North Redondo Beach new construction town home sales are always interesting to discuss. New construction is not only easy on the eyes, but has been one of the hottest aspects of the South Bay housing market over the last five years. Today, I will be reviewing both three-on-a-lot and two-on-a-lot town homes.
Muted Sales Year Over Year
Three-on-a-lot sales in North Redondo Beach were on fire a few years ago. Developers were pumping out units and buyers were eager to pay record prices.
Since then, sales have been muted for reasons neither good nor bad.
In 2017, there were 10 new construction three-on-a-lot sales. With 2018 coming to an end, there have only been four sales.
Are these sales slowing because of the market? The short answer is no. Developers just have not built as many.
Perhaps land costs are too high? Or land is too scarce? Currently, there are only four new construction units available. There is no glut of inventory and if things stay the same, the market would not even have a chance to match last year’s sales pace due to lack of inventory.
Healthy Prices Year Over Year
It is hard to compare three-on-a-lot pricing over the long term as developers have started to go bigger. In the past, developers were conservative building 4-bed units between 1,900 and 2,000 sq. ft.
Now, developers are pushing to 2,150+ sq. ft. with lofts and extra space because buyers were willing to pay a premium for size. This was not always the case in past years for North Redondo Beach.
Larger Unit (2,150+ sq. ft.) Median Sale Prices:
- Six sales in 2017 – $1,160,000
- Five sales in 2018 – $1,190,000 (the median sale was 2307 Vanderbilt Lane #B)
To me, this is a very healthy and steady pace of price growth.
Smaller units (1,900 to 2,000 sq. ft.) Median Sale Prices:
- Two sales in 2017 – $992,000 (the two sales were at 2500 Rockefeller Lane and 1608 Phelan Lane)
- One sale in 2018 – $1,185,000 (2310 Carnegie Lane #C)
As you can see, there was a big increase from 2017 to 2018. That sale on Carnegie Lane #C was a bullish sign for developers to build better town homes with nicer finishes. That said, the North Redondo Beach market may not be ready for town homes with luxurious finishes as the other two Carnegie units are awaiting buyers. Check them out at 2310 Carnegie Lane #A and 2310 Carnegie Lane #B as they are very well done and offer a high-end product not normally found in the area.
All in all, sales are muted only because the supply is limited and the market is seeing steady and in some cases, strong price growth. This part of the market looks healthy even with fewer sales.
New Construction Price Growth
If you read my North Redondo blog back in May, you know that two-on-a-lots were all the rage. At that time, developers were building like crazy and buyers were buying at record prices.
Here is a breakdown of new construction price growth from the previous blog:
- 2013 High Closing – $992,000
- 2014 High Closing – $1,019,000
- 2015 High Closing – $1,250,000
- 2016 High Closing – $1,328,000
- 2017 High Closing – $1,400,000 (Excluding the over-sized lot sales at 3307 Green Lane and 1918 Dufour Avenue)
- 2018 High Closing – $1,500,000 (Occurred in April at 1729 Harriman Lane #A)
Per the last blog, I wrote about a shocking $1.5 million record-breaking sale that closed in April. Not only was it a $100,000 jump higher after years of price appreciation, but it happened so early in 2018. I thought: “Could this sale lead to two-on-a-lots going sky-high through the remainder of 2018?”
Well, I am here to report that even with how white hot this part of this market has been, there has NOT been a higher sale and likely will not be a higher sale for the remainder of the year. This is probably a welcomed relief to buyers.
Here is a sample of closed sales since the record in April:
- $1,496,000 – 2220 Pullman Lane
- $1,440,000 – 1802 Pullman Lane #A
- $1,430,000 – 1802 Pulman Lane #B
- $1,472,000 – 2104 Harriman Lane #A
- $1,470,000 – 2104 Harriman Lane #B
- $1,378,000 – 2309 Clark Lane #B
- $1,425,000 – 2213 Speyer Lane #B
- $1,410,000 – 1729 Harriman Lane #B
All of these were sales post the record-breaking $1,500,000 sale. Furthermore, its neighboring town home on the same lot sold four months later at $1,410,000. So although the market is strong, there seems to be a ceiling price that buyers are not willing to cross as demonstrated by these additional sales.
There were two off-market sales on Warfield in area 151 (2206 Warfield Ave #A and 2206 Warfield Ave #B) that sold for $1,500,000 and $1,490,000 in July. It seems that a smart developer unloaded them pre-market knowing they had a great deal in a less desirable area one street off of Manhattan Beach Blvd. Those sales are likely an outlier, but need to be accounted for in the market.
Two-on-a-lots are still hot in 2018 when compared to 2017 with a new record sale $100,000 higher than the previous year. But to reiterate, it seems when looking at the record in April, buyers put their foot down and kept a lid on pricing. This is a good sign for the market so prices do not get ahead of themselves.
It will be interesting to see the coming data in 2019 on how new construction sales/prices perform. Will the trend continue higher or will prices start to flatten in the face of rising interest rates and less savings as a result of tax reform?
For now the market seems to be healthy but very well may have reached its top. I will check back in mid-2019!