$2M for Dirt

By Dave Fratello | February 19th, 2014

People love to love the flat walkstreets in Manhattan Beach's South End.

Spec builders and folks who want to build for themselves keep paying more for the land.

The latest eye-opening land trade is a lot that went to a spec builder at 504 8th St. for $2.000M. The sale posted recently in the tax records.

The buyer is the development LLC that recently built and sold 340 6th St. (5br/5ba, 3600 sq. ft.), a modern Plantation style home.

The builder paid $1.825M for the dirt there on 6th back in July 2012. The completed home sold for $4.235M in December 2013, hitting a new high on a PPSF basis for the flat family walkstreets.

However, that sale fell slightly short of the off-market sale price on a new home at 337 7th (4br/4200 sq. ft.) at $4.500M. (See "Over $4M on the Flat Walkstreets.")

The location for 504 8th cannot be called as prime as the midblock locations for the 6th St. and 7th St. homes mentioned above. It's the last regular north/south lot before Valley, with three homes fronting Valley buffeting it from the traffic. (The new home will have 3 neighbors to the east.) Also, generally, the lots on the north side of a walkstreet are favored over the south side, where 504 8th is. (To be clear, a lot of people would be happy on either side.)

If you like land speculation, you'll like what the sellers pulled off at 504 8th. They bought it for $1.462M in Dec. 2006. So they just made a tidy $500K over the span of several years.

The prior two sellers did much the same: After a 1997 purchase at $427K, one seller took $985K (+$560K) in 2001, more than doubling their money in four years. And it was that buyer who paid $985K who, five years later, unloaded the property for $1.4M+, a jump of $475K.

Maybe the builder should just hold the plot for 5 years and bank another $500K.

But no, here's betting there's more to be made on the new build.

At 340 6th they built just 3600 sq. ft., meaning they did not have to build a third interior parking space, but that also kept the square footage about 600 below the max. For that they got more than $4.2M. As long as they're building new, why not max out and ask for more? And what's "more" this time? Is another new record for the walkstreets in the offing?

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