When people envision living in Redondo Beach, they most often see themselves living oceanfront. While the neighboring cities of Hermosa and Manhattan Beach have oceanfront homes on The Strand, most buyers are quickly priced out as those homes generally start in the mid $4.0M. Not so in Redondo Beach with an abundance of oceanfront and ocean view condo options. Ranging from studios to true oceanfront estates, Redondo has options for just about everyone.
It wasn’t too long ago that most buyers had heard all of the horror stories involved with short sales and wouldn’t go near them. In many conversations I explained to buyers that if they were looking for a “deal” a short sale was definitely the way to go. Unfortunately that just doesn’t seem to be the case any longer as short sale inventory is almost non-existent. According to Keith Kyle, a South Bay short sale specialist, “it’s a combination of lower inventory and a much more streamlined short sale process in which most short sales are going through. No longer are buyers overly cautious about potential short sales taking 6 months or more like they had in the past.”
While short sale may not be the bargain they once were, they still are the likeliest source of well priced homes if and when you can find them. For a current list of foreclosures visit either our Redondo Beach foreclosures site, or our South Bay foreclosures and short sales listings.
The above chart shows the “for sale” distressed homes in light green, sold homes in teal, and pending sales in red over the past 10 years. Needless to say there’s certainly not an abudance these days.
While we have been buffered a bit from the distressed home market, foreclosures and short sales are still an active part of the Hermosa Beach real estate market. Not surprisingly foreclosures and short sales in Hermosa Beach over the past 12 months have consisted primarily of condos. Why is this? From my experience there are several factors.
Starter Homes – In a very high end market such as Manhattan Beach and Hermosa Beach, it is inevitable that many of the homes that eventually find their way to the foreclosure process are considered “starter homes”. Many or most of these homes were attainable during the loose lending days and many were first time home buyers taking out adjustable mortgages or taking loans that were very aggressive compared with traditional standards
Moving up – Condos in towns such as Hermosa Beach are often considered “stepping stones” and although a good way to start the process of home ownership in a high end market, the intent is often to live in the home only long enough for values to go up, use the equity and buy up. This is a fine strategy if the market is going up.
Demographics – Condos are also often bought by young single people, or younger couples. Once again they are a starting point, and the plan is often to sell and buy up once there are kids involved. Again the challenge becomes trying to sell in a down market.
Shorter term owners – The other aspect that separates condos from single family homes is the relatively high turn over and therefore higher % of short term owners that bought at the peak. For some of the reasons above condo owners are generally shorter term and therefore many bought at the peak of the market and the decrease in home values impacted those owners far more than those that have owned for years and years.
While much of the South Bay has been somewhat immune to the wave of foreclosures and short sales that have been so prevalent in much of Southern California, unfortunately the townhomes of Fusion South Bay haven’t been so lucky. Of the 6 homes that are on the market, or currently in escrow, 5 are either short sales or bank owned which is an unheard of ratio in the area.
ML#
Status
Address
Price
Br/Ba
Year
Sqft
Type
P831850
Active
5403
149TH PL #3
$ 364,900
2/3.00
2007/ASR
1410
REO
V12041598
Pending
5412
149th PL #7
$ 345,000
2/2.00
2007/ASR
800
Short Pay
V12063595
Pending
5511
149th PL #7
$ 348,100
2/2.00
2006/ASR
800
Short Pay
S12090059
Pending
5506
149th PL #8
$ 385,000
2/2.00
2007/ASR
1067
Short Pay
S12055041
Pending
5404
149th PL #12
$ 499,900
3/3.00
2008/BLD
1790
Standard
So why is Fusion impacted so much more than surrounding areas. Unfortunately it’s the perfect storm for foreclosures and is due to a number of factors.
Timing – The project was built in 2005 and 2006 so the original home buyers bought at the very peak of the market, and just before the bubble burst.
Owners – Most of the units were purchased by two types of buyers. Many units were purchased by first time home buyers with access to loose lending and somewhat risky loans. In addition many buyers purchased in Fusion as a “stepping stone” with no intention of remaining there for long. The other primary buyers at the time were investors thinking they would make good rentals (which they have) but as they were second or even third homes they were also more susceptible to the downturn.
Self fulfilling prophecy – Just as the specter of the “shadow inventory” has many buyers and sellers concerned, this actually is the reality in Fusion. As there have been so many short sales and foreclosures, it has driven the price down considerably leading to additional short sales and foreclosure. Prices have dropped considerably and until the wave of distressed sales is resolved there is no clear turn around in sight.
Litigation – for all of 2011 there was pending litigation due to what the HOA considered builder defects. While the issue was being resolved there was no lending available which limited any sales to cash buyers only which hammered prices even further.
Fusion is a great option for buyers looking to be near the beach, with good schools, in a gated community and very new construction for the area. Prices are now favoring buyers looking to get in at the right time. Unfortunately there are 2 sides to every issue and as I’ve sold numerous Fusion condos to some wonderful people, the “great deal” that Fusion has now become isn’t so great for everyone.
Oceanview Penthouse condo in Seascape 2 at 110 The Village #503
**Please note that this home sold and is no longer on the market.**
For the feel of vacation living, the penthouse units of Seascape 2 are hard to beat. The beautifully updated unit at 110 The Village #503 was originally priced at $949,000 which was a bit high in my opinion but is now close to an appropriate price at $899,000. The home is listed by Debbie Allen of Remax.
