Over the last 8 years, “spec building” or speculative development has come back since the downturn. The biggest change in the local spec market is basements. Basements have become a huge part of new home building in the South Bay like never before. A few years ago, there were only a few homes built with basements and they sold for more money and right away. Builders saw this trend and thought if they can add a basement to the house they normally build and make a bunch more money, then that’s what they will do! For example, now in the Manhattan Beach Tree Section, 80% of the new homes being built will have basements, but they will also come with large price tags.
The real “problem” is the price of these homes and number of homes that will be for sale in this range is estimated to greatly outnumber the amount of buyers in this category. The bigger problem is that there are many more buyers that can “afford” the traditional new house without a basement, but no one is building those anymore. The next 12 to 24 months in the Tree Section are going to be very interesting to watch.
Other areas of Manhattan and Hermosa are not having this inventory problem. In fact, it’s the opposite- areas like the “Sand Section” and “Hermosa Valley” have very little amount of spec homes being built because the land has been so hard to find. The Sand Section doesn’t normally have the issue with the price jump due to the house with a basement because the values and the buyer pool can usually support that in that area.
Another interesting trend in our local market is technology in the home. This has been interesting to watch because there is no single leader in the Home Automation department for an all-around home operating service. There are popular lighting systems, audio visual control systems (like Sonos), and security systems, but those are all separate systems that can either be controlled separately or on a single overall system like Control Four, or others. This type of stuff has been around awhile, but you are starting to see more and more of it installed by builders as an inducement to sell.
Other items getting commonly included in the beach area are multi zone Air Conditioning, solar panels, EV car chargers in the garage, Tesla back-up batteries, movie theater rooms (mostly in houses with basements), and built in heaters on patios. Homes are getting more sophisticated these days as the price ranges go up in the area. This is mostly because buyer’s expectations go up with the price. Not to mention, more than ever- the less the buyer feels that they have to do to the house, the more interested they are.