment in 2012 was almost perfectly timed coming out of the financial crisis. $5 million had to be a great buy and yield a nice profit. Right?
Not so fast. (said in my best Lee Corso voice)
After seven months on market, 145 Rocky Point Road was taken off the MLS. A week later in December of 2018, a new listing ensued at an improved price of $7.25 million.
Four months later, the price was cut to $6,999,9999 and made a deal shortly thereafter. The final closing price of $6.3 million was a massive discount from its $8 million start. And, the deal was aided by dual agency representation and some commission discounts to put the finishing touches on the sale.
About a 25% increase in price is not bad seven years later. That being said, for the way the luxury market has performed since the Great Recession, this was a disappointing sale for the P.V. bluff top marketplace.
So was this major discount due to a weak market? Or, was this capitulation from a Seller who just wanted out of their house and to move on?
The house had not had any improvements during the seven years of ownership, but this $6.3 million sale essentially matched the sale price of the $5.9 and $6 million “lot sales” that happened on Via Segovia and Paseo Del Mar back in 2017…and this home certainly boasted a large 5,100 sq. ft. home that was nowhere near tear-down condition.
It was most definitely a type of sale that shows signs of a weakening market.
In my opinion, I believe the next sale or two on the bluffs could really determine the fate of the bluff marketplace. Either 145 Rocky Point Road was an outlier, or the market is in for a decline in pricing.
Current Listings
For now, I am watching how current listings are performing to get a sense of where the P.V. bluff market is headed. The first that comes to mind is the West Palos Verdes listing on Marguerite Drive.
- 41 Marguerite Drive
- 6 bed, 8 bath, 9,335 sq. ft., 47,402 sq. ft. lot
- Asking: $10.95 million
This property was listed in May of 2018 at an ask price of $15.45 million. The listing price seemed extremely ambitious as the Toyota property would likely be deemed more desirable and the Paseo Del Mar $9.25 million sale was in a more coveted location (for most buyers). However, the owner of Marguerite likely pushed for a big price to compensate for the massive 9,300 sq. ft. home.
While a huge square footage number can command a higher price, it also means more maintenance and upkeep. Further, a large home requires a large remodel cost if the home needs to be brought to current living trends and finishes.
After a year on the MLS, 41 Marguerite Drive was taken off the market and re-listed at a significant discount with a new asking price of $10.95 million.
This is an interesting price between the two highest sales discussed above (Toyota house & Paseo Del Mar). Will this listing close above the $9.25 price of the Paseo Del Mar sale in 2018? That is a big question.
Another current listing to gauge where bluff prices could be heading is the “lot sale” at 2833 Via Segovia asking $5.9 million.
- 2833 Via Segovia
- 5 bed, 5.5 bath, 4,242 sq. ft., 17,212 sq. ft. lot
- Asking: $5.9 million
This home and property has seen better days as 45 years along the Pacific Ocean can take its toll on a structure.
Currently marketed as a lot sale, 2833 Via Segovia might have made sense when the 5,100 sq. ft. Rocky Point Road home was asking in the $7 million range. Now that that listing has sold for $6.3 million, it makes this $5.9 million asking price seem like a stretch for a tear-down home.
According to many architects that I have spoken to, the caissons and foundation work needed along the P.V. bluffs easily requires $1 million to accommodate a proper home on this lot.
Why not wait for another home like Rocky Point and do a remodel to the existing structure to save some money and time?
This listing will be a tough sale at its current price and comps, however, the bluffs are so desirable that there is likely a floor to the price, even if the numbers do not add up from a building perspective.
Conclusion
With the most recent 145 Rocky Point Road sale, the P.V. bluffs are showing signs of weakness.
This could all change with the current listings on Marguerite Drive and Via Segovia. These listings could determine the short to medium term fate of pricing on the P.V. bluffs. For now, the scales are tipped in the favor of the buyers.
With other luxury markets throughout Southern California beginning to slow, we will watch to see if the P.V. bluffs will follow suit or buck the trend.