El Porto is On Fire While the Strand is Falling Into the Sea!
Few may realize that just within our little (?) town, each section has its own trends and cycles. Demographics, building trends, and price points play a large part. Areas of our city can boom while others are experiencing mean reversion (analyst speak for declining prices) Nothing could contrast this more than looking at El Porto duplex trends vs South Strand. To do so, we need to back up just a bit.
Following the 2009 trough, Strand prices on the south end of town literally exploded while El Porto Strand nearly stood still. As Manhattan Beach has continually become a “brand” city, (much to the chagrin of some of our long-time residents), the big money scooped up the AAA properties. This created a bit of a mini-bubble on ultra-high end properties. Lot value for a standard 3500 square foot lot south of the pier topped out at about 14-15 million, while El Porto Strand dirt has held steady at roughly 6 million.
What has many developers and realtors scratching their collective heads is how a 600 block Strand property could go for 14.5 million last year, only to see 716 Strand close for 9.3 million on Jan 13 of this year. I know this because I represented the buyer on the latter. Granted, there is a bathroom on the beach just north of said property, yet my clients were not bothered by it one bit. Even if you knock off a million or so due to the bathroom, how can one explain another 4 million dollar decrease in value? Amazing negotiating skills?! Ok maybe a little but….It seems the air may have just left the balloon.
Strand inventory has been building quite markedly in recent months. The reality is that there was some irrational exuberance in the stampede to buy these properties. Most Strand sellers, and there are plenty, are unwilling to admit that asking prices need to come down to match what others are selling for. Time will tell if my purchase was an outlier or the new comp to compete with.
Now let’s take a quick peak at El Porto duplexes. Last Spring, I purchased a fixer for 1.6 million and resold it for 1.83 million. Only months before that, I sold a turnkey SFR for a client on 40th Street for 1.6 million (175k above asking). A few heads turned when I paid the same price for my flip in such short order. However, there are two duplexes now in escrow here will close another 10% to those prices. In six months! While I cannot discuss the exact prices publically until they close to protect the sellers, rest assured, El Porto comps are exploding. Unlike Strand properties, there is next to NO inventory here in our neighborhood, despite a softening in the rental markets.
The bottom line is that real estate is TRULY local! More so than people realize. Here is a snapshot of the health of MB sub-markets.
MB Strand- high inventory per norm (8 including a new one today), no turnover
Sand Section < 3mm excluding El Porto- low inventory (7), high turnover
Sand Section > 3mm high end- moderate inventory (16), low turnover COOLER with highest the price points COLD.
El Porto- next to no inventory (2), high turnover
Tree Section-moderate inventory (22) decent turnover
MB Village- low inventory (2) fast turnover
Hill Section-moderate inventory (10) decent turnover
East MB-moderate to lower inventory, decent turnover