spec dev't

There are currently 19 blog entries related to this category.

It was about 6 years ago. The last real estate upcycle had begun to stall out. New construction sales slowed. A local builder took it upon himself to convince wary buyers that it was an excellent time to buy.

In our January 2008 post here at MBC (see "A Builder's Take"), we copied this extraordinary half-page print ad placed by the builder and discussed the ad's message. (Click to enlarge.)

Memorably titled, "The Crystal Ball Story," the ad said that new home prices could not go lower, and that buying in early 2008, you'd find your investment up 20% in 5 years.

As time has passed, the message of the half-page ad has proved to be about half right and about half wrong.

The wrong parts are easy to spot. The ad noted that many (then) new homes were built…

A year ago, as we looked ahead to the 2013 rally-to-be, Dave was quoted on the front page of the LA Times, saying of MB, "The days of little cottages for under $1 million are mostly behind us." That prediction bore out in 2013.

Now as the 2014 market unfolds, look at what has been offered in recent weeks and months under $1M:

A parcel of pure dirt in a heavily compromised location at 1120 6th St., which was listed under "lots and land" at $895K and made a quick deal. (You would not have seen it in a typical MLS feed showing actual houses for sale.)

Compromised location? This 7500 sq. ft. plot abuts the parking lot and structure of a sports bar. (Can we just say Mr. Pockets?) We've heard tell of past efforts to join it up with the commercial lot, but…

Before this year, do you want to guess how many non-Strand townhomes in Manhattan Beach have sold for more than $3M?

That's $3M+ for a unit that shares a lot and a wall with another.

Before this year: One.

Now, with 611 Bayview coming in at $3.250M, there are two.

And its partner came awfully close. That's 612 Manhattan Ave., the other half of the building, with the sale posting at $2.900M at mid-month.

Put them together, and this little high-end spec project just netted more than $6M.

The lot sure looks like a nice get at $2.2M – that was early 2012.

Before this week, the top non-Strand townhome sale was, surprisingly, from the down year of 2011.

205 27th (3br/3ba, 2870 sq. ft.) is a major, modern remodel of a 70s original on a very favorable lot

Is there a hunger out there for lot sales in Manhattan Beach?

Why, yes. We're seeing a new wave of speculative development get fully under way.

Now would-be owner/user custom builders are competing against spec builders who, traditionally, would not pay as much for a lot. The frictional costs, and inherent risks, for a builder tended to limit their numbers on lot acquisitions. Not so much now, as builders see the upside of an up market.

Last week there were multiple offers targeting the lot at 4101 Crest, where the little cottage is cute but probably unfixable, and the big blue ocean views could really be something with a maxed-out build.

The $999K start price may look interesting in the rear view mirror when the deal wraps up – soon.

Then they'll get…