Rapid Inflation for East MB 5K Lot Homes

By Dave Fratello | July 14th, 2021

Two months ago, as we spotted an emerging price trend in East Manhattan, we shared the data here.

At the conclusion of "Middle 3's for East MB New Construction," we said: "[W]atch the market: More new and newer comparable homes are coming soon, and they'll likely price based on the best mid-3's numbers that others have been getting."

What happened next?

One of those new/newer comparable homes listed very soon after our post, at the new price level, middle 3's.

And sold even higher.

1307 Voorhees Avenue Manhattan Beach CA1307 Voorhees (5br/5ba, 3650 sqft.) was a special offering.

Custom-built just 2 years ago, finely crafted with incredible finishes, a great sense of style and top-tier staging to show it all off, the property absolutely sang.

(One presumes that it still sings. See all photos here.)

Listed at $3.499M, the home went swiftly to a bidding war. (Disclosure: We had clients in the bidding war.)

What came next was what happens when a property is truly singular and becomes a "must have."

Someone decided to take the newly defined "ceiling" for comparable properties and just blow massively past it. From where they went, the buyers could look down and see the curvature of the earth.

The closed price: $3.750M.

We weren't privy to the final details of the accepted offer, but we'll assume two things: (1) There was no appraisal contingency, and (2) any appraiser who did come didn't bring back a validation of that price.

It would almost be a firing offense (sorry!) to say that number was supported by any comps. It was only supported by the market, in this case meaning multiple parties who wanted this specific house so much, they would pay whatever it took.

We recommend that you review the full post from May for more detail and data on these East Manhattan homes on ~5000 sqft. lots. (A couple that were pending then have closed since.)

But we'll just give you two bookends to consider how drastic all of this movement has been.

Our listing at 2113 Chestnut (5br/6ba, 3565 sqft.) was a 2016 build, lightly lived in, well-crafted, in a good, quiet location. There are even some city/mountain views.

We drew multiple offers soon after our late-September 2020 listing. It sold for $2.975M.

Chestnut's basic floorplan was extremely similar to that of 1307 Voorhees (5br/5ba, 3650 sqft.). And both had a very similarly limited amount of backyard space. (That's what comes with the 5K lots.)

1307 Voorhees was 3 years newer, perhaps another tier above in terms of craftsmanship and newness, in a decent location that literally never had seen a comparable sale over $3.000M.

That's right, at the time of 1307 Voorhees' listing, NO property on a lot of ~5000 sqft. in the whole, vast Mira Costa district had ever closed above $3.000M.

And now it has closed for $3.750M, which is:

* $775K (26%) over 2113 Chestnut 7 months prior,

* $200K over nearby 1317 Curtis (5br/6ba, 3500 sqft.), a major remodel/rebuild that closed in late May this year, and

* $250K over fully new construction at 1210 Shelley (5br/6ba, 3580 sqft.).

This is rapid price inflation.

Even if 1307 Voorhees had never listed, the middle-3's would have been a big step for Mira Costa.

Now the next sorta similar property is going to come along and say "our house is as good or better than Voorhees," or "our lot is bigger" or "our street is even better" and they're going to assume $3.750M is the starting point for the next bidding war.

And you might say, "haha, no way, these delusional sellers are gonna get slapped back to reality," but you don't know how much space there is for this inflation to keep growing and filling out.

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