An interesting area of Hermosa Beach that many overlook, is a small section of the Hermosa Valley between Ardmore and Pacific Coast Highway. There lies a few condominium complexes on 1600 Ardmore, 1720 Ardmore, and 1707 Pacific Coast Highway (aka The Hermosa Surf Condos) that offer very affordable home ownership in Hermosa Beach terms.
The main draw to these condos is you can actually own Hermosa Beach real estate at a ridiculously low price relative to almost everything in the area. However, there are some downsides: these condos are located on busy streets, surrounded by commercial property, and they are in massive complexes with small units. Basically… they feel like apartments.
Because of these downsides, these condos sell at a price that is compelling enough to give up renting. If you are buying and living in something that is virtually an apartment, there needs to be a financial incentive. If you are more financially driven, here is how the numbers might break down if you were to purchase a condo in these complexes…
Take for instance 1720 Ardmore Avenue #124 that sold for $576,500 in September 2015. This condo offers 2 bedrooms and 2 full bathrooms with a nice clean living area. The bathrooms could use some updating, but to own a piece of the beach west of PCH for under $600k? That is pretty amazing. If you were to put down 30% and finance a loan at 4%, your mortgage payment would be right around $1,915 a month. Throw in about $615 a month for property taxes and another $470 a month in HOA fees… you are looking at $3,000 a month on the dot.
Now let’s take a look at renting a 2-bedroom condo in this area. If you take this exact same 1720 Ardmore address and plug it into rentometer.com, you can see that a 2-bedroom condo in this area at $3,000 is high, but not crazy high. You would be sitting in the 20th percentile of the most expensive in the area. Now the Rentometer website is not always accurate, but we know for sure that if you move slightly west to a sand section address closer to the water, rents come in significantly higher. So if you want to own a slice of the sand for less than renting and don’t mind a quick bike ride to the beach, a condo in the Hermosa valley could be your best option!
Since the financial crisis, the South Bay has been on a tear… so how do sales of these condos stack up of historically? Let’s use the example at 1707 Pacific Coast Highway #304. During the lowest point of the recession in 2008, this condo sold for $521,000. That had to be a fantastic deal, right?! WRONG. After updating the floors, stone, and new paint, this condo resold in April of 2015 for $575,000. After selling costs and remodel costs, we figure the owner must have broken even on this place.
The fact that Hermosa Beach has jumped, in some cases, close to 50% since 2008 and 2009, especially in housing that is affordable, these condos have shown historically that they don’t move with the larger Hermosa and South Bay market. There are of course differing examples of condos in these complexes selling in the mid-$400s back in 2010, but at a mid-$500s to low-$600s resale today, you still are not making nearly as much as buyers that purchased elsewhere.
In a nutshell, these condos are so much like apartments that their value will always be tied to the apartment rental market. As rents go, so will the value of these condos. And our guess is that they will always be “compelling” due to this correlation.
Richard Haynes
DRE: 01779425
For more South Bay real estate insights, subscribe and follow Richard’s social channels below:
The Richard Haynes Real Estate ShowA leader in South Bay real estate for the better part of a decade, Richard thrives as an advisor to his clients with over $248 million in sales as a broker or investment principal at his boutique agency, Haynes. Richard is known for his keen local market insights which have been featured in the L.A. Times, The Street, and Forbes, along with his weekly South Bay real estate blog. [read more]