East Manhattan Beach Insane Starter Home Prices
Bubble Trouble ain’t so subtle
Life east of Sepulveda in Manhattan Beach, on the surface looks and feels about the same as it has for the last decade. Sure, there have been a few über big sales, such as 111 South Meadows, which just closed for white hair inducing $4,000,000, plus a dozen or so new development projects in 2014, but on the whole, the community is chugging along as middle class neighborhood, at least for those who bought here 5 to 10 years ago.
Today, the insane on the brain comes into play.
Gone, are what were considered outrageous prices just a couple of years ago, a million bucks for 7,500 square feet of dirt. Today, $1,300,000 to $1,600,000 is the minimum check you’ll be writing if you want to play in East Manhattan Beach.
Profile of buyer who can afford a $1,600,000 purchase
If the buyer has no other expenses such as a car loan, student loan, etc. then they would need approximately $250,000 of declared income minimum, and 25% down payment of $400,000.
Bank of Manhattan
Flips, dirt and a ready to sell real estate
To support our bubble concerns, here are a selection of recent transactions that are driving prices even higher.
1409 Wendy Way in Liberty Village, just one short block East of Aviation Blvd., the last street in Manhattan Beach before you’re hitting Hawthorne city limits. This home sold a year ago for $937,500, up from its listing price of $899,000. Today, with a cape cod facelift and roughly 700 new square feet of living space, the home is a pending sale at $1,649,122.
1701 Voorhees is one of our favorite flips in the area. Every step taken in the redevelopment is top-shelf and we believe premiums were paid to bring this home back from death’s doorstop to the masterpiece it is today—we can’t say enough good things about this Lean Arch designed property. Purchased by the investor in April of 2014 for $975,000, there are only three unfixable issues here: 1) the lot is small at 5,000 square feet for this side of East Manhattan Beach; 2) it’s located one block from Aviation Blvd; 3) the property faces Redondo Avenue, which is a traffic thoroughfare between Artesia Blvd. and Manhattan Beach Blvd.. This is a pending sales at 1,625,000.
1345 Voorhees Avenue is a nicely done, mid-tier contemporary facelift that brings a totally refreshed and modernized home to the market at a pending price of $1,439,000. Most every surface is new here including windows, floors, cabinets, appliances and fixtures. The agent-developer bought the home last April for $1,200,000. Compared to many of the other flip sales we’ve seen recently, this transformation seems to be seeking less profit, which almost seems odd. On the downside, the updates didn’t do much to modernize the exterior of the home and its location near Pennekamp school brings a lot of traffic to the street.
1536 23rd Street is a nice three bedroom, two bath east Manhattan Beach home that drew multiple offers when it was listed for sale this past June. Built in 1967, the property has had updates and facelifts over the years, and is super comfortable and modernized. For most, the home was move-in ready, which explains why it attracted multiple buyers. The sellers cleaned the place up a little and put it on the market hoping for the best—and the best is what they got. With nearly $1,500,000 of profit, the seller here couldn’t have timed their move better. This home represents some of the most extreme year over year value increases we’ve seen. We are also assuming that the previous owners spent a $100,000 or more to complete various updates and upgrades. Without actual data, we have chosen to exclude this value.
With just two baths and only 1,720 square-feet of living space, the price seems really rich, but this is where we are today—what would normally be considered a starter home is now super expensive.
1142 21st Street mirrors 1536 23rd in many ways. It’s updated, looks great, move-in ready, and has a nice location. However, the lot is just 5,000 square feet, normal for this particular neighborhood, but small by the 7,500 square foot norm we see throughout most of East Manhattan Beach. Again, we see just three bedrooms and two baths in 1,800 square feet of living space, we’re looking at another Manhattan Beach starter home.
Besides paint and maybe a few minor updates, the home is basically unchanged from its sale in 2010.
1200 Shelley Street is a 1953 built home that has been updated to a very hip and cool mid-century vibe. There are exposed hardwood plank ceilings, hardwood floors, skylights and modern landscaping. Overall, this is a great little home. Little he said. Yes, there’s only 1,387 square feet of living space here, which might be tight quarters for families larger than a close couple or kissing cousins.
1466 3rd Street is a pending sale at $1,460,000. This is a dirt value sale, or it could be a major remodel/rebuild. Whichever the case, the selling price is inline with other East Manhattan Beach land value sales. With its 2,393 square feet of living space, we’d think a flip might be in the air. For $200,000 -$250,000 of investment, there might be a $2,000,000 Phoenix here, which rises from the ashes of neglect and decades of deferred maintenance.
524 N. Redondo Avenue is a super big, 10,800 square foot dirt value lot (actually two lots) that will be developed over the next two years. Expect to see some sort of 4,600 square foot plantation style home here that will list for something north of $4,000,000. Do the math: buy it for $1,655,000, build for $1,500,000 ($325 per square fee) and you’re looking at $3,155,000 in hard costs. Yep, this one may make 111 S. Meadows look like a deal when all is said and done. Of course there’s always the possibility that a family has chosen to build their dream house here, which would put its value inline with recent high value sales in the area.
If it’s a developer hoping to strike big, we’re talking at least a projected $1,000,000 of profit, if the market keeps its pace in 2015.