For this week, I am going old school.
I am throwing it way back to a blog post in 2016, the first full year of writing my weekly blog. Six years is not that long for anything, but as a Realtor, it feels like a lifetime ago.
Writing is not my strong suit and this blog is the most challenging “to-do” of my week.
I struggle to write informative blogs that are easy to read for the non-professional. Sometimes I pull it off and other times not so much.
After going back and re-reading my 2016 blog post, I am pleased to report that after six years of writing every single week, there has been improvement. Those past blogs were rough and quite frankly, a little cringeworthy.
If you have stuck with me for those past six years – I thank you.
So, what was the blog post and what inspired me to go back and find it?
The answer: A recently closed sale at 429 Marine Place in Manhattan Beach.
I will reference the old blog post below for you to read, but my plan is to recap my thoughts in 2016 below in a clearer, more concise way to spare you from the old post. But, feel free to read the embarrassing mishmash of words.
Recapping Deal or Rip-Off 2016
The inspiration for the “A Manhattan Beach Deal or Rip-Off” blog post in 2016 was a brand new two-on-lot town home development in the Sand Section.
At that time, the Manhattan Beach market was moving significantly higher in price while sales were slowly declining. The market was strong and new price records were being made.
Cue the two town homes as lead characters…
- 428 23rd Street, Manhattan Beach
- 4 beds, 5 baths, 2,735 sq. ft., 3,604 sq. ft. lot
- Sold Price: $3,745,000
- 429 Marine Place, Manhattan Beach
- 4 beds, 5 baths, 2,710 sq. ft., 3,604 sq. ft. lot
- Sold Price: $3,065,000
Both townhomes, per the listings, offered virtually the same specs except for one being on 23rd Street with balcony ocean views and the other being on the Marine Place alley with limited views.
The balcony views property sold first (in February 2016) at a whopping $3.745 million, which was a huge price for the product at the time.
The alley property sold second (in August 2016) at a significant discount of almost $700,000 compared to the other unit, closing at $3.065 million.
In a nutshell, the point of the blog was that one buyer either made a heck of great buy or one buyer completely overpaid. I also highlighted the risks associated with being the first buyer of a high-priced development.
If the $3.745 million record buy was correct, then the $3 million buyer got an amazing discount (the deal). If the $3 million buy was more in line with market value, then the $3.745 million buy overpaid dearly (the rip-off).
Long-story short, the numbers (and my humble opinion) pointed to a major over-payment on the $3.745 million purchase.
For reference, I have linked these two extremely tough to read posts from back in the day…
Recent Sale on Marine Place
Now that you have the background from five years ago, you can now see the results of the 2021 sale from this complex. So exciting to see value six years later from an old post.
- 429 Marine Place, Manhattan Beach
- 4 beds, 5 baths, 2,510 sq. ft., 3,604 sq. ft. lot
- Sold Price: $3,210,000
** Side note: The 2016 listing notes that the town home is 2,710 square feet, but according to the assessor’s records, the home is estimated at 2,510 square feet…So, this is why you will see a difference in home size on the 2016 listing and the 2021 listing above. **
This resale debuted at $3.35 million, made a deal in six days and then fell out of escrow…It later reduced its price just two weeks after to $3.25 million and made a deal that eventually closed for an additional $40,000 off the top.
I can do the math for you…That is a $145,000 “profit” from a purchase over five years old.
Unfortunately, that price improvement will not even cover the commissions, let alone closing costs.
If you have read my past blogs or listened to my podcast, you will know Manhattan Beach is up 10% in just the past year.
Median prices over a five-year period show Manhattan Beach real estate is up over 30%.
To be fair, the Sand Section has underperformed over the last five years compared to other areas of Manhattan Beach, but any way you slice it, this is a disappointing result for the seller.
The Rip-Off is Twofold
What we found with the alleyway unit coming to market this year is that they overpaid in 2016 as well.
To break even and likely lose after owning in Manhattan for five years, with the tailwinds of generationally low interest rates and the hottest market in at least a decade, is a hard pill to swallow.
That all said, it is not as bad as the 23rd Street side must be feeling.
Not only did its best comp sell for almost $700,000 less five years ago, but its best comp just sold over $500,000 less last week. Hardly an improvement and a tough hill to climb if they need to sell potential buyers on value in the next few years.
Both units were overpayments, but the front unit might have trouble achieving its $3.745 for many years to come.
Perhaps a lost decade of returns on a significant investment.
I am sure the owner is not sweating it, however, as they closed all-cash on their beautiful brand new home in dreamy Manhattan Beach. If you can afford the real estate, it is hard to care about ROI if you are living free and clear in one of the most desirable addresses in America.
Not everything is about money, and sometimes the enjoyment is more important. That is residential real estate.
Conclusion: Be Careful
In conclusion I say this…
You still need to be careful. Always.
It is easy to get caught up in a hot market and grossly overpay. These two examples (and they are not the only ones) are a cautionary tale for buyers to stay disciplined even when it seems like securing a home is nearly impossible.
There will be a time when prices calm down, and similar or better opportunities arise.
If your home is an important investment to you overall net worth, then you please do your homework and avoid making a mistake on price.
There will always be another deal.
Stay patient, stay disciplined, and be careful.
You’ll be glad you did.