If you have followed my blog over the last 18 months, you know now that I love writing about new construction in north Redondo. It is easy to compare and fun to watch the market run.
Those who follow the market closely know that a couple years ago brand new construction three-on-a-lot town homes were all the rage going from $700,000 to topping $1 million in just a few short years. But in a recent post, (You Can Have One or Six), things look to be plateauing due to inventory supply and buyer fatigue on record pricing quarter after quarter.
Trends can change very quickly in real estate, and the market reaction has been swift in Redondo…three-on-a-lot town homes are so 2015. Presently, it looks like the king of new construction is the larger counterpart two-on-a-lot town homes that offer 500 sq. ft. to 600 sq. ft. more livable space, bigger yards, and one less neighbor to deal with at your HOA meetings. And it makes sense, back in 2015 two-unit town homes with all of their extra square footage and space were selling in-step with the three-unit town homes, but supply did not keep up because, well, developers were producing one-third less per lot due to zoning restrictions. Since then, we have seen a meteoric surge over the last 12 months.
Take a look at our early 2016 blog in February, (The Steady Rise of North Redondo Town Homes), and you can see the nice growth over the years. Then in June, I touched on the topic once again in a blog post titled (North Redondo Town Homes Still Going Strong). If you were paying attention, late 2015 and early 2016 two-on-a-lots were trending in the $1.2 million to $1.25 million range. Only a half a year later we were looking at sales hitting $1.3 million, and pending sales moving higher. It was crazy.
I tried to tell a prophecy in the February blog referencing two-on-a-lots, “…outside of a major macroeconomic event, the rise of north Redondo town homes will not be slowing anytime soon.”
And then again in the June blog, “…as long as these factors hold, then we will hold our thoughts like a broken record: this area will not be slowing down anytime soon.”
Now, look where we are…sales topping $1.37 million! The train keeps rolling.
1921 Speyer Lane #B officially closed at $1.37 million three weeks ago to smash the record of comparable newly built town homes. And its neighbor Unit A is currently pending at the same price. These were two very well done town homes in a fabulous location south of Grant Avenue.
The big question remains…can this price appreciation keep going? I don’t know. But there are some early signs that the train could be slowing.
Currently, there are 11 brand new two-on-a-lot town homes asking between $1.275 and $1.370 million…and they are starting to collect a little dust. The average days on market is about 60 with almost half pushing three months or higher on market.
Right now it is too early to tell if two-on-a-lot prices are topping during the slow holiday selling season. There are more new construction two-on-a-lots being built as I write, so we will see if the market can reduce this current inventory before those homes are ready. The true test will come in the spring selling season when buyers come out in droves to north Redondo to find great homes at the most affordable levels in the beach cities…will they continue to buy surging two-on-a-lot tome homes?
That being said, it would not surprise me to see a top-notch build touch the $1.4 million mark, but outside of that, if inventory starts to rise and buyer fatigue predictably sets in, look for the two-on-a-lots to take a breath in 2017 like their three-unit counterparts seem to be doing in 2016. We expect these town home prices to be flat as bullish builders may have gotten ahead of themselves.
Maybe our latest prediction will fail to pan out, but in the meantime, we will continue to look for the next trends. And hopefully, you can benefit from the insight!
It’s Your South Bay. Own It.