"Is Redondo Beach next?" This question has been popping up from our income unit investors and builder clients for the last couple years. The answer, based on the competition we are running into when making offers on property, is a resounding "Yes."
Historical and forward looking Beach Cities average property values
(2009-2014 actual, 2015 projections - Zillow)
The Manhattan Beach Money Spills Over
In the last 15 years, Manhattan Beach went from a sleepy beach cottage town to a booming, hip city of multi-million dollar ocean view properties. Fueled originally by the run up in values through 2007, it continued the price climb as new families moved in and brought the public schools from average to stellar quality. Next, the "Silicon Beach" tech money rolled in sending ocean frontage Strand homes into the $10,000,000+ range followed promptly by a wave of high income buyers who wanted that relaxed, laid-back lifestyle they had heard so much about.
As the Manhattan Beach prices spiraled upward the builders, flippers and investors all fought over every tear-down home, fixer, vacant lot and even income units. Buyers looking to hold income properties for revenue stream just couldn't compete with the offers from builders who saw millions to be made by putting in new townhomes or luxury ocean view estates on the Strand. It sent many buyers into the next town south, Hermosa Beach. The same wave hit Hermosa and sent those property values racing up. It was only a matter of time before that money started moving south again. The next stop was Redondo Beach.
Redondo is the largest of the Beach Cities, with South Redondo along the coast and North Redondo tucked just behind Manhattan/Hermosa. It is bordered by the popular Hollywood Riviera section of Torrance and the posh peninsula of Palos Verdes beyond. The ocean frontage section of South Redondo is where we are seeing the most activity, but the North Redondo neighborhoods are also seeing bulldozers moving in to replace older 1950's homes/duplexes with new townhome build outs.
Still Time to Buy in Redondo Beach?
The price escalations have certainly started, but there is still room for profit compared to Manhattan Beach or even Hermosa Beach. The signs of the coming changes are all there:
- Multiple offers - In 2013 we ran into twenty offers on a fourplex in Redondo, but 5-10 offers with half of those being "all cash" was very common.
- Duplexes going to builders instead of income property investors. A strong sign of the market shift to new construction.
- The construction fences. We often drive by homes that sold in the last couple months to see the construction fencing wrapping the property and a demolition crew moving in. The architects, builders, landscapers and crews all cover the fence with their business signs knowing more money is moving in.
- Norma Toering Broker/Owner of Charlemagne Int'l Properties (310) 493-8333
- Josh Toering REALTOR (310) 525-9440
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