New construction homes can be tough to come by these days. Inflated building costs and extended building timelines have yielded fewer options, along with the fact that two to two and a half years ago, builders put spec buying and building on hold during the beginning of the Coronavirus pandemic.
As a result, it seems there are little new construction options to go around – not to mention, low interest rates in early 2022 fueled buyers to gobble up already squeezed inventory for new homes.
Today, it is tough to find fairly priced new construction in this shifting market. For this week’s blog, I want to share new construction listings in two different submarkets: East Manhattan Beach and North Redondo Beach.
East Manhattan Beach New Construction
The East Manhattan Beach marketplace was a haven during the pandemic with its large 7,500 sq. ft. lots –perfect for staying and working at home. It appeals to many buyers that want Manhattan Beach real estate but don’t want to sacrifice space like many do in the Sand Section.
There are two new construction homes in East Manhattan Beach on the market that will offer clues of how buyers might receive new construction in the future:
1560 1st Street
- 6-beds, 6-baths, 4,650 sq. ft.
- Asking Price: $5,289,000
- Price Cut to: $4,999,999
1535 Nelson Avenue
- 5-beds, 6-baths, 4,750 sq. ft.
- Asking Price: $5,499,000
- Price Cut to: $4,999,999
Both properties are spec builds in East Manhattan Beach’s Mira Costa submarket. The 1st Street property is a corner lot which allows for a creative floor plan compared to most East Manhattan Beach specs, while the Nelson property is your typical interior 7,500 sq. ft. lot.
If you noticed above, both properties have already cut their prices. These listings started off chasing this gorgeous new home comp below above $5 million:
1618 11th Street
- 7-beds, 7-baths, 5,007 sq ft
- Sold Price: $5,475,000
You don’t get the big price unless you ask for it, however, the market has clearly shown that buyers are unwilling to pay the $5+ million price for these homes – and probably for good measure as this 11th Street home was truly a premier build.
Next up is an additional comp for the market to consider:
1137 6th Street
- 5-beds, 6-baths, 4,665 sq ft
- Sold Price: $4,630,000
This sale closed in June of 2021. One might argue that since then, the market ran much higher, while others might argue this 6th Street’s finishes deserve a premium – I’ll leave that up to the market to decide.
All in all, the market is not yielding a $5+ million sale. Will the sellers be able to hold firm with little competition or will buyers patiently wait for the price to come down to the mid-$4s or even lower? It will be interesting to see how these listings ultimately perform to give clues on the new construction market’s future in East Manhattan Beach.
North Redondo Beach New Construction
Next up is North Redondo Beach and a pair of two-on-a-lot specs. These types of sales are a dime a dozen on R-2 lots:
2314 Huntington Lane, Unit A
- 4-beds, 4-baths, 2,540 sq ft
- Asking Price: $2,200,000
- Price Cut to: $2,090,000
2314 Huntington Lane, Unit B
- 4-beds, 4-baths, 2,594 sq ft
- Asking Price: $2,200,000
- Price Cut to: $2,090,000
Again, you see two properties that asked higher prices in hopes of landing previous high watermark comps. The big comps below occurred on Clark Lane:
1710 Clark Lane, Unit A & B
- 4-beds, 4-baths, 2,508 sq ft each
- Unit A Sold Price: $2,255,000
- Unit B Sold Price: $2,350,000
These might be more stunning builds in better locations (and thus, the much higher prices), and the buyer market seems to agree since they are not yielding prices near these for the Huntington listings.
Below are the next comps for buyers to consider:
2608 Huntington Lane, Unit A & B
- 4-beds, 4-baths, 2,367 sq ft each
- Unit A Sold Price: $1,795,000
- Unit B Sold Price: $1,790,000
These sold back in December of 2021 at what felt like the height of demand in many markets around the South Bay.
Just like in East Manhattan Beach, the question is will buyers want prices closer to $1.8 million or will it be somewhere in between that and the current asking price? Sellers have leverage with little competition, but will they be incentivized to make a deal in the near future? Only time will tell.
Conclusion
The new construction market remains constrained in markets that usually produce new construction specs.
For now, record high prices are not close to being achieved. Perhaps that is not fair as those record sales boasted some incredible well-finished homes, while these specs are more standard for the marketplace.
That said, these listings have decided to cut their prices and have comparable sales that are decisively lower than current asking prices.
Buyers seem content waiting for lower asking prices, while sellers seem confident that little supply allows for them to ask for higher prices.
We will see which side wins.