Why Would a Resale Sell for a Higher Price than a New Home?
Great question and I'm glad you asked!
For years I have been tracking new construction prices in Redondo Beach as a leading indicator of where we can expect to see resale prices going because as I have written multiple times, presumably no one would pay more for a resale than a new home all other factors being equal. Well apparently until now anyway.
Recently I have seen some very comparable resales equal and even surpass the price of new homes. Yes, that got my head spinning and maybe yours too so let's look into whats going on.
2002 Pullman Ln Unit B and 1807 Huntington Ln Unit A
|2002 Pullman Ln Unit B|
These two are basically the exact same detached two on a lot built by the same builder less than two years apart located within a few blocks of each other (MLS Area 152) with the same finish work. I have been in both houses. Same.
1807 Huntington, the resale, sold for $1,315,000 and closed escrow 4/21/2017. 2002 Pullman (new construction pictured above) closed on 4/18/2017 for $1,250,000. Huntington went under contract on 3/20 and Pullman 3/10. So both on the market at the same time although Pullman was active for a much longer period and we all know how Buyers are punishing any listings that don't sell the first ten days.
Seriously, the only discernible difference is that Pullman is a rear unit a few blocks further east with less privacy in the smaller than usual backyard but even that doesn't explain things because unit A on Pullman sold for $1,275,000. I'm just opting to use Unit B as a comparison because it closed more or less at the same time as Huntington.
As far as schools, we are looking at Birney vs Jefferson with the latter usually being somewhat more preferable although both are great schools. So that can't be it.
So maybe there is a preference to have the extra piece of land that goes with the front unit but at a $40K differential, I for once my loyal readers are at a loss for words! But I'll keep writing none the less because if you have read this far undoubtedly you are finding this very interesting.
|1807 Huntington Ln Unit A|
Both properties were staged and here's how each property was marketed in the MLS:
1807 Huntington Ln Unit A
"This beautiful 1 year-old 4 bedroom/3.5 bath family home lives like a single family home. This home has it all, with a large gourmet kitchen featuring granite countertops, huge center island, and top of the line stainless steel appliances. Big eating/entertaining area in kitchen. Kitchen opens to large living room with wet bar and fireplace. Puronics Hydronex water filtration system with new filters. Video intercom system through, central vacuum throughout. The living room opens to the large enclosed backyard which is a great space for children to play and of course for entertaining. Big wet bar downstairs in living room, great for entertaining. Custom iron railings on the staircase, spacious upstairs den could be used as a second family room, already has wet bar. All four bedrooms on one level, large master features walk-in closet, romantic fireplace and luxurious master bath with spa tub and separate shower. Great floor plan for a growing family. Landscaped backyard with stamped concrete patio. Two car attached garage. Did I tell you this is the sunny side of the street and a lovely front unit? Current owner purchased as new and put in tons of upgrades. Better than new condition."
2002 Pullman Ln Unit B"Brand new 4bd/3.5ba detached +/-2,600 sq ft Mediterranean-style townhome. Gourmet kitchen with granite countertops, center island and top-of-the-line appliances opens to large living room with wet bar and fireplace. A powder room and laundry are also on main level. Custom iron railings on staircase leads to spacious upstairs den area with balcony access. Large master suite features vaulted ceilings, gas fireplace, walk-in closet, balcony access and a luxurious master bath with spa tubs and separate showers. Landscaped backyard with stamped concrete patio. Unique custom features include video intercom system and central vacuum. Two car attached garage."
If these were the only matched pair with this anomaly I wouldn't be writing this column. There's more.
2408 Harriman Ln Unit B and 2413 Clark Ln Unit A
|2413 Clark Ln Unit A|
Here's another matched pair that makes no sense with the resale year older home selling for more than the new construction. Only real difference is front vs back unit.
The resale on Clark Ln sold for $1,290,000 and closed escrow on 4/28. The new construction went for $1,260,000 and closed on 5/05. Before you think front vs back unit, the front unit on Harriman sold for $1,260,000 also. Like the example on Pullman, it sold much earlier so I'm referencing the sale closer in time frame.
As for marketing, here's what the MLS read:
2413 Clark Ln Unit A
"Come home to this outstanding contemporary townhouse with an open floor plan and designer touches. This 2-on-a-lot home offers 4 bedrooms, 3.5 luxurious baths, plus a bonus office area. Spacious two car garage with direct access. Kitchen w/ high quality cabinetry, center Island & top of the line appliances is open to the spacious dining area & living room. High ceilings throughout. Plantations shutters on all living area windows. Bedroom windows covered with stunning silk drapery. Current owners purchased last year and added many upgrades. Detached and absolutely feels like a single family home. Do not miss out."
|2408 Harriman Ln Unit B|
2408 Harriman Ln Unit B
"Stunning contemporary new townhouse. Open and bright floorplan with designer finishes. This home offers 4 bedrooms, and 3.5 full bathrooms. Open ground level, with great room, dining area, and powder room for guests. All bedrooms upstairs. Open and bright feeling. Do not miss out on this contemporary masterpiece of new construction. The craftsmanship is evident throughout every detail in this home. Come see for yourself!"
This is interesting, right? Let's look at some more.
2206 Harriman Ln Unit B and 1918 Dufour Ln
Both of these detached Townhomes are currently active as of this writing with very similar list pricing. These are not a matched pair, they have very different attributes and not located near each other with Dufour being in MLS Area 151 North of Artesia Blvd and Harriman South in MLS Area 152.
The exterior of 2206 Harriman is the featured photo at the top of this post. That property is priced at $1,495,000 and was built in 2016. For all intents and purposes it is not much different than the other A & B Unit two on a lots I have been writing about here.
1918 Dufour is a corner lot detached new construction larger, gorgeous property. The corner lot units have no shared driveway so really, really do feel like Single Family Homes. It is priced at $1,489,000 (pictured below). So what's up with that? Newer, smaller, priced higher.
Here's the respective MLS descriptions:
2206 Harriman Ln Unit B"One of a kind coastal contemporary 4 bedroom/3.5 bathroom detached townhouse located in the heart of Redondo Beach. Recently completed in 2016, this spacious home has over 2,600 square feet of living space and has everything you can imagine. The open floorplan features European Oak hardwood flooring throughout and all four bedrooms on the same level. Large great room with two sets of French doors that flow out to the private backyard with grass and an outdoor dining area. Chef's kitchen comes fully equipped with top of the line appliances including a custom Sub-Zero fridge that matches the island. Master suite with huge walk-in closet and bathroom with soaking tub, dual sinks, and city lights views! Custom window treatments throughout and entertainment center recently installed from Restoration Hardware. A/C quiet slim line unit with smart Ecobee system in every room. Automated door locks and temperature control from the touch of your phone. Two car garage with extra storage, epoxy finish and electrical vehicle charging station. Centrally located within a short walk to award winning Redondo Beach schools, restaurants, parks, and the beach."
1918 Dufour Ln
"New Mediterranean-style townhome with a flair of modernity and a single-family home feel, situated on a corner lot in North Redondo. First floor features a formal living room, family room, powder room, bar area, and extra-large kitchen with stainless steel appliances. The second floor holds the master bedroom, which has its own balcony and walk-in closet. Jacuzzi tub and double sinks in the master bathroom. Second bedroom has its own bathroom, whereas the third and fourth bedrooms share a jack & jill. Two-car attached garage and backyard large enough for cozy gatherings."
Here's some more photos:
Final VerdictThe envelope please.
Clearly some Buyers are not placing the highest value on new when compared to resale properties with attractive upgrades and higher end marketing. If the curb appeal, specific location, or other attributes are more appealing, yes, in some instances the similar resale property might sell for more.
So, what do you think?