On Brokers this week (listed by South Bay Brokers) was a 849 Avenue C. Completed a few months ago, this 4000 sq foot home is a work of art. Designed by Michael Lee, a local Manhattan Beach architect who is deft in modern/contemporary architecture, this home has beautiful indoor/outdoor space. The photos I’ve posted are taken from outside by the pool which does or does not have to be separated from the living area by fully retractable floor to ceiling sliding glass doors. There is a dedicated viewing room downstairs with large theater style seating. The home is stunning.
2013 proved to be a good year for real estate. Listings received multiple offers, prices increased rapidly, buyers got historically low interest rates.
Here are some specifics for the North Redondo Beach Area 151:
A total of 184 homes sold this year.
176 of the sales were on the MLS.
8 of the sales were off market and/or pocket listings.
The average Days on Market was 51.
The average List Price was $725,000.
The average Sold Price was $722,150.
There were a total of 14 short sales and 2 REOs.
2013 was a strong market. Many homeowners gained equity in their homes due to rising prices. The number of distressed sales decreased immensely from the two years prior when they represented approximately 15% of the market. Prices continued to climb and buyers continued to pay those prices.
Highest Priced Single Family Residence
2210 Robinson Street: 5 bedroom new construction with 3,078 sq. feet.
The record is still held by 2615 160th Street which sold for $1,500,000 in 2011. This was an off-market sale which may not accurately represent market value at that time. The next highest sale was 2110 Ruhland Ave which sold for $1,450,000 in 2008.
Highest Priced Townhome
1931 Nelson Ave, #B: 4 bedroom with 3,580 sq. feet. Built in 2005.
The record is held by 2023 Dufour Ave which sold for $1,275,000 in 2007.
The pace at which prices are climbing has slowed down, but inventory is still low. For the most part, sellers are getting their asking prices and a little more. As homeowners gain equity, we may see more inventory hit the market in 2014. But until then, there’s enough demand to continue to bolster prices.
If you’re a seller, the lack of competition makes this a great time to sell. With few choices, you can garner more money for your property.
As a buyer, you should be as aggressive as possible. Buyers are competing with each other because inventory is low, making it very easy to chase the market up. For example, if you were buying a 4 bedroom town home built in the 90s in North Redondo in the beginning of 2013, you would pay approximately $775,000. Now, a similar town home would sell in the mid $800s. A newer townhome typically sold for mid to high $800s a year ago. Now, they are selling for low to mid $900s and closer to $1,oo0,000 for the larger ones.
There’s not much inventory in the high end of North Redondo Beach right now. But two listings are coming back on the market for a second chance. 2211 Warfield Ave, #B is a 4 bedroom townhome built in 2005 by E&S Builders. It will be priced in the mid $800s and is a great value. Then there is 2215 Ruhland Ave, #A. It’s a 5 bedroom townhome priced at $899,000 and built by Rich VR.
Both town homes have high end finishes. Warfield offers an upstairs loft/family room and Ruhland has a 5th bedroom which is unusual for the area. Let me know if you would like to see either of these properties before they are snapped up.
If you’re interested in seeing the general trend in prices, here’s the latest from DQ News, comparing prices from October 2013 to October 2012 in the South Bay:
Average Sales Price
City October 2013 October 2012 Increase
Hermosa Beach $1,399,000 $835,000 67.54%
Manhattan Beach $1,386,000 $1,137,500 21.85%
Redondo Beach $747,500 $700,000 6.79%
Redondo Beach had 70 transactions in October, the highest number of the three Beach Cities. Manhattan Beach had 40 and Hermosa had 24.
The trend appears to still be going up. Inventory is still low, and there’s enough demand to continue to push prices up. I don’t think we’re going to see the frenzied pace that we saw in the beginning of 2013, but there will be plenty of activity.
The real estate industry could be tapered by the new Qualified Mortgage standards (effective as of January 10th) which require a borrower’s debt to income ratio to be no more than 43%. Of course, this could just mean that the big lenders are going to continue to grab the lion share of the business since they are less impacted by the QM guidelines; they can hold on to their loans rather than selling them on the secondary market which is dictated by Fannie and Freddie.
Last night the Manhattan Beach City Council voted to approve a revamp of the Manhattan Village Mall which is located at the corner of Sepulveda Blvd and Rosecrans Avenue. The plans call for a $110 million renovation including 60,000 sq feet of pedestrian friendly space and open air shops near the CPK. The plan also calls for additional parking structures, a consolidation of the Macys space which currently anchors both sides of the mall, and an addition near the standalone electronics store, Frys.
The plan exists in a few phases and it’s far from ironed out yet, but it’s a good first step to improving this extremely valuable real estate. I would think that with El Segundo’s shopping development across the way, the Manhattan Village Mall has lost some business over the past few years. It’s a small mall with a limited number of shops and restaurants. The expansion could prove to make it more of a destination site and continue to drive revenue to the city.
Measure Q is at work in the Redondo Beach Unified School District. Over the holidays, construction started at 12 campuses for solar shade structures. These structures offer shade for cars in the parking lot while simultaneously creating solar power for the schools which should help reduce their utility bills. The hope is that with the savings the schools can reallocate funds to other areas.
The above photo is of the parking lot at Lincoln Elementary in Area 151 of North Redondo Beach.
Besides the solar shades, other projects include technology infrastructure and computers for students, new and replacement athletic fields, upgrade emergency communication, new classrooms, and security fencing.
Qualified Mortgage (QM) standards kicked in as of January 10, 2014. Under the Dodd Frank Reform Act, lenders will need to meet more stringent guidelines in order to fall under the QM safe harbor, be protected from liability. Otherwise, they may be held liable for selling a loan that a borrower can’t afford. One of the major points of QM is that the borrower can’t have their total debt exceed 43% of their total income. There are many borrowers who purchased homes last week that exceeded the 43% Debt to Income ratio. Today, they would not be able to get the same loan.
In my opinion, these new rules under QM are going to shrink the lending landscape even more. Smaller lenders may get out of the mortgage business altogether because it may prove to be too risky for them. It’s the big lenders who will benefit from these new rules. Many of them plan not to adhere to these rules because they can keep the loans in their own portfolios rather than sell them in the secondary market. And now they will have less competition and larger share of the business.
We will see how this all plays out in the coming weeks and months. But if you’re looking to buy a home and your debt (including the mortgage) exceeds 43% of your income, then you will probably be doing business with one of the big lenders like Wells Fargo, Bank of America, and Chase. Wells Fargo, for instance, will still go up to 50% debt to income ratio.
Termite inspections are usually paid for by the seller. And typically the seller pays for Section 1 items and the buyer pays for Section 2 items. This will all be clarified in the purchase contract (RPA) and the Wood Destroying Pest Addendum (WPA). Don’t assume this is how it’s going to be… make sure you deal with this in your negotiations!
Section 1 items are any repairs or treatments that are required in order to get a clearance from the termite company. Examples of Section 1 items are fumigation, spraying, and replacing rotted wood. Section 2 items are those things that do not currently pose a problem but could be a problem in the future. You can consider Section 2 items precautionary measures. For instance, the termite report might indicate that the soil is too high up on the exterior wall of the house. There’s no current problem, but this could lead to dry rot down the road.
Case Study: Termite Inspection in Redondo Beach
Last week, a client of mine had a home inspection for a town home in North Redondo, and the home inspector cited termites in the fence between the property and the neighboring property. The inspector made note of it and suggested any further investigations be taken up with the termite company. However, the termite report didn’t make mention of any termites in the fence. Fences that appear to be on property lines are never included in termite reports because the termite company has no way of knowing who owns or who has responsibility for the fence. Fences are neither Section 1 or Section 2 items. The termite company also explained that it’s not cost effective to chemically treat a fence for termites. You’re better off taking the money and putting it toward replacing wooden boards.