Tuesday, May 19, 2015

Redondo Beach Teardowns, Lots, and Fixers Wanted

Investors, flippers, and builders are all paying new record high prices for lots, tear downs, and fixers in Redondo Beach CA. Often the transaction is "all cash" and can close in as little as 10 days.

Sellers often wonder what the benefit of selling to an all cash real estate investor or builder is. Whatever the financial vehicle is, financed or not, the seller gets their proceeds at the end of the transaction either way. While that is certainly true, there are other considerations.

First, there are properties that simply can not be financed (appraisal condition C6). This could be because they have structural issues, are not habitable, or won't appraise (although for the most part the last condition is not relevant to this discussion).

Structural issues can mean cracked foundations while habitable may refer to the presence of mold. Even in a city with a many luxury properties, you do find some real estate with substantial deferred maintenance.

Another reason that homes are sold to investors, flippers and builders is that the sellers need cash fast and the normal listing process and 30 day escrow may not afford enough time. Additionally, when real estate fees are factored in plus termite and other repair work, the cash buyer starts to become more attractive. (Often agents who represent investors, flippers, and builders waive their commission in order to get a "list back".)

If you are considering selling to an all cash commercial buyer here's some things to consider.

Builders typically look to acquire lots at 30-33% of the final project cost. So, if they will build a $3M property, they may want to pay no more than $1M (although there are many instances where they go higher.) If the lot is on a hill, expect something closer to 25% but if it has an ocean view or is on the Avenues or the Esplanade, builders will pay more. Often a lot more (no pun intended). As prices are escalating, many builders are "banking" land and holding on for an even more opportune time to sell. So, if there is a habitable house, or better yet a tenant in place, and the property can be leased, that is attractive to a builder as well.

Flippers look for fixers that have "good bones" and need either extensive cosmetic updates or can be enhanced by the addition of more square feet, bedrooms, baths, etc.

Sunday, May 17, 2015

Highest Priced MLS Listings in North Redondo Beach

Contemporary Remodeled House North Redondo Beach CA
Recently I have been marveling at the fact that there are a number of $1M plus listings and sales in North Redondo Beach. My specific quote is something to the effect of "We never used to have one million and North Redondo in the same sentence".  Well as I'll discuss below, that's somewhat of a misstatement but you know what I mean. Historically when most buyers think of North Redondo Beach Real Estate their price point has been $600,000-$8,000,000. These days that range is more like $700,000-$900,000 meaning that at $900K I start to get the (psychological) pushback even if the buyers are approved for a higher amount.*

Last year I sold 2117 Huntington Lane Unit A for $1,079,000 and that was a new high for an attached front unit townhouse. Or at least a new high at the time because we are routinely seeing new and resale detached townhouse listed and selling anywhere between $1-1.2M. And these days in Golden Hills, $1M is almost a bargain. But all that may be about to change with prices ratcheting up yet again.

If the listing at 1913 Gates Avenue (above) sells at anywhere close to the asking price of $2,200,000 we may see an absolute explosion in home values in 90278. There has never been a SFR sold on 90278 over $2M. In fact the previous high was $1,670,000 in 2007 right at the height of the bubble preceding the collapse. This cycle, the highest closing was $1,576,475 at the end of April (pictured below).

SFR sold on Graham in North Redondo Beach CA
So why is Gates priced so much higher than Graham and is it worth it? The house on Graham has 4 bedrooms and is 3792 sq ft on a 5180 sq ft lot. Gates is 2891 sq ft on a 6745 sq ft lot and one block further west. Gates was built in 1994 and has been extensively remodeled. Graham built in 1990, updated and showed well.

Tuesday, May 12, 2015

Modern Architectural Redondo Beach House for Sale

Redondo Beach Modern Architectural 6 bedroom house for Sale with Ocean Views
If you follow my various blog sites, you know how much I love modern, contemporary, steel and glass architectural homes and basically anything in the Dwell Magazine design ethos. I often lament that we do not see enough homes of this in the South Bay so I'm very excited to be listing for sale one of the most unique and dramatic contemporary homes in the Beach Cities. And one of the largest (over 5000 sq ft) with ocean views from multiple decks and the master bedroom. The property is located just west of PCH in South Redondo Beach.

This amazing home will not be listed in the MLS (pocket listings) but you will see it featured in various publications and magazines. In addition to the five bedrooms you'll find multiple outdoor decks, including a huge roof top deck, a front and backyard, one of the largest dining rooms that you will ever see, an amazing restaurant quality gourmet cooks kitchen, a family room opening to an outdoor terrace, walls of glass pocket doors, a huge 3 car garage, loft style home office, a work out room and an elevator to traverse the 3 floors.

If you or anyone you know wants more information you can contact me directly. I'll be making a video available and there will be a single property website as well. For now you'll just have to feast your eyes on the pictures.

Thursday, May 7, 2015

Homes for Sale in North Redondo Beach CA: Inventory Picking Up

Redondo Beach SFR for Sale
Finally! A "reasonable" number of homes listed for sale. And if not now, when? This is, after all, supposed to be the peak season for real estate activity (although I can honestly say I've been busy year round for quite a while.

As of this blog post there are 60 active MLS listings in North Redondo Beach (90278). There's been a number of months recently when we've been under 50 and sometimes in the low 40's. During April, there were 47 closed escrows so this represents slightly over 30 days of inventory. There are currently 66 homes in escrow (MLS status "backup" or "pending".) By any objective measurement, this is still a Seller's market but one with just a little more choice than 60 or 90 days ago.

If you are looking for a 3 bedroom in North Redondo right now and want more than 1000 sq ft and on a quieter side street, you'll have to pony up at least $600K. (There are some smaller 2 bedrooms in the $5's.) Whereas for many years the "sweet spot" may have been between $600-800K, now desirability is more in the $750-950K range. That's a trend that has been emerging over the past 18 months or so.

Tuesday, April 28, 2015

Homes for Sale in North Redondo Beach CA: Is $1M the "New Normal"?

New Construction Redondo Beach Golden Hills
No sooner had I typed the title of this blog post than I thought maybe I should reconsider and make that $1.2M. That's how fast prices are going up. And, all things considered, even at that price point these properties may still be good deals for the very simple reason that you get so much more for your money than in Manhattan Beach, Hermosa Beach or the Westside. Quality of life, proximity to freeways, shopping, beach, entertainment and out great laid back Beach Cities lifestyle!

But enough of that, back to housing prices.

Right now we're seeing the 3000+ sq ft SFRs with 4-5 bedrooms on 5000-7500 sq ft lots priced at around $1.5M. Move the same house to South Redondo and add at least $250K (and 20 minutes to your commute) or take it to Manhattan Beach and you are looking at $3M-$5M. And what's the difference between let's say the 1700 block of East Manhattan and MLS Area 151 in North Redondo Beach? The other side of aviation for a savings of 50%. Sign me up.

Many of these 3000+ sq ft houses are also found in the "El Nido" neighborhood which I have been forecasting will soon take off in price as it has been undervalued. Like the prior analogy, place the same house across 190th in 90277 and the price point is higher. Sometimes much higher.

Speaking of the "New Normal", prices in Golden Hills are continuing their upward spike with the new Casner construction on Reed poised to (justifiably) scale new highs. Pictured above is a new Tall and Skinny that just hit the market priced at $1,429,000 which (for those keeping score at home) is $567 a sq ft. While that might seem like a very high price for a tall and skinny, not really. I previewed the property last week and it is absolutely gorgeous with all the bells and whistles (and then some) you expect from Casner Construction. The house sits on one of my favorite stretches of Reed with an oversize (for Golden Hills) 2875 sq ft street to street lot meaning the back gate opens on the Ford with no houses behind and western exposure in the back yard. This house also boasts one of my favorite floor plans and other exceptional features.

Wednesday, April 22, 2015

Should You Accept a Contingent Offer?

North Redondo Beach drone shot
I was alternately considering calling this post "Buyer and Seller Contingencies" but more specifically wanted to answer the question of whether, in this unprecedented Seller's Market, a seller should consider a contingent offer. I'm not referring to the usual contingencies of appraisal, inspection, loan, etc. but more specifically to the sale of the Buyer's current property (in order to buy your houses).

The answer, as in most things real estate related, is "it depends".

I, or rather my seller, recently accepted a contingent offer on a very hot property. We did so primarily because it made very good business sense. First, the buyer was paying substantially over the asking price. Second, the contingency period for the sale was no longer than the normal contingency period for the loan would have been.

In fact, not only did we accept the contingent offer, the buyer of the contingent property was also selling a property so they were contingent. In other words, for the sale of my listing to go through, the buyer had to sell their house and their buyer was contingent also. 

As it turned out, everything went smoothly and we closed on time (more or less). Well about a day late which isn't out of the ordinary these days.

Saturday, April 18, 2015

Ellis Posner Sells Redondo Beach Real Estate

I had two escrows close this week in North Redondo Beach: 1748 Dixon St in the Golden Hills neighborhood and 2419 Grant Ave Unit C. Dixon is a "Tall and Skinny" single family house in the "Triangle" near Mira Costa High School in Manhattan Beach and Grant is a rear unit 3 on a lot attached townhouse built by Powers Development in 2003. Both properties sold in less than 7 days on the market with multiple offers over the asking price. 

Tall and Skinny for Sale Redondo Beach Golden Hills
It is very interesting, at least to me, as to what is going on in both of these market segments right now as to price and availability. In large part, the 3 on a lot prices are reflective of the price point of Tall & Skinny SFRs which also tend to move in lock step with detached 2 on a lots.

Many Tall and Skinny SFRs have the exact same reverse floorplan as the attached townhomes with 2 bedrooms on the lower level and the living room, master bedroom, kitchen and dining room upstairs. Often the living room or great room features high vaulted ceilings. The Tall and Skinny houses most typically are between 1700-2000 sq ft with 2-2.5 bathrooms. The attached townhomes are usually 1600-1800 sq ft although some of the much newer ones, particularly if they were built after around 2007, may have 4 bedrooms and be slightly over 2000 sq ft.

Tuesday, April 14, 2015

What is the Price Per Square Foot of Real Estate in Redondo Beach?

North Redondo Beach Price per Square Foot
I remember a number of years ago when in response to my "low ball" buyer's offer, a listing agent stated that me that "price per square foot" doesn't really matter. At the time I thought that was the most ridiculous thing I had ever heard. These days, maybe not so much any more.

For a long time, I put a lot of weight on how much a property was selling for based on the price per square foot but the way the market is moving today, that may not be as good of an indicator as it was previously.

There is still some value using this metric on like kind properties but they truly have to be almost identical in every way. And then it is still a better indicator of value than an absolute value.

Let's extrapolate from the chart at left to some real life examples. This is the average not median price per sq ft looking back over the last year or so during which time we've been above $400. Actually the results for March 2015 are pretty indicative across the board showing $425.

Redondo Beach Median Home Prices
Let's take that $425 and apply it to a few of my recent sales.

I just sold 1748 Dixon St, a Golden Hills "Tall and Skinny" SFR in North Redondo Beach for $920,000. The assessor lists the house at 1922 sq ft. So, based on this "average" number it should sell for $816,850. How could I sell it for $478 sq ft?

I also just sold 2417 Grant Ave Unit B for $725,000. That property is the middle unit townhouse of a 3 on a lot. It is approximately 1710 sq ft. Based on the average, it should pencil out at $726,750. So, pretty much in line with expectations. But then I sold an almost identical rear unit one lot east for almost $40K more putting us at $447 a sq ft. What's going on?

There are really two factors at play whenever you are looking at "medians", "averages" and other traditional real estate metrics.

Saturday, April 11, 2015

Redondo Beach Foreclosures and Short Sales

REO Townhouse Listing Redondo Beach CA
I just noticed that there are two, yes count them 2, Redondo Beach foreclosures (REOs) listed for sale right now. A few years ago, a large part of my business was foreclosures, short sales, and other distressed properties but not so much anymore. So, I couldn't help but wondering, "Where have all the foreclosures gone?" Even the (previously) popular website foreclosureradar.com seems to be gone or at least rebranded as something else.

For the purpose of this post I am referring to actual REOs (bank terminology for "Real Estate Owned") listed for sale that the public can buy. There's been quite a bit of confusion because Zillow and others display "pre-foreclosure" properties along with actual listed REOs that you can see.

What many of the public portals, and some brokerage websites, consider to be "pre-foreclosure" homes are actually properties that have had "NODs", a Notice of Default, filed. A notice of default is the first step in the foreclosure process. What the public doesn't really understand, and what is creating a lot of confusion, is that in most instances these "pre-foreclosure" properties are NOT available listings that they can see, make offers on and actually buy. In fact, often these home owners have no intention of selling and may even be downright belligerent when approached. And I can't say I blame them because even though NODs are considered public knowledge, let's face it, it is also somewhat of an invasion of privacy to some extent.

Tuesday, April 7, 2015

Why Aren't There More Listings in Redondo Beach?

Why is housing inventory so low in Redondo Beach? Great question and one I address often with buyers. In fact, the same issue exists throughout the South Bay and LA County so whether you are looking in Redondo Beach, Hermosa Beach, Manhattan Beach etc, the same story seems to be playing out which is that there just isn't that much to look at. And, based on what I am reading you can extrapolate the same conclusions to be true in many markets throughout the US.

The factors at play driving this are a) many homeowners have refinanced and have very low interest rates b) many current owners bought during the last downturn at prices up to 20% below today's values c) more and more seniors are "retiring in place" d) approximately 15% of homeowners do not have enough equity to sell even if they aren't technically underwater and e) California just hasn't built enough new homes over the past 5 years to absorb the growth.

On the opposite side of the equation 1) rents continue to go up creating more demand for home ownership and 2) buyers want to lock in today's low rates while they can. (ironically, raising rates may be one of the few factors that can create some lid on price acceleration.)

Let's take a look at some actual "numbers".

Saturday, April 4, 2015

Rent vs Buy Break Even Analysis

Zillow pegs the "break even" at 2.3 years nationally.
Escalating rents and low interest rates are two contributing factors to the crush of new buyers we see entering the real estate market right now. The common refrain heard from many renters is that for what they are paying in rent they can afford to buy a comparable or even better home.

Let's look at one of my favorite examples, the North Redondo Beach 3 on a lot townhouse.

Assuming a hypothetical sales price of $725,000, well that's not so hypothetical considering that I recently sold 2417 Grant Unit B for exactly that price, here's an example of 20% down since it is the most straight forward.

At 20% down, the mortgage amount is $580,000. At a 4% interest rate that is a principle and interest payment of $2770 per month. Add to that $125 a month for HOA dues and approximately $750 for property taxes and we're at $3645 before any tax deductions. The same unit might rent for $3200-$3500 per month so without purporting to be an accountant I think I can go out on a limb and state that this is at least a break even proposition with an upside.

Thursday, April 2, 2015

Redondo Beach Inventory Low and Prices are Up

Redondo Beach Contemporary in Golden Hills
Remember that B. B. King song, "The Thrill is Gone"? Buyers may soon be singing it. In unison. Redondo Beach housing inventory remains low and most of what does come on the market just isn't very exciting. Or interesting. Or a good deal even though these days for buyers a good deal quite possibly can be redefined as finding a property you want to buy and actually closing escrow.

As of this blog post there are 39 active North Redondo Beach listings (of which 1 is a mobile home and 5 are senior housing) and 47 in South Redondo Beach. If there were 85 in either zip code it would still be a seller's market.

I just did the rounds on Broker's Open (Thursdays from 12-2) as I do most every Thursday. To say I was singularly unimpressed by any new listings would be a massive understatement. And I wanted to come away being impressed and loving some of these. Here's why.

I've been clamoring for "contemporary", "modern", "architectural" homes in the South Bay for quite a while and I know I'm not the only one who really likes the Dwell design look and feel. Well we're finally getting some product and that's a good thing. As for price and what we're getting, that's something else all together.

Like many of you, I've been keeping an eye on the new construction on Reed in the Redondo Beach Golden Hills. The west side of Reed is one of my favorite streets because a) a number of houses are street to street lots meaning there is not a house behind you and b) some of the lots are larger than the usual 2500 sq ft lots found in Golden Hills.

Sunday, March 29, 2015

Redondo Beach Luxury Homes Defined

Luxury Real Estate Redondo Beach CA
I'm often asked for a definition of what Realtors mean when we refer to "luxury" homes. Great question and surprisingly there are no clear cut definition anywhere. For many people what immediately comes to mind is the waterfront house (or at least an ocean, lake, or river view). For others its the country estate, horse property, mountain ski chalet, city penthouse, golf course adjacent, or trophy house. So the definition very much is also a function of location.

In Southern CA often generic MacMansions get thrown into the bucket of luxury homes. But does size alone matter? And then there's my favorite, the ones real estate agents describe as "Executive" homes. Does that mean a Doctor or small business owner can;t live there? Who knows what that one means.

By definition, you can assume that luxury homes are not cheap.  (I meant inexpensive.) But they may not be large either or expensive relative to other properties in the area. For example, $1,000,000 in Manhattan Beach will get you a lot less than in Redondo Beach or Hermosa. I don't think anyone would consider the 2/1 East Manhattan Beach "starter" listed for $1.2M to be a luxury property. On the other hand for $1.2M in North Redondo you most likely are in a property I would consider to be in the luxury category.

Here's how I define luxury homes.

Saturday, March 28, 2015

Zillow Top Picks for Redondo Beach Realtors

Ellis Posner - ZIllow Top Rated Agent Redondo Beach
There's a tab on the Zillow website called "Agent Finder" where they rank the Top Agents for each city based on metrics that Zillow measures (not necessarily MLS data). They are looking at listings, reviews, sales, and other metrics as reported on their site. I was very flattered and honored to recently see that I was number one in 3 out of six categories and in the top 3 the other times. Well at least for today because these rankings can change anytime. I should have 3 more Redondo Beach transactions closing before April 15th and that may boost me into the top spot in a few other categories. (Please note - Zillow also reports on "Teams", these rankings are for individual producers.) It also looks like Zillow has now made a very smart improvement in that they break out local activity compared to overall activity in Agent Finder if you are looking at Realtor profiles. (Graphic left.)

Here's what they measured and my rankings:

1) Most Active - Number One
2) Most Recent Sales - Number Three
3) Best Local Reviews - Number One
4) Most Listings - Number Four
5) Top Buyer's Agent - Number One
6) Top Listing Agent - Number Two


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