Unless you have been living under a rock, you know that low interest rates and the Coronavirus pandemic have driven insatiable demand for housing.
Specifically, homes with more space, yards, and farther away from cities.
In our South Bay home marketplace, no area best suites the above needs more than the Palos Verdes Peninsula. And, while Rancho Palos Verdes, Rolling Hills Estates, and “Behind the Gates” in Rolling Hills all fit the bill, I am going to focus on the city of Palos Verdes Estates (PVE) this week.
For those of you not as familiar with Palos Verdes Estates, there are four main real estate submarkets (with of course, many more pockets within) called Lunada Bay, Malaga Cove, Montemalaga, and Valmonte that make up the city.
Before the pandemic, Palos Verdes Estates was somewhat “unknown” to individuals outside of South Bay. And, I am willing to bet that not many South Bay residents could tell you much about Palos Verdes outside of Terranea and the South Coast Botanical Gardens.
As a result of being undiscovered, there was incredible value to be had in the real estate market relative to more “known” South Bay home markets such as Manhattan Beach.
I was shocked to see the meteoric rise in price per square feet (PPSF) over the last 18 months compared to what Palos Verdes Estates was accustomed to pre-pandemic.
To give you an idea, let’s look at PVE single-family median price per square foot numbers over the past few years:
- 2021 (YTD) – $842 PPSF
- 2019 – $729 PPSF
- 2017 – $697 PPSF
The 2017 price per square foot numbers remind me of the old value Palos Verdes Estates used to offer. Not many buyers were willing to compromise on commutes, and it was kind of scary to move all the way out to Palos Verdes.
Even two years later in 2019, when median price per square foot broke through $700, that only represented a small increase of about 4.5% over two years. Still some serious value to be had.
But today, year-to-date price per square feet for single-family homes in Palos Verdes Estates have shot up in a huge way. A whopping $113 jump per square foot which is around a 15.5% increase. Real estate professionals were just not used to that type of growth in PVE.
What Does the Median PPSF Sale Get You?
So, what exactly does $842 a square foot get you in Palos Verdes Estates?
This is the home:
- 3208 Palos Verdes Drive North
- 4 beds, 4 baths, 3,443 sq. ft., 8,234 sq. ft. lot
- Sold Price: $2,900,000
This blew me away after doing the research because in the past, PV Drive North in Valmonte was an opportunity for a huge discount and prices well-below the median PPSF.
- 3621 Palos Verdes Drive North
- 4 beds, 4.5 baths, 4,159 sq. ft., 8,840 sq. ft. lot
- Sold Price: $3,015,000
A very tired 4,150 square foot home sold for just $380 a square foot at the end of 2019, right before the pandemic. It was rehabbed and resold for $724 in September of 2020.
The profit margin was huge but both sales were price per square foot discounts relative to the market.
- 3301 Palos Verdes Drive North
- 5 beds, 3 baths, 3,499 sq. ft., 11,311 sq. ft. lot
- Sold Price: $1,900,000
- 3613 Palos Verdes Drive North
- 5 beds, 5 baths, 4,200 sq. ft., 8,773 sq. ft. lot
- Sold Price: $2,995,000
Further, the market was used to a $543 price per square foot sale like 3301 PV Drive North that still occurred in 2020; while 3613 PV Drive North, one of the nicest builds ever on the Drive, sold at just $713 a square.
I pulled comps from 2017 and 2019, and the sales were low, low, low thanks to the combination of busy PV Drive and still relatively “undiscovered” Palos Verdes.
Via Carrillo Sale Perfect Example of Market Strength
Another great example of incredible strength throughout the Palos Verdes home market is none other than a sale in Lunada Bay on Via Carrillo.
- 2425 Via Carrillo
- 4 beds, 3 baths, 2,939 sq. ft., 6,859 sq. ft. lot
- Sold Price: $2,070,000
In July of 2020, this property debuted asking $2.129 million.
At the time, I remember showing it to clients and we were shocked at how high the asking price was for this home. It was a hard pass for multiple clients.
The list price was eventually chopped multiple times, reaching as low as $1.975 million, before being pulled off the market for good in 2020.
Well, the home was not off the market for long. It was eventually re-listed just eight months later (March of 2021) and came out strong asking $2.050 million.
It closed officially last month over-asking at $2.070 million.
No one wanted it a year ago at $1.975 million, but today, it is could ask a higher number than just eight months earlier, and still attract multiple offers and go higher.
Affordable Property Getting $1,000/sf All Day
Another milestone for Palos Verdes Estates property is closing sales that are regularly $1,000 a square foot or higher.
$1,000 per square foot has been normal by the beach for years, and today, the beach can command far higher. At the same time, Palos Verdes Estates might occasionally hit $1,000 a square foot on an incredibly special luxury property or an old tear-down, but it was not the norm.
That has all changed. You can now expect to pay $1,000 a square foot for “affordable” move-in ready homes (and all-day for turnkey luxury properties as well).
- 3115 Via La Selva
- 3 beds, 2 baths, 1,523 sq. ft., 6,339 sq. ft. lot
- Sold Price: $1,850,000
This home was originally shopped off-market for $1.899 million or $1,246 a square foot. It was unable to make a deal and was then listed on the MLS for $1.799 million, where it attracted multiple offers and finally sold for $1.85 million.
Now this is one of the most extreme and expensive examples of a $1,000 price per square foot sale, but there are multiple $1,000+ square foot sales in 2020 and 2021 that the Palos Verdes Estates market would have never supported pre-pandemic.
Miss One Property, the Next One Will Go Higher
Adding fuel to the fire in Palos Verdes Estates, there is still a strong feeling of “FOMO” (fear of missing out) that is driving the market to new price per square foot records.
In the past two weeks, there have been multiple examples of this psychological phenomenon (FOMO, that is) with one in lower Lunada Bay and the other in upper Lunada Bay. I will start with lower Lunada Bay, first.
- 2129 Thorley Road
- 4 beds, 5 baths, 3,762 sq. ft., 11,042 sq. ft. lot
- Under Contract Asking: $3,525,000
This listing sold back in 2017 for $3.15 million and returned to the market in 2020 asking $3.699 million. While a lovely turnkey home, a fabulous pool lot, and a rock-solid location, there were no major upgrades made over the years, so the price was a little rich.
After seven months on market, the owners chopped their price almost $175,000 where it then attracted three offers in total and will close next month.
- 1640 Chelsea Road
- 5 beds, 4 baths, 3,573 sq. ft., 13,451 sq. ft. lot
- Under Contract Asking: $3,650,000
Just a week later, 1640 Chelsea debuted with a similar-sized offering to Thorley Road. The location is considered superior, and the floor plan has great potential. But the key word is potential…this property needs, at least a $750,000 budget to bring it back to life.
But even with that huge line item, not only did Chelsea sell at a higher asking than Thorley, but it also sold in a week thanks to Thorley’s sale somewhat justifying the potential value. Buyers did not want to miss out on another large footprint in lower Lunada Bay.
The same FOMO can be seen in upper Lunada Bay.
- 1449 Via Coronel
- 5 beds, 5 baths, 4,757 sq. ft., 15,004 sq. ft. lot
- Under Contract Asking: $3,295,000
This is a fabulous flat lot estate that was move-in ready with over 4,700 square feet of living space, and almost all of it on one level. This was a no-brainer purchase, and it showed with packed open houses, eventually selling right away for over-asking. In this market, it is an ideal property and a solid buy.
- 2008 Noya Place
- 5 beds, 2.5 baths, 3,351 sq. ft., 16,147 sq. ft. lot
- Under Contact Asking: $3,400,000
Just a week later, another large lot came to the MLS. This time with a pool, but a significantly smaller floor plan by almost 1,400 square feet. Sure, Noya Place is a quieter cul-de-sac off busy Coronel with better ocean views, but the smaller footprint and older finishes require work.
Sure enough, just like Chelsea to Thorley, a higher asking price (even with some opinions believing it was a lesser offering) did not deter buyers. Instead, a quick deal was made as recently scorned buyers did not want to miss out on another home.
Another FOMO sale continuing to push prices higher.
The Palos Verde Peninsula is still experiencing incredibly high demand.
From surging price per square foot prices on PV Drive and $1,000+ price per square foot sales, to homeowners being able to ask more on failed sales and still get multiple offers, to “fear of missing out” driving the market higher…the market just will not quit.
It cannot go on forever, but for now, there seems to be no end in sight.