2018 Winners And Losers - Hermosa Beach

Posted by Mike Michalski on Friday, January 18th, 2019.

The past year was actually a very good one for home prices in Hermosa Beach, even if total residential sales dipped 11% from 2017 (from 199 to 177 units sold).  

In fact, the median price of a single family home city-wide jumped 16.2% last year, which puts Hermosa Beach in first position among all the beach cities using that metric.  And townhomes/condos were not far behind with a 13.4% annual increase. 

At the end of 2018, the median single family home in Hermosa was selling for $2,149,000 and the median townhome/condo for $1,580,000, both all-time records.  To think that, at the end of 2014, the full-year median sale price for single family homes in Hermosa Beach stood at $1,337,500 and the median for townhomes/condos at $1,230,000.  That means over the past 5 years, the median price for townhomes/condos jumped over 28% and the median price for single family homes appreciated at a healthy 61% clip.

Here is our take on last year's biggest winners and losers in the Hermosa Beach residential real estate market.

Biggest Winner, Single Family Home Category: 633 30th Street

For the biggest winner in 2018, look no further than the developer of the brand new 5-bedroom, 7½-bath ocean-view home at 633 30th Street in the area we realtors refer to as Hermosa Valley (not the neighborhood adjacent to Hermosa Valley School but, rather, that neighborhood strip just to the east of the greenbelt between Ardmore Avenue and PCH).

Everyone was amazed when this home listed for $8.5 million and even more so when it closed for $8.3 million, making it the most expensive home ever sold in Hermosa Valley.  Of course, the extra-large (6290 sqft) home had all the amenities, including a home theater, and the ocean views were very nice to be sure.

But we also remember that comparable new ocean-view homes in the immediate vicinity had sold for much less in recent years.  For example, there was 659 30th (pictured below), a brand new 5-bedroom home of comparable size (5775 sqft) and better ocean views on a similar-sized lot just a few doors up the hill on 30th that sold for $5,325,000 when it hit the market in 2015.

Then there was 2850 El Oeste Drive, another new home with the best views of all three of the homes cited here (and, at 7502 sqft, substantially larger than 633 30th) which sold just two years ago for $7.5 million.

All three homes were spec developments but the difference is that 2850 El Oeste and 659 30th both sold for less than $1,000/sqft while our first place winner actually hit $1,320/sqft.  Yet the developers of 659 30th and 2850 El Oeste both regarded their homes as successful projects as they paid just $2,150,000 and $1,795,000 respectively for their lots. 

Now compare - not only did 633 30th secure the highest sale price and highest price per square foot of the three homes, the builder also paid the least amount for the dirt, $1,750,000.

Any way you slice it, 633 30th Street was a home run for the seller/developer and his investors.

Biggest Winner, Runner-up: 2524 Manhattan Avenue

2524 Manhattan Ave

In looking at all the homes that sold for over $2.5 million last year in Hermosa, only three ended up selling for more than their list prices and two were lot sales.  The third in that group was 2524 Manhattan Avenue in the Hermosa Sand section (pictured above) and, boy, did the seller do well on this sale.

This 5-bedroom, 3770 sqft Mediterranean was originally purchased back in 1999 for $1,275,000.  Built six years earlier in 1993, the home was updated along the way and it also enjoys being situated on an oversized street-to-street lot with great ocean views.

So when it came time to list the home, the seller settled on a list price of $3,749,000.  Then a bidding war ensued.

When the dust settled, the seller had walked off with a $4,401,000 sale, some 17% above the list price.

Not bad at all.

Biggest Loser - 1955 Monterey Blvd

This magnificent 4-bedroom, 3600 sqft ocean-view spec home was completed in 2016 and, given how hot the market was back then, looked like a sure bet to break the $5 million ceiling once a sale was consummated.  Indeed, the original list price in the summer of 2016 was $5,199,000.

Yet, fast forward two years and the home finally limped across the finish line with a sale price of $4,600,000.

Beautiful coastal Cape Cod home (the listing description even made reference to Martha's Vineyard as inspiration), sweeping ocean views, what could have gone wrong?

We're not certain but we heard rumors of a long-running dispute with a neighbor that held up the prospect of a sale until the dispute was resolved.

Too bad.  The project certainly looked promising back in 2014 when the developer was the winner in a builder bidding war that saw the price of the original teardown get bid up from a list price of $1,499,000 to $1,955,000. 

However, the luster faded due to an inability to unload the finished home while the developer had to deal with the neighbor.  Once the dispute was resolved so the sale could proceed, the property then sat on the market all last summer before the developer eventually accepted a lowball offer.

My conjecture is the developer still made money but didn't come close to what had been forecast when the project started, plus the construction money was tied up in the home for four years.  I guess that's why they call it spec development.

Of course, if you want to look at the glass as half full, you could say the buyer got a bargain.

Biggest Loser, Runner-up:  2805 Tennyson Place

 

This was not actually a sale, merely a failed listing, so this property could still have a banner year in 2019 or subsequently if and when it does sell.  But, just like the Monterey property, we see a situation where the eventual sale, should it ever happen, will likely fall far short of the initial expectation.

In this case, when the property was first listed in March of 2017, that expectation was for a sale price of $22,500,000 but, after numerous price reductions over the next two years, the listing finally expired on the first of this year, last priced at $17,500,000 or 22% below the starting price.

Was this property ever worth the original list price?  Well, obviously not, but it certainly does has all the bells and whistles, including a saltwater pool, outdoor dining pavilion with fireplace and wine cellar and panoramic ocean views from a high point in the Hermosa Hill section.  The fact the home sits on almost a half acre is worth noting as well.

However, as the months dragged on and the price started to plummet, desperation started to set in.  Besides the price cuts, the seller even brought the head of the listing brokerage onto the listing, a realtor known for making at least one guest appearance on "Million Dollar Listing LA" and whose wife has made a name for herself as a cast member of "The Real Housewives of Beverly Hills."

The listing is now expired but my guess is it will reappear later this year.  It will be interesting to see what the new list price is as well as the star power behind the listing agent(s).

 

 

This entry was posted under South Bay Real Estate News, Hermosa Beach, and Market Conditions.