During my time in real estate, I have learned certain clues give me a fast and fairly accurate analysis on the market. One of those clues is homes resold in a short period of time. I am not talking about flips where an investor adds value to a home, but rather resales where a home owner has done absolutely nothing.
In the hot market of 2012-2015 I saw short term resales (12-24 months later) turn breathtaking price gains all with the owner barely lifting a finger.
In a flat market, you will see little to no price gains on short term resales. And obviously, struggling markets on the decline will see short term resales go for even less.
Resale’s: Old Listing versus New Listing
To begin 2019, there are a few properties that I am watching to see where the market may go for the year. Let’s explore a few…
- 416 South Guadalupe Avenue in South Redondo Beach
- Original Sale Price: $834,500 in March 2017
- Current Asking Price: $999,000
Aside from some paint and handiwork, this is essentially the same home. This new listing debuted on the market last week and after only 21 months of ownership, the Sellers want $164,000 more. With such little value added, it would be tough to justify an almost 20% gain. Will they be able to make a quick deal, or will they have to wait?
- 2741 Palos Verdes Drive North in Valmonte
- Original Sale Price: $1,550,000 in June 2018
- Withdrawn Asking Price: Withdrawn in January 2019 for $1,599,000
This property came out asking an inflated price of $1,900,000 for a 2,000 sq. ft. home. It sold in three months for a big discount, albeit the correct discount, of $1,550,000.
Oddly enough, the property was brought back to the market only two months later asking $1,825,000. After a few price reductions and two different listings, the property was taken off the market three weeks ago at an asking price of $1,599,000.
After commissions and closing costs, there is no doubt this would have been a loss for the Seller. This new listing realistically may have only sold taking a discount below its former sale price. For now, we will never know but it is a good case study, nonetheless.
- 2214 Warfield Avenue #B in North Redondo Beach
- Original Sale Price: $1,350,000 in August 2016
- Current Asking Price: $1,465,000
The town home listing on Warfield is an interesting property. It was your typical two-on-a-lot spec sale back in 2016 that sold for essentially a record price for the 151 area (Villas North) at that time.
Currently, the owners have not done anything to the home since it was new construction, but honestly, they have great taste when it comes to interiors. The listing pictures look much better than it did as a vacant spec home.
The listing has been on the market for over two and a half months and has already made a price reduction. It is still $115,000 away from its original purchase price, so depending on where this listing sells, it will tell us a lot about the health of the new construction resale market.
Bonus Listings
Bonus Flipper
- 2571 Via Campesina #A in Malaga Cove
- Original Sale Price: $584,000 in February 2018
- Current Asking Price: $675,000
This “bonus” listing is an interesting study on “iBuyers.” In a nutshell, iBuyers are big companies that will offer to buy your home quickly for a fee and then make improvements to flip your home for a small profit. These companies will have their part in the market, but it will only be a small part since homeowners can get more money from traditional buyers 99% of the time.
About a year ago, 2571 Via Campesina #A was purchased for $584,000. The company gutted the kitchen and bathrooms, along with upgrading the floors and electrical finishes. They came out asking $739,000 and have since reduced to $675,000. This listing will likely get negotiated down again, and after remodel investment costs, closing costs, and commissions…this investment will be a loss for the iBuyer firm. Not to mention, there will be no profits to pay a CEO and a suite of executives.
This time around, it looks like the original seller got the best of the “Pros.”
Bonus Commercial
Last but not least, a commercial “bonus” listing!
- 1401 Hermosa Avenue in Hermosa Beach
- Original Sale Price: $4,400,000 in January 2016
- Current Asking Price: $3,999,000
Purchased in 2016 for $4.4 million, the owner has been unable to sell and has chopped the price to $3.99 million. Not much to say here other than the owner will be in the house of pain on this resale. Obviously, this property will be a loss, but how much of a loss with still, no buyer in hand?
Conclusion
All of these properties do not have an ending to their story quite yet. But, we should all be rooting for them to succeed and sell for more as it would be an extremely strong sign for the local real estate market.
That said, I am not getting my hopes up. Our team will continue to watch these sales as their final selling prices will be a good indicator of market in the near future.
Richard Haynes
DRE: 01779425
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The Richard Haynes Real Estate ShowA leader in South Bay real estate for the better part of a decade, Richard thrives as an advisor to his clients with over $248 million in sales as a broker or investment principal at his boutique agency, Haynes. Richard is known for his keen local market insights which have been featured in the L.A. Times, The Street, and Forbes, along with his weekly South Bay real estate blog. [read more]