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Will Manhattan Beach Sellers Unrealistic Expectations Lead to a Slower Market?

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By Keith KyleOcean view homes

Regardless of market conditions sellers frequently think that their home is worth more than it really is.  Most sellers think their home is nicer than the one that just sold down the street and offer various details that make their home the most valuable one in the area.  That will never change.

But this market is different.  The luxury market of Manhattan Beach real estate really is hot and prices are going up, but are sellers taking those expected increases to unrealistic levels?   As Realtors we see what values, why, and try to use the latest sales information to see where things are going and how quickly. In this market,  however, sellers often seem to think that regardless of how their home compares with the latest home sale….theirs is better….and worth far more.

It seems in this local market that we’re starting to see homes sit on the market for longer and it may soon no longer be a “make me move” or “name your price” type of market.  As homes sit longer, inventory will rise and once the perception is created that buyers may be able to get a better price if they wait….they’ll likely wait.

Sellers need to be cautious not to overprice their homes and use the expert opinions of local real estate specialists to explain what the home is worth and why it may not be worth what the seller thinks it worth.

Affordability doesn’t seem to be a challenge in this slice of the luxury market, but overpricing may just lead to a slow down of this hot market and a flattening of prices.

Recent Lot Sales in Manhattan Beach

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By Keith KyleConstruction Site

There’s no question that builders have jumped wholeheartedly back into the luxury market of Manhattan Beach as prices have soared and seem poised to continue so for quite a while due to the low inventory and pent up demand.  Recent prices on new construction homes and even flips have surprised even the most optimistic and it’s not surprise that many original condition homes and fixers are being sold for lot value.  Most of these sales are to builders but that’s not always the case as many buyers are willing to build their dream home and pay a premium over what builders are willing to pay.  I wanted to thank Mike Michalski from South Bay Brokers for putting this list together.

LOT SALES
Address                          Size    (WxH)               Orientation                           Price                 Sale Date
750 35th St                  5406   (40 x 135)          South-facing, Interior       $1,120,000        10/9/2013
1905 Elm Ave             4480   (40 x 112)           West-facing, Interior        $1,131,500         5/8/20 13
3113 N Poinsettia       4640   (40 x 116)           West-facing, Interior       $1,140,000      10/18/2013
717 25th St                   5120   (40 x 128)          North-facing, Interior      $1,150,000          5/8/2013
Busy intersection
605 25th St                 5121   (40 x 128)           North-facing, Interior       $1,250,000       4/12/2013
1313 Pine Ave           4480   (40 x 112)            West-facing, Corner          $1,300,000       In Escrow
1600 N Poinsettia   4200   (37.5 x 112)          East-facing, Interior         $1,350,000+
2900 N Ardmore     7500   (75 x 100)            South-facing, Interior       $1,350,000         4/17/2014
Busy street
2409 N Poinsettia   4480   (40 x 112)            West-facing ,Interior         $1,400,000        4/16/2014
2517 Laurel Ave       6867   (63.5 x 108)        West-facing corner             $1,400,000         3/5/2014
750 30th Street        5400 (40×135)               South-facing, Interior        $1,515,000         12/4/2013
636 12th Street         3000 (30 x 100)            South-facing, Interior        $1,589,000       10/17/2013
Possible view, Am Martyrs
3311 Elm Ave            8793   (irregular)          West-facing, interior          $1,611,000          9/18/2013
1804 Agnes Rd        4800   (40 x 120)           East-facing, interior            $1.700,000          5/22/2013 Private party
American Martyrs
738 29th Street       4800   (40 x 120)          South-facing, Interior          $1,750,000         3/31/2014
677 19th Street         9631   (Irregular)         North-facing, Interior          $1,850,000       4/11/2014
Some downslope, Am Martyrs
3309 Walnut Ave     9287   (80 x 116)           West-facing, Interior           $2,050,000      12/24/2012 Double lot
544 Marine Ave        5885   (60 x 99)             South-facing, Interior         $2,250,000       5/14/2013
Double lot
3312 N Poinsettia     9282   (80 x 116)           East-facing, Interior            $2,350,000       1/29/2014
Double lot, some downsloping
524 15th St                  6311  (50 x 125)         South-facing, Interior           $2,500,000       8/13/2013
Some view potential American Martyrs

Why is El Porto More Affordable than the rest of the Sand Section?

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By Keith Kyle Sand-Section

The northernmost tip of the Manhattan Beach sand section was always known as El Porto and has always been the most affordable way to live in this ultra luxury section of Manhattan Beach.  The sand section is generally the area just west of the greenbelt recreation path in between the streets of Valley and Ardmore.   Other than some of the true luxury estates in the Hill Section (see best of all worlds – real estate in the hill section), the sand section is the most highly sought after land in this luxury coastal community.  With townhomes now reaching and exceeding $2.0M, newer walkstreet homes topping $5.0M finding a more affordable option generally means looking east.

The best option for those feeling priced out of the neighborhood is the area of El Porto which is the northernmost section.  In an attempt to shed the El Porto moniker the area has been renamed North Manhattan but to most in the area it’s still known as El Porto.

So why is El Porto so much more affordable?

As with everything in real estate, lower prices involve tradeoffs and compromises.  In the case of El Porto it generally comes down to lot sizes and all of the differences those smaller lots create.  While many lots in the sand section are 30×90 most El Porto lots were split long ago and are “half lots” at 30×45 (with some variations)  This doesn’t just mean twice as many homes, but impacts the layout and feel as well.   One of the appeals to the sand section are the pedestrian only walkstreets that most homes face.  The back of the homes are on, what feel to be, smaller alleys with all of the garages, but homes are all built with the primary open areas facing the the walkstreets and the ocean.  El Porto doesn’t have walkstreets so all of the homes face the streets or alleys so the front of all homes consists of garages (or in some really original bungalows simply a space for one car).  In addition smaller lots generally limit the square footage that a new home can offer.  The good news for buyers is that the limited size of new construction homes greatly limits the appeal to builders who focus on larger lots.  This limits the competition and helps keep prices from skyrocketing during building booms.

Pros of El Porto:

  • Much more affordable prices
  • Proximity to the beach
  • Many homes feature great views due to the steepness of the streets
  • Ideal for commuters as it can take 15 minutes off of a drive compared with other areas

Cons of El Porto:

  • Smaller homes with little to no outdoor areas (roofdecks are not allowed in Manhattan Beach)
  • Very narrow streets (numbered streets are generally wider than named streets but all are narrow)
  • Homes face garages so curb appeal less than other sand section areas.
  • Smaller lots means more homes and has a more congested feel
  • Very little parking.  At best homes have 2 car garage with many older homes having no garages

The Reason You Can’t Find Your Home in Manhattan Beach

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By Keith KyleManhattan Beach sand section homes

As most home buyers read about the market they have,  inevitably heard that inventory is down and that it is a “seller’s market” which is certainly the case but both may be a drastic understatement at the moment.  Inventory is at historic lows with both active homes for sale and sold homes being dramatically below the norm.  The chart below shows the past 5 years with monthly numbers indicating the number of homes active on the MLS (light green), the number of pending homes sales or homes in escrow (red line), and the number of homes sold or escrows closed (dark green) that month.

Manhattan Beach 5 Year Real Estate
The numbers are pretty staggering with February 2014 having only 26 closed sales and 36 current homes active on the market. Contrast that with February 2009 with only 25 closed escrows and 284 homes available for buyers and you’ll understand why buyers are willing to do just about anything and pay any price to get a home in this luxury coastal community. Due to low interest rates, and Manhattan Beach schools surpassing even their own record test scores, the demand for homes is as strong as ever.

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