I am often asked to name the most expensive place to live in the South Bay.
Interestingly, the answer to this question has been shifting with time. Ten years ago, the answer was, by a long shot, the sub-area of Rolling Hills. The median price there was a full $600,000 higher than the next closest area, a significant gap at the time. This past year, the Hill section of Manhattan Beach managed to pull ever so slightly ahead of Rolling Hills to claim the crown with a median price just under $2.5 million.
However, looking at this with respect to area masks the much higher cost of buying on The Strand. In the last couple of years, the cost of entry to buy on The Strand exceeded $4.7 million. It is worth noting that through this past year, the price of a Strand home has not varied all that much with respect to location when all things are considered. This may be about to change in a big way.
For the past 10 or so years, the 200 block has been undergoing a remarkable, game-changing transformation. In 1998, 10 beach bungalows occupied 216 and 220 The Strand. They were on the market being sold as two separable lots at the time. A very well-known local professional athlete purchased both lots for under $4 million and ended up selling them less than three years later for $9.8 million. The buyer managed to pick up the adjacent lot soon thereafter for a tad more than $3 million in the summer of 2001. At the time, the remaining three lots were all independently owned by the same parties and had been for at least 10 years.
In 2004, the property on 200 The Strand was purchased by a non-occupying owner. By early 2009, the homes on 204 and 208 The Strand were both purchased by a single investor and the triple lot property was converted into a substantial single home. The closing prices for the three individual properties ranged from $5.5 million to $6.7 million, consistent with other Strand sales at the time they occurred. The six lots had a collective total selling price of about $31 million, or $5 million per lot. By Strand standards, this average is not particularly noteworthy. It is the added value created by combining lots and building prominent homes that make this story far from finished.
Before I carry on about why I think this piece of the Strand will potentially forever raise the bar on home values at the beach, I thought I would put this into a broader context. Every year, Forbes magazine publishes its list of the most expensive homes in America. Last year, two of the top three homes were in the Los Angeles area. The number one most expensive home was selling for $100 million in Beverly Hills and the number three home on the list was listed at $85 million in Bel Air. If you look at the Bel Air price with respect to land area—which turns out to be greater than the Beverly Hills home—the home prices out to about $20 million per half acre of land.
As a side note, a couple of acres in Lancaster, CA will set you back about $15,000. The six homes on the 200 block of the Strand sit on just under a half acre. Therefore, the $31 million in total acquisition costs for the six lots already significantly exceeds the land value of the top most expensive homes in America.
The home on the triple lot is finished and it looks impressive. The home on the south corner of this block is expected to be completed by Labor Day. There are rumors swirling around that the now double lot in the middle will begin its transformation as early as next month.
So by the end of 2011, this block will have three homes, instead of the usual six, and the collective value of these homes could potentially exceed $60 million according to the handful of people that I have spoken to about this. That's a far cry from the average value of under $2 million per lot placed on these homes back in 1998 and the beginning of a new home pricing paradigm on the Manhattan Beach Strand.