On today’s blog I will be focusing on a trend I continue to see in our South Bay markets.
I forecasted this trend in earlier blogs and the results we are seeing are that “far away markets” that benefited greatly from the pandemic real estate rush are now reversing course in many cases. I encouraged readers and listeners to avoid those markets during the interest rate shifts in the middle of 2022, and while I am not always on target, this one has hit.
On a different topic, I have constantly touched on the challenges of acquiring new construction or move-in ready homes in prime areas of Manhattan Beach.
This week, I will highlight two recent closings that confirm the trends mentioned above.
There will also be a third bonus property closing that serves as a cautionary case study for our local South Bay home market.
Far Away Markets Clearly Softening
In past blogs, I’ve illustrated comparable sales in submarkets where prices are clearly falling in “far away” markets in Palos Verdes. Those submarkets over-benefitted from the flight to suburbs, thanks to work-from-home trends during the pandemic.
We now have a clear example of a property that sold near peak pricing, re-listed, and has now sold for less:
- 3-beds, 5-baths, 3,905 sq. ft.
- Sold: $4,740,000
This gorgeous custom-built home on a sprawling 1.7 acres over-looking the Pacific is truly one of the diamonds of Portuguese Bend located in the P.V. Drive South submarket – certainly an area that takes some time to get to from the beach cities, major economic centers, and even other areas of the Palos Verdes Peninsula.
In March of 2022, it was listed for $4.5 million and made a deal in just six days, closing for a half a million dollars over asking at an official closing price of $5 million. It was re-listed by the new owners just one year later, asking $4.995 million.
After about five weeks on the market, it made a deal and closed this week for $4.74 million – a quarter million loss and that does not include commissions or closing costs.
There is no clearer example than a property listing and re-selling again to prove the point that markets like Mira Catalina, P.V. Drive South, and P.V. Drive East, among others are feeling the effects of high interest rates and the shift back to more urban areas.
Prime Location New Construction is Strong
On the flip side, prime locations and new construction seem to have an insatiable demand in the ever-hot Manhattan Beach home market.
As it stands, buyers are huge income earners where their time is more valuable spent working than fixing up homes and they will pay a premium for turn-key homes. It happens repeatedly in MB and oftentimes in all-cash transactions.
- 4-beds, 5-baths, 4,500 sq. ft.
- Sold: $8,050,000
This incredible custom Matt Morris build still shines after being built 10 years ago. The listing history is as follows:
- Purchased in 2018 for $6.9 million.
- Re-listed in October of 2020 at $7.5 million and was withdrawn.
- Then, listing this April at $7.999 million and closing in less than a month for $51,000 over asking.
This is a new record for flat walkstreet homes in South Manhattan Beach. Not only was it a new record, but it broke the previous record of a $7.5 million brand new 2023 construction sale that sold just 10 days earlier at 413 5th Street.
Truly, turnkey and new construction seems to have insatiable demand in Manhattan Beach and prime locations continue to break records, despite the median price drop for the city in Q1.
While these are just two sales and do not make-up a whole market, I have been reporting on these two trends for some time.
Good luck landing a new construction home or custom turnkey residence without having to pay sky-high prices in Manhattan Beach, while Palos Verdes markets that require drive time to the beach and economic centers are seeing demand and prices fall.
Here is reference to reports on past Los Verdes weakness.
And here are further writings on the strength of areas like the Tree Section.
Bonus Closing: A South Bay Case Study
As a bonus, here is another recent resale to consider:
- 4-beds, 6-baths, 4,247 sq. ft.
- Sold: $6,500,000
I have written about this one in the past and it finally closed last week. Here is the listing history:
- This new construction spec was originally listed at a nose-bleed price of $7.8 million in June of 2022.
- Before that, no Hermosa walkstreet property west of Hermosa Ave had sold even in the $6 millions, let alone high $7s. Furthermore, the highest MLS south of the pier was just $5.1 million.
- The ambitious listing ended up selling for $7.2 million four months later – a massive record for a south of the pier location.
- Just two months later it re-listed at a shockingly lower price of $6.5 million.
- It went on and off the market, with a re-list of $7.2 million but ultimately closed earlier this month for the $6.5 million number.
This is really a bonus case study of what not to do. Avoid, at all costs, a situation where you would need to resell in just two months.
Whether you are in soft market or a hot market, a home put quickly back on the market will likely cost you dearly – especially after paying a significant record price.
Wishing you a very happy Memorial Day weekend honoring our American veterans who paid the ultimate sacrifice for our freedom.