The Strand Market
In 2017, there were 17 home sales on The Strand in Manhattan and Hermosa Beach. Now, five months into 2018, Strand sales are a grand total of ZERO.
What’s interesting about the 2017 Strand market is that of those 17 sales, only three occurred before June. So, a rapid clip of 14 sales happened between June and December. Perhaps the time leading up to tax season affected Strand buyer decisions?
With little activity the first half of this year, it has created some healthy competition for some spec sales. Additionally, it has made some existing owners more realistic, and dare we say…asking fair prices?
Benchmark 2017 Sale: 1540 The Strand, Hermosa Beach
This spec new construction property had 5 beds, 6 baths, 4,643 sq. ft., and is on a 4,180 sq. ft. corner lot. It sold for $14,150,000 almost a year ago today. No question, this is a perfect benchmark new construction sale as it is smack dab in the middle of the Hermosa Strand on 15th Street.
This home is located on a corner lot ⸺ a much more desirable location than an interior lot due to added size, open space, and extra natural light. The corner lot boosted this home’s value, but because the finishes in the home were “cheaper,” I believe it sold for less than it could have. The construction lacked the panache, flair, and high-end finishes one would expect from a Strand home.
Current Listings and Competition
There are three new construction homes on the market that are comparable to the 1540 Strand benchmark sale. Let’s take a look…
58 The Strand
Asking Price: $10,900,000
4 beds, 4.5 baths, 3,575 sq. ft., 2,402 sq. ft. interior lot
This is a similar spec home build to our subject sale but slightly better in finishes (although 1,000 sq. ft. smaller). This home came out asking a nicely discounted price of $10.9 million or $3.25 million off the best comparable sale. Without question, this seems like a reasonable ask to begin negotiations. Perhaps what has stalled this sale is even finer competition on the south end of The Strand where existing, slightly older homes, like 22 The Strand is asking only $7.459 million.
So, would you take a $10.9 million interior lot new construction OR get an even further discount and buy a 2001-built corner lot that needs work at $7.5 million?
212 The Strand
Asking Price: $10,500,000
5 beds, 5.5 baths, 4,403 sq. ft, on a 2,374 sq. ft. interior lot (being sold pre-construction)
This home being sold pre-construction (just past framing) and matches the subject corner lot sale in livable sq. ft., but again, must fight the interior lot and south Hermosa location. This property came out asking $11.9 million and has been cut by $1.4 million to compete with 58 The Strand. You can bet they will raise the price upon construction completion but this one will have a tough road ahead with the competition only two blocks away.
1932 The Strand
Asking Price: $13,200,000
4 beds, 4.5 baths, 3,826 sq. ft., on a 2,400 sq. ft. lot
Thirdly, 1932 The Strand is the latest new construction competitor to enter the market. This time, the property is in the more desired section north of the pier and has much nicer finishes than the listings mentioned above. However, although it looks like a corner lot, it will soon be an interior lot when the corner lot next door begins to build. At $13.2 million, this price is compelling buyers to act, being that it is a nicer home than our subject sale, while also giving a $1 million discount for not having that corner lot value. Is that enough to tempt a buyer based on the $14.15 million sale and the other options listed above?
So, as you can see, 1540 The Strand created quite a benchmark for these three competing new construction specs. They are all listed lower (as they should) and we should all enjoy the excitement, negotiations, and potential price cuts that happen as these properties battle for the next Hermosa Beach Strand buyer.
With zero strand sales this year after a very active 2017, Manhattan Beach sellers are becoming a lot more realistic. Let’s take a look at an example from a sub-market of the MB Strand.
Benchmark 2017 Sale: 3420 The Strand, Manhattan Beach
This 15-year-old home had style and class to endure ever-changing trends. It sold quickly, making a deal in only two months on a highly desired corner lot.
Price Cut Listing: 3120 The Strand, Manhattan Beach
Asking Price: $12,900,000 (down from $16,000,000 from original listing in 2016)
As you can see, that is a big price cut! That’s 19% off the top or $3.1 million. Why you ask? This corner lot offering is in a great location only three blocks away from the 3420 The Strand (benchmark sale). However, it is 10 years older, has not been updated, and a bit smaller.
The seller was clearly too aggressive pricing at $16,000,000 and the $15.400 million sale of a far superior home in turnkey condition forced their hand to make a significant cut, now making the offering much more realistic.
As sales are few and far between on The Strand, how many more sellers will be forced to cut prices to match or even beat the past comparables of 2017?