My team and I are representing more than $100 million in new Westside development, priced from $6.4 million to $22 million. I was recently interviewed by Westside Digs magazine for an editorial piece regarding development on the Westside, here are some excerpts from the interview.
Digs: What’s happening with the Westside real estate market?
John Hathorn: New construction is hot. Right now, in Santa Monica, Pacific Palisades, and Brentwood, there is $114 million worth of active listings for properties built from 2016 or later and $41 million of new or near new houses in escrow. In the past six months, $196 million worth of new construction homes has changed hands. New construction active listings are priced at an average of $6.7 million and the average sold price is $5.9 million. That includes all of the zip codes in Santa Monica (which brings the average price down a bit). And these are only the home sales published in the MLS. There are many more sales that happen under the radar, 20%-25% of sales are occurring outside the MLS. Many of these unpublished sales are occurring before the homes are completed. Buyers of these pre-completion projects are sometimes able to customize the home, choosing colors and styles of certain components.
The developers of these spec homes are well capitalized. In the old days, the general contractor was the developer. Those GC’s, armed with enough market knowledge to take some risks, most of the time, did ok. Today, there are a handful of developers that are much more sophisticated, utilizing huge lines of credit and private equity to finance their projects.
Digs: What are most Buyers looking for?
John Hathorn: Most buyers are looking for turn-key, move in ready homes or total fixer-upper/tear-downs. It is a trend that began about 5 years ago. A house that was 15-20 years old and not updated used to be considered a cosmetic fixer-upper. Now, 10 to 15-year-old homes that are perfectly livable are being viewed as tear downs. Since 2010, the value of land (teardowns) has grown over 100 percent, while average sales prices have only gone up 50 percent. The value of the structure is quickly eroding for any building smaller than 4,000 square feet, meaning the value of the structure is diminished while the value of the dirt it sits on has increased by more than 100 percent.
The low-interest rates mean that a $6 million house is now affordable for more people, where it used to be only a small group that could afford to buy a $6 million house.
Digs: Will this market trend continue?
John Hathorn: I think so. The current crop of developers has proven that they’re building what the people want. If the market were to drop while developers are holding lots of unsold homes, they will certainly lose money on a few houses but over the long term, prices will balance out – lot values may drop and sale prices for spec homes will stop going up but I don’t anticipate price declines, more of just a leveling off.
For the full article pick up the next issue of Westside Digs Magazine.
Montana Avenue Commercial Lease Update:
Retail space just leased at 1331 Montana Avenue, next to my office, near R+D Kitchen. This went fast the previous tenant moved out on Wednesday and the new tenant, Gramercy will open this week. Approximately 825 sqft. 16’6” wide. $7,044 per month (NNN).
Two new listings have come on the market:
547 16th Street – Traditional newly completed home. Approximately 3,899 sqft with open floorplan- 5 bedrooms, 5.5 baths, hardwood floors throughout and huge kitchen with marble center island. Listed at $5,395,000. Last sold November 24, 2015 for $2,999,000.
225 21st Place – Listed at $3,695,000. Colonial style home with 4 bedrooms and 3.5 bathrooms on a 7,626 sqft lot, approximately 2,698 sqft house. Also, includes a 4-car detached garage. Last sold way back in 1990.
Four homes went under contract last week:
213 Euclid Street– 5 bedroom and 6 bath, $6,999,000. Newer custom built home boasting over 6,600+ square feet, on a large 11,000+ square foot lot. Italian style villa designed by J. Charles, nice yard with swimming pool. Last sold in September 1998 for $1,225,000.
323 Adelaide Drive – Listed at $6,195,000. Located on the most sought-after block of Adelaide Drive the 4-level architectural home has modern European details, including an elevator and gym. Ocean and Canyon views! Last sold July 31, 1998 for $2,150,000. Listed by Pence Hathorn Silver.
211 17th Street – Listed at $3,995,000. 1931 Spanish Colonial Revival two-story home with 4 bedrooms and 3.75 baths, original wood beams, painted ceiling and features. Approximately 3,025 sq ft on an 8,900 sq ft lot. Last sold in 1989.
438 11th Street – Listed at $3,390,000. On the smaller side but charming Spanish home with 3 bedrooms and 3 baths, original tile throughout, kitchen with new appliances. 50X150 lot with a private front courtyard with a fountain and new salt water pool with waterfall and spa in the backyard. Last sold April 24, 2014 for $2,195,000.
One closed sale to report:
415 23rd Street – Listed and Closed in 20 days! Traditional 3 bedroom and 3 bath home, Sold for $3,945,000.
Call me for a couple of upcoming attractions that are not yet listed in the MLS, priced from $1.9 million to $16 million. And….here are a few that we have listed in the MLS:
920 Alta Avenue – 6 bedrooms and 6.5 baths $6,395,000
333 17th Street – 5 bedrooms and 6.5 baths $6,395,000
1309 Pine Street – 8,213 sqft. lot, $2,049,000
426 Mesa Road – Vacant Land, $1,440,000
1658 Camden Avenue #306 – 2 bedrooms and 2 baths $985,000