Living La Vida Local

...continued from 2003: Not Enough Property for Sale in Santa Monica

To describe the real-estate market in 2003, it could be said that inventory did
not meet the demand.

Most local homeowners who were interested in selling property and taking
the value out of their home had already done so. 2003 saw close to a 20 percent
decline over 2002 in single-family sales. It’s not that properties have gone unsold, it’s that there’s no inventory. Income properties saw a trend toward larger unit buildings, but the gross rent multiplier — which can determine the price — remained the same.

Now for the details.

According to the Multiple Listing Service, Santa Monica in 2003 saw the sale of 379 single-family homes, down from 463 sold in 2002. We’re now in our median
range. In 2000, 360 homes sold, and 1998 saw 392 homes sell. We’re there.

“The decline in sales is due more to a lack of inventory than anything else,”
noted one real-estate executive. “Prices are up about 20 percent over last year, so it’s not like the demand has declined.”

Of 2003 single-family residence sales 183 were priced under $1 million, 123
were priced between $1 and $2 million, and 73 were priced at more than $2 million. For a point of perspective, 2002 single-family residence sales saw 258 under $1 million, 149 between $1 and $2 million, and 57 at more than $2 million.

The high-end property is described as a “sophisticated villa on a double lot” on
Palisades Beach Road and had an asking price of $8.2 million. The deal of the
neighborhood was a 988-square-foot fixer upper on a 3,200-square-foot lot near
Clover Park that closed at $330,000.

According to the California Association of Realtors, Golden State home sellers earned a record median gain of $150,000 in 2003.

“Sellers in 2003 realized an 8 percent annualized rate of return, far exceeding the returns on many other investment options,” stated Leslie Appleton-Young, the association’s vice president and chief economist.

In the condo market, the MLS boasted that Santa Monica sold a total of 710 condos in 2003, down from 784 in 2002. Sixty-seven transactions were priced at
$300,000 or under. That’s compared with 162 in 2002, 234 in 2000, and 413 in 1998.

In the $300,000 to $600,000 range, Santa Monica saw 439 units change hands, as compared with 473 in 2002, 376 in 2000, and 299 in 1998. This year, there were 167 units selling between $600,000 and $1 million — compared to 130 in 2002 and 72 in 2000. Thirty-seven units sold for more than $1 million. In prior years, a grand total of 95 Santa Monica condos have sold for more than $1 million.

2003’s most expensive condo was a five-bedroom penthouse suite along Ocean Avenue. This $8.1-million unit boasts “Luxury living at its finest. Sensational 360 degree views (elegance abounds).” The least-expensive condo was between Santa Monica College and the freeway. The two-bedroom, one-bathroom condo sold for $130,000 and came with its own set of issues. As the ad explained, “Buyer must inherit tenants with all of tenant’s rights governed under Santa Monica Rent Control.”

The income property market in Santa Monica saw $73 million in business and
transacted more than 106 income properties, whereas in 2002 118 buildings were sold at a total cost of $49 million, according to Carl Lambert, vice president of the Action Apartment Association, a fullservice trade association representing
Santa Monica and the entire Westside of Los Angeles.

The average building size in 2003 was 11 units, and the average unit price was
$174,000, as compared to 7.6 units at $160,000 per unit in 2002. The gross rent
multiplier — the building sale price divided by the contract rental rate — remained stable in the 12.4 to 12.5 range.

“(Gross rent multipliers) are not going up, but the value of buildings and the cost
per unit is increasing,” Lambert noted.

There’s not a lot of land left in Santa Monica. In 2003 only eight pieces of land
changed hands, down from 23 pieces in 2002. The low end was an 800-squarefoot lot near Santa Monica College for $425,000. On the high end, it was 3,118 square feet, a block from the beach in Ocean Park, for $1.95 million.

“With many buyers wanting to live in Santa Monica, there are very few homes
available, and we have seen home prices appreciating very quickly,” said realtor
Dan Urbach. “Last month we saw 29 homes sell with an average price of
$887,573 and an average days on market of 68. With condos we saw 57 condos sell for an average sales price of $421,632 and an average days on market of 53.

(If you have local real estate questions or opinions you’d like to share, e-mail
them to Jodi Summers at [email protected]).

Work with an authority. Enjoy my real estate column and statistics every Wednesday in the Santa Monica Daily Press.

Jodi Summers
Sotheby's International Realty